The college admissions process is stressful enough. By the time you get to filling out your financial aid forms, everything might just feel like a confusing, acronym-filled blur. FAFSA? SAR? EFC? Who even knows what all those terms mean? But don’t worry! Below is a list of all the financial aid terminology a pre-collegiette needs to know to survive funding your education. Pin this article for future reference!
Financial Aid Policies
So you’ve submitted your applications and checked that little box on your college applications that says you’ve applied for financial aid. Do college admissions officers even notice that little box? Does it even matter if they do? One aspect of financial aid that many pre-collegiettes don’t know much about is the difference between need-blind and need-aware schools and how much they can affect your college prospects. But, of course, Her Campus has you covered!
Need-aware schools are able to see your financial aid status, but this does not mean that every other part of your application is moot; it just means they have something extra to look at when they are on the fence between applicants. The vast majority of colleges are need-aware due to the fact that they only have so much financial aid to give out every year, and with more applicants needing more financial assistance with every admissions cycle, it’s becoming harder for schools to meet the demand.
There has been quite a lot of controversy lately over the ethics of such a policy. For example, should a school accept a less qualified applicant because they can pay full tuition, but reject a more qualified applicant because they need lots of financial aid? It’s a difficult question to answer that more and more colleges are faced with every year.
In contrast with need-aware colleges, need-blind colleges do not factor in financial need when looking at your application during the admissions process. What this does is ensure that a school is looking at merit (your grades, extracurricular activities, test scores, etc.) without being swayed by your ability to pay or not pay for the school.
Applying for Financial Aid
Financial aid is a terribly confusing (but also extremely important) part of the college admissions process. If you can’t pay for college, you can’t go. Of course, it’s important to know what financial aid is before you start figuring it out! At its simplest, financial aid is money you need to assist you with paying for college. It can come in many forms, including scholarships, grants, or loans.
So, what are some financial aid terms you need to know to get started? Keep reading!
College Scholarship Service (CSS) Profile:
The CSS Profile is created and run by the College Board (the same people who bring you the lovely SAT) to help provide more particulars about your financial situation. Though the FAFSA (see below) helps give colleges a general picture of your financial aid situation, the CSS profile can help fill in some gaps and provide more detailed information. The profile needs to be filled out at least two weeks prior to your first college or major scholarship deadline. It costs $25 to send the profile to one college and $16 to send it to every additional college.
One important thing to note is that while a CSS profile is not required by all schools, at least 350 different colleges use it, and the number of schools that ask for a CSS profile is growing every year.
Estimated Cost of Attendance (ECA):
Your ECA describes how much it will cost you to attend your school (talk about scary!). Before you start exclaiming, “Wait, can there really be that many zeros in my tuition?!”, notice that it does say “cost of attendance,” in that the number includes everything necessary for attending college: i.e., tuition, room and board, textbooks, traveling expenses, personal expenses, and a whole lot more. Obviously, all of these factors vary greatly from one person to another (for example, one person might only be traveling home twice per year, which can slash travel costs). Although this number might seem gigantic, it may not be how much you will actually pay, depending on your spending habits (hence, “estimated”).
Estimated Family Contribution (EFC):
The EFC is part of your Student Aid Report (arguably the most crucial point), and it explains how much your family is expected to pay for your college education based on several financial factors, including taxed/untaxed income; your parents’ jobs, assets and benefits; family size; and how many of your siblings are currently enrolled in college. Although the number is not set in stone, the idea of the EFC is to show how much money you should be receiving in aid (subtract your EFC from your ECA, and you’ll get the amount of money you need from financial aid!).
Free Application for Federal Student Aid (FAFSA):
The FAFSA is the basic financial aid application that every single person who desires college financial assistance must fill out (put a gigantic red circle around the word “must”!). It is used to determine how much you and/or your family can pay for your education. Filling out the FAFSA is beyond important to any college applicant’s journey, as it is used for student loans and grants as well as for scholarships or financial aid packages given out by colleges.
The FAFSA application opens on January 1st and ends on June 30th. Though that seems like a long time from now, it’s crucial that you get on your FAFSA application right away! The faster you send it in, the more time your financial aid office has to process it and work with you to create a tuition plan that fits your needs. Furthermore, it’s also critical to look at the specific FAFSA deadlines for your state and/or college. For example, some state have deadlines that end in April or May, and you definitely don’t want to miss out on financial aid just because you thought that June 30th deadline was universal.
