The financial aid process is a little bit different for each student, but there are a few things that hold true for just about everyone. First, apply even if you think you won’t qualify. There are many variables involved in determining eligibility and there’s just no way to know for sure if you don’t try. Just because you are still in high school does not mean you shouldn’t start thinking about financial aid. This financial aid for high school students section will get you up-to-speed on everything you need to know as you begin to think about your higher education.
Second, the Free Application for Federal Student Aid (FAFSA) determines eligibility for Federal Student Aid programs as well as eligibility for many private grant/scholarship programs. Filing the FAFSA is essential even if you don’t think you will qualify for federal financial aid.
Finally, the FAFSA is your application for federal student loan programs. If you don’t file a FAFSA, you won’t be able to take advantage of these low cost loan programs.
Filing the FAFSA is Never a Waste of Time
While many people hate the paperwork involved, you really should file a FAFSA even if you don’t think you’re eligible for federal assistance. Why? Because the FAFSA is used by many non-government aid programs in order to determine your eligibility for the scholarships, loans, and other programs they offer. Of course, the FAFSA is also used to find out if you qualify for federal loans. Because of this, completing the FAFSA gives you two big advantages. First, you may be eligible for non-federal aid. And second, even if you don’t want a loan now, the paperwork is done in case you change your mind.
Filing the Free Application for Federal Student Aid (FAFSA)
The quickest way to file the Free Application for Federal Student Aid (FAFSA) is online at: FAFSA on the Web.
Complete the FAFSA as soon as possible after January 1st of the year in which you will need funding.
It will be easier to fill out the FAFSA if you have these items handy:
- Your Social Security card and driver’s license
- Your W-2 Forms or other records of earned-income (and your spouse’s, if you are married) federal income tax return.
- Your parent’s federal income tax return (unless you are filing as independent)
- Records of other untaxed income you received, including welfare benefits, social security benefits, TANF, veteran’s benefits, and military or clergy allowances
- Your current bank statements and records of stocks, bonds, and other investments
- Your business or farm records, if applicable
- Your alien registration card (if you are not a U.S. citizen)
If you or your parents have not completed federal income tax returns yet, use estimates from pay stubs and bank statements.
If you or your parents’ income has not changed significantly, you have a choice. You can use the amount of tax you paid last year or you can estimate. Here’s an easy way to estimate the amount of tax you owe:
- Take the line item from your federal income tax return titled “This is your total tax.”
- Divide it by your adjusted gross income.
- Multiple this number by your estimate of this year’s adjusted gross income to obtain an estimate of the amount of you tax owe.
Other Applications You May Need to File
CSS Profile Incoming freshman may also need to complete the CSS Profile Application. Many private colleges require the profile. Why? It gives financial aid administrators more information to determine your eligibility for need-based assistance and funding directly from the school.
The Profile must be completed earlier than the FAFSA – usually in the middle of October of the year prior to the year you’ll need funding. Check with your college to see if you are required to complete the CSS Profile. You can register and apply online at: CSS Profile
Institutional Aid Applications Some schools require you complete a form they provide you. This is called an institutional aid application. On this form you may be asked to tell the school about outside scholarships you expect to receive and whether you’re interested in other types of aid such as work study. Often you can also use this form to explain any special circumstances not taken into account on the FAFSA (e.g. an unexpected recent loss of income, extraordinary medical expenses, etc.).. If your school requires one of these applications, they will mail it to you.
Eligibility for Financial Aid
Colleges use the processed data from the Free Application for Federal Student Aid (FAFSA) and/or the CSS Profile to determine your eligibility for financial aid. Whether you complete the FAFSA and, if required, the Profile, the basis for determining your award is a number referred to as the Expected Family Contribution (EFC). Your EFC is determined by your household, demographic and financial data among other things.
The EFC is a measure of your family’s ability to pay for college based on student and parent income and asset information, your state of residence, household size, and number of household members in college. You can request a free copy of the EFC Formula by calling 1-800-4FED-AID and asking for the current SFA Handbook or on the Department of Education’s IFAP website.
The school you attend establishes a Cost of Attendance (COA) for the academic period for which you will be enrolled. The COA includes tuition, room and board, fees and estimated living expenses including books and supplies.
COA – EFC = Financial Need
Financial need is an official term for how much need-based financial aid you’re eligible to receive. Your financial need is calculated by subtracting the EFC from the COA. In order for you to receive need-based aid, your Cost of Attendance must be greater than your Expected Family Contribution.
The financial aid office at your school will use the need-based resources they have available to try to meet your Financial Need.
Here is a sample calculation:
Sally filed her FAFSA online on January 15. On February 10, she received her Student Aid Report (SAR). The EFC on her SAR is “01200″ (which means $1,200). Her school has a COA of $18,000. Using the formula above Sally figured out that her Financial Need is $16,800.
