Going through financial planning for college, especially for the first time, can feel overwhelming. Luckily, you have us. Here are some key terms to get a jump on.
The Free Application for Federal Student Aid (FAFSA) is required by all colleges. In some cases, it’s the only application needed to apply for financial aid from all sources: federal, state, and institution (college or university).
Deadlines are typically in January or February but possibly earlier if a student applies for early action or early decision. You can complete the FAFSA online at fafsa.gov beginning October 1 for the upcoming academic year.
2. FSA ID
The FSA ID (username and password) serves as your electronic signature for the FAFSA. It’s required each year for both dependent students and parents and can (and should) be created before the FAFSA opens.
3. CSS PROFILE
The CSS Profile helps colleges determine eligibility for need-based grants and scholarships. It collects in-depth financial information from the family, and, unlike the FAFSA, colleges and universities can add their own questions, allowing for more flexibility when determining eligibility.
The CSS Profile is used by roughly 400 colleges and universities (mostly private) and costs families $25 for the first school and $16 for each additional school. The CSS Profile also opens on October 1 for the upcoming year.
4. EXPECTED FAMILY CONTRIBUTION (EFC)
The Expected Family Contribution (EFC) is a measure of how much a family can contribute to college expenses for one year. It is calculated using information reported on the FAFSA.
Colleges that require the CSS Profile (or their own application) in addition to the FAFSA will use those forms to determine eligibility for institutional aid.
5. COST OF ATTENDANCE (COA)
Cost of Attendance (COA) is a school’s total cost for the academic year. It includes direct expenses (tuition, fees, and room and board) and estimated indirect expenses (books, supplies, travel, and miscellaneous or personal expenses).
6. FINANCIAL NEED / FINANCIAL AID ELIGIBILITY
Financial Need (sometimes referred to as Financial Aid Eligibility) is determined by subtracting a family’s EFC from the COA. Colleges and universities use this figure to award need-based financial aid.
Since each school has a different COA, and EFC is constant, Financial Need will vary. This may impact the amount of financial aid your student receives from each college or university.
Example: A family has a $20,000 Expected Family Contribution (EFC).
College A has a Cost of Attendance (COA) of $50,000.
$50,000 − $20,000 = $30,000 of Financial Need for the family at College A
College B has a Cost of Attendance (COA) of $60,000.
$60,000 − $20,000 = $40,000 of Financial Need for the family at College B
7. NEED-BASED FINANCIAL AID
Financial aid awarded to students based on the financial need of the family is considered need-based. This type of financial aid can take many forms but typically includes grants, scholarships, federal work-study, and subsidized loans. Need-based financial aid comes from various sources, including the federal government, state government, college or university, and private organizations (in the form of scholarships).
8. MERIT-BASED FINANCIAL AID
Merit-based financial aid is awarded to students based on high school achievements (covering areas like academics, athletics, and the arts). Unlike need-based financial aid, merit-based aid does not consider a family’s finances in the awarding process. Not all schools award merit-based financial aid, so make sure you check with a college or university first.
9. STICKER PRICE VS. NET PRICE
Sticker Price (sometimes referred to as Published Price) is the price posted by colleges and universities. Net Price, on the other hand, is the price a family pays for college after any grants or scholarships are deducted.
When comparing schools based on cost, it’s important to use net price, not sticker price, for a more accurate apples-to-apples comparison.
10. NET PRICE CALCULATOR
A net price calculator is a free online tool required for colleges. It allows families to estimate their net price to attend. A college’s net price calculator may ask questions about the family’s finances and certain aspects of the student’s high school academics or outside achievements, including GPA, test scores, and extracurricular activities.
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