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COUNSELING CENTER

FINANCIAL AID

HOW FINANCIAL AID WORKS AND HOW IT MAKES COLLEGE AFFORDABLE FOR YOU
(collegeboard.com)

Financial aid is intended to make up the difference between what your family can afford to pay and what college costs. Over half of the students currently enrolled in college receive some sort of financial aid to help pay college costs.

In a Nutshell
The financial aid system is based on the goal of equal access- that anyone should be able to attend college, regardless of financial circumstances. Here's how the system works:

Students and their families are expected to contribute to the cost of college to the extent that they're able. If a family is unable to contribute the entire cost, financial aid is available to bridge the gap.

Who Decides How Much My Family Is Able to Contribute?
The amount your family is able to contribute is frequently referred to as the Expected Family Contribution, or EFC. The figure is determined by whoever is awarding the aid- usually the federal government or individual colleges and universities.
The federal government and financial aid offices use need formulas that analyze your family's financial circumstances (things like income, assets, and family size) and compare them proportionally with other families' financial circumstances.

What the EFC Figure Means for Most Families
First, many families are unable to pay the EFC out of current income alone. But, not to worry- the formulas assume that families will meet their contribution through a combination of savings, current income, and borrowing.
Second, financial aid is limited. The formulas therefore measure a particular family's ability to pay against other families' ability to pay.

Three Main Types of Financial Aid
Financial aid is any type of assistance used to pay college costs that is based on financial need.

  • Grants and Scholarships

Also called gift aid, grants don't have to be repaid and you don't need to work to earn them. Grant aid comes from federal and state governments and from individual colleges. Scholarships are usually awarded based on merit.
The Pell Grant - One in four American college students receives a Federal Pell Grant, which provides up to $5,550 per year toward your studies. The Pell Grant, which never has to be paid back, is for students whose families earn less than $50,000 per year.

  • Loans

Most financial aid comes in the form of loans, aid that must be repaid. Most loans that are awarded based on financial need are low-interest loans sponsored by the federal government. These loans are subsidized by the government so no interest accrues until you begin repayment after you graduate.

Stafford Loans - A majority of college students find it necessary to take out loans to help pay for their education. The Stafford Loans are federally-backed, low-interest loans that can provide you up to $57,000 over your college career. Find out more about interest rates, loan terms, subsidized vs. unsubsidized Stafford loans, and eligibility requirements.

Perkins Loans - Like the Pell Grant, Perkins Loans are designed for students from low-income families. If you qualify for a Perkins, you may be entitled to up to $22,000 in loans at a fixed 5% interest rate.
PLUS Loans - Do your parents still claim you as a dependent on their annual taxes? If they do, they can take out a PLUS Parent loan to help pay for your school. PLUS Loans have a fixed, low interest rate (currently 8.5%) and can be used to cover your entire cost of attendance minus any other financial aid.

  • Work

Student employment and work-study aid helps students pay for education costs such as books, supplies, and personal expenses. Work-study is a federal program which provides students with part-time employment to help meet their financial needs and gives them work experience while serving their campuses and surrounding communities.

Don't Rule Out Colleges with Higher Costs
Suppose your EFC is $5,000. At a college with a total cost of $8,000, you'd be eligible for up to $3,000 in financial aid. At a college with a total cost of $25,000, you'd be eligible for up to $20,000 in aid. In other words, your family would be asked to contribute the same amount at both colleges.

 

THE FAFSA PROCESS

The Free Application for Federal Student Aid or FAFSA is the financial aid application form you will need to apply for federal and state student grants, work-study, and loans. While the FAFSA may seem lengthy and complex, there are many free resources, online and offline, to help you navigate the application process.

Where to Find the FAFSA
The FAFSA comes in two versions- paper and electronic. You can complete, submit, and track your application using FAFSA on the Web. This is the easiest way to apply for federal aid. Most importantly, your data is checked before it is transmitted to the processing center, so there's less chance of making an error. What's more, filing the FAFSA online can reduce processing time by one to two weeks. You can also get a paper copy of the FAFSA by calling (800) 4-FED-AID or (800) 433-3243.

