How much will a four-year college cost your student?
It depends on how much financial aid your student receives!
Parents often tell me, “We won’t qualify for financial aid.”
This depends on many factors, including your family’s financial “profile,” your child’s academic status, whether a college of interest offers merit scholarships, and whether your child completes the Federal Application for Federal Student Aid (FAFSA ).
There are four types of financial aid:
- Merit Scholarships: Awards are based on various factors, including academic achievement, athletics, artistic talent, and leadership skills. These funds are free and will reduce college costs. It is important to note that some of the most selective universities, including all Ivy League schools, do not offer academic merit scholarships. Often referred to as “gift aid.”
- Loans: If your student submits a FAFSA, they may be eligible for federal direct student loans. These funds are limited to $27,000 – $31,000 over four years and must be paid back with interest.
- Work Study: A federally funded part-time job for students with financial need. Financial need is determined by submitting the FAFSA. These funds do not reduce the college “invoice” but can cover college-related expenses such as books and supplies.
- Grants: Students who submit the FAFSA may qualify for need-based funds from federal or state governments or colleges. Often referred to as “gift aid.”
What is the formula to estimate your student’s financial need?
Let’s first look at some additional terms:
- Federal Application for Federal Student Aid (FAFSA): A student financial aid application used to determine federal aid eligibility. Colleges also use your child’s FAFSA information to determine institutional aid (aid awarded by the college).
- FAFSA Simplification Act Changes for Implementation in 2024-25: The U.S. Department of Education’s Office of Federal Student Aid (FSA) is launching a new FAFSA “sometime in December.” It must be launched by December 31. As a result, the 2024-2025 FAFSA will not open on October 1 – for this year only.
- Student Aid Index (SAI): This is a number calculated based on the financial information used by the FAFSA, such as student’s and parents’ income, assets, tax, and demographic information. Adjustments for family size remain, but the number of children in college are no longer counted. Note: This immediately replaces the old Expected Family Contribution (EFC).
- Cost of Attendance (COA): College costs before financial aid.
- Direct Costs (billable): Tuition, room, board, and fees.
- Indirect Costs (non-billable): Books, personal, transportation, etc.
- Financial Need Formula: COA – SAI
FINANCIAL NEED FORMULA: COA – SAI = Financial Need
- The COA can be obtained from a college’s website.
- SAI calculators should be available once the government releases the new FAFSA.
- General rule of thumb: If your SAI is greater than the COA, your student will not qualify for need-based aid (work-study, grants, subsidized student loans). If the SAI is less than the COA, your student may qualify for need-based aid.
Next week’s College Corner article will cover upcoming changes to the FAFSA.
Published in the Mendon Honeoye Falls·Lima·Sentinal