Lots of families on campus ask about financial aid, as they rightfully should. Unfortunately, my answer tends to slip quickly into industry jargon that is crystal clear to me but (as evidenced by the many glazed looks in the room) much less familiar to families. This is not their fault, and a full dive into the process is going to take time and the expertise of school counselors, financial aid officers, and probably a fair bit of Googling.
But it’s summer, it’s early, and you’re shopping around so in the next few blogs I’m going to provide a “Beginner’s Guide to the Financial Aid Conversation” (and it really is just a beginner’s guide!). My goal: give you the street smarts and insight you need to understand the basics of financial aid.
This is information my colleagues and I wished we knew when we were seventeen. We represent an array of experiences. Some of us graduated with debt, others without, some needed financial help but didn’t get it, others got financial help but didn’t need it, some felt informed about the process, others (aka – most) felt clueless. But, regardless of who we were years ago, we all have one goal now: help you move through this process in a better and smarter way.
This brings us to today’s installment: Words and Phrases! Consider it a fun Jeopardy category. Below, you’ll find some common phrases translated into definitions and scenarios that anyone can understand. Consider this your glossary/decoder ring as you learn more on websites and campus visits about the details of specific institutions.
Quick disclaimer: I am not a financial aid officer and I cannot guarantee every possibility has been captured. That said, it might be helpful and make my explanations easier to follow. More details from experts will surely be needed in time, but I think this is enough information to give yourself a general framework, and prepare you for the next couple phases of the conversation: Common Scenarios, and Action Items. More to come on those soon!
Financial Aid/Financial Aid Package: A group of financing options extended to a student to help pay for their education. This can include some combination of grants (money a student doesn’t need to pay back, sometimes branded as scholarships), loans (money a student does pay back), and work study (money a student earns re-shelving books at the library).
Need Based Aid: Financial aid awarded as a reaction to a student/their family’s economic means, and what they might “need” to afford a college education. “Need” is defined by the institutions and the government, and may or may not coincide with a family’s perception of what they “need” to make college affordable. High income/asset families will, generally, not qualify for this type of aid.
Merit-Based Aid: Financial aid awarded as a result of something a student has done in high school or will do in college. These include athletic scholarships, arts scholarships, and academic scholarships. These are granted according to a student’s specific “merit” without regard to “need.”
Need Blind: A policy where all admissions decisions are made with no regard to or knowledge of a student’s financial need.
Need Aware/Need Sensitive: A policy where admissions decisions can be impacted by a student’s financial need. In the real world, that means decisions can be impacted by an institutions overall financial aid budget, and a student who does not need financial aid could receive a seat in the class at the expense of a student who does need financial aid. On the flip side, it also means an admissions committee can advocate for low income students. If you don’t know a student is living below the poverty line, you might not be able to adequately contextualize their achievements. In a “need aware” process, all decisions can be impacted by financial aid. In a “need sensitive” process, only some decisions will include finances as a factor. For example: Top candidates are admitted with no regard to financial need, but students who are debated in committee could be discussed in the context of the remaining budget.
Estimated Family Contribution (EFC): The amount of money a family can “afford” to contribute to the cost of their child’s education. This number is determined by the FAFSA and/or CSS Profile and is not always what a family expects.
Net Price Calculator: A website built by all American colleges that allows families to enter their information and get an advance sense of a student’s EFC and what they might qualify for in the realm of financial aid. These calculators take some time and are only as good as the information you provide, but should be highly accurate when populated with thorough and accurate data.
Meets Full Need: A policy where the university makes up the difference between a family’s EFC (aka, what the family can “afford” according to the forms and formulas) and the total cost of attendance with a financial aid package. Example: Family can afford (according to the CSS/FAFSA) $5,000 a year and the cost of attendance (tuition, housing, fees, etc.) is $60,000. A financial aid package amounting to $55,000 is awarded.
Does Not Meet Full Need: A policy where need or merit based financial aid may be awarded, but there is no guarantee that enough will be allocated to make attendance affordable for the family. Sometimes, a student receives as much as they need, or more. Example: A student whose family can afford the full cost of attendance is awarded an academic merit scholarship of $30,000. Other times, less funding than is needed is awarded. This is often called “gapping.” Example: A family can afford $5,000 a year and the cost of attendance (tuition, housing, fees, etc.) is $60,000. Student received $10,000 in need-based aid and a $10,000 merit scholarship. There remains a $35,000 “gap.”
This is enough to get you started on the basics. It’s a lot to process, I know! Give it a read, and let me know in the comments if you need further clarification. Again, we’re not financial aid officers, so our answers can only get you so far, but we’ll do our best to help!
If you're ready for Episode Two, all about common scenarios of what types of aid schools might give, go ahead and click here!