What is a fafsuh and why do I have to file after October 1st? What is a Common App and why is it so common? What is the difference between a grant and a loan? Which colleges are in wooee and what does that mean? When is a GPA weighted and does it need to go on a diet? Welcome to the wonderful world of acronyms and college jargon.
The definitions are divided into three groups: Financial Aid, College, and Standardized Testing.
Let's start with Financial Aid
Warning, there are enough acronyms to make you dizzy.
Financial Aid Terms
Free Application for Federal Student Aid. This no cost application is filed starting October 1st of the year before your student goes to college. In other words, fall of the senior high school year. It is available on-line https://fafsa.ed.gov/ . It should be completed as soon as possible. Since you are using tax returns from a prior year you should have all of your tax information. You will also use a current financial picture of your savings and investments. If you make a mistake, you can send corrections later. Federal Deadline: June 30. California aid deadline: March 2. Schools have their own deadlines, usually earlier than the federal and state ones. It must be refiled each year.
In general, the FAFSA looks at adjusted gross income, number of students in college, and parent and student assets.
The College Scholarship Service:Profile (CSS:Profile) is an online application for financial aid required by over 200 private schools. These schools tend to be more selective in their application acceptance rates (under 30%). It is provided by the College Board, the place you register to take the SAT. It asks more detailed questions than the FAFSA delving more into your assets, home equity, and income. The private schools require that you file BOTH the FAFSA for Federal Aid and the PROFILE for aid from the school. Some private schools use the FAFSA only (e.g. Loyola Marymount, University of Puget Sound). Each school decides how much to question or how deep into your financial picture they want to probe, so read each application carefully.
The PROFILE is available starting Oct. 1 of each year. You must check your selected colleges filing deadlines to find out when it has to be submitted. As with the FAFSA you use prior year's tax returns. The application costs $25 for the first application and $16 for each subsequent one. (2015) There are fee waivers available if the College Board deems the family eligible. https://student.collegeboard.org/css-financial-aid-profile The application must be renewed each year.
The CSS:Profile considers adjusted gross income, number of students in college, parent and student assets, and home equity, . Look for a more detailed description in the upcoming discussion: Financial Aid 101.
Cost of Attendance (COA) is the total amount including tuition, room and board, books, campus fees, health coverage on campus, personal expenses and activity fees. Some COA include transportation costs to and from campus. You can look up or Google the COA for any school. In 2015, for instance the COA for UCLA for a California resident is $33,898; for Stanford $64,477; for Cal State Northridge $16,136 without room and board, $21,224 with on campus housing. PLEASE NOTE: THIS IS THE “STICKER”PRICE. Despite what you might think, few students actually pay the entire “sticker” price. They are usually very high income or international students. You can get an idea of your personal sticker price by using a Net Price Calculator
NET PRICE CALCULATOR:
Not all net price calculators are created equal. If it only asks a few questions about your family’s economic status, then it may not be that useful. NOTE the calculator will not tell you exactly what your financial aid offer will be, it shows your eligibility for both Federal and private (college based) aid. You can search for “net price calculator” on any college or university website. Usually it will take you to one run by the College Board. Enter as a “Guest” and see what it says.
GRANTS and SCHOLARSHIPS:
Grants and scholarships are basically “free” money that you do not have to pay back. There are Federal grants such as the PELL grant (this year’s max is. $5,775, the amount changes each year) the FSEOG (Federal Supplemental Education Opportunity Grant is for low-income students) ($100-$4,000). There are state grants like the Cal Grant. And there are grants given out by the colleges themselves.
Scholarships are given by either the schools or private sources.
For the best information on federal aid
Cal grants are grants for California residents (and Dream Act students) who are attending school in California. There are Cal Grants A, B, and C. The application deadline is March 2. http://www.csac.ca.gov/ . There are various restrictions on the use of the money and the type of post-secondary education it can be used for. The Cal Grant C is for vocational or career training.
MIDDLE CLASS SCHOLARSHIP (California)
This is a program for California residents attending schools in the UC and Cal State system. http://www.csac.ca.gov/mcs.asp . PLEASE note, it is dependent on state funding and may be discontinued. It is a scholarship for tuition and is available to families with incomes up to $150,000 and household assets up to $150,000. Application is done through the FAFSA. For families earning $100,000 and under the scholarship award is up to 40% of tuition and fees. http://admission.universityofcalifornia.edu/paying-for-uc/glossary/middle-class-scholarship/index.html
UC BLUE AND GOLD OPPORTUNITY PLAN (California)
For California families whose total family income is under $80,000, AND the family qualifies for financial aid; the plan covers tuition and fees at any UC. Note, this does not cover room and board. The plan combines federal, state, and institutional aid. It covers first 4 years of college or 2 years for a transfer student. http://admission.universityofcalifornia.edu/paying-for-uc/glossary/blue-and-gold/index.html Application is based on the FAFSA and UC application.
