Understanding the Financial Aid Process

Knowing how colleges calculate your expected contribution is the key to maximizing your aid.


Billions of dollars in financial aid grants, scholarships, work-study jobs and low-interest loans are available each year. Understanding the financial aid process will help your child receive the best aid possible.

What's Your Expected Family Contribution?

The key to the aid process is your Expected Family Contribution (EFC), which colleges figure by running your family situation through a financial aid formula. The EFC is the amount of money you'll be expected to pay each year for your child's college education -- whether it's with current income, borrowed money or assets (such as stocks and bonds) that you sell.

Your EFC is based on a number of factors, including: family size, marital status, age, adjusted gross income, untaxed income, value of assets (such as savings, investments, business assets and, for some schools, home equity), taxes paid and some even the type of tax return you file. If special circumstances exist, such as high medical expenses or loss of income, a college financial aid officer may be able to adjust your EFC. The money you save for education will affect your child's aid eligibility, but not as much as your income will.

Your EFC will be compared to the college's cost of attendance: tuition, fees, room, board, books, transportation and personal expenses. If the EFC is less than the college's cost of attendance, you've demonstrated need and are eligible for aid.

Navigating the Financial Aid Process

So how do you maximize the benefits of financial aid? By following application deadlines and instructions carefully, and preparing in advance.

1. Estimate your income and expected income taxes before year-end. Some schools have aid-form deadlines in late December and early January, so it's acceptable to estimate your income and tax figures on the forms. Your application won't be kicked out if your figures are a bit off.

2. Have your son or daughter complete and submit the Free Application for Federal Student Aid. All students seeking financial aid must file the Free Application for Federal Student Aid (FAFSA) after January 1 for the following academic year.

3. Have your son or daughter register for PROFILE. Produced by the College Scholarship Service, PROFILE is a more detailed financial aid analysis form than the FAFSA, and is required by many private and some state colleges. When your student registers for it, the form will be customized to include extra questions on behalf of the schools your student designates. If your student is considering a school that requires the PROFILE form, she should register for the form four weeks before her earliest PROFILE deadline. Her high school guidance office will have registration materials.

4. Make a master list of forms and their deadlines. Many schools require forms in addition to the FAFSA, and the penalty for missing a filing deadline can be severe -- some schools have no qualms about reducing a financial aid package by thousands of dollars when forms aren't received on time.

5. Double-check completed forms to see that all required signatures are in place. Make photocopies of all original documents submitted, and keep track of the date the forms were mailed. You might also wish to send the paperwork in a trackable manner, so you get confirmation that it arrived safe and sound (the U.S. Postal Service has inexpensive options such as delivery confirmation or certified mail, return receipt).

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