“Few admission counselors will admit that your chances for acceptance will increase at some schools if you do not apply for financial aid. There are only a handful of colleges and universities in the U.S. that can afford to be totally and fully blind to financial need. Most schools cannot meet the full need of all the students they accept. Ask the question. I think you will be surprised with the answers you get.”
Most families in the United States and around the world know that financing a college education is expensive.
But a college degree is an investment for both the student and family. So how much financial aid is available?
According to a report by the College Board, in 2012-13 a total of $185.1 billion was awarded to undergraduate students. Loans represented 37% of the total amount awarded and 24% was awarded in grant aid. This represents an increase of 132% since 2002-03.
The following statistics are important as you search for the best school for you and your family. Last year:
- $13.0 billion was awarded in federal grants other than Pell grants.
- Pell Grant funding totaled $32.3 billion.
- Federal loans totaled $67.8 billion.
- Private and employer grants were $9.8 billion.
- Institutions awarded $34.9 billion in grant aid last year.
- State grant funding totaled $9.6 billion.
In addition to federal loans and grants, the federal government funded $.9 billion in Work-Study funding.
- Never eliminate a school because of the published costs. Few families pay the full amount and as you can read in this blog, there is a great deal of money, from federal, state, institutional and private sources, that can assist you in funding your education.
- International students should find out, before they enroll, all of the financial aid available at each of the schools on their lists.
We know enrolling in college is one of life’s biggest steps – and a very exciting one!
The world changes, a quantum shift – both for students and for parents. A lot of research and thought pays off prior to applying to your first choices.
Before filing an application to any college or university, I would schedule a meeting or speak with a financial aid counselor and get answers to the following questions:
- Is the school blind to financial need when considering admission?
- Is the school’s policy to meet full need?
- What percentage of students receives merit aid and what percentage receive need-based aid?
- Will my admission application be treated differently if we do not file for financial aid? Will I have an advantage?
- If my high school grades are outstanding, am I certain to receive a merit scholarship?
- If my family’s financial situation does not change, will I receive the same amount of financial aid each year?
- How will an outside scholarship impact my financial aid award?
- What can I do if I need more money to attend your school? Is there an appeal process?
- Establish a relationship with a financial aid counselor before you enroll.
- Be honest in all of your dealing with the financial aid office.
- Get everything in writing and keep accurate records of all of your meetings with your financial aid counselor.
You know your child is headed for college and you also know your family is going to need financial aid to pay for your child’s education.
You are certainly not alone. In the last two posts, we covered facts you need to know about college financial aid and explained the all-important FAFSA.
The official form letter you receive will list the type and amount of the aid you will receive. That includes funding from:
- Federal Aid
- State Aid
- Institutional Aid
- Outside organization or private funding sources.
Examples of What Your Financial Aid Package Will Include:
- The largest federal grant program is the Pell Grant Program. Awards range from $600 to $5,500.
- Most colleges and universities, especially private schools, have their own grant programs and awards are usually based on outstanding high school grades. Individual states also sponsor grant programs. Check your state’s website for further information.
- One popular federal loan program is the Perkins Loan Program. The current interest rate is 5% and the maximum amount is $5,500 per year.
- Stafford loans are federally subsidized loans and have an interest rate of 3.4%.
- Freshmen can receive $3,500, sophomores $4,500 and juniors and seniors $5,500 to meet their educational expenses.
- Parent Loans to Undergraduate Students (PLUS) allow parents to borrow up to the total cost of education minus any financial aid awarded. The interest rate is 7.9%.
- The federal Work-Study program allows students to work part-time usually on-campus.
- Many colleges and universities sponsor their own employment programs.
- Compare all of your estimated financial aid awards before you apply.
- Be honest and accurate in completing all of your financial aid forms.
- Calculate your estimated loan bill with an estimate of what your first year salary is likely to be. I recommend allocating 15% of your first year’s salary to meeting your loan bill.
- Make employment an essential part of your financial aid plan.
- Financial aid counselors can exercise professional judgment to increase your award if you can make a good case.
Getting accepted at a college or university can be confusing enough but applying for financial aid can be overwhelming, particularly at one’s first glance at the FAFSA.
Just, exactly, what is the FAFSA and what purpose does it serve? Do you really need to fill it out? (Hint: the answer is yes.)
The Free Application for Federal Student Aid (FAFSA) is the form families must submit to all of the colleges and universities on their list before being applying for financial aid.
Based on the information on your FAFSA, an Expected Family Calculation (EFC), will be computed and based on that your eligibility for federal aid, most state aid programs, institutional aid and aid from private sources or organizations.
Families will be asked to complete the FAFSA with the following information:
- Taxed and untaxed income
- Specific assets (social security income and home equity are not considered assets)
- Family size
- Parental ages
- Number of children in the family and the number in college
Families can file the FAFSA online. It takes approximately three to four weeks for your FAFSA to be processed. You will receive a Student Aid Report (SAR) after that time indicating what your family is expected to contribute to your college expenses.
- Find out before you file a FAFSA if you can afford all of the schools on your list by meeting with financial aid counselors before you file any application.
- You can also estimate your EFC by using a financial aid calculator. Check out the Department of Education’s website. Another useful website is BigFuture .
- Don’t try to game the system. It never works. Financial aid counselors have heard it all before.
- File the FAFSA as early as possible, even before you file your income taxes. You can go back and amend your FAFSA after your taxes are filed. You can also have your tax returns automatically and electronically transferred into your FAFSA.
- If you really believe the EFC does not accurately reflect your family’s contribution, you should appeal your case to the financial aid director.
According to the U.S. Department of Education, 71% of undergraduate students received some form of financial aid in 2011-12.
That is a 5% increase since 2007-08.
The average amount of aid increased from $9,000 to $10,800.
According to a report from Sallie Mae, How America Pays for College, in 2013, college expenses were covered in the following way:
- Students borrowed 18%
- Parents borrowed 9%
- Parents’ savings 27%
- Grants and scholarships 30%
- Relatives and friends 5%
- Student income and savings 11%.
Since the recession of 2009:
- Parents have contributed less to meet college expenses.
- Students borrowed more to meet college expenses.
- Use of college savings plans increased.
- Affordability has jumped to become the #1 factor in college selection.
- Many colleges and universities have slowed the rate of annual tuition increases.
- Some schools are charging different tuition rates for different majors.
- Finding out before you apply if you can afford the schools your list.
- Meet with a financial aid counselor before you submit an application.
- Ask the hard questions.
- Debt is manageable or unmanageable only in relationship to starting salaries. Try to keep your loan payments to 15% of your first year starting salary.