Financial need is the difference between the cost of attendance for a student going to college and the amount the student and his or her family is expected to contribute toward that cost. (The terms "Financial Need," "Cost of Attendance (COA)" and "Expected Family Contribution" are commonly used during the financial aid application process.) If the amount of college aid a student receives doesn't fund the student's entire financial need, the student and his or her family must make up the difference.
The cost of attendance, also referred to as the student expense budget, is the annual cost of attending college for a particular student. The cost of attendance includes tuition, books, fees, room and board, transportation, and out-of-pocket expenses. The cost of attendance for a particular student is used to determine that student's financial need.
To be eligible to receive federally funded college aid, a student must be a United States citizen or legal resident. In some states, non-citizens may receive assistance through state funds to attend college.
FAFSA is the Free Application for Federal Student Aid, the application form that students and their parents fill out at the beginning of the financial aid application process. Along with the completed application, which is available online at www.FAFSA.ed.gov
, students and their parents submit income tax forms when applying for financial aid. The information on the FAFSA is used to determine the amount a student can afford to pay for college. It is important for students and their parents to complete the form as soon as possible after Jan. 1 of each year, because federal funds for college financial aid are awarded on a first-come, first-awarded basis.
After I filed a FAFSA form I received a Student Aid Report (SAR). What is the purpose of the report?
After receiving a completed financial aid application from a student, the government produces a Student Aid Report, which indicates the student's expected family contribution (EFC). The government sends the expected family contribution to the colleges requested by the student.
How do I know how much financial aid I am getting from my college or university?
Colleges and universities notify students of their financial aid packages directly, by sending an award letter to the student. The award letter details the configuration of the financial aid package the school is offering and also includes any requirements attached to the financial aid offer.
What is a grant?
A grant is money provided to a student that does not have to be repaid.
What is merit-based aid?
Merit-based aid is any form of financial aid awarded on the basis of a student's personal achievement or individual characteristics, without reference to financial need. Merit-based financial aid awards are also known as scholarships. Much merit-based aid is awarded based on grade point averages and national test scores, such as scores on the Scholastic Aptitude Test (SAT) and the American College Test (ACT).
Can students and their families use loans to pay for college?
Many students and their parents use loans to pay for part of the costs of attending college. Some of the loans come from federal loan programs specifically for college; students and their parents also obtain private loans from a variety of sources.
What are federal loan programs?
Federal loan programs allow students to borrow money to help pay for their college expenses. Loans obtained through federal loan programs may come either directly from the federal government or from a private lender. Students obtaining loans through federal loan programs must repay both the principal (the amount borrowed) and interest (fees charged for borrowing the money). The interest rate charged for federal loans is often lower than that charged for loans from other sources.
What types of federal loans are there?
There are several different types of federal student loans: the Stafford Loan (subsidized), Stafford Loan (unsubsidized), Federal Perkins Loan and Federal Parent Plan for Undergraduate Students (PLUS) loans. Brief information about each of these types of loans is included in the glossary.
What types of private loans are available?
In addition to federal student loan programs, students and their parents may seek money from private loans. Such loans may come from banks, credit unions, life insurance policies or home equity loans. Whether student or parent, an individual borrowing a private loan must qualify for the loan by being credit worthy; the lender will establish the terms of the loan, with the interest rate dependent on the borrower's credit history.