Financial Aid Guide

Financial Aid Guide

Learning the basics of financial aid is an important part of the college admissions journey. Approximately $150 billion is given out each year in the form of grants, work-study funds, and loans – almost $2.9 billion was left unclaimed last year because students eligible for federal student aid did not complete the FAFSA.

This guide will help you to understand the financial aid basics and how to apply for financial aid. You will learn how to tap into all of the resources available to you.

What is financial aid?

Financial aid is made up of money you receive from a college, federal government or state government as a gift (scholarships and grants), loan or self-help (work study). Your first step to access financial aid is to submit the FAFSA.

You will apply for these funds using the FAFSA and, in some cases the CSS PROFILE during your senior year of high school, around the same time you are applying to colleges. Around 400 colleges use the CSS PROFILE. At those schools, the CSS PROFILE is used in addition to the FAFSA.

Next, you will receive a student aid report (SAR) that contains your Expected Family Contribution (EFC). Colleges use the EFC in a formula to determine your “financial need”. The Cost of Attendance minus your EFC is considered your financial need. Some colleges meet 100% of your financial need, most do not.

As a result, most families will pay more than the Expected Family Contribution (EFC). Families use a combination of student loans, scholarships, grants and savings to pay for college. Given the ever increasing cost of college, most students will have to take out loans to fund all or part of their education. If you must borrow, do so responsibly. Experts recommend that you should not borrow in excess of what you expect to earn in your first job after college.

What type of financial aid is available to pay for college?

Financial aid comes from four main sources – the federal and state governments, colleges and private organizations.

The main types of financial aid are:

  • Grants can come from federal government, state or the college itself. This is considered gift-aid and does not have to be repaid.
  • Scholarships are considered gift aid that does not have to be repaid. You can be awarded one based on a your financial need or based on merit. Scholarships can be awarded by state government, colleges or private organizations.
  • Student Loans are also considered self-help financial aid that has to be repaid. Loans are available through the federal government, colleges, banks and other private institutions. Here are the different types of federal loans available to undergraduate students and parents:
    • Subsidized loans are available only for students that demonstrate financial need. The government pays the interest while you are in college. Students have to begin repaying loan with interest after they graduate.
    • Unsubsidized loans are available for all students. Students have the option to pay the interest while they are in college (the recommended option); or allow the interest to accrue (not recommended) and begin repaying the interest with principal (original amount borrowed) when they complete college.
    • Parent Plus Loans are available to parents of undergraduate dependent students.
  • Work-study is considered self-help financial aid that is made available for you to earn income through part-time work on-campus and, in some cases, off campus. Work-study jobs are not guaranteed, you must apply for these positions.

How do I apply for financial aid?

Your first step is completing the Free Application For Federal Student Aid (FAFSA) which is available every year on October 1. In addition to the FAFSA, some private colleges may require the CSS PROFILE.

You may also have to fill out a college’s own financial aid form, in addition to the FAFSA, to qualify for the college’s own financial aid (institutional funds). Check with the college’s Financial Aid Office or website to determine what items you will need to submit.

How do I know if I am eligible for financial aid?

Most students are eligible for some kind of financial aid so it makes sense to apply. You must be a US citizen or eligible legal resident with a social security number to qualify for federal financial aid. Some states like Texas offer state financial aid for undocumented students who are classified as state residents.

Some of the main factors that will impact your eligibility for need-based aid includes you and your family’s income, assets, and the make-up of your household (for e.g., number of family members and number of students in college). While the majority of need-based federal financial aid is reserved for low-to-moderate income families, you may qualify for need-based aid from some private colleges even if your family is classified as high-income.

Some private colleges, especially the highly selective ones, are known for their generous need-based aid even for high income earners. For example, at Rice University, families earning between $65,001 – $130,000 will be eligible for full tuition; and those earning between $130,001 – $200,000 will receive aid to meet half of their tuition.

To find out what aid you might be eligible to receive before you file the FAFSA, use the Net Price Calculator found on each college’s website. The calculator will ask you a series of questions about your family’s income and assets and then calculate your estimated Net Price. Your Net Price is the college’s cost of attendance minus any grants and/or scholarships. In the end though, the only way to truly know how much financial aid you will receive is to submit the FAFSA and, whenever required, the CSS PROFILE.

RELATED: How to Use The Net Price Calculator

What is the FAFSA?

The Free Application for Federal Student Aid, also known as the FAFSA, is used to apply for financial aid. It is used by colleges to determine your eligibility for federal grants and loans; state grants and scholarships, and the college’s own scholarships and grants. The FAFSA is your first step towards accessing financial aid to cover your college costs.

