Financial Aid 101: A Crash Course in Paying for College

The range of CoA values at the colleges you’ve applied to might surprise you. Consider Student X, who’s applying to an in-state public university within driving distance of her hometown, where the tuition matches the average in-state public school tuition, $19,388. She’s also applying to a private college on the other side of the country, whose tuition is $39,028, the average cost for a private university. The difference in tuition is about $20,000, but after Student X factors in transportation costs (it costs $500 more for her to fly home during breaks than to drive), room and board ($3,000 more at the private school), and miscellaneous costs (for example, she’ll have to pay to store her belongings or ship them home over the summer at the private school), her CoA is actually $23,500 higher at the faraway private institution.

Expected Family Contribution (EFC)

Your EFC is an estimate of how much your family can afford to pay toward your college education. It is determined by your family’s income, assets, and other factors like how many of your siblings are currently in college. Check out the College Board’s free EFC calculator to determine your family's estimate.

After figuring out your Cost of Attendance and Estimated Family Contribution, calculate the difference between the two to find out exactly how much assistance you need in order to attend a particular college. For example, if the CoA at your first-choice school is $25,000, and your EFC is $10,000, then your financial need is $10,000. In other words, you’re eligible for up to $10,000 in financial aid.

Keep in mind that because CoA varies with each college, your financial need will also differ from one university to the next. It’s helpful to calculate your financial need for each college you’ve applied to so that you’ll end up with a range of possible financial aid goals. Later, when you receive your financial aid offer from each college, you’ll be able to compare it to your corresponding financial need at the same college to see if it’s economically feasible for you to enroll there.

Once you know how much financial assistance you need, it’s time to check out the kinds of aid available to you.

Types of Aid

Gift Aid
Gift aid, usually consisting of scholarships and grants, is the preferred form of financial aid because you don’t have to pay it back or work in exchange for it. Gift aid is a payment from a private institution and often entails an application process.

What’s the difference between a scholarship and a grant? “A grant is usually based on financial need,” says Kay Lewis, Director of Student Financial Aid at the University of Washington. Colleges, the federal government, and state governments provide grants. For example, the Pell Grant awards up to $5,550 a year to low-income undergraduates.

“A scholarship can be based on both merit and need, or just merit,” Lewis explains. Colleges, corporations, and other institutions fund scholarships. When applying for aid, it’s advantageous to seek out local scholarships, whose eligibility restrictions will narrow the applicant pool. On the other hand, large-scale scholarships such as the College Board’s National Merit Program may provide a larger award sum for the small percentage of applicants who are selected. Although many scholarships are commitment-free, “students should watch for ‘conditional scholarships’ which may mean that work in a certain field is required after graduation or the scholarship turns into a loan that has to be repaid,” Lewis says.

In addition to scholarships, some colleges may offer you a work-study position. The Federal Work-Study Program ensures that you work reasonable, part-time hours on or near campus. Although work-study is a considerable time commitment, the program allows you to avoid post-college debt. At many universities, certain jobs or a fixed number of positions at a particular workplace are set aside for work-study eligible students, aiding you in the process of securing part-time employment. If you do not qualify for work-study but still need help covering your cost of attendance (or want some extra cash to splurge on coffee for all-nighters!), most campuses provide plenty of part-time employment opportunities geared toward students.