Click here for Financial Aid FAQs
Financial aid could make a difference in your life.
It may mean being able to continue your education
when you otherwise would not be able. Or it could mean being able
to attend the school of your choice despite higher tuition costs.
Financial aid covers the education costs that you
can't pay for. Most financial aid is awarded to families on the
basis of eligibility or need which is determined by the school
you attend based on information you provide about you and your
family's ability to pay for your education costs and formulas
set by law.
In general, there are four types of financial aid
-- Scholarships, grants, work-study and loans -- some of which
you may receive to help pay for your education. Scholarships and
grants are gift aid. Scholarships may be based on merit or special
interests. Grants are given to students judged to have financial
need. Government-sponsored student loans are based on eligibility
requirements and must be repaid. Work-study provides jobs for
students with financial need to help pay for education expenses.
If you are a high school student, ask your high
school counselor for information on schools and financial aid.
Also, contact the financial aid office of the school you are interested
in attending for information on financial aid programs, application
procedures and forms, deadlines and awarding policies. It is very
important that you complete the forms and follow their procedures
accurately and on time. Talk to the financial aid counselor if
you have problems or unusual circumstances. He or she can help
you design financial aid plans to meets your needs and qualifications.
The first form you will need to fill out to receive
financial aid is the Free Application for Federal Student Aid
(FAFSA) This form, is designed to determine your eligibility for
federal and state financial aid, and should be completed as early
as possible in the year you plan to start college.
The federal government offers the most grant and
student loan programs but several states also offer a variety
of financial aid programs. Federal financial aid programs include
the following:
| • |
Federal Pell Grant assists undergraduate students
with financial need attending any eligible public or private
school. For many students, Pell Grants provide a foundation
of financial aid to which other aid may be added. |
| • |
Federal Supplemental Education Opportunity
Grant assists undergraduate students with financial need attending
any eligible public or private postsecondary school. |
| • |
Federal Work-Study Program provides employment
opportunities for undergraduate students with financial need
attending any eligible postsecondary school. |
| • |
Federal Perkins Loan Program provides long-term,
low-interest loans to financially needy students attending
any eligible postsecondary school. |
| • |
Federal Family Education Loan Programs includes
Federal Stafford Loans (subsidized
and unsubsidized), Federal PLUS (Parent)
Loans, and Federal Consolidation
Loans. |
| • |
Federal Direct Student Loan Program offers
loans directly to students and parents through schools. The
Direct Loan Progam offers Direct Stafford
Loans (Direct Subsidized), Direct
Unsubsidized Stafford Loans (Direct Unsubsidized),
Direct PLUS (Parent) Loans,
and Direct Consolidation Loans. |
Financial aid is also available through state-sponsored
programs.
To obtain more information on federal or state financial
aid programs, or to apply for financial aid through any of these
programs, contact the financial aid office at the school you plan
to attend, talk to your high school guidance counselor or call
the U.S.
Department of Education at 800-4-FED-AID.
Financial
Aid FAQs
Q. Are a student's
chances of being admitted to a college reduced if he or she applies
for financial aid?
A. Generally
not. Many, if not most, colleges have a long-standing policy of
need-blind admissions, which means that a student's financial need
is not taken into account in the admission decision. However, some
colleges do consider the ability to pay before deciding whether
or not to admit a student, and others consider financial need when
placing students on the wait list or in other special situations.
(Some colleges mention this in their literature, others may not.)
Despite this situation, families should definitely apply for financial
aid if they are going to need it.
Q. Are
parents penalized for saving money for college?
A. No. As a matter of fact, families
that have made a concerted effort to save money for college are
in a much better position. For example, a student from a family
that has saved money may not have to borrow as much in student
loans, which are part of most financial aid packages. Also, when
the parental contribution is calculated for federal aid, less
than 6 percent of the parents' assets are entered in the calculation,
and none of their home equity is included. Thus a parent who saved
$40,000 for college expenses will have $2,240 counted as part
of the parental contribution. When students have assets in their
names, 35 percent of those assets count toward the calculated
family contribution. The reason for the difference is that the
student will be the direct beneficiary of the college education.
Q. How
does the financial aid system work in cases of divorce or separation?
How are step-parents treated?
A. In cases of divorce or separation,
the financial aid application(s) should be completed by the parent
with whom the student has lived for the longest period of time
in the last twelve months. Although not a federal requirement,
colleges who award their own aid will often ask for financial
information from the noncustodial parent. If the custodial parent
has remarried, for purposes of financial aid the step-parent is
considered a parent and must complete the applications accordingly.
