Financial Aid and Merit-Based Scholarships
College Counseling Seminar Series
Understanding College Costs: Financial Aid and Merit-Based Scholarships
March 27, 2013
Types of Financial Assistance Two main types of assistance: • Need-based financial aid – More than 80% of the total aid given to all students is need-based
• Merit-based scholarships – More sources of merit-based aid, but usually of smaller amounts
Need-Based Aid What is need-based aid? • Financial assistance that is based on an analysis of your family’s ability to contribute first, given your family’s income, assets, size, how many are enrolled in college, etc. • Goal is to make the financial burden of college as equal as possible from one family to another
Need-Based Aid What forms of need-based aid are there? • Grants: Aid that does not need to be paid back (Pell Grants, SEOGs, state-based grants, institutional grants) • Federally or institutionally-subsidized loans (Federal Stafford and Perkins loans, institutional loans) and College Work-Study jobs – Frequently also called “self-help” since the student is responsible for these
Need-Based Aid
How do you apply for need-based aid?
• For US citizens, complete the Free Application for Federal Student Aid (FAFSA) after January 1 of the student’s senior year for all colleges • Most private colleges also require the College Scholarship Service’s (CSS) Profile form, which can be completed in the fall (for Early Decision/Action) or winter of the senior year – Tax returns are frequently submitted through “IDOC” or sometimes directly to the college • Be aware of institutional deadlines for forms!
Need-Based Aid • International applicants usually complete the College Board’s International Student Financial Aid Application for private colleges – Many private colleges have very limited (or no) financial aid for international students.
• Public institutions frequently do not offer need-based grants to international undergraduate students
Need-Based Aid • Is there an income cap on eligibility for need-based aid? – It depends upon many factors, but at higher-cost colleges, families with one child in college and an income above about $175-200K are usually not eligible.
• Will applying for aid affect my child’s chances of admission? – Sometimes at “need-aware” colleges, but usually less so at upper and lower income levels.
• Should I apply if I think I may be eligible, even though I may not be? – Generally, yes. It may not be possible to apply later.
Merit-based Aid What sources of merit-based scholarships are there? • Institutional scholarships • External scholarships (corporations, service organizations, etc.) – Fastweb.com and Finaid.org have useful listings
Merit-Based Aid How do you apply for institutional merit-based aid? • Only a few require a special nomination from the secondary school (Morehead-Cain from UNC, Jefferson from UVA, etc.) • Several require a special application from the student (check institutional websites) • Most are offered as a result of the student’s academic credentials compared to others (most are grades or scorebased) and do not require a special application
Types of Financial Assistance What determines which type of aid that you receive? • Institutional selectivity/prestige: – The most selective institutions (the Ivies, most of the highly selective liberal arts colleges, etc.) offer only need-based aid (including for recruited athletes) – Less selective institutions offer need-based aid to the extent that they are able.
Types of Financial Assistance What determines what type of aid that you receive? • Institutional recruiting goals: – Merit-based aid (academic and athletic scholarships, etc.) used primarily to attract stronger applicants to attend that institution – Unequal access to this type of aid • Institutional resources – Not all institutions are able to meet full need for every student or offer scholarships to everyone
Types of Financial Assistance For institutional merit-based scholarships, what do I need to do to keep that scholarship over all four years? • For academic scholarships, usually maintain a minimum GPA • For athletic or other activity-based scholarships, maintain your involvement in that activity
Need-Based Aid How is need determined?
The Basic Formula Cost of Attendance (COA, including travel allowance, books and personal expenses, etc.) - Expected Family Contribution (EFC) = Financial Aid Eligibility/Need
Need-Based Aid What factors are taken into consideration in determining the Family Contribution? • Taxable income • Untaxable income • All taxes • Size of household • Expenses for other children enrolled in college • Living expenses for family • Other non-discretionary expenses – Sometimes: Private secondary school expenses
• Assets (both liquid and non-liquid)
Need-Based Aid How could I have a different FC at different colleges, if it was based on the same information? • FAFSA vs. Profile methodology differences • Institutional need-analysis is driven by institutional resources – Different treatment of assets (home equity, retirement, etc.) – Different treatment of expenses
Need-based Packaging COLLEGE A COST OF ATTENDANCE
COLLEGE B
$30,000
ESTI. FAMILY CONTRIBUTION -10,000 _ NEED =20,000 STUDENT JOB
2,000
COLLEGE C
$45,000
$60,000
-10,000
-10,000
=35,000
=50,000
2,000
2,500
STUDENT LOAN
3,500
7,500
5,000
GRANT/SCHOL.
