Undergraduate Financial Aid
Many young people from disadvantaged communities feel that the biggest obstacle in the way of their college careers is finding a way to finance it. Many are completely unfamiliar with the often-confusing financial aid process. For example, the latest statistics reveal that as many as 95% of the families that complete the FAFSA form (a federal form that must be filled out to be considered for any financial aid) do so with mistakes, errors or inconsistencies that can cause them to lose some or all of their financial aid
Many families, particularly from disadvantaged communities, do not understand that there is usually some form of financial aid available for everybody, regardless of family income. Our main focus will be to help students avoid common problems and to encourage them to get their financial aid paperwork done early to avoid complications and get the best package available.
Financial Aid and Scholarships
One of the simplest mistakes to make in the college search process is to discount consideration of a school based solely on its tuition. Like any significant financial commitment, the sticker shock of tuition and fees, especially at a private college, can be frightening. In reality, however, most students do not pay the sticker price. Since the origination of the GI Bill, the first large-scale program that allowed people from all socioeconomic backgrounds to attain a college degree, access to education for people from all walks of life has been a priority for public and private colleges alike. While it is true that many students do not receive financial assistance to attend college, most do receive some form of aid.
Financial assistance is not offered solely to low income students. A significant amount of scholarship and even need-based aid is now available to middle and upper-income students. In order to take advantage of these opportunities, you should be familiar with some basic information. Before describing the various forms of financial aid and the process of applying for them, it is critical to understand one fundamental concept. Education in America is not free; someone must pay for it. Financial aid offices work from one basic premise: the primary responsibility of paying for a college education belongs to the student and his or her family. Federal, state and institutional need-based aid is intended to supplement family resources, not to replace them. With this understanding, however, it is also important to know that much of the money given by the colleges themselves is not tied directly to financial need. Traditional scholarships based on academic, athletic, musical or other talents are available to some students. Furthermore, while the initial impetus to provide financial aid and scholarships was historically to provide access, a key function of such programs now is to use merit money as a marketing tool. Many colleges routinely use merit money to entice students to matriculate into their programs rather than into a competitor’s school.
The process of applying for financial aid and scholarships can be as complicated as applying for admission in the first place. It is important that you understand the following terms:
Merit-Based financial aid is awarded according to a particular student’s talents or achievements. Art, music, drama, academic, athletic and other scholarships that recognize a student’s strengths are considered merit-based awards. They are usually not dependent on the student’s financial situation or that of his or her family.
Need-Based financial aid is awarded according to a student’s and his or her family’s ability to pay for his or her education.
Estimated Family Contribution (EFC) – This is the estimated amount of money a family can spend for one year of a student’s educational expenses. It is important to remember that the cost of attending college includes much more than the tuition of a particular school. It includes room and board, fees, books, transportation and other personal expenses. Each of these factors is generally included in the federal and institutional methodology that determines a student’s EFC.
Need refers to the difference between the cost of attending a particular college or university, and the student’s EFC. In essence, it is the amount of financial aid you will “need” in order to attend that school.
APPLYING FOR FINANCIAL AID
In order to know whether you qualify for need-based financial aid, you must apply for it at each college that you are considering. This is generally done at the time you apply for admission and must be repeated for each year you are enrolled. If you do not apply as a freshman, you can generally still apply as an upperclassman. Each school determines its own process of applying for need-based aid, but some application forms have been standardized. The following is a list of forms of which you need to be aware.
Free Application for Federal Student Aid (FAFSA) – All schools that administer federal money, which includes nearly all public and private colleges, require that financial aid applicants file a Free Application for Federal Student Aid (FAFSA). It must be completed after January 1 of the academic year before you enroll, and is generally due very soon thereafter. Most of the data it requires can be taken directly from the family’s income tax returns. If your family tends to file its tax forms later than January or February, it is better to use estimated figures rather than delay submitting the FAFSA. If this is the case, check with each financial aid office directly to determine a school’s policy. The College Counseling Office mails FAFSA forms to the families of all seniors before the end of the calendar year. There is no cost to file the FAFSA, but make sure reports are sent directly to each school on your list.
