Financial Aid for College: The Basics

By Josiah Enos, Associate College Counselor

The college admissions process is an incredibly exciting time. However, it involves making a number of big decisions, including how to finance your college experience. The financial aid process can be very complex, with many elements to consider. Within this article, we will explore common types of financial aid, including grants, scholarships, work-study, and loans. Additionally, we will explore how financial need is calculated and will discuss universities that will meet 100% of need, touching on what you can expect. This is a lot to examine, but understanding financial aid can greatly cut the cost of your college education and take the stress out of the equation. 

Common Types of Financial Aid:

There are four main types of financial aid: grants, scholarships, loans, and work-study. Each is different; however, they are all great ways to cut the cost of college.

Let’s start with grants. Grants are a form of financial aid that in most cases do not require you to pay anything back. These are awarded based on the information you provide on the FAFSA. Grants take financial-need into consideration, and many of the major federal grants are awarded automatically.  There are some limitations here: for example, if you withdraw from school or fail to fulfill a service obligation, you may have to repay your grants. However, if you meet all the requirements, grants do not need to be repaid!

Another type of financial aid that does not need to be repaid is a scholarship. Scholarships can be offered by the educational institution itself or by a number of nonprofit and private organizations. Scholarships can be awarded for any number of criteria, including specific talents, academic achievements, or programs of study. There are also scholarships that are need-based!

Let’s look into loans next. Loans can be awarded from the federal government or can be private student loans. However, it is important to note that there are different types of federal student loans: subsidized and unsubsidized. Subsidized loans offer undergraduate students an option to cut costs, and are awarded based on the cost of attendance at your school, subtracting both your expected family contribution and other financial aid awards. The biggest advantage of subsidized loans is that they do not accrue interest while you are enrolled as at least a half-time student. On the other hand, unsubsidized loans are available for both undergraduate and graduate students and do not take financial need into consideration. Unlike subsidized loans, interest is charged during your time in school.

The last type of financial aid to explore is federal work-study. Work-study provides both undergraduate and graduate students with demonstrated need with full or part-time employment opportunities, allowing students to work and earn money to help pay for their educational costs. 

How Financial Need is Calculated: 

Let’s start with how financial need is defined in terms of the college admissions process. Financial need is the cost of attending your university minus your expected family contribution. It is determined by the FAFSA, where students and their families provide supplemental financial information including tax documents, W-2s, and bank and investment statements. These documents are all used to help calculate what level of financial contribution can be expected from families.

The FAFSA is one of the main ways that financial need is determined, along with supplemental forms that are available for unique circumstances. All of this information is used to provide students and their families with the cost of attendance (COA). If you are at least a half-time student, the COA presents the total cost of school attendance, including an estimate of tuition and fees, the cost of room and board (or living expenses), and expenses like books, supplies, transportation, loan fees, and more. In most cases, the COA lays out the cost for the entire academic year. 

What Meeting 100 Percent of Demonstrated Need Means: 

In the past few years, universities that offer to meet 100% of demonstrated need have become much more common. A university that meets 100% of demonstrated need will use your FAFSA and other documentation to determine what level of financial support will be required.

However, it is very important to note that this does not necessarily mean that a student is receiving a full ride. In some cases, universities meet 100% of their students’ needs without any loans, like at Amherst University, Brown University and Colgate University. These are just a few of the many universities that offer this type of package, allowing the students with the highest level of financial need to find support and pursue their dreams.

However, other universities will offer to meet 100% of demonstrated need using federal student loans, so it is very important to talk with your financial aid counselor to discuss what this means for you and what your best options are.

This is just a glimpse into what to expect when it comes to the financial aid process as you apply to universities. The best recommendation is to speak with the universities you are applying to, ask questions, and build a relationship with your financial aid counselor. They are an incredible resource throughout this process and are truly the subject matter experts. Additionally, never hesitate to advocate for yourself. This can go a long way in bringing the cost of college down, and in doing so, bringing you closer to achieving your dreams.

If you’re looking for additional resources, you can download our free guide, Your Guide to Organizing the Scholarship Search, or check out the financial aid tab on our blog.