Financial aid can significantly reduce the out-of-pocket cost of college. Understanding how financial aid is calculated and the different types available can help you maximize your eligibility and make informed decisions.

The Financial Aid Process

1. File the FAFSA: The Free Application for Federal Student Aid is the gateway to most financial aid
2. EFC Calculation: Your Expected Family Contribution is calculated based on your FAFSA information
3. Financial Need Determination: Schools subtract your EFC from their Cost of Attendance
4. Aid Package Creation: Schools create aid packages based on your financial need and available funds
5. Award Notification: You receive financial aid award letters from schools that accept you
6. Compare and Decide: Compare net costs after aid to make your college decision

Types of Financial Aid

• Grants: "Free money" based on financial need that doesn't need to be repaid. Examples include Federal Pell Grants, FSEOG, and state grants.
• Scholarships: Merit-based awards for academic achievement, athletic ability, special talents, or other criteria. Available from schools, private organizations, and government sources.
• Work-Study: Part-time employment opportunities, often on campus, that help students earn money for education expenses while gaining work experience.
• Loans: Borrowed money that must be repaid with interest. Federal student loans typically offer better terms and protections than private loans.

Factors Affecting Financial Aid Eligibility

• Income: Both parent and student income significantly impact EFC calculations
• Assets: Savings, investments, and real estate (excluding primary residence)
• Family Size: Larger families typically qualify for more aid
• Number in College: Having multiple family members in college simultaneously reduces EFC
• Age of Older Parent: Affects asset protection allowance in the formula
• State of Residence: May impact eligibility for state-based aid programs

Maximizing Your Financial Aid

• File FAFSA Early: Submit as soon as possible after October 1st each year
• Meet All Deadlines: Federal, state, and institutional deadlines vary
• Apply to Multiple Schools: Aid packages can vary significantly between institutions
• Consider Financial Aid When Saving: Student assets are weighted more heavily than parent assets
• Appeal If Circumstances Change: Request a professional judgment review if your financial situation changes
• Search for Outside Scholarships: Use scholarship search tools to find additional funding

Understanding Net Price

The net price is what you'll actually pay after subtracting grants and scholarships from the total cost of attendance. Many schools offer net price calculators on their websites to provide personalized estimates. Compare net prices, not sticker prices, when evaluating college affordability.