A college education is expensive, but financial aid can make it cheaper. Learn everything you need to know about college financial aid, including how to apply, who is eligible for it, and how to maintain it while in school.
Financial aid is funds that help you pay for college or career school. There are many types of financial aid available, including grants, work-study, private and public loans, and scholarships. Each type of financial aid will help to lower the cost of higher education. Financial aid can come from a variety of sources, including the federal government, state agencies, community organizations, corporations, foundations, high schools, and more.
Whether or not you have to pay back financial aid depends on the type of aid you receive. When the financial aid office at your chosen school sends you an aid offer, you must indicate which type of financial aid you want. The U.S. Office of Federal Student Aid recommends you accept aid in this order: programs you do not have to pay back (scholarships and grants), earned money (available from a work-study), and borrowed money (available from federal and private student loans).
To receive financial aid, you must fill out the FAFSA, or Free Application for Federal Student Aid. The results of the FAFSA form will be sent to your college or career school, and they will decide whether you qualify for financial aid, and how much of a loan you may receive.
How much financial aid you get, if any, depends on your expected family contribution (EFC), what year of college you are in, your enrollment status, and the cost of attendance at your school of choice. The financial aid office at your college or career school determines how much financial aid you are eligible to receive by subtracting your EFC from the cost of attendance to find your need.
Need-based financial aid is a designation that is based on a student and their family’s financial need. To calculate a family’s need, the U.S. Federal Aid Office created a formula that colleges and universities have to follow: They subtract your expected family contribution from the cost of attendance to find your need. You can’t receive more need-based aid than the amount of your financial need. If a family is considered low income, for example, the student may receive a need-based grant like the federal Pell Grant.
If you do not receive the amount of financial aid that you were hoping for after filling out the FAFSA, you may be eligible to file a financial aid appeal letter. Before sending a financial aid appeal letter, you need to make sure your reason for appeal is valid. Call or email your school’s financial aid office for specifics. Some circumstances that warrant an appeal include an error on your FAFSA, changes to your family’s financial situation, or significant mental or physical health challenges. A financial aid appeal letter should be addressed to a specific person and include the following: a clear ask of why you did not receive the specified amount of financial aid requested; details of the circumstances that have changed; supporting documentation; and polite and thorough language.
The EFC is an assessment of a family's financial strength, and it determines a student's eligibility for certain types of financial aid; it's not necessarily the amount a family will have to pay for college. Your EFC is calculated using a formula set by Congress using the financial information you give on your FASFA application, including income, assets, benefits, family size, and the number of family members in college. To help determine your financial need, colleges subtract your EFC from their estimated cost of attendance (COA).
The CSS Profile is an online form college students can use to apply for nonfederal financial aid. It is administered by the College Board and varies depending on the school to which you are applying. Many private colleges and universities require the CSS form in order to determine student eligibility for nonfederal loans.
The Teacher Education Assistance for College and Higher Education (TEACH) Grant is a federal aid program that helps teachers pay for their qualifying higher-education costs in exchange for fulfilling a four-year service obligation. If you don’t complete your end of the deal, the grant converts into a loan that must be repaid with interest.
A Pell Grant is gift aid paid out by the federal government through the Federal Pell Grant Program. This program helps millions of students afford higher education each year. In 2019, almost 8.2 million students received Pell Grant funds. In 2020, the number was 6.7 million students. Unlike student loans, Pell Grant funds don’t need to be repaid.
This is financial aid from the federal government that is designed to help families and students pay for education expenses at an eligible college or career school. It consists of grants, loans and work-study programs. You may want to maximize the amount of federal student aid before moving on to other college financing options.
A college grant is a form of financial aid that you don’t have to repay (in most cases). The government and other organizations offer grants to in-need college students to help them pay for higher education. However, to qualify, you must meet certain eligibility requirements.
Student debt is money you borrow to pay for college education costs such as tuition, books, and living expenses. For many borrowers, student debt is a necessary way to deal with increasing college costs.
A for-profit college is an educational institution operating as a business that expects to turn a profit by generating more revenue than it spends. Growing that profit and passing it on to owners and shareholders who have invested in the school is a central business aim.
The FAFSA—or Free Application for Federal Student Aid—is a form that current and prospective college students in the U.S. must fill out to determine their eligibility for (and receive) student financial aid. The FAFSA opens on Oct. 1 for the following school year, and it is best to fill it out as early as possible.
No-loan colleges" are academic institutions for higher learning that offer financial aid to their students without the expectation of being reimbursed—supporting enrollment through grants and scholarships, and without federal student loans. Such colleges make graduating without student loans a guarantee, rather than a remote possibility.
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