Important Financial Aid Questions You Didn’t Know to Ask
Last Updated on November 17, 2021 by Jill Schwitzgebel
Before reading this, make sure that you fully understand the basics, such as what the FAFSA and the CSS Profile financial aid forms are. The forms represent federal methodology and institutional methodology respectively, for calculating college financial aid awards. If you are just getting started with college admissions and are not sure what those are, you may want to start here.
What is EFC?
That stands for Expected Family Contribution, and you receive that number after completing your FAFSA. The difference between your EFC and the college’s Cost of Attendance (COA) is what will determine your eligibility for federal aid. Colleges will use it to determine your family’s financial need.
What is COA?
This stands for the college’s total cost of attendance. That number includes direct costs like tuition, fees, room and board. It also includes projected indirect costs of items such as textbooks, transportation and personal expenses. These indirect costs may be higher or lower depending on your student’s personal circumstances.
What is Financial Need?
This is relatively simple – subtract your EFC from the COA. The tricky part is that most colleges will not meet full financial need, which would leave you with a financial aid “gap.” You will be left to figure out how to fill in that gap yourself. And if your EFC already feels high to you, that may be difficult.
What is a Net Price Calculator?
Every college is required to provide this to prospective students and a link is on their website somewhere. This will help you to estimate what the college costs, including how much financial aid the college will give to you. The accuracy of the results is only as good as the information you input. And remember, while calculators do vary, they will only calculate need-based aid and generally do not include any merit based aid that the college may award.
If EFC = Zero, is College Automatically Free?
Not usually. Only a very limited number of colleges will meet full need of every student. It does mean that you will be eligible for various federal and state aid programs. That will likely include loans though and still may not meet your full need.
What Effect Does Merit Aid Have on Financial Need Awards?
It depends. At most schools, outside scholarships will just reduce your COA, and so the college will respond by reducing need-based aid by that same amount. If the student receives a merit-based award from the college itself, they may do the same. But some schools will stack the merit-based scholarship on top of need-based aid, which could help you fill that financial aid gap. Many times, that depends on whether the school considers the student to be highly desirable (See Preferential Packaging, below).
Do Colleges Consider Ability to Pay in Admissions?
Sometimes. Some schools are “need-blind” and will not consider your ability to pay when making an admissions decision. This is true of most colleges with large endowments. That still does not mean that they will give you enough financial aid for you to be able to afford it, though they are usually quite generous
“Need-aware” colleges will consider your ability to pay, but still may provide financial aid that could be generous too. (Again, see preferential packaging.)
What is Preferential Packaging?
Colleges will sometimes distribute aid based not only on need, but also on how desirable they consider the applicant to be. In other words, the students that the college most wants to enroll will receive the best aid awards. Those packages will also include a greater percentage of grants as opposed to loans and work-study.
Are Scholarships and Grants Taxable?
If they cover tuition, fees, and books they are not. But, if they cover room and board, they are considered taxable income. Your student will receive a 1098T which will guide you at tax time.
Can a Student Declare Themselves Independent to Get More Aid?
Generally, no, this doesn’t work, unless the student genuinely has been self-supporting in high school. There is a long list of questions to determine if they can be declared as independent.
If My Student Attends College Out-of-State, Can They Become Residents for Tuition Purposes?
Usually not. In-state tuition is for students who graduated from high school in that state and there is no easy way to become an in-state resident as a full-time college student. Exceptions are when states participate in Tuition Exchange programs or when there are merit-based out-of-state tuition waivers. Some colleges do make it slightly easier to become a resident as a college student, but there are rules about how long the student must live in the state, money earned from employment, etc.
Which Parent Completes FAFSA in the Case of Divorced Parents?
The FAFSA is completed using the information from the parent that the student has lived with the most for the past year. It doesn’t matter which parent claims the student on taxes or which parent earns more. If the student has lived the same amount of time with each parent, then the parent who provides more support completes the FAFSA.