A SAR is a Student Aid Report. It will be sent to you by the government in a few weeks after filing the FAFSA. It will show how much the government expects your family to pay for college, what loans, grants, or work study the student would be eligible for both from State and Federal sources. Any amount that remains, that is left over between what the government offers and what they expect your family contribution to be, is the “gap.” This gap in funding may be filled by the grants, loans, and scholarships that the college might offer in its Financial Aid Package
FINANCIAL AID PACKAGE
A Financial Aid Package is a document created by the college. It is based on your FAFSA filing, and the CSS:Profile (if this is required by that college). The Financial Aid Package or Award Letter will list all of the Federal and State aid, but more importantly what the individual college is offering whether it is grants, merit scholarships, scholarships, or suggested loan amounts for 1 year of college. Since the financial aid applications are refiled every year, the financial aid package is only for the first year.
These Award Letters are notoriously difficult to understand, much less compare between colleges. Make sure that the COA (cost of attendance) includes room and board if your student is living on campus. Carefully review the loans for both the parents and the students. You are not obligated to take out these loans. If you own property you might be able to use a lower interest Home Equity Loan or Line of Credit.
The Financial Aid Package usually comes with or around the time of the acceptance letter. However, the UC’s and some Cal States are very slow and it may take an extra 2-3 weeks.
If you have ANY questions, call the college Financial Aid Office. They actually do want to talk to you about making your child’s college dreams come true, if they can.
EFC is the Expected Family Contribution. In other words it is the amount of money that the school expects the family of the student to be able to come up with to pay for a year of college. You can get a rough idea of your EFC by filling out the FAFSA Forecaster. https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1 . Note that the number of students who are in college at the same time will generate a lower EFC. That’s a little bit of help for parents of twins and siblings closer in age. For instance using a UCLA’s COA of $34,000, a family with an income of $54,000 has an EFC of $4,197. A family earning $80,000 has an EFC around $11,000. A family with $150,000 income has an EFC of around $33,000.
Note: this is not necessarily the amount the family HAS to come up with in cash. It is what is can be expected, however, the school may determine the need for more aid.
FEDERAL LOAN TYPES:
There are two major types of Federal Loans -- Subsidized and Unsubsidized.
Direct Subsidized Loan
In this loan the government pays the interest while the student is attending college. It is for students when they are undergraduates. The repayment period starts 6 months after graduation or drop-out. It has a 10 year repayment term and is offered at a low interest rate, currently 4.29% for undergraduates. There is a $3,500-$5,500 yearly limit dependent on what school year (freshman, sophomore etc.). This is a financial need based loan. https://studentaid.ed.gov/sa/types/loans
Direct Unsubsidized Loan
With this loan interest starts accruing when the money is disbursed and it is added to the loan amount. However, payment can be deferred until 6 months after graduation. It is not need based, so any undergraduate, graduate, or professional student can apply for it. There is a 10 year payback term and currently the interest for undergraduates is 4.66%. https://studentaid.ed.gov/sa/types/loans
Just to confuse you, this is another name for Federal Direct Subsidized or Unsubsidized loans.
Federal Perkins Loan (subsidized)
This is a loan that is available through the school or institution for undergraduates with exceptional financial need. There are no loan fees. It is subsidized so the interest does not accrue while the student is in school. The repayment period starts 9 months after graduation. The interest rate currently is 5%. Not all schools offer this. Students may borrow up to $5,500 a year to a maximum of $27,500. Amounts can be considerably higher for graduate students. https://studentaid.ed.gov/sa/types/loans/perkins
Direct PLUS Loans (unsubsidized)
These federal loans are for parents of undergraduates. They are also for graduate and professional students. Applicants must not have a negative credit history. The maximum amount is the Cost of Attendance minus any other financial assistance. The loan rate is currently (2015) 6.84% for parents. Interest accrues when the loan starts and there are loan fees around 4.2%. The repayment period is between 10-25 years. https://studentaid.ed.gov/sa/types/loans/plus
Other Federal Aid Federal Work Study
Federal Work Study can be part of a financial aid package. Under work study a student can find paying part-time work on campus. The student is paid by the college and can use the money to pay for tuition, books, etc. https://studentaid.ed.gov/sa/types/work-study Award of work-study is based on demonstrated financial need.
Now take a breath and relax. Many of these terms are explained and defined. You just need to know where to look. If you run across a new term to add to the definition, please let me know. GetSmartforCollege@gmail.com
I will be posting a series of blog posts about Financial Aid. I am not a financial aid expert and do not pretend to be. I will help you understand what financial aid is in the context of both public and private college institutions. I will provide plenty of resources for you to explore and extend your understanding. You can do this without losing your cool, well, would you believe, without losing all of your cool?