With the Common Application’s deadline behind us and ApplyTexas’ shortly ahead, you might be thinking that the college admissions process is over and that now it’s just a waiting game. This is true to a certain extent, but there is one more hoop to jump through before deciding on what college you’ll go to —financial aid. This four part series will hopefully illuminate what is a murky financial aid system.
Scholarships vs. Grants. Vs. Loans
“Financial Aid” is the umbrella term for the combination of scholarships, grants, and loans that finance your education. Though all three compose a total financial aid package, there are differences between each of these. For example, scholarships and grants are not expected to be paid back, whereas a cataclysmic apocalypse couldn’t protect you from your loan officers. In addition, scholarships are generally merit-based whereas grants and loans are generally need based, though many grants do require certain GPA and performance stipulations.
How do I apply for financial aid?
Thankfully, there aren’t many steps to applying for financial aid, though each step can be long and arduous. Most, if not all, schools use the Federal Program for Student Aid, or FAFSA, to determine grant eligibility and need. Much like the Common Application, a single FAFSA can be sent to multiple schools, but unlike the Common App, this application is completely free and costs nothing to send to schools requiring it. In order to fill out the FAFSA, you’ll need the current year’s tax documents, as the application will ask questions regarding your parent’s income (or your own if you are not a dependent), savings, and capital. From there, the FAFSA will use a combination of black magic and math to calculate your eligibility for federal grants and loans, and similarly, state governments and universities will use the FAFSA information to make their own independent calculations on your eligibility for various programs.
In addition to FAFSA, some colleges also use a supplementary application from College Board called PROFILE to calculate eligibility for need-based institution grants. The full list of participating schools are listed here, but unfortunately, there is a fee associated with PROFILE, which is $25 for the first school and $16 for every school thereafter.
Once all this financial wizardry and calculations has occurred, you will be offered a financial aid package by each school. This package will include all federal, state, and institutional grants you’re offered. The school will take their estimated cost of attendance (which is a sum of their tuition, room and board, miscellaneous fees, and estimate of textbook costs) and subtract the total amount of grants you’re offered. The difference is the amount you and your family are responsible for, and most individuals take out federal student loans to make up this difference.
Most schools have deadlines in the early spring, with March 1 being the most common deadline, but make sure to check with each school you’re applying to for their specific deadline. If you don’t submit your financial aid application, be it FAFSA or PROFILE, on time, you likely will not qualify for ANY financial aid!
How do scholarships affect financial aid?
For schools that have strong institutional grant programs, you might think that by amassing multiple external scholarships you would have extra pocket change at the end of the day. Unfortunately, this is not quite true, as you are obligated to report all scholarships to your institution, and in fact, most scholarship checks are written out jointly to you and your school. If you do receive external scholarships, your school will adjust their financial aid/grant package to reflect this, meaning any grants offered will decrease accordingly.
For example, if you attend ABC University, which has a total cost of attendance of $35,000, and receive $10,000 in university grants, you would be eligible for $25,000 in federal loans.
Then, if you receive a $1000 Testmasters scholarship for receiving a perfect 2400 on your SAT, and you report this to your school, the school will then offer you $9,000 in grants, still leaving you with $25,000 to take out in loans.
While this might not seem fair, keep in mind that all institutional loans come from alumni who have donated their money to help fund your education. If your financial burden is alleviated through external scholarships, the school is then able to shift funds or perhaps save them for the next student who comes along and requires aid.
Come back next week to see Part II of this financial aid series, which will discuss Loans.
Want to learn more about financial aid? Learn more here!