Another important point to remember with the FAFSA is that it must be filled out every year you’re enrolled in college; the financial aid fun doesn’t stop after freshman year!
Student Aid Report (SAR):
After you submit your FAFSA, you will receive a Student Aid Report that details the information you gave and how much money you and your family will be able to contribute to your college tuition. This report is jam-packed with information, including your all-important ECA and EFC. Your SAR will come anywhere from three to 10 days after you submit it, depending on if you fill out your FAFSA electronically or by mail.
Types of Financial Aid
So you’ve figured out the basics and know your EFC, but now an important question remains: who or what is going to be paying the rest of your tuition bill?
Grants are funds that, unlike student loans, do not need to be repaid. They can come from federal or state governments, colleges, or other independent organizations. You can read more about federal and state grants offered to students on the U.S. Department of Education’s Federal Student Aid page.
Merit-based financial aid is given to students who meet certain academic or extracurricular requirements as set by an institution, group, or person. This can include a combination of GPA, test scores, and community involvement. An important note, pre-collegiettes: merit-based aid does not account for financial need, meaning that anyone with any type of financial background is eligible to obtain it!
Students can either apply for certain types of merit-based scholarships, or they can earn them automatically (for example, a university could give a certain amount of money to all applicants who have at least a 3.5 GPA or who have completed 100 community service hours).
Need-based financial aid can come in the form of scholarships. As the name sounds, the main requirement for eligibility is a lack of financial assets. Every school has their own system for determining what counts as “need” and in what areas, so definitely keep in close contact with your prospective schools’ financial aid offices as the time gets closer to choosing a college!
Parent (PLUS) Loans:
PLUS loans are federal loans granted to graduate students or parents of dependent undergraduate students who need additional financial aid. These loans come with a fixed interest rate of 7.9 percent, and your parents must have a good credit history. To find the maximum amount you can get for your PLUS loan, take your ECA and subtract all other financial aid you’ve received.
The word “scholarship” covers a broad range of financial aid. Scholarships are considered “gift aid,” so you don’t have to pay them back. Many scholarships instruct the person receiving the award to use the funds towards a particular aspect of the college experience (textbooks, meal plans, etc.), but some provide finances for whatever part of college life the student needs the money for.
Looking to start your scholarship search? Some great websites to check out are Fastweb (which allows you to fill out a profile detailing your GPA, extracurriculars, and interests and receive scholarship suggestions based on your data), ScholarshipExperts.com (which also allows you to fill out a profile and keep track of scholarship deadlines), and Zinch (which combines scholarship finding with the overall college admissions timeline).
Student loans are given to college students to help them pay for tuition, living expenses, and other school-related means (like textbooks or lab equipment). What separates student loans from other types of loans is that they typically come with a deferred repayment schedule (i.e. the collegiette starts paying off the loan after she graduates) and low interest rates (between 3.4 and 6.8 percent).
Once your college reviews your FAFSA and determines that you have reason to receive need-based aid, there are two different types of loans you could receive: subsidized or unsubsidized loans. You may be given a subsidized loan, meaning (as mentioned above) that your interest rates are low (around 3.4 percent) and you start paying them off after you graduate.
Unsubsidized loans can be offered to anyone who submits a FAFSA profile. It is up to individual universities to decide how much money should be given to the student. Financial need is not necessary to receive one of these loans, and because of this fact, unsubsidized loans have a higher interest rate of 6.8 percent compared to their subsidized counterparts.
Students participating in a work-study program are typically employed by their university (in a job at the campus store, the campus coffee shop, etc.) and have a certain amount of their wages donated to the student contribution of their financial aid. If you’re looking at a work-study option, you will be negotiating with your school’s financial aid office to figure out what your job will be, how much you’ll earn per hour, and how much of that income will go towards your financial aid contribution.
Don’t worry that you won’t be able to find a work-study job you like! Colleges offer tons of jobs for students, from working in the library to helping university communications with social media accounts (hint: colleges love students who know how to tweet effectively!) to being an usher for campus shows.
Overall, the most important part of the financial aid process is making a plan to pay off any loans and staying on top of that plan. Fill out applications and forms as early as possible, and soon you’ll be a financial aid expert!