what does it mean to get financial aid

by German Streich V Published 3 years ago Updated 2 years ago

Financial aid is any college funding that doesn't come from family or personal savings or earnings. It can take the form of grants, scholarships, work-study jobs, and federal or private loans. Financial aid can be used to cover most higher education expenses, including tuition and fees, room and board, books and supplies, and transportation.

Full Answer

What are the disadvantages of financial aid?

The Disadvantages of Financial Aid

Loans. You must pay back your student loans after graduation. ...
Scholarships. The good thing about a scholarship is that you don't have to pay back the money that the organization gives you.
Employer Financial Aid. Many employers offer to reimburse their workers for education that relates to the job. ...
Easy Availability. ...

What are the four types of financial aid?

Types of Financial Aid

Grants. Most grants are awarded based solely on financial need and have no requirement of repayment. ...
Scholarships. Scholarships are funds that are awarded based upon academic achievement. ...
Loans. Loans are low-interest awards that must be repaid after students terminate their studies at the University.
Federal Work Study. ...

What can affect your financial aid?

What can affect your Financial Aid?

The Courses you choose. ...
For Federal aid only. ...
First-time New York State Grant and Scholarship (TAP, WTC, etc.) Recipients must be registered full-time, however at least six credits must be college-level class work.
Before You Drop a Class, Withdraw from College, or Simply Stop Attending. ...
Important. ...
You do have alternatives to consider. ...

More items...

What do you need to know about financial aid?

Social security number (including your parents’ if you are a dependent student)
Driver’s license number, if applicable
Federal tax information or returns (including parents’ or spouse’s, if applicable)
Records of untaxed income
Bank account, investment, and real estate asset information

What does it mean to receive financial aid?

Financial aid is money to help pay for college or career school. Grants, work-study, loans, and scholarships help make college or career school affordable. Grants.

Is financial aid free money?

However, the FAFSA enables the student to qualify for many types of financial aid from several sources. Some of this money is free money, some must be earned through work, and some must be repaid.

Do I have to pay back financial aid?

You'll have to repay the money with interest. Subsidized loans don't generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan.

Does financial aid give you money?

Generally, your school will give you your grant or loan money in at least two payments called disbursements. In most cases, your school must give you your grant or loan money at least once per term (semester, trimester, or quarter).

How much financial aid can I get?

Average and maximum financial aidType of AidAverage AmountMaximum AmountFederal Supplemental Educational Opportunity Grant$670$4,000Total Federal Student Aid$13,120 (dependent) $14,950 (independent)$19,845 to $21,845 (dependent) $23,845 to $32,345 (independent)Total Federal Grants$4,980$10,3453 more rows

Who qualifies for financial aid?

Our general eligibility requirements include that you have financial need, are a U.S. citizen or eligible noncitizen, and are enrolled in an eligible degree or certificate program at your college or career school. There are more eligibility requirements you must meet to qualify for federal student aid.

What happens if I fail classes with financial aid?

What happens if I lose my financial aid because of a failed class? Losing your financial aid isn't final. If you end up becoming ineligible due to a drop in your GPA, you'll go on academic probation. Academic probation is for students who don't make satisfactory academic progress after getting evaluated.

What are the 4 types of financial aid?

Grants, work-study, loans, and scholarships help make college or career school affordable.

Is FAFSA a loan or grant?

The FAFSA is not a loan. It is an application form. However, you can use the FAFSA to apply for financial aid and federal student loans. The FAFSA, or Free Application for Federal Student Aid, is used to apply for several types of financial aid, including grants, student employment and federal student loans.

How much money is too much for FAFSA?

With only one child attending college normally an income above $125K will disqualify you from financial aid qualification at a public university, and about double that, or $250K in income will disqualify you from garnering financial aid.

Can I use financial aid to buy a laptop?

Financial aid helps students cover tuition, room and board, travel expenses to the school, textbooks, school supplies, and even laptops. That's right! You can actually use your financial aid to buy a laptop if it's something you need for school.

Does financial aid go to your bank account?

