Financial Aid: Frequently Asked Questions (FAQs)

1. How can I tell if I'm eligible for financial aid?
2. How do I apply for need based aid?
3. What is the difference between FAFSA and CSS Profile?
4. Where can I get a copy of the FAFSA?
5. I probably don't qualify for aid. Should I apply for aid anyway?
6. What are the documents required for financial aid application?
7. When should I start looking for financial aid options?
8. How can I find out how much aid I will need to attend a college?
9. What is a financial aid package?
10. What federal need based aid in the form of grants and loans are available?
11. What does the Expected Family Contribution (EFC) cover?
12. Do I need to be admitted before I can apply for financial aid at a university?
13. Who should I contact about various financial aid opportunities?
14. I missed my school's deadline for filing financial aid. What should I do?
15. Do I have to re-apply for financial aid every year?
16. What's the best way to find out about scholarships?
17. What are the common categories of grants and scholarships?
18. What is Federal Pell Grant ? How do I apply for the grant?
19. Can I reject part of my financial aid package, and what happens if I do?
20. I got an outside scholarship. Should I report it to the financial aid office?
21. How can I reduce the cost of going to college?
22. My parents' earnings for this year will be much lower than last year. Will colleges take that into consideration?
23. What are GATE loans, and why doesn't my university participate?
24. What is federal work study and how does it work?
25. Are international students eligible for financial aid and scholarships?
26. Are my parents responsible for my educational loans?
     

(Suggested Read: Financial Aid Guide for Students)

1. How can I tell if I'm eligible for financial aid?

Most people are eligible for financial aid for college or career school. Your eligibility for most federal student aid depends on a variety of factors, including your Expected Family Contribution (EFC), your year in college, your enrollment status, and the cost of attendance at the college you will be attending.

There are several online work sheets you can use to calculate how much money you'll be expected to put toward college, which is called your Expected Family Contribution or EFC. The EFC formula was established by Congress to determine a family's ability to contribute toward the cost of a child's education. You can calculate your EFC here.

To apply for financial aid, you'll need to fill out the Free Application for Federal Student Aid (FAFSA). Find out if your college requires you to fill out the College Scholarship Service (CSS) /Financial Aid Profile in addition to the FAFSA. While FAFSA is used to calculate a student's eligibility for federal aid programs; the CSS Profile is used by many private colleges and universities to determine your eligibility for non-government financial aid, such as the institution's own grants, loans and scholarships.

2. How do I apply for need based aid?

There are two need-based aid applications being used nationally, the FAFSA and the College Scholarship Service's Profile The FAFSA is the application for all federal funds and is required by all institutions of higher learning. Many institutions will require complete copies of your most recent tax and W-2 forms.

The Profile, which is generally viewed as the application for private or institutional funds, is required by many, but not all institutions. If you're applying to a college whose aid awards include significant levels of institutional funding, there is a good chance that the school will require both forms. If you're unsure which form(s) is required, check with your school's financial aid office.

The FAFSA and the Profile rely heavily on numbers from your income tax returns. If you're applying as a dependent of your parents, then the numbers will come from your parents' tax returns. If you are applying as an independent, then use your own tax returns.

In addition to income and asset information, each form also collects demographic data including family size, parent age, number of students in college and other related information. You're also invited to provide each school with information on any extenuating circumstances that affect your family's ability to support educational expenses. Take advantage of the opportunity to provide this information by writing directly to the college(s) you're considering. Don't be shy!

3. The biggest differences between the CSS Pofile and the FAFSA include:

•Submission dates: The CSS Profile can be submitted in the fall; FAFSA cannot be submitted before January 1;
•Specific questions: The CSS Profile questions are specific to the school or program you're applying to; FAFSA contains the same questions for everyone;
•Different methodology: The CSS Profile determines your financial need differently than the FAFSA. While the CSS needs detailed information about your family finances (including step parents). The FAFSA is more lenient and only requires information on the custodial parent, plus any child support;
•Minimum student contribution: The CSS Profile requires this; the FAFSA doesn't;
•Cost: Each CSS Profile costs a fee, varying from year to year; the FAFSA, as the name implies, is free.

