 | It is important for families to discuss the financial aspect of college admissions by the end of the junior year of high school. Students need to know how much money they are responsible to bring to the table based on the costs of the colleges to which they are applying. If possible parents should be clear and detailed with their children on just how much they will realistically be able to contribute to post secondary education. If this family “ability to pay” is clarified early on in the process then conflicts and misunderstandings will not occur as students are admitted to expensive institutions. Today’s price tag for higher education can range anywhere from approximately $2000 per year for a local community college to over $50,000 per year for some out-of-state, private schools. It is important for everyone to be on the same page financially as students go through the process of building a list of schools.
Some Important Definitions:
Grants & Scholarships are gifts. They do not have to be repaid, which makes them the most desirable forms of financial aid.
Merit Scholarships depend on academic, artistic, or athletic merit or some other criteria, and do not depend on the existence of financial need. Merit-based awards look at grades, test scores, hobbies, and special talents to determine eligibility for scholarships dollars.
Loans must be repaid. They count as financial aid when they feature favorable repayment terms. For example, they may be interest-free while the student is in school and carry lower-than-market interest rates after graduation.
Work Study is exactly that – money the student works for while he or she studies. The money does not have to be repaid, and the college provides the job.
Dependent students are those who are dependent on their parents for support. Both the parents’ and the student’s income and assets are evaluated to determine the expected family contribution to college costs.
Independent students are not dependent on their parents for support. Only their own income and assets, and those of their spouse, are tapped for college expenses. In general, students must be at least 24 years old by December 31 of the award to qualify as independent. Orphans, veterans, wards of the court, and students with legal dependents also qualify. So do married students and graduate students. Students who do not meet any of these conditions may be declared independent only at the discretion of the school’s financial aid administrator.
FAFSA – Free Application for Federal Student Aid – Government form required to establish the Expected Family Contribution. This figure is calculated based on parental/student federal income taxes for the previous year. This form can be filed anytime after January 1 st of the year the student will begin attending college. For detailed information log onto www.fafsa.ed.gov .
CSS Profile may be required in addition to the FAFSA by some colleges and universities. This form asks for more detailed information regarding family finances in order for the college to better assess your students need. For detailed information log onto www.collegeboard.com .
Expected Family Contribution (EFC) is the official term for the amount of money a family must contribute to college costs. Understanding this contribution is key to formulating your entire financial aid strategy.
Student Aid Report is the notification by the federal government of your expected family contribution based on the FAFSA you have filed. This report will contain a number preceded by some letters. EFC: 06700, for example, means you have an Expected Family Contribution of $6700.00. This information will also be sent to the colleges you designate so the college financial aid officer can begin working on your financial aid package.
Financial Need is the difference between your expected family contribution and the total cost of attending the school. Some schools will guarantee to meet your financial need with the financial aid package; others will attempt to meet your need.
Financial Aid Package is the total amount of financial assistance offered an admitted student. This amount will include grants and institutional scholarships, loans, and work study, also any private scholarships you have been awarded and reported to the school. The best case scenario is that the EFC plus the total figure offered in the financial aid package by the school will equal the total cost attendance.
Negotiating with Financial Aid Offices is perfectly acceptable, especially if the total amount of your award falls short of your actual need. Often the EFC comes out to be higher than the family feels capable of contributing. If there are extenuating circumstances, such as job loss, a parental death or divorce, or business reverses this information should be discussed with the financial aid officer of the school. This official has the ability to adjust your financial aid package based on this new information. Even without extenuating circumstances it does not hurt to ask if there are additional discretionary funds the college could award so that will make it possible for the student to attend.
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