Financial Aid: Five Things You May Not Know

If you want to apply for financial aid, first of all, you need to complete the Free Application for Federal Student Aid (FAFSA). As the price of a college education is touching the sky, you may need some substantial outside help to foot the bill.

The colleges you select from the list on the FAFSA will take your information. They will use it to calculate the financial aid that you are eligible for. However, your financial aid awards may vary from college to college, based on many factors. For instance, the Expected Family Contribution (EFC), the cost of attendance (COA), year in college, and your eligibility for state and institutional aid. It also includes the number of credits you take each term.

You must know that many colleges have a priority deadline. Therefore, the sooner you apply each year, the better will it be.

Below we mention five things that you may not know about financial aid:

The FAFSA Approval Page is Not Your Financial Aid Award Page

After you have completed the FAFSA application online, it will take you to a confirmation page.

You will get a lot of helpful information on this page. Give it a good read. However, most people get confused by two sections on that page:

  • Expected Family Contribution (EFC) (bottom left): FAFSA uses the information you put on the site to calculate your EFC. You must keep in mind that the EFC, in most cases, is not the amount of money your family needs to pay for college. Hence, if you get zero EFC, that does not mean that you do not have to pay anything. Instead, the EFC is an index number. Financial aid offices use it to calculate how much financial aid you will receive if you attended their college.

Contrary to popular belief, the EFC formula counts more than just income. It considers some additional factors. For instance, it looks at your family size and dependency status. It also calculates the number of children in your family who are studying in college.

  • Federal Aid Estimates (bottom right): The FAFSA confirmation page gives you a federal aid estimate. It is based on the information you add to your FAFSA. You must remember that these figures are truly only estimates. Additionally, they assume the information you put on the FAFSA is correct. Therefore, any mistakes will result in an incorrect estimation!

In order to calculate the actual amount of aid that you are eligible for, your college will consider some other factors. For example, the cost to attend school is one.

Moreover, these estimates only take into account federal assistance. They do not consider any out outside scholarships or institutional and state financial aid that you may also be qualified for. You’ll have to mention them if you win any!

Outside Agencies Colleges, States, and Colleges May Require Additional Applications

Beyond federal financial aid, available to you after completing the FAFSA, are the colleges and state-based options. Some may need additional applications. Only then can they finalize your eligibility for institutional or state financial aid. You may also need to check with the financial aid office at every college you want to apply. Besides that, you must ask if any of them will require additional applications or not.

You must also check the deadlines. These financial aid applications may contain considerations for institutional or state or grants, loans, work-study, and scholarships.

How Do They Calculate Financial Aid Amount: COA – EFC = Financial Need

Cost of attendance (COA) minus Expected Family Contribution (EFC) is equal to financial need. Institutions use this formula as a starting point to evaluate your financial aid package. The cost of attendance is an estimation of what it will cost you to go to college. In most cases, it is the cost for two or three semesters. It is not only your tuition fees. It also includes books and supplies, room and board, transportation, and other miscellaneous personal expenditures.

The financial aid office at your college will decide how much financial aid you are eligible to get.

First, the college will award need-based aid. For instance, subsidized loans and grants. Then, it will award non-need-based assistance, for example, unsubsidized loans. So, in almost all cases, the total amount of aid you will receive cannot exceed your COA.

Financial Aid Award Letters are College Specific

There is not a standard award letter format. Therefore, some of the letters you receive may look similar, while others may look entirely different. Some colleges may send you an award packet or a paper letter. On the other side, others may send the information electronically.

Some of the colleges might also provide you with a Shopping Sheet. It is a letter that lays out personalized information on net costs and financial aid. Additionally, it gives you general information on institutional outcomes — for example, default rates and graduation rates.

Due to the fact that these notifications or letters may look different, you must be careful when comparing and assessing them. Moreover, you may be awarded the same amount of federal aid from college to college. However, it will not be unusual to see different award packages. What you get will depend on the colleges you are applying to. You can see more tips here to help you compare these letters.

FAFSA Information will not Always Correctly Reflect Your Family’s Financial Condition

The FAFSA will not always accurately show your family’s current financial condition. Also, there is a possibility that your situation might change. While most of the colleges are not required to take into account exceptional circumstances, many of them do.

There are many factors that colleges may count. For instance, a reduction in monthly income as compared to what you reported on the FAFSA, or loss of a job. So, it is significant to know that even if your current situation has changed noticeably, what impact will it have on your total financial aid award. You can discuss your circumstances with a financial aid advisor or counselor at the college. Make sure you have a complete understanding before sending in and collecting all the required documents. For more info, please visit us.

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