Financial Aid Basics

Financial Aid is money that can help students pay for college.  This money comes in many forms, such as grants, loans, work-study, and scholarships. It can come from the Federal or State governments, the student’s college, or from private organizations.  Applying for financial aid can be intimidating and time-consuming, so many students fail to apply.  But with a bit of support, the application process can be smooth and easy, and students can get the money they need to make their college dreams come true.

Learn more about the types of financial aid and how to apply!

Grants, Loans, Work Study, and Scholarships: These are the four main types of financial aid for college students. Each type works a bit differently.

Grants: Grants are free money – gifts that the student will not have to pay back.  The federal government and the California government both offer grants to eligible students.

Loans: Loans are packages of money that will have to be paid back, with interest, after the student graduates from college.  However, some loans have the interest rates subsidized by the government.  Generally, loans offered by the government have better interest rates and repayment terms than those offered by private companies, so encourage your students to use all options offered by the government before turning to private student loans.

Work Study – Work study is when the government offers monMey to supplement a student’s wages from a term-time job, which allows the student to make better income or work fewer hours to support themselves during the year.

Scholarships – Scholarships are generally grants offered to a student based on a certain skill or quality the student possesses, such as academic accomplishments, athletic talent, or family background.  Most scholarships require their own application process.


Federal, State, and Institutional Aid: Financial aid is available from the federal government, from California, and from colleges themselves.

Federal Aid: Federal Student Aid issues grants, such as the Pell Grant (worth up to $5,730); loans, such as the Direct Subsidized and Unsubsidized loans and PLUS loans; and work-study funds.  Only US Citizens and Permanent Residents are eligible for aid from the federal government.  In order to receive any aid from the Federal Government, a student must fill out the Free Application for Federal Student Aid (FAFSA).

California State Aid: The state government of California also issues grants, such as the Cal Grant (worth up to $12,000+ a year) and BOG Community College Fee Waivers.  If a student is a California resident and will be graduating from a California high school, then they may be eligible for a Cal Grant.  In California, even undocumented students without US citizenship can apply for Cal Grants and BOG Fee Waivers!

Institutional Aid: Many colleges offer their own financial aid, as well.  All colleges will require applicants to complete either the FAFSA or the College Board’s CSS Profile application, and will then use that information to calculate a student’s eligibility for institutional aid.

FAFSA: The FAFSA (Free Application for Federal Student Aid) is the main application for all types of financial aid.

The FAFSA asks detailed questions about the financial situation of the student and his or her family.  It uses this information to calculate a number called the “Estimated Family Contribution” or EFC, which represents how much money they believe that the family can afford to pay for college. This EFC number will be shared with the student’s college financial aid department, to help the college make a financial aid decision.

The FAFSA becomes available each year on January 1st, and must be completed by March 2ndMake sure all your students fill out the FAFSA completely and carefully before the March 2nd deadline!  Otherwise, they may miss out on thousands of dollars of desperately needed money.

To get more details on helping students through the FAFSA process, visit our Resource Library for a collection of important and relevant resources.

Cal Grant: If a student has gone to a California high school for three or more years, then they may be eligible for a Cal Grant – giving them extra money for college – if their family’s income is below a certain threshold.

To apply for a Cal Grant, a student must fill out the FAFSA, and then make sure that their high school GPA and graduation records are confirmed with the California Student Aid Commission (CSAC).  High schools can electronically upload all of their seniors’ records at once using CSAC’s new electronic uploading tools.  This is a very important step to make sure that none of your students miss out on important grant money that will help them afford college!

To learn how to make sure your students receive their Cal Grants, visit our section on FAFSA and Cal Grant Applications.

Cal DREAM Act: The new California DREAM Act allows undocumented students who meet AB540 requirements and who have been going to a CA high school for more than three years to receive CA state financial aid, and in-state tuition at California public colleges.

These students should not fill out the FAFSA, but should instead fill out the CA DREAM Application.  They will not be eligible for any federal financial aid, but they may be able to receive a significant amount of money for college through a Cal Grant or BOG waiver.

For more information about advising these students, visit the College Gold Rush section on Special Situations.

After the FAFSA – Completion and Verification: There are many reasons a FAFSA application could process incorrectly – if a student misspells their name or incorrectly enters and other piece of identifying information, the application can be held up. Also, a fraction of FAFSA applications will be selected for verification.

Completion: A student’s FAFSA is not successful until the Estimated Family Contribution appears on the confirmation page of their FAFSA.  Many students miss out on their financial aid simply because they forgot to sign the forms!  Encourage your students to be very attentive and detailed with the FAFSA.

Verification: A certain fraction of FAFSA applications will be selected for “verification”, where the student’s college financial aid office will ask for financial documentation that supports the numbers that the student entered on the FAFSA.  Is these requests are not responded to quickly, the student may miss out on their financial aid.

After the FAFSA – College Decision Making: Many students think that they are done with the financial aid process when they click submit on their FAFSA. However, there are still many decisions that a student needs to make in order to choose an affordable college option.

Once a student has received their Estimated Family Contribution report from the FAFSA, each college to which they have applied will send an Award Letter, which details the financial aid that they will receive if they go to that college.  These letters can be complicated, but it is important to understand them.

A college’s “sticker price” is often very different from the actual cost of attendance, since many of the “more expensive” schools offer more generous financial aid packages.  Have your students make use of a net price calculator so they can understand which school will actually be the best financial option.

 

Additional Resources
Check out some of these additional resources for more information on this topic: