A Guide to Understanding Financial Aid

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Applying to college is one thing — paying for it is another. In this article, we've partnered with CollegeAdvisor.com to bring you a guide to financial aid and scholarships. For more tips on how to succeed in college admissions, create a free account and check out CollegeAdvisor’s extensive library of free webinars and articles.

Understanding Financial Aid and Scholarships 🤔

Financial assistance exists in two categories: need-based aid and merit aid. Need-based aid is awarded based on your family's demonstrated financial need as understood through the FAFSA and CSS Profile. In contrast, merit aid is awarded based on test scores, grades, and other qualifications.

Check out this guide on how to complete a scholarship search and tips on how to get scholarships for college.

The Financial Aid Process: Need-based Aid 💸

About 90% of first-time, full-time undergraduate students at private universities and 84% at public institutions receive financial aid to attend college. If you plan to apply for assistance, check out the rest of the article as well as Fiveable's financial aid guide and CollegeAdvisor’s financial aid FAQ.

The FAFSA 📋

The FAFSA, or Free Application for Federal Student Aid, is the most important document for students seeking financial aid. All students must complete the FAFSA in order to be considered for financial aid. The FAFSA is free to complete and can be completed online beginning on October 1st of each year.

When completing the FAFSA, you’ll provide your name, address, and other personal details, as well as your family's financial information. As you prepare to fill out the FAFSA, have the following on hand:

• Your Social Security number 📇
• Your parents' Social Security numbers, if applicable 🗃️
• Your driver's license number, if applicable 🚗
• Your or your parent’s federal tax information or tax returns, including IRS W-2 information 🧾
• Records of any untaxed income received by you or your parents 📁
• Information on your or your parents' assets, including bank account balances, investments, and real estate 🗄️

Be sure to set aside enough time to gather your documents and work with your family to complete the FAFSA in the fall of your senior year 🍂 Remember that the application opens Oct 1st, and it’s a good idea to be ready to submit as close to that date as possible 🍂

Use these articles to understand what FAFSA is and the application process for FAFSA.

The CSS Profile 📜

Administered by the College Board, the CSS Profile is another important part of the financial aid process. Like the FAFSA, colleges use the CSS Profile to better understand the financial support you may need. However, the CSS Profile allows you to present the narrative of your financial situation in greater detail.

The CSS Profile does require a fee, though fee waivers are available for those with extenuating circumstances. Unlike the FAFSA, not all colleges require the CSS Profile, so do your research!

When filling out the CSS Profile, you will want to have the following documents handy:

• Your or your family's most recent tax returns 🧾
• W-2 forms 📝
• Records of current year income 🖨️
• Records of untaxed income and benefits 📁
• Records of assets and bank statements 🗄️

I've filled out the forms — now what? 🤷

After you've filled out the FAFSA and CSS Profile (if applicable) and submitted them to the relevant schools, you're all set until decisions are released.

Once you've received your admissions decisions, colleges will follow up with your financial aid awards. In order to calculate financial aid awards, colleges use the FAFSA and CSS Profile to calculate your Expected Family Contribution (the amount of money they believe your family can pay given your circumstances). The rest of your tuition is then covered by your financial aid award.

Most financial aid awards include the following components:

🤑 Grants: Grants are financial aid awards given directly to a student that do not need to be paid back. There are four main programs:

• Federal Pell Grants
• Federal Supplemental Educational Opportunity Grants (FSEOG)
• Iraq and Afghanistan Service Grants
• Teacher Education Assistance for College and Higher Education (TEACH) Grants

🏦 Loans: Loans are financial aid awards that are designed to be paid back over time. There are four types, and the fixed interest rate for each is set by the federal government.

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct Plus Loans
• Direct Consolidation Loans

Every college has a different approach to financial aid. To get a better sense of how much a particular university covers, make sure to visit their admissions page, where you’ll find an average percentage of covered tuition/costs for the previous year. Financial aid awards may also include work-study or other provisions.  

The Financial Aid Process: Merit Aid 🤩

Merit aid is financial assistance afforded to students based on merit rather than need. Merit aid can result from a student's test scores, grades, or overall profile. Nearly all merit aid comes in the form of grants.

Unlike need-based aid, there is no streamlined process for merit aid. Some merit scholarships are awarded by particular schools, while others operate independently.

Interested in merit aid? Start with these questions:

• 🏫 Do the schools on your list offer scholarships?

Some schools—particularly larger state schools—offer substantial merit scholarships. Often, you’ll need a certain GPA and test scores to apply, even at test-optional schools. Plan to take the SAT or ACT. Your scores may create more scholarship opportunities.

• 💪 What national scholarships are you eligible for?

There are many major scholarships available to students on the national level that you can find through a quick Google search. Note: these can be competitive, so start strategizing early if you're hoping to apply.

Check out this list of 40 national scholarships and read more about the most famous scholarship, the National Merit Program.

• 🤝Are there local/regional scholarships available?

Local scholarships are often smaller in value but can quickly add up. Ask your guidance counselor, teachers, and members of your community for their recommendations. If you or your parents belong to any organizations, faith communities, or foundations, check to see if they offer scholarships.

Make sure to read about how to find local scholarships with your college scholarship search.

Financial Aid: Final Thoughts 💭

Paying for college isn’t easy, but applying for both federal and merit-based aid can help take the pressure off you and your family. Remember to begin early, fill out all applications completely, and research national, local, and organization-based scholarship options. Good luck!