When two parents complete the FAFSA, most colleges will accept
this family unit and will not expect the other natural parent
to contribute. If your family has any special circumstances, you
can discuss these directly with the financial aid office at the
colleges you are applying to.
Q. When
are students considered independent of parental support in applying
for financial aid?
A. The student must be 24 years
of age in order to be considered independent. The only exceptions
are if the student is married, is a graduate or professional student,
has legal dependents other than a spouse, is an orphan or ward
of the court, or is a veteran of the armed forces.
Q. What
can a family do if a job loss occurs?
A. Financial aid eligibility is
usually based on the previous year's income. For example, a family's
1998 income would be used to determine eligibility for the 1999-2000
academic year. In that way, the family's income can be verified
with an income tax return. But the previous year's income may
not accurately reflect a current financial situation, particularly
if a parent has lost a job or retired. In these instances, income
projected for the coming year can be used instead. Families should
discuss such a situation directly with the financial aid office
and be prepared to provide appropriate documentation.
Q. When
my daughter first went to college, we applied for financial aid
and were denied it because our family's expected "contribution"
was too high. Now, my son is a high school senior and we will
soon have two in college. Will we get the same results?
A. The results will definitely be
different. Because need-based financial aid is based on what a
family can afford to contribute, this amount is divided in half
when there are two children in college. Also, keep in mind that
the equity in your home is now excluded from the federal formula.
This means that many more middle-income families will qualify.
Both your daughter and your son should apply for financial aid
if you believe you need it.
Q. Speaking
of middle-income, I've heard about the "middle-income squeeze"
in regard to financial aid. What is it?
A. The so-called "middle-income
squeeze" refers to the fact that low-income families qualify
for aid, high-income families have adequate resources, and those
in the middle are caught in between -- not eligible for aid but
without the ability to pay college costs. There is no provision
in the Federal Methodology that treats middle-income students
differently than others (such as an income cutoff for eligibility).
The family contribution rises proportionately as income and assets
increase. If a middle-income family does not qualify for aid,
it is simply because the need analysis formula yields an expected
contribution that exceeds college costs. But remember that while
the family contribution remains constant the balance "needed"
changes according to the cost of the college. Thus, a family earning
$60,000 a year may not qualify for aid at a public university
with a $10,000 tuition but may very well need aid at a private
college that costs $20,000 or more. Middle-income families should
realize, however, that many of the grant programs funded by federal
and state governments are directed at lower-income families. It
is therefore likely that a larger share of an aid package for
a middle-income student will consist of loans rather than grants.
Q. Given
our financial condition, my daughter will be receiving financial
aid. We will help out as much as we can, and, in fact, will be
borrowing ourselves. But I am concerned that she will have to
take on a lot of loans in order to go to the college of her choice.
Does she have any options?
A. Absolutely. If she is offered
a loan, she can decline all or part of it. One alternative is
for her to ask in the financial aid office to have some of the
loan changed to Federal Work-Study, if the college has funds available.
Or, she can find her own part-time job. Usually the placement
office on campus can help students locate a campus job. If she
finds a job, she should tell the financial aid office so that
they don't continue to process her loan application.
Q. Is
it possible to change your financial aid package?
A. Yes. Most colleges have an appeals
mechanism. Requests to change need-based loans to Federal Work-Study
are often approved if the college has funds available. Requests
to alter a student's budget or to change an element used in the
need-analysis formula may also be granted if the expense is nondiscretionary
and can be documented. At most colleges, requests for more grant
aid are rarely approved unless they are based on a change in the
information reported. Students should speak with the financial
aid office if they have concerns about their aid package.
Q. My
son was awarded a Federal Stafford Loan as part of his financial
aid package. His award letter also indicated that we could take
out a PLUS loan and could borrow from a private source to meet
our expected contribution. How do we go about choosing our lender?
Do we go to our local bank?
A. Choosing a lender should not
be taken lightly. Chances are you will have a long relationship
with your lender. Your family may even have several loans with
that same lender, including both student and parent loans. If
the college does not participate in the Direct Lending program,
they may send a list of participating lenders with your son's
award letter. In addition, there are private organizations, such
as Academic Management Service, Inc. and The Education Resources
Institute, that offer both subsidized and unsubsidized Federal
Stafford Loans as well as private loans. You are free to choose
any lender that participates in the Federal Stafford Loan program.
But you might want to check with the financial aid office before
choosing. Although they probably won't recommend any one lender,
they may steer you away from one with whom they've had problems.
Q. The
cost of attending college seems to be going up so much faster
than the Consumer Price Index. Why is that and how can I plan
for my child's four years?
