Must-read advice on how to get funds to pay for college
Families spent an average of $30,017 on college tuition in the 2019-20 academic year, according to a 2020 survey by the UK’s Daily Mail, by Sally May and market research firm Ipsos. Nearly half of that (47%) came from financial aid. 1 From these data, two things are immediately clear: first, college tuition is expensive; and second, financial aid is generally required to pay tuition.
KEY TAKEAWAYS
- Start planning early on how and where to get financial aid.
- Financial aid can be need-based, merit-based, or both.
- Federal aid, as well as most state and agency aid, requires a form known as the FAFSA.
- CSS profiles are required by many private universities.
- If you don’t get enough aid, you can ask for more.
What is financial aid?
Financial aid is any college aid that does not come from family or personal savings or income. It can take the form of grants, scholarships, work-study, federal or private loans. Financial aid can be used to cover most higher education costs, including tuition, room and board, books and supplies, and transportation.
Aid can come from a variety of sources. This can include federal and state agencies, colleges, high schools, community organizations, foundations, corporations, and more. The amount of funding you receive will depend on various source rules, as well as federal, state, and university guidelines.
get up early
Whether you’re a potential college student or the parent of a child, it’s never too early to start planning. The US Department of Education’s (DOE) Office of Federal Student Aid has released a college readiness checklist that will help guide you You pay for your education from elementary, middle school, high school, or young adult to where you want to end up in college with a plan.
Ask your high school counselor about assistance local and state organizations may offer you or your child, including scholarships and grants you may receive while still in high school. Although you must declare any outside aid you receive when you apply to college, and this aid reduces the amount of federal, state, and college aid you can receive, it also reduces the amount of aid you need, so the net effect is a cleansing.
Take note of all grant application deadlines and don’t let them pass before you apply. Use the DOE checklist mentioned above to build your foundation and the information in this article to guide you in your search for financial aid.
Need-Based Aid vs. Performance-Based Aid
The two main funding categories are need-based and non-need or merit-based. Simply put, need-based aid is awarded based on the awarding agency’s assessment of your ability to pay for college. Merit-based aid is awarded for exceptional talent or demonstrated ability, such as in academics, athletics, music, or other fields.
Whether your financial aid is need-based or merit-based (or both) does not determine whether you have to pay it back. It depends on the specific type of aid you receive. Most scholarship grants, for example, do not have to be repaid. Most loans are like this.
Two Important Application Forms: FAFSA and CSS Summary
When you enter college, there are two main paths to financial aid. One is the Free Application for Federal Student Aid (FAFSA) sponsored by the US Department of Education and requires you to be considered for federal aid as well as most college and state aid.
The second, known as the Scholarship Application Form, is sponsored by the College Board and used by about 400 private colleges and universities from which to distribute non-government financial aid.
Each form has its due date and procedure (see details below). You should file with the Federal Financial Services Administration, even if you do not believe you are eligible for federal financial aid. That’s because (a) you could be wrong, and ( b) even if you’re right, most local, state, and individual school financial aid, including scholarships, requires the Federal Financial Services Administration. Whether you should submit a CSS file may depend on your interest in financial aid or whether the school you plan to attend requires it.
Breaking down the FAFSA
Be sure to submit your FAFSA for the next school year by October 1 (or shortly after). This means, for example, that you submit October 1, 2020, for the 2021-22 school year. Although the federal deadline to apply is June 30 of the academic year (in this case, June 30, 2022), it may be too late to receive most financial aid. It’s also likely well past most state and college aid release deadlines. 2
You must also update your FAFSA every school year you are in school or you will not be eligible for additional federal financial aid (including renewable aid you received the previous year). To maximize aid, please renew your FAFSA before October 1 of this year for the academic year you are renewing, just like your first year of college.
The update process is usually simpler and faster than the original process because a lot of personal and demographic information is preserved. You still need to check it to make sure it is accurate, but there is no fee to file or update the FAFSA.
Breaking down CSS configuration files
If the college or university you plan to attend uses CSS as part of its financial aid process, please submit a CSS Profile. On October 1st, at the same time as filing the FAFSA, if required, on the same day each year.
View the College Board’s list of participating institutions and programs for details on which schools require CSS and which student or parent classifications need to be filed.
For example, Amherst College in Amherst, Massachusetts, requires CSS profiles from domestic and international students, as well as non-customized parents on either side. On the other hand, Loyola University in Baltimore, Maryland, requires both domestic and international students to have CSS profiles but does not require information from non-customized parents.
Most pay a $25 fee to submit their initial CSS profile ($16 for each additional university). First-time applicants to domestic universities are exempt in the following cases:
- You received an SAT fee waiver.
- For a family of four, your parent’s income is $45,000 or less.
- You are an orphan or a court ward under the age of 24. 3
The earliest open date for funding applications is more important than the latest application deadline.
Check open dates, not deadlines
Tractors beware! Although the FAFSA, CSS Profile, colleges, and universities all have deadlines, the last date you have to apply for aid each year is the most important of all the open dates — the first date of the year when you can submit your aid application.
As noted above, the open date for the FAFSA and CSS files is October 1 of the calendar year preceding the academic year for which you are applying for funding. For example, the opening date for the 2021-22 school year is October 1, 2020.
You can apply for federal aid for the 2021-22 academic year through the FAFSA any time between October 1, 2020, and June 30, 2022. However, keep in mind that state and college/university aid opening dates and deadlines, including through the FAFSA and CSS profiles, are usually much earlier than June 30, and some states and schools direct you to apply as soon as possible after the 1st FAFSA/CSS open date. Others have set the deadline sometime between January and March next year, and some will even follow the FAFSA’s June 30 deadline. State deadlines are available on the FAFSA Deadlines webpage.
