What is Financial Aid?

Student Financial Aid emerged as a vital force in financing American higher education during the 1970’s, when the Education Amendments Act of 1972 authorized a massive expansion of funding. It also established a program to encourage states to become more involved or to do more in assisting their students with their educational costs. Today, over half of all students in higher education rely on one or more forms of financial aid during their academic careers.

Forms of Financial Aid

Financial Aid is designed to help individuals meet their educational expenses when their own resources are not enough. A student who believes that his/her own family resources are not sufficient to pay for all costs of attendance (tuition, room and board, books, transportation, etc.) should apply for financial aid through the college’s financial aid office. There are three types of aid available:

  1. Grants - gifts or scholarships which do not have to be repaid.
  2. Loans - money borrowed to cover school costs, which must be repaid (usually with interest)
    over a specified period of time (usually after the student graduates).
  3. Work - employment which enables a student to earn a portion of school costs.

What is Expected Family Contribution?

The Expected Family Contribution (EFC) is the amount of money a student’s family is expected to contribute toward college expenses. The family contribution includes funds from the student and parents. The amount of money that is expected to be contributed by the family is calculated by a standardized formula. Although other factors are included, the following is taken into account:

  • Family’s financial resources (income and assets)
  • Size of family
  • Basic living expenses of the family

The EFC calculation is based upon information provided by the student’s family on a standardized need analysis form. All students who apply for federal financial assistance are required to complete the Free Application for Federal Student Aid (FAFSA). There is no charge to the student or the student’s family to process the form, determine the student’s eligibility, or receive federal financial assistance. You can receive the FAFSA form by calling (800) 433-3243, downloading a copy of the form by visiting the FAFSA website at http://www.fafsa.org, or requesting a copy from your high school guidance counselor. Results are usually mailed within six weeks.

What is Financial Need?

A student’s financial need is the difference between the student’s educational expenses and the amount of money the family is expected to contribute (EFC). In general terms, the formula to determine financial need is:

School Costs minus Expected Family Contribution minus Financial Aid = Financial Need

What is a Financial Aid Package?

A financial aid package is a combination of financial aid resources (grants, loans, work-study, etc.) put together by the college financial aid administrator and designed to meet, as closely as possible, the student’s individual financial need. The amount of awards and types of assistance in a package depend upon the total cost of attending a particular college, the student’s need, availability of funding, and outside funds available to the student. For example, if a student applies to and is accepted by two different colleges, the student may be offered two different financial aid packages.

Applying for Financial Aid and Financial Aid Applications

You should apply for aid every year, even if you think you do not qualify. There are many factors affecting eligibility. To apply for student financial aid from the federal government you will need to submit the Free Application for Federal Student Aid (FAFSA). There is no charge for submitting this form. The FAFSA is also required by all state and many school student assistance programs.

Free Application for Federal Student Aid (FAFSA)

It is important that a student complete the proper application forms in order to secure financial aid. For most of the federal student aid programs, the FAFSA is the only form you need to file. As mentioned earlier, you can receive this form through your high school guidance counselor, by calling (800) 433-3243, or by visiting their web-site at http://www.fafsa.org. The FAFSA is available in paper and electronic formats. Read the instructions carefully when you complete the FAFSA and pay close attention to questions relating to income.

When you apply for aid, you should be certain that you have all of the necessary records and materials on hand when applying. Also, be sure to save or keep a copy of your filed FAFSA. You may need it later to prove the information you reported is accurate. This process is called “verification”.

When should you apply?

You cannot apply for financial assistance prior to January 1, so apply as soon as possible AFTER January 1 because you will need to use your tax information from the prior year. It is easier to complete the application when your family’s tax returns are done. Do not sign, date or send in your application before January 1. If you apply by mail, send your completed application using the envelope that came with it. This will ensure that your application reaches the correct address.

Your eligibility is determined annually. For example, the results from your previous year's application are good only for the academic year.

Because circumstances can change greatly from one year to the next, you must re-apply for federal aid every year. Check with your college to find out what steps you must take to continue receiving aid. After you apply for the first time, you may be able to renew your application by completing the Renewal FAFSA. With this form, you only need to complete the information that changed from the previous award year.

What happens after application?

If the application is made by mail, it will be processed in approximately six weeks (three weeks for FAFSA applications submitted on-line). You will then receive a Student Aid Report (SAR) in the mail. The SAR will reflect the information from your application and your Expected Family Contribution (EFC). Each college you listed on the FAFSA application will also receive the results from your application. If you haven’t received this information within six weeks, you can check the status of your application by calling (800) 433-3243 (Monday – Friday, 9:00 a.m. to 8:00 p.m. Eastern Time and Sundays, 1:00 p.m. to 7:00 p.m. Eastern Time, except for Federal holidays).

If you apply electronically, your application will be processed sooner - in about three weeks. The results will be sent electronically to you and your college; however, you will also receive a copy in the mail.

When you receive the SAR, please review the information carefully. If changes are necessary, you may need to re-submit your FAFSA. If not, your accurate and completed form will be at your school by the last day of enrollment or by August 31, whichever is earlier.

Contacting the U.S. Department of Education

Help is always available from the United States Department of Education. You can receive information on the following:

  • Help in completing the FAFSA
  • Explanation of the federal student aid eligibility requirements.
  • Explanation of the process of determining financial need and awarding aid.
  • Providing you with the Federal School Codes you may need when you apply.
  • Information on whether a school participates in the Federal Student Aid programs.
  • Information on a school’s student loan default rate.
  • Publications on Federal Student Aid.

For online assistance regarding federal student aid and or to view this and other student aid publications online, please visit their web-site at http://www.ed.gov/index.jhtml.

If you need assistance in completing the FAFSA, help is available to you online at www.fafsa.ed.gov/faq012.htm. A list of Federal School Codes that you may need to complete the FAFSA is also online.

You can also call the Federal Student Aid Information Center at (800) 433-3243. If you are hearing impaired, you may call toll free at (800)730-8913 (TYY).

The College Scholarship Service (CSS)/Financial Aid PROFILE

PROFILE is a financial aid application service of the College Scholarship Services (CSS), the financial division of the College Board, a national nonprofit association of colleges, universities, and educational organizations. Many colleges, public and private, use the information collected on the PROFILE to determine eligibility for institutional aid and help them award non-federal student aid funds.

The differences between the CSS PROFILE and the FAFSA are as follows:

  • Submission dates for the PROFILE can be submitted in the fall where the FAFSA cannot be submitted prior to January1.
  • The PROFILE asks questions specific to the school or program you will be applying to whereas the FAFSA asks the same questions for everyone.
  • The PROFILE determines your financial need differently than the FAFSA by taking into account such factors as whether your family owns a home. In general, the PROFILE asks for more detailed financial information than the FAFSA.
  • The PROFILE requires a minimum student contribution where the FAFSA does not.
  • The PROFILE gives the financial aid counselors greater freedom to grant aid based on a student’s particular circumstances.
  • The PROFILE has a cost where the FAFSA is free.

You can ask your guidance counselor for the PROFILE registration guide to get the process started or call (800) 239-5888 for more information. You may or visit their web-site at www.collegeboard.com. You can also register for the PROFILE on-line at https://profileonline.collegeboard.com. When you register, you will need the PROFILE code of the school or program to which you are applying.