The Basics of Financial Aid for Collegeed
By on May 23, 2009
As nervous as college freshmen may be, their cash-strapped parents are probably trembling more. Disciplined savings using any or a combination of the options mentioned above may not cover the full expense of a college education. As they have for the last ten years, college costs rose faster than inflation this year. For the 2009-10 school year, a college freshman can expect to pay anywhere between $15,000 and $60,000 for a full year of tuition, room and board, books, etc.
But many college students don’t pay full sticker price. 63% of students receive some form of aid, either loans, grants, or both, according to the National Association of Student Financial Aid Administrators.
This year’s College Board data on financial aid show that almost $143 billion in student aid was distributed in academic year 2007-08-almost $10 billion more than the previous year. In addition, students borrowed almost $19 billion dollars from nonfederal sources to help finance their education. On average, undergraduate students received an average of $8,896 in aid in the form of grants and tax benefits. Graduate students received an average of $20,320 in aid.
College financial aid departments will require the Department of Education’s Free Application for Federal Student Aid (FAFSA) form, available at www.fafsa.ed.gov, which provides financial details of the parents and student. It is important to file the FAFSA form early as some grants are given on a first-come-first-serve basis.
Financial aid is intended to make up the difference between what a family can afford and what college costs. The federal government and all public college financial aid offices use a “need formula” that analyzes a family’s financial circumstances and compares them with other families. The results will vary by college and by state, but the Expected Family Contribution (EFC) formula assumes family contributions are met with savings, income and borrowing. If a shortfall of college funds does exist, financial aid is awarded. This aid can be in the form of grants, loans, and work-study programs.