If the school requires the Profile, the financial aid office will be delving deeper into your family finances.

Note: Students must find out what percentage of their financial need (established in their financial aid forms) each of their select colleges will meet. Not many colleges will meet 100 percent of their demonstrated financial need. So students must check with their short-listed schools and accordingly prepare.

4. Where can I get a copy of the FAFSA?

You can ask your guidance counselor for a copy. You can also get the FAFSA from the financial aid office at a local college, your local public library, or by calling 1-800-4-FED-AID. The online version of the form is available at http://www.fafsa.ed.gov.

5. I probably don't qualify for aid. Should I apply for aid anyway?

Yes. Many families mistakenly think they don't qualify for aid, and prevent themselves from receiving financial aid by failing to apply for it. It is in the best interest of the student to apply for aid and speak with a financial aid officer to get additional information. There are several sources of funding available for students who have financial need. For example, Direct Subsidized Loan or Direct Unsubsidized Loans among many others. Applying for financial aid is therefore a must, students can then figure out different ways of funding and paying for their college education.

6. What are the documents required for financial aid application?

You will need records of income earned in the year prior to when you will start school. You may also need records of your parent's income information if you are a dependent student.

• You will need records of income earned in the year prior to when you will start school;
• You may also need records of your parent's income information if you are a dependent student;
• Social Security Number (can be found on social security card);
• Driver's license (if any);
• W-2 forms and other records of money earned;
• Your and/or spouse's, (if you are married) federal income tax return;
• Parent's federal income tax return (if you are a dependent student);
• Untaxed income records - social security, temporary assistance to needy families, welfare, or veterans benefits records;
• Photocopy of loan agreement(s), if any, with all supporting documents;
• Bank statement certificate of savings (if any);
• Business and investment mortgage information, business and farm records, stock, bond, and other investment records;
• Transcript of grades for the last three years;
• Photocopy of car(s) registration form for each car owned by family;
• Alien registration card (if you are not a U.S. citizen);
• Any additional document that would support the application for financial aid (e.g. medical reports and recent medical/hospital bills, certificate of job termination or end of service, etc...)

7. When should I start looking for financial aid options?

Plan ahead! It is in your best interest to start the financial aid process in the spring of your junior high school year. Also, equally important is to select and shortlist colleges you want to attend. Few basic questions a student should seek when considering a college/ school for further studies include:

• Does the school offer the courses and type of program you want?
• Do you meet the college admission requirements?
• Does the school offer a high quality education at a reasonable price?
• Does the school offer services you need and activities you are interested in?
• What are job placement rates for students who have recently graduated?
• What is the school's student loan default rate?
• How is the school's accreditation?
• What is the school's refund policy?
• What is the school's campus security policy?

8. How can I find out how much aid I will need to attend a college?

Financial need is the difference between your school's cost of attendance (including living expenses), as calculated by your school, and your Expected Family Contribution (EFC).  Calculating your EFC  can indicate how much money your family will be expected to contribute to the cost of college. This is determined by the Federal Processor from the information you provide on the FAFSA form--but you can estimate your EFC right here on the Internet. 

To get started please involve your parents to add up the total cost of attending each of your target college(s) for one year. You can gain a clear idea of the costs by researching each school through College search. Many colleges will provide you with information to estimate total annual cost of attending their select institution. 

Note: Add up fixed items such as: tuition, housing, food services, etc. Also, add in the estimated cost of books, clothes, personal expenses, supplies, travel to and from school, and entertainment. Try to be realistic in setting these amounts. Now take the total estimated cost of one year at college and subtract your Expected Family Contribution amount. This gives you a general idea of what your financial aid "need" will be. This "Financial Aid Package" will hopefully consist of a combination of federal and state grants, private or college-based scholarships, grants, and loans.

