The Ins and Outs of Financial Aid (Part 1)

22 May 2015

Why (and How) You Should Sort Out Financial Aid FIRST

College is expensive. We all know this. But that’s not the end of the story.

Paying for college is actually much more complex than just taking on a bunch of student loan debt and suffering through it.

College can actually be affordable, depending on where your student goes, how many kids you have in college, your gross family income, your student’s academic standing, and so many other factors.

This is why you should start figuring out what you can afford and how much aid you could receive before your student gets his/her heart set on a particular university.

Does this task seem too daunting? Do you still doubt that you could afford to send your student to college? Don’t freak out! March Consulting is here to help you find your way. That’s why we’re doing this series on financial aid NOW, before the crunch time of college applications.

Here are some tips to get you started thinking about financial aid:

1. The first step is just to figure out how important financial aid is to you. Is the cost of a university a make or break factor? Or could you maybe get by if your student REALLY wanted to go to the out of state school? Before you start this crazy process, do some soul searching (and some bank account searching) to see what you think you’ll need.

2. Calculate your Expected Family Contribution (EFC). This is just a formula that the government has put together to help colleges determine how much money you can afford to pay every year. It’s a bit like pre-qualifying for a loan before you buy a house. They get this number when you fill out your FAFSA (Free Application for Federal Student Aid). We’ll have more details on that another time. All you need to know right now is that you fill in all of your financial information (And I mean ALL of it.), and then the federal government decides the maximum amount that you can afford – your EFC.

The good news is that you can calculate your EFC for yourself even before you fill our your FAFSA! Just click on the link below to get started.

EFC Calculator

I highly recommend you use the EFC calculator before doing anything. It will only take a few minutes, and it can make a huge difference in which colleges your student puts on his/her application list.

(Note that your student’s school will likely require you to pay your ENTIRE EFC, particularly if it’s a public institution. Financial aid will not cover any more than they HAVE to. There are exceptions with merit scholarships at private schools, but it is not very common.)

3. Know what’s really in your budget. Remember that there will be other costs besides tuition and housing. Those are the two biggest ones, but there are others that sneak by you – books, flights to out of state schools, gas to drive to the school, parking if your student takes a car, groceries, activities/concerts, etc. – that can really add up. Make sure there is a little wiggle room outside of your EFC for these costs.

4. Calculate your need. Once you calculate your EFC, look up the total cost of attendance (TCA) for each school. The TCA minus your EFC is your financial need. You can use this number to gauge how likely you are to receive aid from a given school.  Most colleges will factor in some extra wiggle room into the total cost of attendance (including transportation, books, and misc expenses).

5. Look at the school’s financial aid website and statistics. What percentage of students are receiving financial aid? How much aid does the average student receive? If your need exceeds this number, then you may want to consider another location. Get very well acquainted with financial aid web pages. They’re always full of little nuggets that most people don’t know about – scholarships, grants, exceptions, fee waiver options, etc.

6. Be aware of your options. Most people know about sports scholarships and student loans, but there are so many other sources for financial aid. Some of these could include grants (similar to scholarships, in that you don’t have to pay them back, but from the federal government), parent loans, merit scholarships (money given to students with exceptional academics or leadership), need-based scholarships (money given based on financial need only), and work study (an on-campus job that earns money that goes directly to paying for tuition or housing fees).

Has your student been very involved in high school? Did he/she get good grades? Can he/she write a killer essay about important issues? He/she will likely be able to get some merit-based aid. (This, of course, depends on the competition as well. If your student is vying for merit scholarships at USC, for instance, they might not be as likely to get it as a smaller school in the Midwest.)

Again, have your student scour the financial aid website for available scholarships, and don’t be afraid to have your student apply for ALL of them, even if it doesn’t seem like your student qualifies. Often scholarships go unnoticed, so no one applies for them, but that money still has to be given to someone. Even the gender-specific scholarships can sometimes be bent depending on the applicants.

As you can see, financial aid is a fairly complicated process, full of hidden gems and difficult decisions. This is why you should get started in thinking about it NOW. That way you can make informed decisions about which colleges you can afford and which ones your student should apply for.

More posts are coming with more details, so if one of your questions didn’t get answered, hang on until next week.

Until then, happy college hunting! Best of luck to you all.

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