Federal Grants and Loans Federal loans and grants, as well as state loans and grants, will be applied first to your student bill to cover tuition and other school costs. Then any leftover will be deposited to your bank account.

Is FAFSA free or a loan?

Does FAFSA give you money or the school?

If your FAFSA qualifies you for federal grants, loans, or work-study programs, that money is disbursed directly to your school. With grants or loans, your school will apply that money toward your tuition, fees, and room and board (if you live on campus).

How can I get free money?

6 Ways to Get Free Money From the GovernmentFree money from the government.Get help with utility bills.Find money for child care.Recover unclaimed money.Get down payment assistance.Find tax credits for health insurance.Apply for college grants.Watch out for scams.

Can I use my financial aid for anything?

Even though college financial aid may seem like free money, you can't spend it on anything you want. You can only spend your federal financial aid money on purchases that are necessary for you to continue your studies. These necessary purchases may be defined under your school's itemized cost of attendance.

Keep two key questions in mind as you read each financial aid offer

The purpose of financial aid offers, which are often called “award letters,” is to bridge the gap between your Expected Family Contribution (EFC) and the cost of the school. As you compare your offers, keep these big-picture questions in mind:

Make sure you understand how long each kind of aid is offered

Federal student aid (such as federal loans) is offered on a yearly basis, so you’ll receive a new aid offer each year. Meanwhile, schools may offer aid (such as scholarships) for one year or for multiple years.

Understand the total costs involved in attending each school

In your award letter, a school will provide a calculation of the total costs for attending during the school year. This calculation is called the cost of attendance (COA) . If you’re attending at least half-time, your COA is the estimate of:

Understand how Expected Family Contribution (EFC) works

The Expected Family Contribution (EFC) is a number each school uses to calculate how much financial aid they would offer you. The EFC is based on the information you report on your FAFSA form , and you can find it on the first page of your Student Aid Report.

Note the funding that you have to pay back

Evaluate each school’s offer for the financial aid you do have to pay back, such as loans. Compare each loan listed in your offer. Consider interest rates, grace periods, and repayment plans. You may see the terms “ Direct Subsidized Loan” and “Direct Unsubsidized Loan. ”

Consider a Direct PLUS Loan among other options, if you need more financial help

Direct PLUS Loans are available to graduate students and parents of dependent undergraduate students. These loans are not based on your financial need. But Direct PLUS Loans require a separate application process that includes a credit check.

Decide which parts of your aid package you want to accept

To keep your borrowing down, you can reject a portion of your package. Prioritize scholarships, grants, and work-study over student loans.

When Does Financial Aid Come In?

Now you’re wondering, how and when do I get the money? As a general rule, most schools begin to disburse (release) loan money no earlier than ten days before school starts. But this will depend on the school’s policies and even your academic level. More on that later.

How does work study affect financial aid?

Federal work-study is a bit different from the grant and loan programs. You will have to work to earn this aid, and you will be paid directly by paycheck. There is a requirement that you are paid at least monthly for the hours you completed. So this aid is equivalent to earning a paycheck which you can then use to help with your expenses. A nice benefit of income earned from a federal work-study job is it won’t affect you financial aid the next year. Although you must report your income earned on your FAFSA, you can identify this income as earned under federal work-study, and will be exempt from your financial aid calculations.

How much will my second Pell grant be?

For example, if you had an award of $4,000 your first disbursement will be for $2,000, and your second disbursement will be for $2,000.

How long does it take for a student loan to be disbursed?

If you’re a first-year, first-time federal student loan borrower (i.e., a first-time freshman with no federal student loan debt) your disbursement of your first federal student loan may be delayed 30 days from the start of your program. Although you may find this rule a bit frustrating, it is actually a protection for both you and your school.

How to make sure you have enough money for school?

1. Make sure you have enough money for everything you need. Make a list of all your expenses, then go through and classify them as needs for school ( like books, supplies, housing, etc.), and wants ( dining out, cable). Look at how much money you are refunded, and make sure you have enough to cover your needs.

How to use a refund for college?

