Info Regarding Financial Aid

Some of the best things in life may be free, but college costs are at an all-time high--so is uncertainty among students and their families about the ability to pay the bills. Contrary to what you may have heard, help is available -- and lots of it -- in the form of financial aid. You can improve your chances of getting sufficient financial aid by learning about the application process and by planning ahead.


WHAT IS FINANCIAL AID?

Financial aid is help for meeting college costs, both direct educational costs (tuition, fees, and books) and personal living expenses (room and board, personal expenses, and travel). Broadly, there are two kinds of financial aid available: aid based on need, as determined by the College Scholarship Service, federal guidelines, or institutional policies, and no-need or merit scholarships awarded for academic excellence, athletic prowess, artistic talent, leadership, or other criteria.


NEED-BASED FINANCIAL AID

Individual colleges determine financial aid packages based upon the information provided by you on several forms -- the Free Application for Federal Student Aid (FAFSA), the College Scholarship Service (CSS) PROFILE, and the college’s own institutional forms. These forms will help the financial aid office determine the estimated family contribution (EFC) to the student’s educational costs. The difference between the cost of attending the college and the EFC is the need. The individual college will put together a financial aid package designed to meet that need. At most colleges, a package will include a combination of grants, loans, and work-study employment. Families receiving financial aid from AOC should note that college financial aid packages will differ from high school financial aid packages. Your dean and the Net Price Calculators on college web sites can help you anticipate college costs.


Grants are funds that do not have to be repaid. Grants are usually awarded on the basis of need alone and can come from a variety of sources -- Pell Grants (federal money), state grants (usually available only to students attending college in their home state, such as Cal Grants), and grant money from the college's own financial aid budgets.


Loans must be repaid, generally after you have graduated or left school, and usually have lower interest rates than commercial loans. The amount of these federal student loans are capped to ensure that students are not overburdened with debt when they leave school. There are also federal loans available to parents if their child is enrolled in school at least half-time and makes satisfactory academic progress. Parents may borrow up to the difference between the cost of education and other financial aid awarded. The loan, which is not based on parents’ income, has a variable interest rate and repayment begins immediately.


College Work Study Program involves earning tuition dollars or money for other college costs as payment for a job, usually one arranged for you by the college. Students normally work up to ten hours a week in an on-campus job selected by the student.


Not every college can meet full need for every student; it is increasingly common for a student to be admitted to a college but denied the full amount of financial aid needed to attend. This practice is called “gapping.” Some of the best endowed colleges guarantee that they will meet 100% of demonstrated need. However, many schools consider financial need while making their admission decisions. Institutions that can afford to offer financial aid to all aid applicants have a “need blind” admission policy. “Need aware” schools acknowledge that their financial aid budgets are not big enough to fund all applicants who apply for need-based aid; the admissions process at “need aware” schools will be slightly more competitive for those applying for financial aid.


HOW DOES FINANCIAL AID WORK?

Although you don't have to be low-income to qualify, you do have to demonstrate that you need aid. “Need" is the difference between what it costs to attend a particular college and what you and your family can afford to pay toward those costs. Your financial aid eligibility is usually equal to the amount of your demonstrated need. Since the amount you are able to pay stays the same whether the costs are high or low, you would be eligible for different amounts of aid at different colleges. In fact, you could end up paying the same amount at a high-cost college as you would at a low-cost college.

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