Financial Aid, FAFSA and Your Family
E very year, college attendance costs rise faster than inflation. The latest numbers from the College Board, in their report “Trends in College Pricing,” show average tuition and fees at public four-year colleges or universities rose 7.1 percent to $5491. In addition, room and board increased an average of 9.8%, rising to $10,636 per year.
For this same time period, private four-year colleges and universities average tuition costs rose 5.9 percent over the previous year to $21,235, with a the combined annual bill that included room and board rising 5.7 percent to $29,026.
Adjusted for inflation, tuition costs at public colleges have grown 69 percent over the past 10 years, with tuition increases at private schools beating inflation by 57 percent over the same timeframe. According to the College Board, these trends in college costs are long-term, and will continue to outrun inflation.
Financial aid becomes available in early January. Complete your family’s taxes and fill out the FAFSA early. To speed the process, apply online www.fafsa.ed.gov and use their help features and calculators. The online process gives a warning if anything is left out, and don’t leave any blanks or the application will be voided.
The paper application takes six to eight weeks to be processed, but the online turnaround is generally about 2 weeks. Using estimated tax figures is perfectly acceptable, and actual numbers can be exchanged later if a difference is discovered.
While financial aid money is distributed through May, it goes out on a first-come, first-serve basis, and is often fully distributed March to April. So filing early can mean the difference between receiving thousands of dollars and hundreds of dollars—or no money at all.
Jean Chatzky, financial editor for NBC’s Today Show and an editor-at-large for “Money Magazine,” says, “Start by determining what your student’s eligibility for aid and EFC—expected family contribution—is likely to be.”
The Princeton Review Web site at princetonreview.com has a calculator you can use to run through this task, and here are some additional points Chatzky recommends families consider:
- Avoid out-of-state public schools if financial needs are great. Out-of-state schools only charge higher tuition rates to non-resident students, but state money available to the school will be needed by its own resident students.
- Look for a financial “safety school.” Yes, the high-priced private schools can generally offer more financial aid, but in case funds fall short, look for a backup college, like an in-state public university, where scholarships and grants can cover most or all of the costs.
- You can run, but you can’t hide from the numbers. Since not all schools look at finances the same way, pay close attention to how each college runs your family’s numbers. Some consider your home’s full market value, others don’t consider any of its value, and still others cap value at twice the family income. While it may seem an invasion of privacy, the more information a school requires, the more money you’re likely to receive. Likewise, furnish documentation on family setbacks, such as large medical expenses or job loss.
- Check out the up-and-comers. Many good schools try to make their names by attracting top-notch students. If your grades are competitive, ask for merit-based aid, and pay attention to the percentage of total cost they are willing to meet.
- Use what you’ve got. Books and the Internet are filled with information you can use to decide where you place against the top quartile of students applying to any school. By choosing where you will be considered “a catch” you can gain a better package. Also, look for schools that need your specialty, if you’re, say, a band member or a member of lacrosse or rowing.
- Create your own (geographic) diversity. Having students from all across the country is important to college. Consider applying to distant colleges that none of your classmates are considering.
To determine eligibility for federal financial aid, the U.S. Department of Education (DOE) uses a formula called the expected family contribution (EFC). The EFC is a formula that considers the financial resources of the student’s parents, as well as those of the student.
Federal aid programs for college include:
- Grants. A grant is government money that does not have to be repaid, and is usually given only to those students most in need of financial assistance. The two main types of grants include Pell grants and Supplemental Education Opportunity Grants (SEOGs).
Subsidized loans. Subsidized student loans are when interest is paid by the federal government until the loan-repayment period begins after graduation.
A subsidy is also like free money, since qualified recipients have to repay the loan principal but can avoid any interest expense. Stafford loans may or may not be subsidized. All Perkins loans, however, are subsidized student loans.
- Work-Study. Work-Study is a paid on-campus job administered by the school, and lets students earn money to offset some of their school-related expenses. Students must fill out the FAFSA and qualify for work study.
How the EFC Formula is Calculated:
The DOE considers money in UGMA/UTMA accounts and education savings accounts (such as the Coverdale) to be the student’s assets. Assets in Section 529 plans are considered assets of the parents. Parents’ retirement plans are not considered in the formula.
To apply to the subsidized programs described above, a student must complete a Free Application for Federal Student Aid (FAFSA). To be eligible to receive aid from one of these programs, a student must:
- Demonstrate financial need.
- Have a high school diploma or G.E.D.
- Be enrolled in an eligible program of study.
- Maintain a 2.0 or above GPA.
- Use borrowed funds for educational purposes.
- Not be in default on any other student loans.
- Have a Social Security number.
- Be either a U.S. citizen or eligible non-citizen.
- Must have registered with the Selective Service if an 18-year-old male student.
- Start early
- Treat scholarship searches just like a job.
- Applications will require your academic and personal résumé—grade point average (GPA), unusual or advanced courses, school and community activities, awards, hobbies, and work or volunteer experiences. You need to stand out, so don’t hide your achievements, but be honest.
- Check on local, state, regional, national, and institutional scholarships.
- Contact local organization chapters of Rotary, Lions, Elks, etc.
- Difficult essay scholarships have less competition, so if you can write, give any of these a shot.
- Ask the funding organization for help if you don’t understand any of the requirements. Don’t be afraid to ask for help.
- Follow directions precisely.
- Make sure each scholarship application is neat and typed. Follow directions.
- Complete a rough draft of your scholarship application, then have both the rough draft and final copy proofread by someone else.
- Set up a time to talk with your counselor or advisor to go over all your applications and sign them (if needed). Don’t be afraid to take suggestions.
- Pay attention to deadlines—never turn applications in late.
- Keep a copy. Make a copy of the entire packet. If your application goes astray, you will be able to reproduce it quickly.
These are funds that students do no have to pay back. All require families to file the FAFSA. File early, as money is given on a first-come, first-served basis.
- Federal Pell Grant is determined by FAFSA results, and awards up to $4000 per year for full-time students. Available only to needy undergraduate full-time students, offer reduced awards to part-time students.
- Federal Supplemental Educational Opportunity Grant, or SEOG, is determined by FAFSA need analysis, and is reserved for students with very high financial need. Awards average $1000 per year, and are offered only to undergraduates.
- Oklahoma Tuition and Grant, or OTAG, is determined by the Oklahoma State Regents for Higher Education and is based on FAFSA results. Must be filed by March 30th, and maximum awards run $1000. Full- and part-time undergraduates are eligible. Also, if your student is still in grades 8 through 10, sign up for the OHLAP scholarship at www.okhiered.org/ohlap/ or phone 1(800)858-1840.
- Exceptional Need Grant is determined by FAFSA need analysis, and is available to undergrad freshmen and sophomores who have remaining financial need after all other financial assistance has been awarded. Maximum award is $3000.
- Subsidized Stafford Loan—for students demonstrating financial need. Repayment begins 6 months after ceasing to be a half-time student.
- Unsubsidized Stafford Loan—for undergraduate students regardless of financial need, and carry a higher interest rate than the subsidized loan. Repayment begins 6 months after ceasing to be a half-time student.
- The Federal Perkins Loan—determined on the FAFSA, and provides annual loan limit up to $4000.
- The Direct Stafford and Federal Family Education Loan gets funds directly from the federal government, so the process for applying and repaying differs from Stafford loans. Consult the Department of Education for details.
- Federal Parent Loan for Undergraduate Students—or PLUS loans are for the parents of the undergraduates. Interest is variable, but is capped and repayment begins immediately.