10,000
20,000
42,500
TOTAL AID "GAP"
15,500
29,500
4,500
5,500
50,000 0
What is the Family Contribution? And what isn’t it? • It is a measure of parent´s capacity over time to absorb educational costs. • It is not an amount expected just from current income and assets (three different time periods are included). • It is not an estimate of what your family has "left over" after paying for all of its other expenses.
What do I do if I cannot afford to cover the difference between total cost and total financial assistance? • Many colleges have their own payment programs to spread out the cost over the year • Longer-term parent loan programs (e.g., PLUS loans, etc.) • Unsubsidized Stafford student loans (frequently already pre-packaged in award) • Private supplemental student loans (but beware!)
What do I do if I cannot afford to cover the difference between total cost and total financial assistance? • External Scholarships – But: Find out how external scholarships are treated in terms of their impact upon the other aid you are receiving, especially if your need is being met “in full” (Total financial assistance cannot exceed total need, based on FC!) • Fill the “gap”? (if full need is not met with aid) • Replace loan and/or job? • Replace institutional grant or scholarship?
Can I request a reconsideration of my financial award? • Need-based awards: – Yes, but it should normally be based upon new financial information (e.g., unexpected nondiscretionary expenses, etc.), not just “better offers” from other colleges
• Merit-based awards: – Sometimes, depending upon how the student compares with other admitted students
Can I find out in advance of applying about what my Family Contribution will be? • All colleges are now required to have net price calculators that enable families to input their financial information and get a rough sense of their possible eligibility • Check institution’s financial aid website • Compare different estimates!
Questions to Ask the Instituion • Is the admissions decision-making process “need blind”? • Is the financial assistance given need-based, merit-based, or both? • Does the institution meet the full need of admitted students? • If so, does it do so for all four years?
Questions to Ask the Institution • What is the average undergraduate debt with which students graduate? (National average is currently about $24K.) • How do you treat outside merit-based awards which the student may receive? • What is your policy for collecting financial information from non-custodial parents? • What is your eligibility policy for international students?
Understanding College Costs: Financial Aid and Merit-Based Scholarships
March 27, 2013
Types of Financial Assistance Two main types of assistance: • Need-based financial aid – More than 80% of the total aid given to all students is need-based
• Merit-based scholarships – More sources of merit-based aid, but usually of smaller amounts
Need-Based Aid What is need-based aid? • Financial assistance that is based on an analysis of your family’s ability to contribute first, given your family’s income, assets, size, how many are enrolled in college, etc. • Goal is to make the financial burden of college as equal as possible from one family to another
Need-Based Aid What forms of need-based aid are there? • Grants: Aid that does not need to be paid back (Pell Grants, SEOGs, state-based grants, institutional grants) • Federally or institutionally-subsidized loans (Federal Stafford and Perkins loans, institutional loans) and College Work-Study jobs – Frequently also called “self-help” since the student is responsible for these
Need-Based Aid
How do you apply for need-based aid?
• For US citizens, complete the Free Application for Federal Student Aid (FAFSA) after January 1 of the student’s senior year for all colleges • Most private colleges also require the College Scholarship Service’s (CSS) Profile form, which can be completed in the fall (for Early Decision/Action) or winter of the senior year – Tax returns are frequently submitted through “IDOC” or sometimes directly to the college • Be aware of institutional deadlines for forms!
Need-Based Aid • International applicants usually complete the College Board’s International Student Financial Aid Application for private colleges – Many private colleges have very limited (or no) financial aid for international students.
• Public institutions frequently do not offer need-based grants to international undergraduate students
Need-Based Aid • Is there an income cap on eligibility for need-based aid? – It depends upon many factors, but at higher-cost colleges, families with one child in college and an income above about $175-200K are usually not eligible.
• Will applying for aid affect my child’s chances of admission? – Sometimes at “need-aware” colleges, but usually less so at upper and lower income levels.
• Should I apply if I think I may be eligible, even though I may not be? – Generally, yes. It may not be possible to apply later.