A. The cost of higher education
cannot be compared to the Consumer Price Index. Neither the CPI
nor even the Higher Education Price Index take into account some
of the fastest changing costs. For example, the dollars that universities
spend on need-based grants and scholarships have soared to match
rises in tuition, food, housing, and books. Second, most universities
have increased their enrollment of students from less affluent
families, further increasing the need for institutional financial
aid. Third, colleges are expected to be on the cutting edge of
technology, not only in research but also in the classroom and
in the library, which creates unprecedented expenses for them.
Lastly, during the high inflation years of the 1970s, most colleges
deferred needed maintenance and repairs that can no longer be
put off. As for planning for your child's four years, we suggest
you seek the assistance of a professional financial adviser. The
cost of higher education has been increasing at 7 to 9 percent
per year and will probably continue at or near that rate. There
are some colleges and some state programs, however, that offer
tuition guarantees through which you pay a set amount of tuition
for all four years.
Q. I
will be receiving a scholarship from my local high school. How
will this scholarship be treated in my financial aid award?
A. Federal student aid regulations
specify that all forms of aid must be reported and included in
the calculations that create your statement of need. This means
that outside scholarships may not be used to reduce your family's
contribution. If a college has not filled 100 percent of your
need, they will usually earmark outside scholarships to close
the gap. However, if they have met your need, they must reduce
some portion of what they have given you and replace it with the
outside award. Most colleges will allow you to use an outside
scholarship to replace self-help aid (loans and Federal Work-Study)
rather than grant aid.
Q. I
know we're supposed to apply for financial aid as soon as possible
after January 1. What if I don't have my W-2's yet and my tax
return isn't done?
A. Although you can apply for federal
financial aid any time after January 1 of each year, you don't
have to have the application in until the deadlines set by the
colleges you are applying to. The earliest deadlines are in early
February, and many are much later. Chances are you'll have your
W-2's by then, although you won't have a completed tax return
yet. Complete the financial aid application using your best estimates,
then, when you receive the Student Aid Report (SAR), you can make
any needed corrections. This year, many colleges are asking students
to actually begin the financial aid application process earlier,
in October or November, by filling out a new form, the Financial
Aid PROFILE. However, this form can only be used to apply for
the college's own funds. For federal aid, you'll still have to
complete a FAFSA after January 1. Check with your colleges for
more information.
Q. Is
there enough aid available to make it worthwhile for me to consider
colleges that are more expensive than I can afford?
A. Definitely. Over $36 billion
in aid is awarded to undergraduates every year. With about half
of all enrolled students qualifying for some type of assistance,
this comes to over $4,000 per student. You should view financial
aid as a large, national system of tuition discounts, some given
according to a student's ability and talent, others based on what
a student's family can afford to pay. If you qualify for need-based
financial aid, you will pay only your calculated family contribution,
regardless of the cost of the college. You will not pay the "sticker
price" (the yearly budget listed in the college catalog)
but a lower rate that is reduced by the amount of aid you receive.
No college should be ruled out until after financial aid is considered.
In addition, when deciding which college to attend, consider that
the short-term cost of a college education is only one criterion.
If a college meets your educational needs, and you are convinced
it can launch you on an exciting career, a significant upfront
investment may turn out to be a bargain over the long run.
Q. If
I don't qualify for need-based aid, what options are available?
A. If you are not eligible for need-based
aid, you can still look into ways to reduce your parents' expenses.
There are basically three sources to look into. First would be
merit scholarships awarded by a college or a private organization
in recognition of academic or other talents. You should start
the search for merit scholarships during the initial stages of
the aid application process. Second is employment, during both
the summer and the academic year. The student employment office
at your college should be able to help you find a job during the
school year. Third is borrowing. Even if you don't qualify for
the need-based loan programs, the Unsubsidized Federal Stafford
Loan program and the Federal PLUS Loan are available to all students.
The terms and conditions are the same as the Subsidized Federal
Stafford Loan except that interest accrues while you are in college.
After you have contributed what you can through
scholarships, working, and borrowing, your parents are left with
their share of the college bill. Many colleges have monthly payment
plans that allow families to spread their payment over the academic
year. If these monthly payments turn out to be more than your
parents can afford, they can take out a parent loan. By borrowing
from the college itself, from a commercial agency or lender, or
through the Federal PLUS Loan, parents can extend their college
payments over a ten-year period or longer. This kind of borrowing
reduces the monthly obligation to its lowest level, but the total
amount paid over time will be the highest because of principal
and interest payments.
