Institutional Need-Based Aid
Every college or university has their own specific procedure for need-based financial aid. The easiest way to determine each college’s specific policy is to go on the college website’s financial aid page.
In general, applicants for need-based financial aid will need to fill out a FAFSA and a CSS/Profile. These are typically filled out in the winter months of your senior year in high school. These forms ask for information regarding your family income, savings, etc. These numbers are then put into a set formula, which will determine how much money your family can reasonably be expected to pay each year. That number is called your EFC (Expected Family Contribution).
CSS/Profile:
https://profileonline.collegeboard.com/index.jsp
FAFSA:
http://www.fafsa.ed.gov/
Many colleges also require that you fill out an entirely separate financial aid form specifically for their school. In conjunction with the FAFSA and CSS/Profile, colleges will determine your “need”, or the amount of additional money you and your family need in order to afford college. Roughly speaking, your “need” is the difference between the total cost of college (tuition, room, board, fees, living expenses) and your EFC (expected family contribution). For example, if college will cost $50,000 for the year and your family can afford $10,000, your financial, need will be $40,000. Unfortunately, the FAFSA and CSS Profile can only be filled out by students planning to enroll in college within approximately half a year’s time. Prior to that time, a good way to estimate your “need” is to use the FAFSA4caster. This is very similar to the actual FAFSA. It asks many of the same questions and uses a similar formula. The main difference is that the results don’t officially count.
FAFSA4caster:
http://www.fafsa4caster.ed.gov/
How much will they give you?
Once “need” is determined, different colleges have their own methods of covering the “need”. As a general principle, elite universities, especially private ones, will cover 100% of demonstrated financial need. This simply means that if you need $30,000 per year, that is what you will get. These schools have billions stored up in endowments (donations from successful alumni and others) and will insure that every student can afford to attend their schools. Other schools that are not as prestigious will generally cover less than 100% of demonstrated financial need. To get an estimate of what percent of need each college covers, (
click here).
Unfortunately, “covering need” doesn’t mean that the college will simply hand over cash to you to cover your costs. Instead, colleges will give you a financial-aid “package” which will include grants, scholarships, work-study, loans, etc. Grants and scholarships come from either the government, independent groups, or an associate of the college itself. This is essentially “free money” and does not need to be repaid. Work-study simply means the college will offer you job opportunities so that you can pay for part of your own college costs. Loans are, obviously, loans. You get an amount of money and you have to repay it later. However, students with financial “need” are often eligible for special types of loans offered by the government. These special loans often have lower interest rates which do not begin accumulating until you have graduated college. Two of the most well known and advantageous loans are:
Federal Perkins Loan: $4,000 per year maximum; no interest until 9 months after graduation as long as student is enrolled at least half-time in school; 5% interest rate
Federal Stafford Loans: $5,500 maximum for Freshmen (maximum $3,500 may be subsidized), $6,500 maximum for Sophomores (maximum $4,500 may be subsidized), $7,500 maximum for Juniors/Seniors (maximum $5,500 may be subsidized); no interest until 6 months after graduation as long as student is enrolled at least half-time in school; 6% interest rate for subsidized loans, 6.8% for unsubsidized loans
Because you do not have to pay interest while in college, it may be a good idea to take these loans even if you do not need to. If they are offered to you, take them simply because you can pay the same cost after graduating. In that time you can invest or save the money and earn interest of your own.
Groups other than colleges also give scholarships based on financial need. Visit our page on external scholarships for information on these.
This article was written by Xinquan (Paul) Gu