Type of funding
Whether need-based or merit-based, federal or private, financial aid typically takes one of the following forms:
grant
Bursaries are ‘free’ and do not need to be repaid (unless you fail to comply with the terms of the bursary, such as leaving school). Grants can come from federal or state governments, schools, private or nonprofit organizations. Most grants are need-based, but there are also merit-based grants.
The federal government’s Pell Grant Federal Supplemental Educational Opportunity Grant (FSEOG) is an example of a need-based grant. Information about merit-based grants, such as Wyoming NASA Space Grants and Broadcast Education Association (BEA) grants, can usually be found on your state higher education website or through your school counselor’s office.
scholarship
Like grants, scholarships are gifts and do not need to be repaid unless you do not honor the terms of the scholarship. Like grants, scholarships can come from federal or state governments, universities, private or nonprofit organizations.
Scholarships are often merit-based, although some need-based scholarships or scholarships combine merit and need. Some scholarships are for specific groups, such as women, minorities, and students from military families. Find out about the scholarships available to you through your school counselor, college aid office, or even at your local library.
work-study
Work-study generally refers to federal work-study, a program that provides part-time employment on or off-campus while you are enrolled. Federal work-study programs are only available to you if you demonstrate financial need. Eligibility does not guarantee you a job. You need to apply, interview, and be hired. You’ll earn at least the federal minimum wage (for a higher-skilled job), depending on your financial need and the school’s available funds when you apply. 4
Another type of work, called non-work study, is also available at many colleges and universities. The jobs are not government-funded, the income varies, and funding comes from the recruiting department. To learn more about these two programs, please contact your university financial aid office.
Federal Student Loans
Federal student loans are government loans that include terms and conditions with benefits (ie., fixed-rate, income-based repayment plans) that are not available on most private loans. The Federal Direct Loan Program offers four types of federal loans:
- Direct Subsidized LoansQualified undergraduate students with financial need
- Provides direct unsubsidized loans to eligible graduate or undergraduate students, not based on need
- Direct Additional Loans for graduate or professional students and parents of dependent undergraduate students, not need-based, but subject to a credit check
- Direct Loan Consolidation, which lets you consolidate all eligible federal student loans into a single loan
private student loan
Private student loans are provided by banks, credit unions, and other state agencies. These loans include terms and conditions set by the lender and are usually (though not always) more expensive than federal student loans.
Unlike most federal loans, private loan rates are based on your credit score and the lender may give you a variable rate (rather than a fixed rate). You may need to start repaying your loan while you are in school. Federal loans allow you to wait until you leave school or graduate.
How is financial aid awarded?
Most of the details of getting funding happens at the college or university level. Importantly, while there are many similarities in the way colleges award financial aid, each school has its unique process in terms of start dates, deadlines, procedures, and the actual award process.
It’s especially important to understand the difference between scholarships, grants, and loans (see above) when you read your financial award letter. For example, some schools promise 100% of your financial aid needs, but also include student loans.
Still, others offer bursaries without loans, and some even raise bursaries each year to cover tuition increases. Know not only what you’ll get, but how it’s packaged. A large part of the financial aid process has to do with you and your family’s ability to pay for college, that is, your family’s Expected Family Contribution (EFC).
But keep in mind that starting October 2022, the Student Aid Index (SAI) will replace the EFC in all FAFSA forms. In addition to some changes in how SAI is calculated, this change seeks to clarify that this figure is a student aid eligibility index, rather than a reflection of how much a family can or will pay for higher education.
When will you know how much you will receive?
You will eventually receive financial aid award letters for all colleges you applied to through your FAFSA or CSS file. When the letter arrives depends on the school, but generally, you can receive it at the same time as the school’s acceptance letter.
Funding amounts offered range from zero to the full cost of attending college. It will be broken down into three categories: free money you don’t have to pay back, earned money (through work-study or non-work-study), and borrowed money (federal or private student loans).
And if that’s not enough?
If you feel your federal financial aid award is insufficient, you may request a professional judgment review of the awarding school. However, you need a sound reason to convince the school that your award is not enough.
One way is to show that your family’s financial situation has deteriorated. If so, the school will usually ask you to submit a letter outlining the new situation. This may include divorce, family death, unemployment, or sudden high medical bills.
If another school offers you a larger award, you can try contacting the school that offers the lower award and ask if they will match the larger award.
A new deal may help you get the most aid
Historically, many colleges have been criticized for encouraging college candidates to promise ahead of time that they cannot change colleges, although this understanding is not legally binding. For candidates, committing early may mean giving up a position with a better financial aid package from another school.
Now, though, students can turn to help. The National Association for College Admission Counseling (NACAC) moved in September 2019 to rescind provisions in its Code of Ethical and Professional Practice (CEPP) that would allow college counselors to enroll students even if they have already enrolled at another school.
In addition, NACAC members can now encourage enrolled students to transfer to schools with better financial aid packages, offer perks (such as special scholarships and select priority courses for early-entry students), and have the traditional May 1 deadline Enrolling students after the date gives those students more time to choose the best financial aid package.
NACAC took action in the form of a consent order before the US Department of Justice (DOJ) filed a lawsuit in December 2019 accusing NACAC of violating antitrust laws. NACAC said it would follow the restrictions set out in the consent order, although it argued that CEPP The clauses that were removed in, did provide substantial assistance and protection to students.
Understanding how these process works are the best way to establish as much control and choice as possible in college financing.
