What is Student Financial Aid?


Simply put, student financial aid is funding to help the student pay for higher education.  Financial aid can be based on the family’s financial circumstance (Need-based) or the qualities of the student (Merit).  Financial aid can include grants, scholarships, work study and student loans.  As a general rule, merit aid is handled by the admissions office and need-based aid is administered by the financial aid office.

There are two types of need-based aid, “self-help,” or money you have to repay or work for, and “gift,” which is free.  Funds can come from federal and state governments, colleges and private sources.

The cost of attendance (COA) is the total cost of school for a given period (usually referring to a full academic year):

Tuition and fees

Room and board

Travel to and from school

Books and materials

The COA is used as the benchmark for your financial aid eligibility. To determine the student’s eligibility, the federal government and the college or university compares the COA to the student’s Expected Family Contribution (EFC), which is the amount the family is expected to pay each year toward the cost of college.  If the COA is higher than the EFC, the difference is the student’s need-based eligibility.   Unfortunately, not all of your need may be met, which leaves you with a certain amount of unmet need.

Depending on the college’s policies, the EFC can be calculated in two different ways. Using the Free Application for Federal Student Aid (FAFSA), which determines the distribution of federal aid, the process is called the federal methodology.  Then some schools, mostly private, also require the CSS Profile, which they use to distribute collegiate aid.  This calculation is called the institutional methodology.

When the student is accepted for admission, they will also receive a financial aid award letter that outlines the aid they are being offered.

The student must file the FAFSA each year and make sure to keep in contact with the financial aid office each year as the family’s circumstances can change.

OptimumEd highly recommends doing an estimated EFC calculation ahead of looking at potential college and universities, so the family has a good idea of their cost for a particular school will be.


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