9. What is a financial aid package?

A financial aid package is a collection of different types of financial aid from multiple sources. It is intended to help you fill the gap between your ability to pay (your expected family contribution or EFC) and college costs (the cost of attendance or COA). It is based on your financial need, the difference between COA and EFC.

The financial aid package awarded by a college or university will be explained in the award letter you receive from the school. In your award letter, you will see all the federal grants, college scholarships, college loans and work-study programs that school is willing to offer you. This aid will come from a variety of sources, including federal aid, state aid and college aid.

10. What federal need based aid in the form of grants and loans are available?

Your financial aid package is likely to include funds from the Federal Student Aid (FSA) programs. Note that not all colleges participate in all FSA programs. These FSA programs, described below, are administered by Federal Student Aid and provide over $150 billion a year to students attending post secondary schools:

• Federal Pell Grants are available to undergraduate students. Graduate students in a teaching credential program may also qualify. Grants do not have to be repaid.

• Federal Stafford Loans are student loans that must be repaid and are available to both undergraduate and graduate students. Stafford loans are provided through the Federal Direct Loan (Direct Loan) Program, meaning the federal government provides the funds for the Stafford loan. There are two types of Stafford loans:

  1. Subsidized Stafford loan - A loan for which the government pays the interest while you are in school, during grace periods, and during any deferment periods.

  2. Unsubsidized Stafford loan - A loan for which you are responsible for paying all the interest that accrues at any point in time.

• Federal PLUS Loans are unsubsidized loans made to parents of undergraduate students. If your parents cannot obtain a PLUS loan, you may be eligible to borrow additional Unsubsidized Stafford loan funds. The interest rates may vary based on when the loan is borrowed.

•  Campus-Based programs include:

  1.  Federal Supplemental Educational Opportunity Grants are  available for undergraduates only;

  2. Federal Work-Study provides jobs to undergraduate and graduate students, allowing them to earn money to pay education expenses.

  3. Perkins Loans are low-interest (5 percent) loans that must be repaid.

11. What does the Expected Family Contribution (EFC) cover?

The Expected Family Contribution is determined by the federal government. It is the amount your family contributes to your college education. When colleges establish a financial aid package for you, they balance your EFC with the total cost of attending the school, which includes tuition, fees, room and board, books, personal expenses, spending allowance, and travel allowance. Many colleges do not meet 100 percent of the need established in your financial aid form, which leaves you to pay your EFC and any gap between what the colleges offer and your EFC. You should check with all of the colleges that you are considering to see what percentage of need they will meet.

12. Do I need to be admitted before I can apply for financial aid at a university?

No. You can apply for financial aid any time after January 1. To actually receive funds, however, you must be admitted and enrolled at the university.

 13. Who should I contact about various financial aid opportunities?

• Stay in touch with your counselor and career center specialist beginning in your junior high school year to make sure you find out about all available scholarships in your area. They will also help you obtain the forms for federal and state- aid programs and update you on the same.

• Visit financial aid officers at your target colleges to find out specific information about financial aid procedures at each college.

• Attend college fairs and be aware of college representative visits to your high school, they are a good source for information about financial aid programs and procedures.

• Talk with your parents about their financial status and how it may impact your chances of receiving aid. Ask for your parents' advice and help as you gather financial aid information. Be sure your parents attend any financial aid program events being held at your school.

• Consider consulting an independent counselor or financial aid advisor. For a fee, these professionals can help you locate sources of funding and help you through the financial aid application process.

14. I missed my school's deadline for filing financial aid. What should I do?

Missing the financial aid deadline that a school sets loses your opportunity at some of the aid available. Unless you have a valid reason for turning in your information late, you cannot change that. You'll have to find a way to pay for more of your schooling, or attend a different school that you turned in the information to on time and offers a better package.

15. Do I have to reapply for financial aid every year?

Yes. Most financial aid offices require that you apply for financial aid every year. If your financial circumstances change, you may get more or less aid depending on the situation. After your first year, you will receive a "Renewal Application" which contains preprinted information from the previous year's FAFSA.

