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Provided
by: Collegeboard.org
And How It Makes College Affordable for You
Financial aid is intended to make up the difference between
what your family can afford to pay and what college costs.
Over half of the students currently enrolled in college receive
some sort of financial aid to help pay college costs.
In a Nutshell
The financial aid system is based on the goal of equal access
-- that anyone should be able to attend college, regardless
of financial circumstances. Here's how the system works:
- Students and their families are expected to contribute
to the cost of college to the extent that they're able.
- If a family is unable to contribute the entire cost, financial
aid is available to bridge the gap.
Who Decides How Much My Family Is Able to Contribute?
The amount your family is able to contribute is frequently
referred to as the Expected Family Contribution, or EFC. The
figure is determined by whom ever is awarding the aid -- usually
the federal government or individual colleges and universities.
The federal government and financial aid offices use "need
formulas" that analyze your family's financial circumstances
(things like income, assets, and family size) and compare
them proportionally with other families' financial circumstances.
What the EFC Figure Means for Most Families
First, most families can't just pay the EFC out of current
income alone. But, not to worry -- the formulas assume that
families will meet their contribution through a combination
of savings, current income, and borrowing.
Second, financial aid is limited. The formulas therefore
measure a particular family's ability to pay against other
families' ability to pay.
Three Main Types of Financial Aid
Financial aid is any type of assistance used to pay college
costs that is based on financial need.
Grants and Scholarships
Also called gift aid, grants don't have to be repaid and you
don't need to work to earn them. Grant aid comes from federal
and state governments and from individual colleges. Scholarships
are usually awarded based on merit.
Loans
Most financial aid comes in the form of loans, aid that must
be repaid. Most loans that are awarded based on financial
need are low-interest loans sponsored by the federal government.
These loans are subsidized by the government so no interest
accrues until you begin repayment after you graduate.
Work
Student employment and work-study aid helps students pay for
education costs such as books, supplies, and personal expenses.
Work-study is a federal program which provides students with
part-time employment to help meet their financial needs and
gives them work experience while serving their campuses and
surrounding communities.
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Don't Rule Out Colleges with Higher Costs
Say your EFC is $5,000. At a college with a total cost of
$8,000, you'd be eligible for up to $3,000 in financial aid.
At a college with a total cost of $25,000, you'd be eligible
for up to $20,000 in aid. In other words, your family would
be asked to contribute the same amount at both colleges.
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