>>RELATED: 14 Basic Financial Aid Terms You Should Know

When do I file the FAFSA?

You should be aware of three deadlines when completing the FAFSA – the federal deadline, the state’s deadline, and the college’s deadline.

The FAFSA becomes available on October 1 each year and allows you to apply for financial aid almost a year ahead of the academic year in which you plan to attend college. Although the federal deadline to submit the FAFSA is approximately 20 months after it becomes available, you will need to meet most colleges and states deadline much sooner. In addition, some financial aid funds are available on a first-come, first-served basis so submitting the FAFSA very close to when it becomes available in October has its advantages.

Here are the three deadlines you should be aware of:

  • College deadline: Each college has its own financial aid deadline, and it is generally the first of the three deadlines. Some colleges will have a priority deadline and a regular deadline. Priority deadlines allow you to access the most funds for college so plan to submit the FAFSA and any other required applications as early as possible. To find the deadline for a specific college, you should check on the college’s financial aid website.
  • State deadline: Many states offer financial aid and have different deadlines for eligibility for state funds. To find out more about any state’s program and deadline and what, if any, aid you might qualify for, please visit the National Association of Financial Aid Administrators’ (NASFAA) website.
  • Federal deadline: If you are applying for federal funds, the FAFSA can be filed approximately one year before you begin college, beginning on October 1. The deadline is about 20 months later. For e.g., if you plan to attend college in the 2020-21 academic school year, the FAFSA will be made available on October 1, 2019 with a deadline of June 30, 2021 (the end of the academic year). However, you should be aware that some federal funds are limited and are awarded on a first come, first served basis, so the earlier you file the greater your chances of receiving an award. In addition, the FAFSA you submit will, in many cases, be used for federal, state and institutional funds so following the earliest financial aid deadline would be prudent.

You are required to list at least one college (maximum of 10 colleges) on the FAFSA to receive a Student Aid Report (SAR) – the report that is generated upon filing the FAFSA. You will have the option to add more colleges on your list after you submit the FAFSA.

Should I submit the FAFSA if my parents make too much money?

Yes, you should absolutely submit the FAFSA even if you think you will not qualify for need-based aid. While federal grants (for e.g., Pell Grant) are reserved for families with low-to-moderate income earners (with financial need), many colleges award need-based aid to families making well over $150,000. There are many advantages to filling out the FAFSA.

First, in most cases, you will have to submit the FAFSA (or CSS PROFILE) to become eligible for institutional funds (scholarship and grant money colleges award from their own funds).

Many private colleges and universities, including highly selective colleges, will provide “need based” aid to families with high-income. For example, Rice University listed by US News & World Report as #14 for 2019 Best Value Schools in the country, offers a 50% tuition discount to families earning as much as $200,000.

Another advantage of submitting the FAFSA is the access families have to unsubsidized loans for students (if they do not qualify for subsidized loans), and Parent PLUS loans available to parents of undergraduate dependent students. These loans generally have lower interest rates and more favorable repayment options than private loans.

You should also note that many colleges will ask you to submit the FAFSA (and, in some cases, the CSS PROFILE) to qualify for scholarships and other merit based aid. So even if your family earns “too much” money to receive need-based aid, filling out the FAFSA is still well worth it.

What happens after I submit the FAFSA?

After you submit the FAFSA, a Student Aid Report (SAR) will be emailed to you within a few days (sometimes it can take a few weeks). You can also access your SAR at Federal Student Aid using the FSA ID you created when you filled out the FAFSA. The report summarizes everything you listed on your FAFSA and will also be sent to the college/s listed on your FAFSA.

The Student Aid Report will list your family’s Expected Family Contribution (EFC) and your eligibility for federal financial aid. Colleges use the EFC listed on your SAR as a basis for making financial aid awards.

Once you receive your SAR, check it for any errors. If you find an error, you may be able to make changes to your FAFSA. Check with the Federal Student Aid for more information on what you can or cannot change.

If you are accepted to one of the colleges that received your SAR, the college will prepare a financial aid award letter that outlines the Cost of Attendance, and all of the scholarships, grants, loans and/or work-study you have been awarded. The letter will also contain your EFC. The Financial Aid Administrator at your college will be your best source of information regarding when and how your financial aid award will be paid out.

RELATED: 6 Things You Should Know About the FAFSA

How do I apply for scholarships at colleges?

Each college has a very different process. However, the average college will ask you to submit the FAFSA and, in some cases, the CSS PROFILE. Some colleges might have a separate application for some or all of their scholarships. Yet other colleges will use your college application alone to consider you for their institution’s scholarships and grants.