Note: that your eligibility for financial aid may change significantly, especially if you have different number of family members attending college. Renewal of your financial aid package also depends on your making satisfactory academic progress toward a degree, such as earning a minimum number of credits and achieving a minimum GPA.

16. What's the best way to find out about scholarships?

Consulting with your guidance or career office to see what type of scholarship opportunities are available locally is first and foremost. Your best scholarship sources are local. These scholarships are from civic and other local and regional organizations. Federal scholarships are awarded solely on the basis of need as determined by your FAFSA.  While school scholarships may be need-based or non-need based. Non-need-based scholarships, for example, may be based on academic achievement or athletic skill.

There are numerous free scholarship searches on the Web. A word of caution: Never pay for a scholarship search. The databases in the free searches ( U.S. News Online) are just as extensive as those in the paid searches. Before conducting your search, you should take a look at the Federal Trade Commission's site called: Don't Get Scammed on Your Way to College.

In addition, some colleges publish booklets or Web pages that outline all the scholarships they offer.

17. What are the common categories of grants and scholarships?

• Achievement-specific: awarded to students who have a special characteristic, skill, talent, or ability and often factor in an applicant's extracurricular activities and community service record.

• Need-specific: provided to students who demonstrate financial need. Most financial aid, particularly public-funded aid, is awarded on the basis of financial need determined through the college application process and in accordance with a prescribed federal formula.

• Student-specific: scholarships for which applicants must initially qualify based upon gender, race, religion, family and medical history, or other student-specific factors.

• Career-specific: scholarships a college or university awards to students who plan to pursue a specific field of study. For example, many schools in the United States give future nurses full scholarships to enter the field, especially if the student intends to work in a high-need community.

• College-specific: are offered by individual colleges and universities to highly qualified applicants. These scholarships are awarded on the basis of academic and personal achievement.

18. What is Federal Pell Grant ? How do I apply for the grant?

To get a Federal Pell Grant you need to submit the FAFSA. A Federal Pell Grant, unlike a loan, does not have to be repaid. Federal Pell Grants usually are awarded only to undergraduate students who have not earned a bachelor's or a professional degree. Amounts can change yearly. The maximum Federal Pell Grant award is $5,645 for the 2013–14 award year (July 1, 2013 to June 30, 2014). The amount you get, though, will depend on-your financial need; your cost of attendance; your status as a full-time or part-time student; and your plans to attend school for a full academic year or less. Note: You may not receive Federal Pell Grant funds from more than one school at a time.

19. Can I reject part of my financial aid package, and what happens if I do?

After you submit your application for financial aid, you will receive a financial aid award letter from the college(s) to which you applied, typically in early to mid-April. This letter spells out the details of your financial aid package.

A financial aid package is a collection of different types of financial aid from multiple sources. It is intended to help you fill the gap between your ability to pay (your expected family contribution or EFC) and college costs (the cost of attendance or COA). It is based on your financial need, the difference between COA and EFC.

After you receive the award letter, you may be asked to return a signed copy of the letter in which you accept or reject each source of financial aid. Most financial aid packages include work study and loans, which are called self-help funds. Often this is the portion of the package that families are likely to reject. However, please note that the college will not increase other aid to compensate if you reject part of the financial aid package, such as loans. If you choose to reject any portion of the aid package, it will be your responsibility to make up the difference. The college will not offer you other forms of aid to compensate for that loss.

20. I got an outside scholarship. Should I report it to the financial aid office?

Yes, if you are receiving any kind of financial aid from university or government sources, you must report the scholarship to the financial aid office. Unfortunately, the university will adjust your financial aid package to compensate. Nevertheless, the outside scholarship will have some beneficial effects. At some universities outside scholarships are used to reduce the self-help level. For example, at MIT 40 percent of the scholarship amount is applied toward the self-help level, and the rest replaces institutional funds. At other universities outside scholarships are used to replace loans instead of grants.

21. How can I reduce the cost of going to college?

• Consider public over private schools: compare the costs of attending a public college vs. a private institution. Public schools can often offer comparable levels of academic and social possibilities.

