Top 6 Financial Aid Questions

Top 6 Financial Aid Questions

Here are answers to some of the most common questions people ask about financial aid.

Q: Are a student's chances of being admitted to a college reduced if the student applies for financial aid?

A: Generally not. Nearly all colleges have a policy of "need-blind" admissions, which means that a student's financial need is not taken into account in the admission decision. There are a few selectivecolleges, however, that do consider ability to pay before deciding whether to admit a student. Some colleges will mention this in their literature; others may not. The best advice is to apply for financialaid if the student needs assistance to attend college.
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Q: How does the financial aid system work in cases of divorce orseparation? How are stepparents treated?

A: In cases of divorce or separation, the financial aid application(s) should be completed by the parent with whom the student lived for the longest period of time in the last 12 months. If the custodial parenthas remarried, the step-parent is considered a family member and must complete the application along with the biological parent. If your family has any special circumstances, you can discuss these directlywith the financial aid office. (Note: Colleges that award their own aid may ask the noncustodial biological parent to contribute.)
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Q: I will be receiving a scholarship from my local high school. How will this scholarship be treated in my financial aid award?

A: Federal student aid regulations specify that all forms of aid must be included within the definition of need, and need-based aid recipients cannot receive more than the cost of education. This means thatadditional aid such as outside scholarships must be combined with any need-based aid you will receive; it may not be kept separate and used to reduce your family's contribution.

If the college has not filled 100percent of your need, it will usually earmark outside scholarships to close the gap. Once your total need has been met, however, the college must reduce other aid and replace it with the outside award.

Most colleges will allow you to use some, if not all, of an outside scholarship to replace self-help aid (loans and Federal Work-Study) rather than grant aid.
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Q: I know we're supposed to apply for financial aid as soon as possible after January 1. What if I don't have my W-2's yet and my tax return isn't done?

A: The first financial aid application deadlines usually fall in early February, and many are much later. Chances are you'll have your W-2 forms by then, but you won't have completed a tax return. If that is thecase, complete the financial aid application using your best estimates. Then, when you receive the Student Aid Report (SAR), you can use your tax return to make corrections.
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Q: Is there enough aid available to make it worthwhile for me to consider colleges that are more expensive than I can afford?

A: Definitely. More than $60 billion in aid is awarded to undergraduates every year. With more than half of all enrolled students qualifying for some type of assistance, this comes to more than $5,000 per student.

You should view financial aid as a large, national system of tuition discounts, some given according to a student's ability and talent, others based on what a student's family can afford to pay.

If you qualify for need-based financial aid, you will essentially pay only your calculated family contribution, regardless of the cost of the college. You will not pay the "sticker price" (the yearly budget listed in the college catalog), but a lower rate that is reduced by the amount of aid you receive.

No college should be ruled out until after financial aid is considered. In addition, when deciding which college to attend, consider that the short-term cost of a college education is only one criterion. If a school meets your educational needs and you are convinced it can launch you on an exciting career, a significant up-front investment might turn out to be abargain over the long run.
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Q: If I don't qualify for need-based aid, what options are available?

A: You should try to put together your own aid package to help reduce your parents' share. There are three sources to look into.

First is a search for a merit scholarship during the initial stages of the aid application process. Second is employment, during both the summer and the academic year. The student employment office on campus should be able to help you find a job during the school year. Third is borrowing.

Even if you don't qualify for need-based loan programs, the Unsubsidized Federal Stafford Student Loan and Unsubsidized Direct Loan programs are available to all students. The terms and conditionsare the same as the subsidized loan programs, except that interest accrues while you are in college. After you have contributed what you can through scholarships, employment, and loans, your parents will be faced with their share of the college bill.

Many colleges have monthly payment plans that allowfamilies to spread their payments over the academic year. If these monthly payments turn out to be more than your parents can afford, they can take out a parent loan.

By borrowing from the college itself, from acommercial agency or lender, or through the Federal PLUS Loan program, parents can extend their college payments over a 10-year period or longer. Borrowing reduces the monthly obligation to its lowestlevel, but the total amount paid will be higher due to principal and interest payments.
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