Financial Aid

The Beginner’s Guide to Financial Aid

Don't know your EFC from your COA? We cover that and more with this intro to financial aid.

The Beginner’s Guide to Financial Aid
Get the most out of your financial aid application by knowing more about how the process works.
If you’ve begun the college search, you’ve probably heard of a little thing called financial aid. The term is pretty self-explanatory; however, if you’ve talked to anyone who has filled out financial aid forms, the process is anything but simple. But it’s not impossible. Learning more about financial aid on a basic level can help you get a grasp of the process and the end goal as you’re sharing information with colleges and analyzing financial aid award packages. So why don't we start with a simple equation:



What’s up with the confusing acronyms? Let’s start with COA, which stands for Cost of Attendance. A school’s Cost of Attendance includes the total price for tuition, room and board, books, fees, transportation and an allowance of miscellaneous fees. You can typically find a university’s cost of attendance under their admissions or financial aid page. Federal law also requires colleges and universities to include a net price calculator as well that provides greater transparency into the true cost of attending that particular institution.
The net price calculator will ask a lot of the same questions as the FAFSA, such as parental income, student income and cash on hand. It will then provide a look at what the students and their family can anticipate to pay towards cost of attendance after scholarships, loans and self-help. You should also keep in mind that cost of attendance changes on an annual basis, so the net price for freshmen year may be different than sophomore year and so on.


The FAFSA, or Free Application for Federal Student Aid, is required to determine a student’s EFC, which stands for Expected Family Contribution. EFC is defined as what a family can realistically pay for college when it comes to finances and other circumstances. This FAFSA asks a lot of questions, similar to the Net Price Calculator, about parent assets, student income and student assets, all of which help to formulate EFC.
While the form asks a lot of financial questions, it also asks about the number of family members living in the household, number of students in college at the same time, ages of each family member and state in which the student resides. Unfortunately, most of the time, the EFC and what you can actually pay don’t equal the same number.


And that's where need comes in. Again, need is determined by Cost of Attendance minus Expected Family Contribution (COA – EFC = NEED). For instance, the total Cost of Attendance at an institution may be $50K while the Expected Family Contribution is $20K. That leaves $30K in need. While it would be ideal to get a scholarship for $30K, that’s not how the system works most of the time. Rather, the federal government and/or school will provide you with a financial aid package that contains scholarships or grants, loans and work study. Now that you have a basic understanding of what it takes to pay for school, it’s time to start strategizing. You can begin by maximizing your aid eligibility and saving for college today.

Financial Aid Options for Students

In order to make up the difference between what a college costs and what students and their families can actually pay, most students require scholarships and financial aid. There are different components to financial aid – so here is a brief breakdown: Scholarships and grants – Scholarships and grants are free money toward a college education that do not have to be paid back. They are often distributed based on academic performance, extracurricular involvement, and financial need. Students can secure scholarships and grants from the federal or state governments, colleges and universities, and public or private organizations. Loans – Student loans are money that is borrowed by the student, or their parents, in order to pay for college. These funds can be borrowed from the government or private lenders. After a six-month grace period after graduation, students must begin making loan payments toward their balance. Work Study – Work study is the final component of a financial aid package. A work study job allows students to find a job on campus and use the funds to either pay their tuition bills or be paid directly to the student. These jobs often come with flexible schedules and less working hours so that students can effectively balance their academic and work schedules.

Applying for Financial Aid

As mentioned above, the FAFSA is the application used for determining EFC and applying for financial aid. Without this application, a student cannot qualify for any aid money. The form is used by the federal government, state government, and colleges and universities in order to determine how much financial aid to give a student. Many colleges require a supplemental form to the FAFSA. These supplemental forms provide a more in-depth look at the student and their financial situation. Students must fill out a supplemental form for each college they are applying to; these forms are typically found on a college’s financial aid web page.

Financial Aid Next Steps

Now that you have a basic understanding of what it takes to pay for school, it’s time to start developing your strategy. You can begin by maximizing your aid eligibility and saving for college today.

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