• Plan ahead to reduce the number of years you attend college: while still in high school, taking Advanced Placement courses and taking the accompanying Advanced Placement exams can give you college-level credit. You can also take community college courses to get college-level credit. Look into summer programs offered by community or 4 year colleges in your area. Finally, consider taking summer session courses offered by colleges while you are actually in college! All of these options can help you substantially lessen the amount of tuition you will pay.

• Spread out the number of years to complete college: if you lessen the number of units or courses you take, you will likely free-up more time to work to help pay your tuition and living expenses. It may take you longer to graduate, but you will be able to spread the cost of attending college over a longer period of time and you will be able to afford it more easily.

• Attend a community college for the first two years: of your college career. This way you will be able to complete most, if not all of your lower division required courses at a much more affordable cost. Take advantage of this option if finances are really tight for your family and especially if you do not want to go into debt by taking student loans.

• Develop a reasonable budget while attending college: many students find that they can save substantial amounts of money by simply keeping close track of expenses. Use common sense: buy used books instead of the ridiculously expensive new ones, find the cheapest living accommodations possible, ask college housing offices if there are low cost dormitory options and food service plans, and finally, you may want to consider living at home to save money too.

(View: our financial aid road map for more information.)

22. My parents' earnings for this year will be much lower than last year. Will colleges take that into consideration?

The Expected Family Contribution (EFC) for the FAFSA is always calculated based on the family income and assets from the previous tax year. Each year, the student is required to file an update. Any time families think there are extenuating circumstances that could impact their ability to pay their EFC, they should send a letter to each college's financial aid office explaining those circumstances. The school can override the EFC calculation from your FAFSA at its discretion. It is not easy to get schools to override the EFC, because they have limited funds. It is, however, worth the effort if you think the FAFSA is not a true representation of your finances. Credit-card debt, large mortgage payments, or second homes generally will not earn you much sympathy, but extensive unexpected medical expenses could.

23. What are GATE loans, and why doesn't my university participate?

GATE loans is a nonprofit private loan program (Guaranteed Access to Education) offered through participating schools in conjunction with Bank of America, Bank of Boston, and the National Collegiate Trust (NCT). There is a minimal credit check and schools can recommend whatever loan amount they'd like the student to receive. The interest rate is also rather low. There are several reasons why a university might not want to participate in this program: There is some risk-sharing by the schools. As a result, the program will be most attractive to schools with a low default rate. The schools receive less than the full face value of the loans immediately, with the up-front amount depending on the school's default rate and the interest rate. In effect, the schools are providing part of the loan capital.

24. What is federal work study and how does it work?

Federal Work-Study provides you with a job on or near campus. A student may work a maximum of 20 hours per week and will receive at least the federal minimum wage. You will receive a paycheck for the work you perform, up to the amount awarded in your financial aid package. That money goes directly to you for books, spending, and travel. You do not have to give the money back to the college unless your family has decided that part of the work study funds should be used to cover tuition costs.

The money you earn from Federal Work-Study is generally subject to federal and state income tax, but exempt from FICA taxes (provided you are enrolled full time and work less than half-time).

25. Are international students eligible for financial aid and scholarships?

Your best source of funding in the United States will be the universities that accept you for admission. You are not eligible for any of the federal loan programs because they are reserved for U.S. citizens and those eligible non-citizens who have permanent residence in the United States. Scholarships are limited for international students, as well. You should be in contact with the universities to see what is available.

One of the best resources is the International Student Handbook of U.S. Colleges from the College Board. The book describes financing college in the United States and lists colleges that offer financial assistance to international students.

Finance yourself: Here are some of the ways you can finance your studies. Learn more about student loans, part- time on campus jobs, summer jobs, scholarships, and co-op programs.

26. Are my parents responsible for my educational loans?

No. Parents are, however, responsible for the Federal PLUS loans. Parents will only be responsible for your educational loans if they co-sign your loan. In general you and you alone are responsible for repaying your educational loans.