Before You Apply
Complete Your Income Tax Return
Filing the FAFSA online can reduce processing time by 1-2 weeks. We recommend that you complete income tax returns before filling out the FAFSA- much of the information requested is the same. Please note that you do not have to file your income tax return with the IRS before you fill out the FAFSA. You can find a list of documents you'll need to get started at the FAFSA on the Web.

Apply for your PIN
If you plan to complete and submit your FAFSA through FAFSA on the Web, you are required to obtain a U.S. Department of Education PIN. The PIN will serve as your electronic signature. To get your PIN, you should simply fill out the brief application at www.pin.ed.gov. Your PIN will be mailed to you in 7-10 days. You can still use FAFSA on Web without a PIN, you will have to print and mail in a signature page.

Completing the Application
Here are some reminders and resources to help you complete the FAFSA.

  • January 1 is the first day that you are eligible to file the FAFSA. You should try to file as close to this date as possible, as school, state, and private aid deadlines may be much earlier than federal deadlines, some as early as February 15. Please pay attention to your colleges' priority financial aid deadlines.
  • If you have questions about any part of the FAFSA application, go to Completing the FAFSA, a government website with a detailed, question-by-question guide to filling out the FAFSA.
  • Many schools will also require you to submit additional financial aid forms such as the CSS/Financial Aid PROFILE® or institutional financial aid forms.

What Happens After You Apply
Once you submit the FAFSA, it goes to a large processing center that handles about nine million forms each year. This is where your family financial information is processed through the federal need formula.

The Student Aid Report (SAR)
You will receive either an email or a paper form from the Department of Education's Central Process System within a few days to four weeks after submitting the FAFSA. The form is called the Student Aid Report, or SAR, and contains the data you entered on the FAFSA. Review the SAR carefully for errors (the form will highlight items that didn't pass the edit) and follow directions for making and submitting corrections. Submit corrections promptly to avoid long delays in processing your application. Make sure to keep a copy of the SAR for your records.

Expected Family Contribution (EFC)
At the upper right of the front page of the SAR, you'll find a figure called the Expected Family Contribution (EFC). The EFC is a preliminary estimate of the amount your family can contribute to college costs. The EFC is sent electronically to your state scholarship agency, as well as to the colleges you listed on the FAFSA. State agencies and colleges will use the EFC to determine the size of your aid award.
If you see an asterisk next to your EFC figure, it means that your application has been randomly selected for a routine process called verification. Your colleges will request copies of signed tax returns or other information to verify the information reported on the FAFSA. Be sure to furnish this information as soon as possible.

Help With the FAFSA
If you have questions about the application, FAFSA on the Web, or about federal student financial aid in general, call:
Federal Student Aid Information Center
(800) 4-FED-AID (433-3243) / TTY (800) 730-8913
Monday through Friday, 8 a.m. to 12 midnight Eastern Time
Saturdays from 9 a.m. to 6 p.m. Eastern Time

FAFSA4CASTER
http://www.fafsa4caster.ed.gov
FAFSA4caster will help you get an early start on the financial aid process by:

  • Providing you with an early estimate of your eligibility for federal student aid.
  • Working you through a process similar to FAFSA on the Web
  • Allowing you to transfer all of your FAFSA4caster data to FAFSA on the Web once you are ready to apply for aid.
  • Providing you the option to apply for your Federal Student Aid PIN.
  • Increasing your knowledge of the financial aid process, and providing information about other sources of aid.

WHERE THE COLLEGE SCHOLARSHIPS ARE
(www.collegeboard.com/parents/pay/scholarships-aid/21403.html)

Develop Your Scholarship Strategy

Although most student aid comes in the form of federal education loans and grants from colleges, scholarships -- with their lure of "free money" -- get a huge amount of attention from students and their parents. If you decide to invest your time in a search for scholarships, it's important to have an organized system to find, apply for, and win scholarship money.