To learn more about scholarships and grants available through colleges, check the college’s financial aid website or ask the Financial Aid Administrator.

If you would like to know the average amount of scholarships and grants a college typically awards to a student, visit College Board’s Big Future website. Search for the college by name or location, then click on “Paying”, and “Financial Aid By The Numbers” to access this data. You will learn, among other things, the average dollar amount in scholarships and grants students receive, the average financial aid award, and the average amount of debt students have upon graduation.

When will I receive my financial aid award?

If you are admitted to a college and approved for financial aid, you will receive an award at the same time you receive your offer of admission or shortly after.

The financial aid award letter will list, among other things, the full cost of attendance and any grants, scholarships, work-study and/or student loans you will receive to offset the cost of attendance. Not all financial aid packages will contain student loans. If you are a strong applicant and/or apply to a college that meets 100% of your financial need without loans, you could end up with all gift aid (money that does not have to be repaid).

For example, Davidson College in North Carolina, one of the most generous colleges in the country, prides itself on meeting 100% of demonstrated need and making financial aid awards that are loan free. Students and parents still have the option to take out loans to cover their Expected Family Contribution (EFC).

After you receive the financial aid awards from all of the colleges on your list, you may want to spend some time comparing the award letters to determine which college offers you the best value (the best education for the least amount of money).

Can I appeal my financial aid award?

Yes, you can appeal a financial aid award and, in most cases, you should. However, you might not succeed if you are appealing just to get more money and without any documented changes in your financial circumstances.

In most cases, you will need to present a compelling case to be successful. If your circumstances have changed – for e.g., job loss, illness in the family, or other circumstances — from the the time you submitted your application, you should definitely appeal the financial aid award. Here are “5 Tips to Appeal a Financial Aid Award”.

>>RELATED: How to Review Your Financial Aid Award

Do I have to apply for financial aid every year I am in college?

For federal aid – yes. For other types of aid (for e.g., scholarships from the college), you will have to read the fine print in your award letter. Some scholarships might be a one-time award while others may require you to reapply every year you are in college. Then there are other scholarships that may automatically renew each year you are in school as long as you are attending full time and/or remain in good academic standing.

After you receive your financial aid award letter, contact the Financial Aid Administrator to find out if the award is renewable or only good for your freshman year. You should be aware that some colleges might offer a one-time scholarship award to lure students to attend. Don’t be afraid to ask for clarification before you accept an offer of admission.

How can I tell what college will really cost before I apply?

Most students never pay the full cost of attendance (tuition, room and board, books and other fees) listed on a college’s website. They receive some type of financial aid. The discounted cost to attend that college is known as the Net Price.

To find your Net Price – cost of attendance minus any scholarships and grants you might be eligible to receive – you have to use a college’s Net Price Calculator. Each college has a Net Price Calculator (NPC) on their website which will calculate your Net Price after you answer a series of questions about your family’s income, assets and household (for e.g., number of children in college).

Remember, the Net Price is only an estimate and is not a guarantee of financial aid. In addition, all Net Price Calculators are not created the same. The better NPC (for e.g., the College Board’s version) available will take you about 15-20 minutes to complete and the questions will range from family income, assets and makeup of household (how many students in college) to GPA, ACT/SAT scores and class rank. Some Net Price Calculators ask only a few basic questions and, as a result, do not provide the most accurate estimate of Net Price.

In the end, completing the FAFSA is the only way you will know your exact financial aid award. When in doubt, check with the Financial Aid Office at the college you plan to attend. They will be able to give you the most accurate information you need to get the most financial aid possible.

RELATED: How to Use the Net Price Calculator

How can I apply for financial aid available through my state?

In many cases, you will apply through your college. Most students will only have to submit the FAFSA to be eligible for financial aid available through the state, federal and college funds. However, to receive state financial aid in some states you will have to complete a separate application.

To learn more about each state’s financial aid program, please check with the college’s financial aid office or visit

How many colleges can I list on the FAFSA?

You must list at least one college when filling out the FAFSA, and no more than ten. If you would like to add additional colleges, you will need to remove one or more of the other colleges on your list so that it does not exceed ten colleges. Alternatively, you could provide the Financial Aid Administrator at the college you want to add with your Data Retrieval Number. The Data Retrieval Number is a four digit number found on your Student Aid Report.

Do I have to list colleges on the FAFSA in any specific order?

To be eligible for state financial aid, some states require that you list an in-state college on your FAFSA, sometimes in a specific order. Find your state’s financial aid policy at under “Order of Schools on Your List”.

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