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Keys to Preparation: A Look at Financial Aid

By Dr. Belinda J. Wilkerson

      Paying for college has become one of the largest household expenses for families with college-bound students. The proliferation of printed materials, online resources, and services offering assistance grew exponentially in the last decade. A Google search for “financial aid for college offers 134,000,000 links for exploration. No wonder families often throw their hands in the air as they try to solve the financial aid puzzle!

      Let’s start by unpacking phrases, terms, and words associated with paying for college. Keep these two important points in mind: college is a business and parents are responsible for paying for their students’ college education. For a college, their bottom line is to have a financially sustainable institution while providing students with a strong collegiate experience. They have to pay their faculty and staff, maintain existing buildings, build new ones, provide utilities all throughout campus, and keep their campus neat and attractive. The federal government and colleges contribute to students’ financial aid packages; however, one basic principle is that families are the primary entity responsible for college costs.

FAFSA. Where do families start in their quest to make sense of financial aid?  Completing the Free Application for Federal Student Aid (FAFSA) is the first step for many college-bound students and their families. The FAFSA, using an algorithm created by the federal government, determines the Estimated Family Contribution (EFC), which furnishes a dollar amount known as demonstrated need. What families think they need and what the FAFSA identifies as their need are usually very different. After completing the FAFSA (any time after October 1, every year), families receive a Student Aid Report (SAR) that includes their EFC. Each college listed on the FAFSA receives a copy of the SAR and uses this information to prepare the family’s financial aid package, which may be a combination of grants, scholarships, loans, and work-study. The FAFSA calculates the EFC based on parents’ income and assets and each student’s income and assets. If there are multiple college-bound students in the same family, each student must have a FAFSA account with at least one parent on each account. To register for the FAFSA, go to https://fafsa.ed.gov, pick the tab for new or returning user and begin. Registering for the FAFSA requires the creation of a FSA ID, giving each registrant a username and password to access the FAFSA electronically. Guard this information just as you guard your social security number.

CSS PROFILE: Many private colleges and universities use a separate document to determine the distribution of their institutional funds. Whereas, the FAFSA is free, College Board, owner of the CSS PROFILE, charges $25 for the first college and $16 for each college thereafter. Unlike the FAFSA, this application uses home equity in the EFC calculation; however, how it’s used varies between institutions. For example, some colleges may factor 100% of home equity into their financial aid calculations. Check College Board’s website to see a list of colleges, schools, and universities requiring the CSS PROFILE. Then call colleges of interest and ask their financial aid offices how their institution views home equity. Generally, this information is not on the websites for schools.

COST OF ATTENDANCE (COA): Look closely at the full cost of college. This is important. The cost of attendance consists of two main components—direct costs and personal expenses. Direct costs are tuition, fees, room and board, which are expenses controlled by the college, not by the families. Qualifying for merit scholarships may earn students a tuition discount. Residence halls have tiered pricing; the more amenities, the higher the price. On the other hand, students have more control over the cost of books, transportation, and personal expenses. Many colleges and online resources have the option to rent textbooks and sometimes, professors put them on reserve in the library for their students to use. Used books are an option, but check to make sure students have the correct edition.

Transportation costs are within the student’s control. It depends on the distance students must travel to go home and what mode of transportation students use. How often will the student be going home? Personal expenses are within the student’s control, too. Preparing a budget and sticking to it is one of the best things students can do. Be mindful about the number of times off-campus excursions take place and how quickly that can eat into the student’s budgets. Colleges and universities provide a myriad of on-campus activities and events without costs. 

Knowing the basics about financial aid before the college search starts in earnest helps families make informed decisions. Meet all deadlines, know your options, and eliminate random acts of college planning.

Dr. Belinda J. Wilkerson is the founder of Steps To The Future, LLC, a college and career counseling service.