Start With a Personal Inventory

Most of the information you will be asked for on a scholarship search questionnaire will be easy to come up with -- year in school, citizenship, state of residence, religion, ethnic background, disability, military status, employer, membership organizations, and so forth.
Beyond those questions, you will have to give some thought to your academic, extracurricular, and career plans. You should ask yourself:
Do I want to participate in a competition? If so, what are my talents and interests?
What subject do I plan to major in?
What career do I plan to pursue?
Do I want to apply for all types of aid or only scholarships?
Your answers to these questions will help determine your scholarship eligibility. Take your time brainstorming and don't overlook anything -- the more personal characteristics you discover, the more scholarships you could potentially apply for.

Research Local Scholarships First

In general, the smaller the geographical area a scholarship covers, the better your chances of winning. Begin with your high school counseling office.  Counselors will know about scholarships for students graduating from your high school. They may also be aware of scholarships for residents of your town, county, and state.
Your next stop should be the college aid section of your public library. Most libraries will have a number of books about financial aid, including scholarship guides such as the College Board's Scholarship Handbook. They also may have information on local scholarships.
Then it's time to start looking at large national scholarships such as Reserve Officer Training Corps (ROTC), National Merit, Gates Millennium, Intel Science, Coca-Cola, and Robert Byrd.

Check Membership Organizations and Employers

Organizations of all types and sizes sponsor scholarships -- leave no stone unturned. Explore categories you might not have considered, such as religious, community service, fraternal, military, union, and professional.
And don't forget your parents. Many large companies offer scholarships or tuition programs for children of employees. If you are uncertain, ask your parent to check with his or her human resources department.
Don't overlook student jobs. Employers like fast food chains, department stores, and supermarkets often give scholarships. Awards related to student employment can come from unexpected sources. For example, there are a number of scholarships for golf caddies.


Use a Free Scholarship Search Service
A scholarship search company collects information on hundreds of awards and compares your student characteristics with scholarship restrictions. Based on your answers to a questionnaire, you will receive a list of possible scholarships. It is up to you to decide which ones you will try for.
You should never have to pay for scholarship information. If you're asked to pay a fee for "exclusive" scholarship leads, there's a good chance your scholarship service is really a scholarship scam.

Here are some free scholarship search services:
www.Scholarships.com , www.collegeboard.com , www.fasteweb.com , www.FinAid.com, www.salliemae.com
www.pasfaa.org, www.federalstudentaid.ed.gov, www.pheaa.org, www.freschinfo.com, www.educationplanner.com (for a financial aid timeline)

 

Contact Your State Department of Higher Education

Almost every state has a scholarship program for residents -- keep in mind, however, that awards are usually limited to students who attend college in-state. For example, the Pennsylvania Higher Education Assistance Agency offers the NEW ECONOMY TECHNOLOGY SCHOLARSHIP (NETS) to academically-qualified Pennsylvanians who decide to attend in-state colleges and universities and agree to work full-time in PA following graduation, one year for each year that a scholarship is received.

Research Institutional Scholarships

Since the vast majority of all scholarship money is disbursed by colleges, it makes sense to research what kinds of scholarships are available at the schools that interest you. Check out college websites, catalogs, and financial aid offices for this information. Institutional awards can be offered on a university-wide basis, or within a particular college or major. Eligibility for such awards can be based on merit, financial need, intended major, ethnicity, or a variety of other factors. Here are some questions you might want to ask about these awards:
Are scholarships awarded automatically if a student matches certain criteria (such as GPA or SAT® score)?
What is the application procedure? What materials are required?
Is the award renewable? What are the requirements to maintain the award?

College-bound seniors should remember that your COUNSELORS NEED UP TO TEN SCHOOL DAYS TO PROCESS SCHOLARSHIP APPLICATIONS.