What Families and Students Need to Know About Paying for College
Prepared by Misti Ruthven
Having a discussion about how to pay for college can be a sensitive subject for many families and students. However, it is important for families to consider their “ability to pay” in the college selection process. As you’ll see in this section, there is an “affordable” college option for any and all students.
What is financial aid?
Financial aid is money that is given, borrowed or earned for educational purposes. Sources of financial aid include federal and state governments as well as the school/college/university the student attends and private businesses (common scholarship providers). Sometimes businesses offer tuition remission or payment programs for their employees as well.
Who is eligible for financial aid?
All students who are U.S. citizens or eligible non-citizens are eligible for some kind of financial aid. To be eligible for financial aid students must:
- Be a US citizen or eligible non-citizen
- Have a valid social security number (Note: Parents do not need a SSN for their children to apply for aid)
- Comply with Selective Service registration (if mail, age 18-25)
- Enroll at least half time in an eligible program at a college/university/vocational school, etc.
- Have a high school diploma or GED
- Be enrolled or accepted for enrollment as a regular student working toward a degree or certificate in an eligible program at a school that participates in the federal student aid programs
- Not have a drug conviction for an offense that occurred while receiving federal student aid (such as grants, loans or work-study)
- Not owe a refund on a federal grant or be in default on a federal student loan
- Demonstrate financial need (except for unsubsidized Stafford loans)
Where should families begin?
The Free Application for Federal Student Aid (FAFSA) is the universal application for financial aid for all schools in the United States. The only legitimate place for families to complete a FAFSA is www.fafsa.gov. One parent and the student must also apply for a Personal Identification Number (PIN) to electronically sign the FAFSA form.
- Families must complete the FAFSA each year their student attends college in order to receive aid.One FAFSA per student attending college per year.
- The earliest possible date a family can complete a FAFSA is January 1 of the year the student plans to attend school.For example, if a student plans to attend school in Fall 2014, the earliest date the family can complete a FAFSA is January 1, 2014.
- To complete the FAFSA families need:
o Social Security Numbers (this is required for students only)
o W-2 forms and other earning records
o Current bank statements
o Business and farm records
o Investment records
- Families are required to download their federal tax return data using the IRS Data Retrieval Tool in the FAFSA.However, if families are unable to provide the most current year’s tax information at the time of initial FAFSA completion, they can estimate using their prior year’s taxes. Families who are unable to download their federal tax return data may be required to request a Tax Transcript from the IRS if the student’s FAFSA is flagged for verification. Verification means that a student and/or family must provide additional information, upon request of the financial aid office in order to receive federal or state financial aid.
- The EFC or Expected Family Contribution is the number that is sent to the family after completing the FAFSA.This is how much the Federal government believes the family can afford to send their student to school. However, families will not necessarily need to write a check for this amount, but can use some types of financial aid to cover their EFC if they don’t have resources.
- The Cost of Attendance (COA) or how much it costs to attend a certain school minus the EFC equals the family’s financial need.Cost of attendance varies by institutions with two-year colleges generally being the lowest and private colleges usually the highest. Consequently, it is possible for families to not have a “need” at some colleges while having a “need” at other colleges. If this number is positive, then the family has “need” and may qualify for need-based aid.
TIP: The FAFSA does NOT look at the following assets for the student or their family:
- Life insurance plans
- Retirement plans
- Equity from primary residence
- Value of small business (if 100 employees or fewer)
- Farm when it is the primary source of income
Unique Family Situations:
Students must include one parent’s information on the FAFSA unless they are 24 years of age or older, a veteran, ward of the court, married, in graduate school, supporting dependents (and providing more than 50% of support), both parents are deceased, foster youth or unaccompanied homeless youth.
If the student’s parents have divorced or separated, they should answer only the questions about the parent that they lived with the most during the last 12 months. If the student did not live with one parent more than the other, answer only the questions about the parent who provided most of their financial support during the last 12 months. If this parent is remarried, the step-parent’s financial information must be included on the FAFSA.
Keep in mind that the Federal Department of Education believes it is the family’s responsibility to pay for their child’s education, regardless of their ability to pay or desire to pay.
BEWARE: Scam web sites charge families to submit their FAFSA information.