What is student financial aid?
Student financial aid is, quite simply, money to help you pay for higher education. It comes in two forms: money you have to repay, and money you do not have to repay. Funds can come from both government and private sources and can include grants, scholarships, student loans, and more.
“Financial aid” is a term used to describe all kinds of financial products and services used to cover the overall cost of attending college. There are many different kinds of financial aid, from federal to private student loans, each of which have many different iterations.
The cost of attendance, or COA, is an important term to know if you are to understand exactly what financial aid entails.
Cost of Attendance is the total cost of school for a given period (usually referring to a full academic year, term or semester), which includes all associated costs of the academic program, such as:
- Tuition and fees
- Room and board
- Travel to and from school
- Books and materials
The COA is almost always a large number, and it is used as the benchmark for your college costs. To determine your financial aid eligibility, the federal government and your college or university compares your Expected Family Contribution (EFC) to the school’s COA. The difference between the two figures, if it exists, is the amount of financial aid you require. Unfortunately, not all of your need may be met, which leaves you with a certain amount of unmet need. These three components comprise the total COA. To review:
- Expected Family Contribution (EFC): This is the amount the family is expected to pay toward the Cost of Attendance. The EFC is calculated in one of two general ways, which we’ll talk about later.
- Financial Aid: Usually made up of grants and scholarships, work-study and loans and awarded to the student by the school or third-party sources.
- Unmet Need: This is when the school cannot come up with enough financial aid to cover the remaining cost of attendance after the EFC. (This is everyone’s least favorite component.)
How to Get Started
To get the process started, families and students need to do several things. First, you must file the Free Application for Federal Student Aid (called FAFSA). The information you provide on the FAFSA is used to calculate the types and amounts of financial aid for which you qualify. The quickest and easiest way to file is to use FAFSA on the Web: fafsa.ed.gov. With all financial aid, the sooner you apply, the better your chances. File your FAFSA as soon after January 1st each year as you can. The FAFSA will ask you about your age, education, residency, income, the types of financial aid that interests you, and other information about your family’s income and assets.
Secondly, the student and their family must apply for financial aid at every college the student applies to. These applications are used by the school to calculate financial need and the Expected Family Contribution. Some schools only ask for the FAFSA, while others may require you to fill out different or additional financial aid forms, such as the CSS Profile or institution-specific forms.
When you have submitted all the paperwork, you will receive an award letter or package from your school that outlines the aid you have qualified for and what is available to you. If the package is not satisfactory, you can appeal it, which will not result in any negative consequences on your child’s candidacy at the school or your extant aid package. The financial aid office at your college will have more information about the specific grants, scholarships and student loans available to you – especially its own institutional aid and the federal government’s aid programs. Make sure to keep in contact with the financial aid office each year as your circumstances change and as you have questions about your financial aid options.
Financial Aid Basics