The financial aid office at Sally’s school used this information to construct a financial aid package for Sally that might look something like this:
$5,000 Institutional Grant
$3,500 Federal Stafford Loan
$1,600 Federal Work Study
$1,550 Federal Pell Grant
$1,000 Federal Supplemental Educational Opportunity Grant (SEOG)
$1,000 Federal Perkins Loan
Total aid: $13,650
That means Sally’s need for financial aid (after subtracting the EFC) is $16,800. Since the financial aid office was only able to meet $13,650 of that, she has an unmet need of $3,250. Unmet need, a common occurrence in financial aid packages, is the difference between cost of attendance and the total financial aid package. In plain language, what that means to Sally is that in addition to the EFC of $1,200, she will also have to contribute $3,250 for a total of $4,450.
Once the college has received your FAFSA data, they may still need additional information to complete your award. This process is called “verification”. If you are selected for verification, the school will request that you fill out a Verification Worksheet, and that you provide copies of your and your parents’ federal income tax returns W-2′s and any other income statements (e.g. 1099′s). Warning: the college will not process your financial aid, without this additional documentation.
If you plan on accepting Stafford or Perkins loans, you will also need to complete promissory notes. The college you attend will provide you with specific information on how to complete this part of the process.
Read everything the college sends you carefully and respond to requests promptly. If you have questions or don’t understand something, call the financial aid office and ASK! They’ll be more than happy to provide a helping hand. Finally, remember, you’ll have to re-apply every year.
Types of Financial Aid
Federal Student Aid
There are three types of Federal financial aid: grant programs, work study and loans.
Federal Pell Grant
- Available to the neediest students only
- Up to $5,550 for the 2011/2012 and 2012/2013 award years
- Eligibility based on EFC of zero to 5,273 for the 2011/2012 and award year
Federal Supplemental Education Opportunity Grant
- Available to the most needy undergraduates only
- $600 maximum grant for 2011-2012 academic year
- Based on EFC and student must usually be Pell eligible
Federal Work Study
- Available to students with financial need
- Net Federal Work Study Earnings may not exceed financial need
- Award is paid directly to the student in the form of a paycheck
Federal Stafford Loan (Direct Stafford Loan)
- Subsidized – the government pays interest for you while you are enrolled half-time or more OR Unsubsidized – you pay the interest or defer interest until you graduate or are no longer enrolled or not in deferment. The interest is accruing daily, however, you are not required to pay the interest until the loan enters repayment. Any accrued interest will be added to the principal of the loan.
- Fixed interest rate of 6.8% for Unsubsidized or 3.40% for Subsidized
- Up to 25 years to repay depending on total borrowed.
- Available to Undergraduate and Graduate Students.
- Range from $3,500 to $20,500 depending upon grade level. Graduate Health Professional loan limit is up to $38,500.
- Payment begins 6 months after you graduate or are enrolled on less than a half time basis.
Federal Perkins Loan
- The maximum amount an undergraduate student may borrow is $5,500 per award year; the maximum for a graduate or professional student is $8,000 per award year.
- School determines eligibility
- 5% fixed interest rate
- No interest charged while enrolled at least half time
- Payment begins 9 months after you graduate or are enrolled on less than a half time basis.
Federal Grad PLUS Loan
- Available to graduate students
- Fixed interest rate of 7.9%
- Must meet credit criteria requirements and must apply for the annual maximum Stafford Loan
- May borrow up to the Cost of Attendance minus other financial aid including other loans.
- Payment begins within 60 days after the second disbursement of the loan, but may be deferred while attending school half-time or more (interest will still accrue).
- Up to 25 years to repay if total borrowed amount exceeds $30,000. Ten years is the standard repayment term.
Federal PLUS Loan
- Available to parents of undergraduate students
- Fixed interest rate of 7.9%
- Must be creditworthy
- May borrow up to the Cost of Attendance minus other financial aid including other loans
- Payment begins after the second disbursement of the loan
- Up to 25 years to repay if total borrowed amount exceeds $30,000. Ten years is the standard repayment term
In all cases, your school’s financial aid office determines your eligibility for the above sources of assistance. All federal student loans are provided the Federal goverment through the Department of Education.
Many states offer assistance to their residents or to non-residents studying at a college in their state. Assistance can come in the form of scholarships, grants and/or loans. Certain states have a specific application you must complete in order to be considered for assistance. Check with the financial aid office at your school to see what state aid programs are available.
Institutional Assistance (money supplied by the school you attend)
Institutional Assistance can come in the form of scholarships, grants, loans and/or work. Check with the financial aid office of the school you will be attending to see what you need to do to apply for this type of aid.
Thousands of scholarships, based on need, achievement, affiliation and/or a myriad of other criteria are awarded each year. One source is ScholarshipExperts. Their goal is to provide students with the opportunity to complete their education regardless of their financial situation. It’s a good resource to use to research and apply for scholarships.
You should also check with your high school’s guidance office or you college’s financial aid office to see what awards are available locally or thought your school.