Misconceptions about paying for college
EVERY year, parents are shocked that the colleges their teen applied to didn’t award enough, or any, financial aid. It’s complicated. Here are a few things to understand before financial aid letters arrive.
• The FAFSA doesn’t award financial aid. Filling out the Free Application for Federal Student Aid determines whether your student is eligible for federal aid, including Pell Grants, FSEOG grants, work- study, and subsidised student loans.
“Submitting the FAFSA doesn’t mean you’re now getting financial aid,” says Vicki Beam, founder of Michigan College Planning.
Yes, a partial or full Pell is automatically awarded to eligible students, and all students who fill out the FAFSA, regardless of income, qualify for unsubsidised federal student loans (and many qualify for subsidised loans).
However, federal aid is packaged into the college’s financial aid award letter, which may include state grants and institutional grants, if your student qualifies, plus possible merit scholarships.
The FAFSA itself doesn’t give financial aid. It’s just the messenger.
• Your EFC isn’t the amount you’ll pay. Every family has an expected family contribution, or several, depending on the colleges your student applies to. Most use the FAFSA, but approximately 300 institutions also use the College Board’s CSS Profile, and 23 highly selective colleges use a “consensus methodology,” calculated using the CSS Profile.
Your EFC is a measure of your financial strength, and it’s understood to be the amount you can afford to contribute. But for most families, it’s not the amount they pay.
That’s because most colleges don’t offer enough aid to cover remaining costs above your EFC. Nor are they obligated to, says Michelle Kretzschmar, founder of DIYCollegeRankings. com, a website that provides information for families to compare colleges.
“I can’t stress enough to families that their cost is tuition, room and board minus grants and scholarships.
That’s your cost, no matter what your EFC is,” says John Falleroni, associate director of financial aid at Pittsburgh’s Duquesne University. Your EFC, or “FAFSA score,” as Falleroni prefers to call it, simply quantifies your demonstrated need. Many institutions, particularly public universities, cannot meet it. Even if your stellar student gets accepted to a competitive “meets need” institution, you’ll likely have to cover your full EFC - as that institution defines it.
Of course, exceptions exist. Hefty scholarships happen. But most families, experts say, pay more than their EFC - unless it’s higher than the cost of the college choice.
• Understanding your EFC does help. When the financial aid letters arrive, your EFC is useful for understanding if a college is affordable. You can use college net price calculators now to predict ballpark awards (merit scholarships may be tricky). Your EFC also helps define best colleges for your financial profile. It’s not too late to research which offer generous merit scholarships or need aid, and whether your student qualifies.
• A merit scholarship might not be enough. A US$ 20,000 ( RM84,000) annual scholarship sounds generous, but it can leave a bill of US$ 40,000 at a private college. If your EFC is US$ 10,000, that college isn’t feasible. Full scholarships exist, but they’re rare and typically are offered by geographically unpopular universities, Kretzschmar says.
• Loans might be the only “aid” your student gets. Officially, federal student loans aren’t financial aid. “When the federal government analyses colleges’ average net price after gift aid (grants and scholarships), it specifically excludes loans,” Kretzschmar says. However, loans might be the only package offered, particularly at a public university. — WP-Bloomberg