Paying for College

Find Out About Colleges Financial Aid

Three Key Questions To Ask

It is important to get a sense of the financial aid practices used by the colleges you are considering before you begin the actual FAFSA process in the spring of the senior year. Below are three key questions you should ask of financial aid and/or admission personnel at all of the colleges on your list early in the information-gathering process.

1. Does the college or university meet 100% of demonstrated financial need?

If they do, your EFC will reflect the total your family will be expected to pay. If they don't, however, be very careful. Let's say a student has a demonstrated financial need of $10,000. If the college does not guarantee they will meet 100% of financial need and they only offer $7,000 worth of financial aid, the family must pick up the additional $3,000 even though the federal formula says they should only be expected to contribute the amount of their EFC. The college in this example has added $3,000 to the family's bill.

Tip: Just because the federal formula gives a student an EFC, it doesn't mean every college will honor the calculation and fully meet the student's financial need.

2. Does the college or university make any changes to the federal formula in figuring student need and institutional financial aid awards? (In other words, does the college also use an Institutional Methodology?)

This is important because some colleges and universities do not rely solely upon the federal formula. For example, currently the federal formula doesn't include home equity, cash values in life insurance policies, or retirement funds, all of which may allow you to borrow from them. Some colleges and universities (often more selective schools) include these kinds of resources, which could mean that the college will expect the family to pay more, even if the federal formula doesn't say that they should. It is also possible that an institutional methodology may generate a lower EFC than what is calculated under the federal formula. When a college chooses to look at these additional factors, they usually require the student to complete another financial aid form - often a form called the CSS Profile.

Note: These adjustments will only affect financial aid from the college (not federal or state grants).

Tip: You need to find out if a college makes any adjustments to the federal formula that would affect your EFC.

3. What will your financial aid award from the college or university contain?

In meeting your financial need, how much of the award will consist of scholarships and grants (money you won't ever have to pay back)? How many hours will you have to work each week as a part of a campus-based work study program? How much loan debt will you incur each year and how much will it total over your years in school?

Here's an example. You apply to two colleges of similar cost and show $10,000 of financial need at each. One college gives you a $1,000 scholarship, a $1,000 job on campus and $8,000 in loans. The other college gives you an $8,000 scholarship, a $1,000 job and a $1,000 loan. Which is preferable? The first one will give you $32,000 worth of loan debt after four years, and the other will leave you with only $4,000 worth of loan debt after four years.

Tip: You need to get some idea ahead of time from a college's admission or financial aid personnel about their tendency to give scholarships and/or grants in meeting financial need versus loans.