An Overview of Some Financial Aid Terms

Financial aid can be incredibly overwhelming, but a process most families need to go through to be able to fund their students’ education. While I am far from a financial aid expert (in fact, I recommend my families speak to a financial advisor if they have specific needs or questions), what I can offer is a broad overview of terms families will encounter as they move through this process:

FAFSA - The FAFSA (or Free Application for Federal Student Aid) is the cornerstone of the financial aid process, as it dictates the level and shape of financial support that the federal government will provide to help students complete their education. FAFSA is used to determine grants, scholarships, work-study funds, and loans. I encourage ALL families, regardless of household income, to complete this form using their tax returns from the previous calendar year. It can be submitted starting on/around December 1st, but is available now to start working on!  

CSS Profile - The CSS Profile is the financial aid form, offered through the College Board on behalf of around 270 institutions (mostly smaller, private schools) that calculates institutional aid (ie: money provided by the school, not the government). The CSS Profile should be submitted in time for the deadline a student is applying to (in November for Early Action, etc). For increased ease, parents can fill out the form by logging in with their child’s College Board account. 

Need-Based Aid - Quite simply, need-based aid is offered to students based on their family’s ability to pay for college. Their level of need is based on their previous year’s income as indicated on their FAFSA. To get a rough estimate of what a given school might cost, families can go on a school’s website to calculate their Student Aid Index (SAI), formerly Expected Family Contribution (EFC). Be forewarned that not all schools are capable of matching a student’s full need so families would need to target outside loans or scholarships to fill in that “gap”. 

Scholarships - Scholarships are financial grants offered by federal, state, and local organizations that can help a student support their education. They are often geared towards students with specific (oftentimes, SUPER specific) backgrounds/talents/etc. Websites like Scholarships.com, FastWeb, and FinAid.com are great resources for targeting some great fit scholarships!

Merit Aid - Simply speaking, this is money awarded by an institution that is commensurate with a student’s high academic performance. The most selective schools do not offer merit aid, as there is an expectation that all admitted students are held to a high standard of academic excellence. But at all other institutions if, for instance, a student’s grades/test scores are a little higher than the typical admit, schools will use scholarships to entice them to attend. These awards can make private schools with astounding sticker prices much more affordable options! Here is a list, for example, of great schools that have a reputation for generous scholarships!

Loans - Loans are one of the most common forms of financial support that families turn to to help pay for college, and are also offered by the federal government. As implied in the name, unlike merit or need-based aid these need to be repaid! They come in 2 forms: subsidized and unsubsidized. On the former, the government will pay the interest while a student is still in school, so interest only begins to accrue 6 months after a student graduates. FAFSA must be completed in order to qualify for these loans. 

Federal Work-Study Program (FWSP) - Work-Study is a way for students to subsidize their college costs by attaining a part-time job on or off campus. These jobs are usually related to a student’s area of study or are community-service/non-profit oriented and will pay at least federal minimum wage. Students will receive a bi-weekly paycheck that will help cover additional school expenses (books, supplies, etc). Work-study eligibility is also determined by filing FAFSA.

Ultimately, once you receive all of your financial offers, it is important to compare those packages to the best of your ability to figure out which schools are going to be most affordable (and it is hardly comparing apples to apples!). This handy tool can help you get a realistic comparison of what different schools might cost to attend.