Any refund you receive should be used to cover costs related to your education and living expenses (including those not directly billed by your college/university). This may include things like transportation and miscellaneous personal expenses. But refunds should not be used to splurge on items that are considered luxuries.

What to do if you don't have a financial aid account?

3. If you don’t have one, get a bank account. If you can get a bank account, it will be easier to get your financial aid refunds from your school (many schools offer direct deposit options). And having a bank account will keep your money safe.

How Is Financial Aid Disbursed?

Federal financial aid and institutional financial aid are disbursed in the form of a credit to the student's account.

When do students receive their aid?

Students shouldn't expect to receive their aid until around the time classes start, or maybe a few weeks after. They may have expenses come up in the summer prior to that time, such as textbooks, laptops and other back-to-school items.

Why is financial aid delayed?

"One of the most common reasons aid might be delayed occurs when a family is missing documentation or additional information to confirm aid eligibility ," Ruiz says. "To avoid potential delays, it's important that families meet all deadlines and submit all requested documentation in ...

Why are student loans delayed?

Other reasons for delays in disbursement include failing to complete steps like signing the student loan promissory note, participating in student loan entrance counseling or providing some verification documentation, Vasconcelos says. She also notes that colleges need time to review applications, confirm details about a student and their requested loans, and process disbursements – which may be especially true this year due to the spread of COVID-19, the disease caused by the novel coronavirus.

When should students save up for school?

Since it's likely most schools won't be able to provide support before the typical disbursement date, experts suggest students save up during the remainder of the summer in anticipation of paying in cash upfront for necessary items before classes start.

Does disbursement lead to a refund?

Sometimes, disbursement will lead to an additional credit in the student's account. In these cases, colleges issue a refund.

What Is Financial Aid?

The average cost of tuition and fees among ranked universities for the 2021–2022 school year was $43,775 at private colleges, $11,631 for in-state students at public colleges, and $28,238 for out-of-state students at state schools. For many families, these costs would be an insurmountable problem without student aid, student loans, or both. 1

When do you start receiving financial aid?

If you apply for financial aid, you’ll start receiving financial aid award letters shortly after your acceptance letters start to show up. The amount of financial aid that schools offer can play a big role in where you’ll spend your college years.

When Will I Get My Financial Aid Award Letter?

Schools typically send out financial aid award letters close to when they send their acceptance letters. If you have questions about the timing, reach out to the school’s financial aid office. 9

Does Credit Card Debt Mean I Can Get More Aid?

Probably not . Generally, more debt does not increase the amount of financial aid you'll be awarded, according to Mark Kantrowitz, a financial aid expert. In fact, it could even lower your eligibility for need-based financial aid. 17

When Is the FAFSA Due?

FAFSA forms are usually due by June 30 of the current academic year. . For example, for the 2021–2022 school year, you can file a FAFSA up until June 30, 2022. Note that some college and state grant programs have their own FAFSA deadline, which can be as early as Feb. 1. 5 6 Be sure to check the dates.

What happens if you submit a FAFSA and are approved for financial aid?

If you submitted a FAFSA and were approved for financial aid, then each school that accepted you will send you a financial aid award letter. While there’s no standard format for these letters, each explains how much financial assistance the school is offering you.

What is the FAFSA form?

The Free Application for Federal Student Aid (FAFSA) is the online form that you need to submit to get any federal financial aid. Financial aid award letters detail how much financial assistance a school offers you. There are four main types of financial aid: grants, scholarships, work-study programs, and loans.

How long does it take for a school to pay you for financial aid?

This remaining amount is called a credit balance. If you have a credit balance, your school must pay this amount to you directly within 14 days unless you authorize the school to keep the money to pay for future institutional charges.

When do you get financial aid disbursement?

you are eligible for disbursement (i.e., the payment of your financial aid) 10 days before the term begins and

What happens if you take out a loan from your school?

If you take out a loan as a student or parent, your school (or your child’s school) will notify you in writing each time they give you any part of your loan money.

How long do you have to wait to get a student loan?

