Today I am sharing a story of a student I recently worked (I'll call him Sam) who was eligible for (and received) need-based aid.
Before I share Sam's story, I’d like to explain that college financial aid can come in 4 main forms:
1. Grants - grants are FREE money, they do not have to be repaid.
Grants can be either need-based or NON-need based (non-need-based aid is not dependent on a family's financial situation and is typically given for GPA and SAT or ACT scores).
Grants can come from a college’s own funds (private colleges give the largest grants) and/or from the state or federal government.
2. Loans - either federal (which usually have low interest rates and are capped each year) or private (best to stay away from those).
3. Work Study - the opportunity (not the guarantee) to get a job on campus and use that money to help pay for college expenses.
4. Outside scholarships - from sources outside of the college or
the government-- such as from the Kiwanis Club or Dollars for Scholars (usually not the best way to spend your time). More on private scholarships here.
The best type of aid to get, of course, are grants and scholarships -- grants (aka FREE money).
Here’s the example of how a generous need-based grant reduced the cost of a private college for Sam.
Sam's family had an Expected Family Contribution (or EFC) of around $5,000 (if you do not know what an EFC is you can learn about it in this blog post)
Sam's family had saved some money for college money for college and could afford to pay about $15,000 per year. Sam hoped to go to a small, private college.
Because Sam's EFC was low we targeted schools for hime that we thought would give him good need-based aid.
He applied to 8 schools -- and would have been happy to attend any of them. He had a number of offers, some better than others.
Sam’s choice was a small, private liberal arts college in Pennsylvania that offered him $51,840.00 PER YEAR in need based GRANT aid (aka FREE money):
The need-based grant (aka FREE) monies reduced the sticker price of $72,150 to $20,310:
$72,150 - $51,840 (grants/scholarships) = $20,310
Sam was also awarded $6,000 in federal loans and work study monies...not free money, but a way to help pay the remaining balance over time.
In this example...
... the cost of this small, private college was less than what Sam would have paid at his state’s public college.
This is not, of course, always the case. But with a willingness to do some research, the possibility exists for many.
Major point: If you want to bring down the sticker price of college, you need to choose the colleges you apply to based on the type of financial aid -- need or merit -- that you are most likely to qualify for.
If Sam's family did NOT have financial need (as demonstrated via the required formula(s)) he would gotten NO or very little aid at this school.
Some colleges do a great job with need-based aid, some do a great job with merit aid, and some do well with both.
If I had just one opportunity to give a tip to a family (that can't or doesn't want to pay full price for college), this is the tip I'd give:
If cost is a factor in your college decisions, as it is with most families, you need to determine if you will qualify for need or merit based aid (or both) before you start creating a list of colleges to apply to.
To learn how to figure out if your family is more likely to qualify for merit aid or need-based aid, go >> here <<
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