PROFILE – The College Scholarship Service (CSS) of The College Board developed the PROFILE in 1995. It provides supplemental information that does not appear on the FAFSA. Many private colleges and universities require that financial aid applicants submit a PROFILE. Filing the PROFILE consists of two steps. First, you must register for the PROFILE. This can be done by telephone or via the Internet. Once you register, a customized PROFILE form is sent to you. Keep in mind that the two-step nature of this process means that you must be very conscious of deadlines. It takes time for you to receive the PROFILE. The CSS requires a base fee for the PROFILE, and adds charges for each school to which you send results.
Institutional Applications – Aside from the PROFILE and FAFSA, many colleges require financial aid applicants to complete an institutional application. This is a form designed by the individual college or university.
APPLYING FOR SCHOLARSHIPS
There are three general sources for scholarships. First, most merit-based scholarship money is awarded directly by colleges and universities. In many cases, merely applying for admission makes you eligible for scholarships, but special forms, essays, portfolios, recommendations or interviews are sometimes required. It is up to you to research the process of applying for these funds. Private foundations, corporations and other organizations also offer scholarships. Competition for the Coca-Cola, Gates Millennium and other scholarships is fierce. Research your options and apply for these resources early. Also, in addition to the well-known scholarships, there are many smaller awards offered every year. Local organizations, churches and special interest groups are active in funding education. In many cases, they are looking for students with distinctive qualities. Finding these scholarships requires significant research. Resources can be found in the College Counseling Office, public libraries, bookstores and, of course, on the Internet. A list of resources is also included in the next section of this handbook.
Finally, employers sometimes provide scholarship money as an employee benefit. This by far is the largest amount of unclaimed funds each year. Have your parents dust-off their employee handbooks and check with the personnel office to see if their employers offer these awards. As a final note, please keep one thing in mind. Most students try to go after big scholarships, hoping to win the jackpot. Many smaller scholarships go unclaimed. Five two hundred-dollar scholarships are just as good as a thousand dollar one. Don’t ignore the small ones.
COMPARING FINANCIAL AID PROGRAMS
Unfortunately, you will not know how much financial aid and scholarship money you will receive until after you have been accepted. The real cost of a year in college is impossible to know until you’ve found out the results of your applications. Despite the rising cost of an education, colleges have limited resources. They have been under increasing pressure to cut expenses and stretch tuition dollars. In spite of the media frenzy regarding the increasing selectivity of college admissions, however, competition among peer institutions for students is high. As mentioned earlier, merit money has become an increasingly important marketing tool. The following is a list of different ways colleges administer need-based and merit-based aid:
Need-Blind admission signifies that a college or university will not hold a student’s need for financial assistance against him or her in making an admission decision. You will not be rejected solely on the basis of your need for help in paying for college
Need-Conscious or Need-Sensitive admission programs may take a student’s financial resources into consideration when deciding whether or not to admit him or her. Some colleges are need-sensitive with their entire applicant pool; others limit their use of financial resources as criteria to a certain percentage of the pool. While it is not considered unethical for colleges and universities to be need-sensitive, it is very important that colleges be honest as to whether they are need-blind or need-sensitive with regard to admissions.
Full-need – Colleges that guarantee to meet the full financial need of their students promise to provide 100% of the financial support a student needs to attend a particular college, as defined by federal, state and institutional methodology. Need may be met through grants, scholarships, loans and work-study.
Gapping – Rather than guarantee to meet the full need of all students who receive financial aid, some institutions gap their aid packages. A college with a 10% gap would provide 90% of the money each student would need to enroll. It is then up to the student to find the extra funds needed to attend that particular institution.
Admit/Deny is a philosophy that admits students without regard to their financial need, but provides financial assistance only to those whose academic records are competitive within the college’s applicant pool. If accepted, the student has the option to attend the institution, but she or he must find alternative ways of paying for their education.
Preferential or Differential Packaging is a means of distributing financial aid using a combination of financial need and academic merit. The use of preferential packaging has increased dramatically over the past several years.
Financial Aid Leveraging is a particular form of preferential packaging. It uses financial aid as a marketing tool. Money is distributed to students based upon their estimated likeliness to enroll. Colleges will increase the financial aid of the most sought-after students in order to lure them away from competitor institutions. One good reason to wait until May 1 to decide which college to attend is that you can compare the various offers of financial aid you receive. As always, diligence, creativity and patience are invaluable in the financial aid application process.
