What Your Financial Aid Really Means

 graduate on steps

Financial aid is one of the most important pieces of your biggest post-high school decision.  So why is it so hard to figure out?  In this post, we’ll cover a quick history of the FAFSA, the main components on your FAFSA award letter, and how you can better prepare yourself for future FAFSA deciphering with the college of your choice.

 

A Quick History of the FAFSA

The FAFSA—or Free Application for Federal Student Aid—started as an idea in 1953 when John Munro of Harvard University created the first financial need analysis formula and implemented other methods, prior to our regulated FAFSA form, which allowed colleges and universities to enable financial aid.  By 1992, the first FAFSA form was in circulation and now in 2017, we can file our FAFSA form online and receive financial assistance from the government for higher education within a matter of weeks.

 

The Main Components of Your FAFSA Award Letter

Not all financial aid award letters are created equally, but you can expect the layout to look similar.  Here are the main components:

 FAFSA pie chart

 

            Grants...  Typically for undergraduate students; grants are distributed based on needs, enrollment, and other eligibility factors.

 

            Scholarships...  These can come with strings.  It’s usually a matter of keeping up your grades to a specific GPA.  This can fluctuate year to year.

 

            Student Employment… You’ll need to find work at your institution and work a certain amount of hours each semester to receive this total amount.

 

These are known as your “gift aid”.  Which means you do not have to repay this amount as long as you fulfill any stipulations attached.  Make sure to read the fine print. 

 

The other portion of your FAFSA includes:

            Loans…  These can come in many forms, from subsidized to unsubsidized.  There’s also Stafford, Perkins, PLUS, Private Education, and more. Becoming familiar with loan terms can be crucial, as some can be negotiated or reapplied through different applications. 


            EFC (Expected Family Contribution)… 
This is not an amount expected to be paid by your family.  EFC gives FAFSA an idea of the family’s economic strength, which assists in determining the applicant’s level of eligibility for financial assistance.

 

            Gap Unmet…  With some higher education institutions, you’ll want to ask if they meet “full demonstrated financial need”.  If there is any unmet need, the applicant will be asked to cover this cost prior to enrolling or during their fall semester.

 

 group thumbs up

 

Tips For A FAFSA Prepared Future

 College students are asked to reapply for financial aid prior to the beginning of each new school year.  FAFSA will start accepting applications for the 2017-2018 school year on October 1, 2017.  There are a few step you can take to ensure a more secure, tailor-made award letter.

 

Think about out of pocket expenses.  Sometimes your FAFSA will include other expenses aside from tuition—and that’s great!  Watch out for vague or incomplete financial award letters.  You’ll have room and board, books, transportation, and other various out of pocket expenses to cover depending on your major and if you’re attending school in-state or out-of-state.

 

Be transparent with your financial aid office.  Prior to filling out your form, talk to your financial aid office about any major life events that may affect your total gift aid—such as a marriage, divorce, addition to the family, or a job transition for either parent or yourself.

 

Attend college planning seminars.  There are many different resources where you can speak to college planning professionals, like a school counselor or university career coach.  You can also learn more about deciphering your financial award letter, net cost vs. net price, and accepting or declining awards with our free Student Choice National webinar on Wednesday, March 22nd at 1 p.m. or 6 p.m. EST. 

 

Do you have FAFSA filing advice or tips that worked for you?  Tell us in the comment section below!

 


Thank you for your thoughts and comments on this blog topic. We welcome hearing from you. For your security, please do not to request transactions to your account in your comments. Additionally, do not include confidential information in your comments as this communication is not a secure channel for transmission.