Regardless of a family's financial situation, a college education is a significant investment that requires careful research and planning. When it comes to financing a college education, the fundamental premise is that, to the extent they are able, it is the family's responsibility to pay for a child's education.
In the 1960's, federal and state financial aid programs were developed to help our nation's most needy families access higher education. When competition for students increased in the 1990's colleges began to use merit (non-need based) scholarships to encourage selected students to enroll. Today, families encounter a combination of need and merit based financial aid options.
Principles of Need Analysis
(Adapted from a presentation by Kathy Ruby, Director of Financial Aid at St. Olaf College.)
- To the extent they are able, parents have primary responsibility to pay for their dependent children's education.
- Students also have a responsibility to contribute to their educational costs
- Families should be evaluated in their present financial condition.
- A family's ability to pay for educational costs must be evaluated in an equitable and consistent manner, recognizing that special circumstances can and do affect ability to pay.
When you evaluate the packages offered by colleges, remember, the largest award may not necessarily be the best. Consider differences in cost of attendance. The largest dollar offer may also be the one at the most expensive college, and, therefore, the one with the greatest unmet need or "gap" between cost and available resources. If you cannot fill the gap with other resources, you still may not be able to enroll in that college.
Even two offers that fully meet your need may not be equal. If the estimated student expense budget used to calculate need is unrealistically low, you may have more real unmet need than the award letter suggests. Some institutions estimate their costs conservatively to imply a more complete meeting of need than actually exists. You should compare stated costs with similar institutions to verify reasonableness. Consider, too, the loan burden you will have at the end of college in light of your long-range plans. Will you be attending graduate school? Will you be entering a lower-paying profession? If so, the cost of loans might be extremely burdensome.
If you have questions about your financial aid package, you or your parents should contact the financial aid administrator at the college.
Sources of Financial Aid
Financial aid includes scholarship/grants, which are gifts to the student, and self-help, which includes loans (parent and student) as well as student employment.
There are four primary sources of financial aid:
Institutional aid comes directly from and is controlled by the individual college or university. Amounts of institutional aid offered by one college may differ significantly from what may be offered by another and can be based on financial need and/or merit.
Private sources include foundations, religious, cultural, community, or fraternal organizations. This funding may be scholarship or loan and can be based on merit, need, or by association with the awarding organization.
The State of Minnesota, like other states, has funding available to students who choose to attend a Minnesota college or university. State programs include the Minnesota Grant Program, the State Work-Study Program, the Student Educational Loan Fund, and State Reciprocity Agreements. Most state money is awarded on the basis of financial need.
The Federal government administers a number of grant and loan programs designed to aid students with college costs.
Applying for Financial Aid
The Free Application for Federal Student Aid (FAFSA) is the financial aid application required by all colleges and is processed by the Department of Education. Some colleges and private scholarship programs may also require the CSS/Financial Aid PROFILE (PROFILE) processed by The College Scholarship Service of the College Board. It is important to check with the college financial aid office or scholarship program for specific application requirements.
When to apply for Financial Aid
The FAFSA is available online at www.fafsa.ed.gov and should be completed and filed as soon after January 1 as possible using information from the previous year's federal tax forms. The FAFSA calculates the Expected Family Contribution (EFC) based on a standard formula known as federal methodology. Each college's financial aid officer then determines each student's demonstrated financial need by assessing the difference between educational expenses (tuition, room, board and some expenses) and your EFC. Many families are required to submit additional information such as income tax records as a part of the process.
The EFC and what the family feels it can afford to contribute often differ. Financial Aid Officers are there to help students and parents through the process—don't hesitate to contact them for help. College financial aid officers attempt to maintain loan and work levels that will allow reasonable repayment either during or following college.
Important Note: There should never be a fee to complete the FAFSA. If a website charges a fee, you are not using the correct online FAFSA!
The Profile is available online at www.collegeboard.com and families can begin to complete this form in the fall of the senior year.
For the student who does not qualify for aid but finds it difficult to cover college costs, alternatives often exist. Seek out possible scholarships offered by the colleges of interest to you. Colleges will use scholarships to entice students who will enhance their student body (often students who are at the top end of the academic profile) to enroll.
Also pursue scholarships you might apply for from "outside" sources such as companies, foundations, and community organizations.
Tips for pursuing Non-Need scholarships:
- Be aware of deadlines.
- Treat any required essays with great care. (See information on writing your college essay.)
- Carefully read the qualification requirements and only apply for those scholarships if you meet the criterion.
- Like the college application, scholarship applications take time.
Evaluating Financial Aid Awards
- Are the non-billed costs (such as books and travel) used to determine financial need realistic?
- Is my full need being met with financial aid? If not, what is the gap?
- If the billed fees (tuition, room, board, activity, etc.) increase in future years, will the new costs be considered in awarding future financial aid?
- How many meals per week are covered by the dining plan?
- What portion of my aid is gift aid (grant/scholarship)?
- Must I accept all the financial aid offered in the financial aid package, or can I decline the loan or job without losing any other part of the package?
- What is the school's policy if I receive an outside, private scholarship? Will it be used to reduce the college grant or the self-help (loan/work) portion of my award?
- Is my top choice college (for academic and other reasons) feasible financially?
Every fall or spring students and their families are targeted to receive letters from companies claiming to be able to provide special access to scholarships, grants, or "guaranteed" financial aid packages. If you have to pay money to use the service, it is probably a scam. You can read more about this at http://finaid.org.
Financial Aid Tips
- Both students and parents should learn as much as possible about the college financial aid process. Meet with college financial aid administrators to establish a relationship.
- Submit a FAFSA, even if you do not think you qualify for aid. Being rejected for federal aid is often a prerequisite for private awards.
- Apply for aid as soon as possible after January 1. Be aware of ALL deadlines.
- Inform financial aid administrators in writing about unusual expenses. Sometimes allowances may be made to assist you.
- Take advantage of tuition prepayment discounts. Some colleges offer discounts for early payment.
- Investigate company-sponsored tuition plans. Many employers will invest in the education of their employees.
- To avoid gift tax liability, money from grandparents should be paid in your name directly to the school.
- Apply! You cannot win awards or receive funds for which you do not apply, so pay attention to deadlines.
- Use scholarship search engines like www.finaid.org or www.fastweb.com to help you find the private sector assistance you need.
- Beware of scholarship scams. You should not ever have to pay a fee to file a FAFSA or to receive a scholarship.
Web Resources for Financial Aid
The following websites will be helpful to you as you research financial aid and apply for various financial aid programs and scholarships.
Scholarship Sources/General Financial Aid Information
Federal Government Sites
State of Minnesota
FAFSA on the Web
Disabled Family Resources