Dollars and Sense: Demystifying College Financial Aid 

How much does College Cost? The costs of college include direct costs such as tuition, fees, and room and board and indirect costs such as books, supplies, transportation, and other miscellaneous expenses, like those midnight pizza runs. Annual college costs can range from $3,400 at a community college to over $60,000 for a private university. One little known program is “tuition break for New England residents.” This program provides a tuition discount to New England residents when they enroll in approved degree programs at out-of-state public colleges and universities throughout New England. Visit www.nebhe.org/tuitionbreak for additional information. Other regions of the country have similar programs.

What are the types of Financial Aid? There are two primary types of aid: Gift Aid, money that does not have to be repaid, which usually includes scholarships and grants, and Self-Help, which includes loans, and work-study.Federal tax incentives, although a relatively small component of financial aid, helps families recoup some of the money they have paid out for higher education.

Scholarships, or “merit aid”, are awarded to students in recognition of academic, athletic, artistic, or leadership abilities. Institutional aid comes directly from the colleges that award scholarships to students whom they wish to attract to their school. Many corporations, non-profit agencies, religious organizations, civic organizations, employers and unions have scholarship dollars. Often relatively few students apply for these, increasing your chances of being an award recipient. The school guidance office maintains lists of scholarships and their requirements. Frequently an essay and/or recommendations are necessary to apply. Finally, there are legitimate online sources of scholarships where students complete a profile and receive email notifications for scholarship opportunities that match. One of the best web-based resources is: www.fastweb.com. Please be aware of scholarship scams on the web.

Grants are awarded to students based on their financial need. The Pell Grant is the largest need-based grant provided by the federal government. Pell Grants are only given to students who show a high degree of financial need based on the Free Application for Federal Student Aid (FAFSA). Apply online at www.fafsa.ed.gov.  Grants are also available through colleges, state agencies, corporations, non-profit agencies and civic organizations.

Work-study enables students to earn money for college expenses by designating an amount of money and providing the opportunity to secure a job, usually on campus. Eligibility for work-study is based on financial need.

With college costs increasing each year families are relying more heavily on loans.  The federal government offers low interest loan opportunities for both students and parents. These programs include the Federal Direct Stafford Loan and Perkins Loan programs for students and Direct PLUS Loans for parents and graduate students. To qualify for any of these programs families need to complete the FAFSA. If a subsidized loan is awarded the federal government pays all accruing interest while the student is attending college and during the six month grace period after the student leaves college. Subsidized loans are based on financial need. Unsubsidized loans are not based on financial need and interest is charged as soon as the disbursements are made. Be a savvy consumer if you choose to borrow and limit the amount of student debt.

How is Financial Aid Determined? The formula used to compute how much financial need a family has is derived by taking the total Cost of Attendance (COA) for the college and subtracting the Expected Family Contribution (EFC). The remainder is the Financial Need. All need-based aid is figured from this bottom line. 

In order to determine the EFC, the student and family must complete the FAFSA (Free Application for Federal Student Aid). It is available online at www.fafsa.ed.gov starting on October 1st for the next school year. Since each college has their own deadlines, complete the FAFSA as soon as possible. It is easy to go back to update and make corrections online. There is help available on the website. * Starting with the 2023-2024 school year there will be a redesigned simplified FAFSA. The term Expected Family Contribution (EFC) will be replaced by the Student Aid Index (SAI). This is a positive change since many parents are misled into thinking their EFC is the only amount that they will be expected to pay for college when often it is significantly higher for colleges that cannot meet full financial need and there is a gap between the amount the family can contribute and the actual cost of the college.

Once the application is reviewed the student will receive a Student Aid Report (SAR), which lists the Expected Family Contribution and whether the student is eligible to receive a Pell Grant. Each college the student has listed on the FAFSA will receive an Institutional Aid Report. Some private colleges require an additional application such as the CSS/Financial Aid Profile. It is available online as early as October 1st, at www.collegeboard.com. There is a fee for this application with charges for each college that it is sent to.  

The Financial Aid Award Letter: Most college award letters will list the type and amount of financial aid the student is eligible to receive. Students can accept or decline all or part of the award. Not all colleges are able to meet a student’s full financial need. There may be a gap between the amount of aid awarded and the EFC.

The EFC itself may be higher than what you feel you are able to pay. That is because needs analysis is based on the principles that parents and students have the primary responsibility to provide for a college education. The FAFSA is income driven in order to be fair and equitable to all students and does not take into account the family’s level of debt. Be sure to find out if private scholarships affect the schools aid package and the requirements to keep the award from year to year.

Negotiating with a college: College financial aid officers may have some discretion in how they award financial aid. Therefore, it is important to make a contact with a real person in the financial aid office as early in the process as possible. Special family circumstances such as a parent’s illness or job loss are often taken into consideration. Once a student has been admitted to colleges in the spring you may be able to tell one college about a better financial aid package offered at another school. The college just might be able to match the better offer.

The Bottom Line: Take heart. There is money available to go to almost any college. Don’t rule out a college based on its sticker price alone. Sometimes the school with the higher cost of attendance will actually provide a better financial aid package than one with a lower cost. Remember to start early, complete all forms as soon as possible and look for scholarship opportunities. Always have a financial safety school: one the student can afford to attend should they not receive sufficient financial aid or if family financial circumstances change. Get to know the financial aid officer at the colleges you are considering for additional help and advice.

Francine Schwartz is the Founder and President of Pathfinder Counseling LLC. As a former Assistant Director of Financial Aid, and a Certified School Counselor and Licensed Professional Counselor, she has guided numerous families through the financial aid and scholarship process. www.pathfindercounselingllc.com. 

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