What Is Financial Aid?
Financial Aid is all money that helps students fund their education. Financial aid can consist of all or some of the following:
-
Scholarships
-
Need-based awards
-
Work-study employment
-
Low-interest, Federal Student loans
Nearly two-thirds of full-time college students receive some form of need-based aid [source: NCES]. Need-based financial aid eligibility is based on two calculations -- the total cost of education and the family's ability to pay. The cost of education can vary significantly from institution to institution. Generally, these calculations include all reasonable costs (tuition, room, board and living expenses) of attendance.
​
THE EARLIER THE BETTER!!
-
FAMILIES THAT APPLY FOR FINANCIAL AID EARLY HAVE THE BEST CHANCES OF GETTING THE BEST OFFERS OF AID!
-
EVERY STATE HAS ITS OWN FINANCIAL AID DEADLINE.
-
APPLY FOR FINANCIAL AID STARTING ON OCTOBER 1ST!
-
THERE IS NO REASON TO WAIT.
​
WILL YOU BE ELIGIBLE? THE ONLY WAY TO FIND OUT IS TO COMPLETE THE FAFSA!
​
To apply for need-based financial aid, families must complete the Free Application for Financial Aid (FAFSA) as early as possible starting on October 1st each year and, if appropriate, the College Board's College Scholarship Service's (CSS) PROFILE application for institutional aid that some schools also require.
These forms are used by schools to determine what amount, if any, a family (and that means both parent and student) can afford to contribute to the annual cost of attendance. That number is known as the Expected Family Contribution (EFC). The specific amount of your EFC may vary somewhat from institution to institution, but the formulas are in place ensure that most EFCs are similar.
FINANCIAL AID IS RELATIVE TO THE COST OF ATTENDANCE.
The formulas consider a variety of family circumstances when determining eligibility. (The College Board Web site has some great financial aid calculators you can use). Consequently, there's no real cut-off point or maximum income a family can have and still qualify for assistance. Even if you have a comparatively high income, you may still qualify for need-based aid, particularly if you have more than one child in college. Every student, regardless of financial situation, should apply for need-based aid to see what happens.
There are two need-based aid applications used nationally:
The Free Application for Federal Student Aid (FAFSA): The FAFSA determines eligibility for federal money and is required by all institutions of higher learning. Completing FAFSA requires tax returns from two years prior to college enrollment.
Which FAFSA should a student in Class of 2023 complete?
-
A student who will graduate in 2023 and plans to start college in fall of the 2023-2024 school year will complete the NEWLY REDESIGNED 2023-2024 school year FAFSA, and will use the family's 2022 tax returns.
-
If that student plans to start college during the summer immediately after high school graduation, that student will also need to complete the 2022-2023 school year FAFSA using family tax returns from 2021.
The CSS PROFILE: The CSS Profile helps determine eligibility for money from a private college or university, 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 income tax returns. If you're applying as a dependent of your parents, then the numbers will come from your parents' tax returns. Most students will be considered dependents, even if they are 18 years old, but if you live with a relative or someone other than a biological parent, are homeless or live in foster care, you may be considered independent. If you are applying as an independent, use your own tax returns if you have them. To determine if you will be considered dependent or independent click here.
Financial Aid will be offered to students after they are admitted to an institution. 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 -- others won't be.
​​
Aid Package Examples from Northwestern University
The examples below illustrate possible options for families from a variety of financial backgrounds. Due to the many factors that go into determining an aid package, your individualized award package may differ from those below, even if you seem to have similar financial circumstances.
​
The Art of the Possible
A student from Florida lives in a single parent household and has no siblings. Her family income totals $25,000. The family has no savings and does not own a home.
Family circumstance
-
Total cost of attendance $73,774
-
Expected Family Contribution $2,500
-
Financial need $71,274
Financial aid award
-
Pell Grant $6,495
-
Federal Supplemental Educational Opportunity Grant $4,000
-
Northwestern Scholarship $58,654
-
Federal Work-Study $2,700
-
Total aid offered $71,274
​
Building for the Future
A student from Michigan is one of two children to be enrolled in college next year. Both parents are employed outside the home. The family’s income is $155,800. They have $150,000 in home equity and $100,000 in savings. The student has $1,000 in savings and investments.
Family circumstance
-
Total cost of attendance $73,384
-
Expected Family Contribution $26,750
-
Financial need $46,634
Financial aid award
-
Northwestern Scholarship $43,934
-
Federal Work-Study $2,700
-
Total aid offered $46,634
Working Together
A student from California is the only member of her family in college. She has two younger brothers. Both of her parents are employed and together earn $107,300. They have $100,000 in home equity and another $10,000 in investments and savings.
Family circumstance
-
Total cost of attendance $73,880
-
Expected Family Contribution $22,200
-
Financial need $51,680
Financial aid award
-
Northwestern Scholarship $48,980
-
Federal Work-Study $2,700
-
Total aid offered $51,680
Lending a Hand
A student from Illinois is one of two siblings and will be the only family member in college this year. Both parents are employed and together earn $425,000. They have $285,000 in home equity, as well as $324,000 in savings and investments. The student has $2,500 in savings. The expected family contribution exceeds the cost of attendance. In this case, the University can offer various financing options.
Family circumstance
-
Total cost of attendance $72,980
-
Expected Family Contribution $72,980
-
Financial need $0
Financial aid award
-
Unsubsidized Federal Direct Stafford Loan $5,500
-
PLUS Loan $67,480
-
Total financing available $72,980
If you demonstrate need, you're eligible for need-based financial aid. Demonstrated Need is a simple concept -- it's each institution's cost of education minus the Expected Family Contribution (EFC). So the "formula" looks something like this:
Cost - EFC = Aid Eligibility
If your aid award includes federal dollars -- and most do -- your total aid cannot exceed your demonstrated need. Some institutions will meet 100 percent of your demonstrated need; others will meet only a portion of that need. Regardless of the portion of need that a school meets, almost all package aid offers three types of assistance:
-
Loans -- Low-interest federal student or parent loans that will need to be repaid
-
Grants -- Federal or institutional awards that DO NOT have to be repaid
-
Work-study --Part-time campus employment subsidized by the Federal government. Work-study jobs are not guaranteed.
The breakdown of funding in each financial aid package varies from one college to another. While grants are everyone's favorite type of financial aid, don't discount work and loan opportunities.
Federal law requires that you reapply for need-based financial aid each year. There are no exceptions. Applications are generally available in early October of each year. Mark your calendar to reapply in October. You don't want to receive your fall bill and discover that you failed to apply for aid. At that point, it may be too late!
In most cases, a school will tell you of your financial aid eligibility at the time that admission is offered. Colleges and universities know that you are concerned about costs and most will not ask you to commit to them until they commit to you.
If you don't qualify for aid in the first year, apply again in the second year. Circumstances change and so does aid eligibility. You may be surprised to find that you receive aid in the second year. And if your circumstances change mid-way through an academic year, most institutions are willing to meet some or all of your newly demonstrated need.
​
For more financial aid resources click here.
​
​
​