If the sheer thought of how to pay for college is keeping you up at night, you are not alone. With the cost of attending college increasing every year, figuring out your need for financial aid and finding the right funding opportunities can be overwhelming.
Here is some basic information to help you navigate through the complex process of securing need-based financial aid and cover your college expenses.
How is Need for Financial Aid Determined?
To determine a student’s need, colleges calculate the difference between the Cost of Attendance (COA) and your Expected Family Contribution (EFC).
Financial Need = COA – EFC
Expected Family Contribution
EFC is defined as the amount of money your family is expected to contribute towards your education expenses from your total family assets and available income. If your family’s adjusted gross income is less than $50,000, assets are not included in the calculation of EFC.
Available income is calculated after deducting taxes, employment expenses, and an income protection allowance. Income protection allowance varies depending on the size of the family and the number of children enrolled in school. In addition, if more than one family member attends college, the available income is divided between them.
Cost of Attendance
Your COA is the estimate of:
- Tuition and Fees – This includes the tuition for classes provided by the college. Fees include other services that are automatically charged, such as library, health center, etc.
- Board and Room – Room refers to the cost of accommodation, whether on-campus or off-campus. On the other hand, board includes the cost of food, whether bought from the college cafeteria or prepared by the student.
- Cost of books and other supplies – In college, students are required to purchase their own books, as well as other educational supplies, such as stationery, computer supplies, etc.
- Transportation – All students spend some money on traveling to the campus and back to their homes during holidays. Students who live off-campus must carefully figure in the cost of commuting to the campus and add it to their total cost of attendance.
- Personal Expenses – This includes miscellaneous expenses, such as laundry, clothing, healthcare, etc.
While EFC remains constant, the cost of attendance (COA) varies from school to school. In addition, non-resident students and students who live in other states face a higher COA than students who live in the same state.
Qualifying for Need-Based Financial Aid – Example
In order to qualify for need-based, students are required to complete the FAFSA. FAFSA is used by the Department of Education, as well as colleges to determine a student’s need for financial aid.
The application form asks for information about a student’s and their family’s finances to determine their expected family contribution. Based on the information provided, different types of need-based financial aid are offered to students.
To successfully secure a need-based grant or scholarship, students need to demonstrate financial need. Also, many need-based funds are awarded on a first-come, first-served basis. Therefore, students should complete the FAFSA before the start of each academic year as early as possible.
For students who demonstrate financial need, there are several types of need-based financial aid available. The amount of need-based financial aid a student is eligible for depends on the difference between their COA and EFC.
For example, if a student’s EFC is $14,000 and their COA for a particular college is $16,000, their financial need is $2000. This also means that the student is not eligible for more than $2,000 in need-based financial aid. However, even if a student qualifies for need-based financial aid, they may not get enough money to cover all the education expenses. Therefore, a large number of students also apply for non-need-based financial aid every year.
Calculating Non-Need-Based Financial Aid
As the name specifies, eligibility for non-need-based does not depend on a student’s EFC. All that matters in determining the amount of non-need-based financial aid required is the cost of attendance.
Non-need-based financial aid required = Cost of Attendance – Financial aid received so far
Let’s say that a student’s COA is $16,000 and they have secured $5,000 in need-based financial aid so far. This means that they are eligible to receive $11,000 in non-need-based aid. Some of the programs that offer non-need-based financial aid to students include the TEACH Grant, federal direct unsubsidized loans, and federal PLUS loans.
Getting Financial Aid from the College
Completing the FAFSA process and knowing your EFC can help tremendously. It can help a student choose the right school for their needs. However, the government’s statement of how much a student is expected to pay out of pocket is often overstated. In such an instance, the student is not eligible for enough need-based financial aid that can cover the education expenses.
Here are some steps to determine how much a school can offer to you in such a scenario:
- Find out the school’s COA. It is usually listed on the website.
- Calculate the difference between the COA and your EFC to find out your financial need for that school.
- If the COA is higher than the EFC, the student is said to demonstrate financial need and eligible to receive need-based aid.
- If EFC is higher than the COA, the student does not have a financial need and they can only receive non-need-based financial assistance.
Finding a College That’s the Right Fit
There is no denying the fact that higher education is expensive in the US. Although a variety of college funding is available to students, most do not fulfill a student’s need completely. Therefore, to find a college that’s both academically and financially right for a student, it is important to apply to a variety of schools. Also, determine your financial need at each school and choose the one that offers generous need-based and non-need-based aid to its students.