Understanding financial aid

The process behind financial aid has become a common unknown for many college-bound students and families. With fall deadlines approaching, lets breakdown four common questions:

1. How is financial aid determined?
Colleges and universities will start with the income and assets of an applicant’s family to determine their Expected Family Contribution (EFC). An admissions officer will examine factors such as annual household income, equity in your home and business, career and credit history as well as any relevant contributions from relatives or trusts. Your household income will also consider any additional children currently enrolled in college and any family circumstances that may have affected your financial outlook.

Another determinant of financial aid is endowment, which serves as an indicator of the school’s financial health. Budgets for institutional aid change from year to year and help an admissions committee determine how much they can give.

2. What types of financial aid are available?
There are two primary forms of financial aid: federal and institutional. The former is a product of the U.S. Department of Education and the FAFSA application. FAFSA helps determine student eligibility for a variety of aid packages including work-study, loans and grants.

FAFSA also is used by schools to determine eligibility for institutional aid. This type of aid refers to financial support that comes directly from your child’s respective college or university. As stated above, schools utilize FAFSA to determine the appropriate aid package for your family. Many families today also make use of a CSS PROFILE offered thru the CollegeBoard.

3. What does the evaluation process consist of?
Financial aid changes annually along with new resources, goals and admissions quotas. With that in mind, it’s important to remember that your family’s financial aid profile is evaluated in relation to the rest of your child’s application and in comparison with the total applicant pool.

When it comes to the evaluation process, each college and university relies on a financial aid director/dean and their staff to review your application. Their decision making, in part, is determined by the school’s financial aid budget allocated through the president’s office, board of trustees and financial aid committee(s). Typically, aid is distributed each year depending on the recruitment goals of a school (i.e. first generation students, minorities, athletics) and will be evaluated using a “need based” or “need blind” approach.

“Need based” financial aid means that a school will match 100% of the aid they determine an accepted student and their family will need. By using your Expected Family Contribution (EFC), a school’s decision is based on the difference between the total cost of enrollment and how much they determine you can pay.

On the other hand, many schools have adopted a “need blind” approach. This means that an institution will not evaluate your financial records as part of the admissions process, nor will they make assumptions about your ability or inability to pay.

4. What are some alternatives for alleviating costs?
Aside from financial aid, scholarships can serve as an important source of cost alleviation. Scholarships generally vary in terms of duration and amount, and it’s important to consider the terms when accepting an award. The most common scholarships include:

• Merit scholarships, highly competitive grants generally awarded on the basis of a student’s overall academic achievement. This type of scholarship usually recognizes a student’s excellent GPA and SAT scores.
• Need-based scholarships, which a college determines solely based on a family’s ability to pay. A college will consider family income, assets, and other children in college to determine what a family’s “need” is to afford college.
• Athletic scholarships, given to athletes recruited by universities to play on a varsity team. To remain eligible for the scholarship, athletes need to maintain a minimum GPA and participate on the team for the entire four years of college.
• University-based scholarships, offered by schools per the stipulation of the donor. Criteria might include race or ethnicity, religion, geographic origin, or academic major

Selecting the proper scholarships and crafting each application can be a time-consuming process. Our team of former admissions officers can help you find, apply to and attain scholarship money to make college more affordable.