Financial Aid Basics
There’s a ton of talk about the FAFSA right now, which on the one hand makes sense because it will be available next week. (Yes, all evidence to the contrary, time does continue marching forward with the result that Oct. 1 arrives next week.) But all the hoopla around the FAFSA tends to obscure the fact that the FAFSA itself plays a pretty limited role. It’s a little bit like talking about the ticket booth when you’re going to the movies. (Remember going to movies?) The FAFSA’s primary role is to give schools a tool to evaluate all applicants’ financial strength on a consistent set of metrics. In and of itself, the FAFSA only guarantees access to federal student loans. The schools themselves dole out the financial aid. Here’s a quick summary of how that works.
The FAFSA and the CSS Profile calculate your Expected Family Contribution, or EFC. (Here’s how the FAFSA does it.) That data is sent to every school the student applies to. Each school has its own Cost of Attendance, or COA, and its own financial aid policies. The difference between COA and EFC is called Demonstrated Need. Your Demonstrated Need will be different at every school because every school’s COA is different.
There is a short list of schools that that meets 100% of need through grants and scholarships, or “gift aid.” This list changes from year to year; google “schools that meet 100% of need” to get a current list and then verify that data through the school’s Common Data Set information (which is generally posted somewhere on the school’s website but you may have to google “[school name] common data set” to actually find it). Alternatively, if you already have schools in mind, look up their Financial Aid Profile on CollegeData under the Money Matters tab.
There is no requirement that schools meet financial need, least of all through grants and scholarships only, and generally those that do are extremely competitive to get into. Most schools include loans and work study, or “self-help aid” along with grants to cover some or all of a student’s demonstrated need. The best tool to find out your likely financial aid package from a school you’re interested in is to use its net price calculator. You can access these through your student’s College Board account or by googling “[school name] net price calculator.” Every school is required to have one. Best of all, only gift aid can be shown in the net price calculator. This is especially helpful because your financial aid award from the school is likely to show your net cost of attendance after loans and work study are subtracted. And a loan or a job is your money.
Many schools also offer merit aid, although the most exclusive schools generally do not. Merit aid is always in the form of scholarships; there are no merit loans. And it tends to be far more generous than need-based aid because it’s offered in order to attract desirable students. A student in the top 20% of the student body academically (based on high school GPA and test scores) is likely to be eligible for merit aid if the school awards it. CollegeData is a great resource in this regard as well: academic profile information is under the Admissions tab, while the Money Matters tab details merit awards received by students with no financial need. Merit scholarships often include additional perks like a faculty mentor, research grants or preferred course or housing selection. Some schools combine merit and need-based awards; one common approach is replacing the Direct Student Loan in a student’s aid package with a scholarship. Merit aid that is granted automatically– such as “every incoming freshman with a high school GPA above 3.8 gets $6,000 annually”– can be included in a net price calculator. Any awards that are discretionary or require an additional application cannot be included in the net price calculator. Students need to research merit aid policies at the schools they are interested in to get a better sense of what they’re eligible for and whether additional applications are needed to be considered.
Students applying to multiple schools will get a range of aid awards. When we ran net price calculators for my daughter, her costs ranged from $11,000 to $82,000 based on different aid policies. We used net price calculators to rule out a number of schools, since $82,000 wasn’t in our price range. Her actual aid awards at the schools she was accepted to were all within $2,000 of the net price calculators’ estimates.
All by way of saying: just like the movie ticket booth, the FAFSA is important but it’s not the whole story. By all means, do your best to capture the most beneficial financial snapshot on the FAFSA but don’t think your work is done at that point. You still have to know what the schools you’re interested in will do with your FAFSA.
See How Student Loans Are Used for additional info.