Merit-based Aid What sources of merit-based scholarships are there? • Institutional scholarships • External scholarships (corporations, service organizations, etc.) – Fastweb.com and Finaid.org have useful listings
Merit-Based Aid How do you apply for institutional merit-based aid? • Only a few require a special nomination from the secondary school (Morehead-Cain from UNC, Jefferson from UVA, etc.) • Several require a special application from the student (check institutional websites) • Most are offered as a result of the student’s academic credentials compared to others (most are grades or scorebased) and do not require a special application
Types of Financial Assistance What determines which type of aid that you receive? • Institutional selectivity/prestige: – The most selective institutions (the Ivies, most of the highly selective liberal arts colleges, etc.) offer only need-based aid (including for recruited athletes) – Less selective institutions offer need-based aid to the extent that they are able.
Types of Financial Assistance What determines what type of aid that you receive? • Institutional recruiting goals: – Merit-based aid (academic and athletic scholarships, etc.) used primarily to attract stronger applicants to attend that institution – Unequal access to this type of aid • Institutional resources – Not all institutions are able to meet full need for every student or offer scholarships to everyone
Types of Financial Assistance For institutional merit-based scholarships, what do I need to do to keep that scholarship over all four years? • For academic scholarships, usually maintain a minimum GPA • For athletic or other activity-based scholarships, maintain your involvement in that activity
Need-Based Aid How is need determined?
The Basic Formula Cost of Attendance (COA, including travel allowance, books and personal expenses, etc.) - Expected Family Contribution (EFC) = Financial Aid Eligibility/Need
Need-Based Aid What factors are taken into consideration in determining the Family Contribution? • Taxable income • Untaxable income • All taxes • Size of household • Expenses for other children enrolled in college • Living expenses for family • Other non-discretionary expenses – Sometimes: Private secondary school expenses
• Assets (both liquid and non-liquid)
Need-Based Aid How could I have a different FC at different colleges, if it was based on the same information? • FAFSA vs. Profile methodology differences • Institutional need-analysis is driven by institutional resources – Different treatment of assets (home equity, retirement, etc.) – Different treatment of expenses
Need-based Packaging COLLEGE A COST OF ATTENDANCE
COLLEGE B
$30,000
ESTI. FAMILY CONTRIBUTION -10,000 _ NEED =20,000 STUDENT JOB
2,000
COLLEGE C
$45,000
$60,000
-10,000
-10,000
=35,000
=50,000
2,000
2,500
STUDENT LOAN
3,500
7,500
5,000
GRANT/SCHOL.
10,000
20,000
42,500
TOTAL AID "GAP"
15,500
29,500
4,500
5,500
50,000 0
What is the Family Contribution? And what isn’t it? • It is a measure of parent´s capacity over time to absorb educational costs. • It is not an amount expected just from current income and assets (three different time periods are included). • It is not an estimate of what your family has "left over" after paying for all of its other expenses.
What do I do if I cannot afford to cover the difference between total cost and total financial assistance? • Many colleges have their own payment programs to spread out the cost over the year • Longer-term parent loan programs (e.g., PLUS loans, etc.) • Unsubsidized Stafford student loans (frequently already pre-packaged in award) • Private supplemental student loans (but beware!)
What do I do if I cannot afford to cover the difference between total cost and total financial assistance? • External Scholarships – But: Find out how external scholarships are treated in terms of their impact upon the other aid you are receiving, especially if your need is being met “in full” (Total financial assistance cannot exceed total need, based on FC!) • Fill the “gap”? (if full need is not met with aid) • Replace loan and/or job? • Replace institutional grant or scholarship?
Can I request a reconsideration of my financial award? • Need-based awards: – Yes, but it should normally be based upon new financial information (e.g., unexpected nondiscretionary expenses, etc.), not just “better offers” from other colleges
• Merit-based awards: – Sometimes, depending upon how the student compares with other admitted students
Can I find out in advance of applying about what my Family Contribution will be? • All colleges are now required to have net price calculators that enable families to input their financial information and get a rough sense of their possible eligibility • Check institution’s financial aid website • Compare different estimates!
Questions to Ask the Instituion • Is the admissions decision-making process “need blind”? • Is the financial assistance given need-based, merit-based, or both? • Does the institution meet the full need of admitted students? • If so, does it do so for all four years?
Questions to Ask the Institution • What is the average undergraduate debt with which students graduate? (National average is currently about $24K.) • How do you treat outside merit-based awards which the student may receive? • What is your policy for collecting financial information from non-custodial parents? • What is your eligibility policy for international students?
