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How is financial aid determined                                                                                                    

So, you have determined that funding your children's education is one of your goals.  The easiest way to reduce the financial burden of college expenses it to start saving a little money as early as possible.  The soon you start, the more time you have to compound the interest and grow the money.

 

There are programs to help.  There are Federal Grants, Scholarships and Financial Aid programs to reduce the amount you will need to personally save.  Here we are going to talk about how Financial Aid is determined.  Many people just don't know what's available and how to go about applying for it.

 

 

Assistance is determined case by case?

 

Most financial aid is heavily dependant on the financial need of the student.  The system takes the total cost for attending a year of school and subtracts the amount the family is expected to contribute to generate the financial need of the student.  The equation used is:

 

      Tuition/cost of attendance                             $ Amount

      - Expected Family Contribution (EFC)           -$ Amount

      Financial Need                                            $ Amount

 

That means the cost of the school can influence the qualification.  If the family chooses an ivory league school with high cost, then the financial need could be large.  If the family chooses a lower cost school, than the financial need will be less.

 

The process begins with filling out the Free Application for Federal Student Aid (FAFSA).  You can obtain the application through:

 

  • The student’s high school or through a college.

  • Through the FAFSA website: www.fafsa.ed.gov

 

As mentioned before, the equation to determine the need for financial aid is heavily influenced by the families expected contribution (EFC).  The equation was created by congress and the EFC is really the only constant.  The cost of attendance is obtained through the college or university directly. The EFC looks at the parent’s taxable and non taxable income, their assets such as bank account balances, retirement funds and benefits like unemployment and Social Security.  The family’s income and assets are only taken into consideration if the student is a dependant of the family.  A student is considered independent (and the family’s income / assets are excluded) if he/she satisfies any one of the following:

 

  • Married

  • Older than 23

  • The student has his or her own dependants other than a spouse

  • An orphan or ward of the court.  Was a ward of the court until he/she

              reached 18.

  • The education is for a Masters or doctorate degree

  • A veteran of the US Armed Forces

 

High income families should not be discouraged.  The formula looks at the number of people in the family, the number of years until the parent’s retirement, number of children in private school or college and the financial burden on the family.  For more information you can contact the Federal Student Aid Information Center at 1-800-433-3243, or through their website: http://studentaid.ed.gov.

 

 

 

 

 

 

 

 

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