The following may apply if you haven’t taken out a federal student loan before: If you’re a first-year undergraduate student and a first-time borrower, you may have to wait 30 days after the first day of your enrollment period (semester, trimester, etc.) before your school is allowed to give you your loan money.

What happens to the money you get from a grant?

Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.

How often do you have to give a grant to a school?

In most cases, your school must give you your grant or loan money at least once per term (semester, trimester, or quarter).

What to do if you don't receive financial aid?

If you don’t receive the type or amount of financial aid you expected, contact your school. The financial aid office can explain how your aid was determined.

How long is federal financial aid?

For example, federal aid is generally limited to six years for a Bachelor’s degree and three years for an Associate’s degree.

What does it mean when you fill out the FAFSA?

When students fill out the FAFSA®, they are applying for federal student aid. After their application is reviewed, students will generally receive information on what aid they are eligible for, if any.

What is financial aid suspension?

Financial aid suspension occurs when financial assistance given to a student stops coming in.

What does it mean when you don't submit your FAFSA?

Failing to submit the FAFSA means students may not receive federal aid for that year. Additionally, when the FAFSA is filled out annually, a student may not receive the same amount or type of aid should their family’s financial situation change.

How many years of federal aid for a bachelor's degree?

This information is generally listed in a school’s catalog. For example, federal aid is generally limited to six years for a Bachelor’s degree and three years for an Associate’s degree.

What happens when a student's loved one passes away?

For example, if a student’s loved one passed away that semester, the student may have become upset and unable to concentrate on their grades. Sometimes, students experience tough circumstances that have nothing to do with school, but their grades suffer. Schools understand that this happens and they may be willing to work with students who show they are still dedicated to their studies.

How to cut costs for students?

A few options to cut expenses might include opting to use public transportation instead of driving, moving to cheaper housing off-campus, cooking meals at home instead of eating out, or limiting how much they spend on entertainment.

What is the purpose of financial aid glossary?

The intent of this glossary is: To provide colleges community-defined and accepted definitions of common terms used on institutional financial aid offers. To provide greater clarity and understanding by students through consistency in the use and meaning of terms on financial aid offers across all colleges and universities.

When was the glossary of terms for financial aid created?

The Glossary of Terms for Financial Aid Offers was created in 2012 by NASFAA's Award Notification Task Force, and updated in 2019 after consultation with NASFAA membership, the NASFAA Board of Directors, and members of the higher education community, to more accurately reflect the current financial aid environment.

What is a parent PLUS loan?

Federal Direct Parent PLUS Loan (PLUS): Loan funds provided to the parents of dependent undergraduate students by the U.S. Department of Education, through the school. This federal loan program allows parents with no adverse credit history to apply for a loan amount up to the Cost of Attendance each year, less any financial aid received by the dependent student. Repayment of principal and interest begins immediately once the loan is fully disbursed with some options to delay payment available.

What is EFC in financial aid?

Expected Family Contribution (EFC): An eligibility index that college financial aid staff use to determine how much financial aid you would receive if you were to attend their school. The EFC is calculated according to a formula specified in law and is based upon the information provided by the student and their family on the Free Application for Federal Student Aid (FAFSA).

How long does it take to get a student loan back after a student is enrolled?

Repayment begins six months after the student ceases to be enrolled at least half-time with options to delay payment available. To be eligible, the student must be enrolled at least half-time in an eligible program of study.

What is a private student loan?

Private Loan: A student or parent loan from a commercial, state-affiliated or institutional lender used to pay for up to the annual Cost of Attendance, less any financial aid received.

What is FAFSA verification?

Verification: A federally mandated process to confirm the accuracy of data provided by selected applicants on the Free Application for Federal Student Aid (FAFSA). To complete the verification process, the student, their parent (s), or spouse, if applicable, are required to provide certain documents to the school for review. If the documentation the student provides the institution doesn't match what was reported on the FAFSA, verification can result in changes to the student's financial aid eligibility, and/or financial aid offers.

What does EFC stand for in FAFSA?

Source. EFC stands for Expected Family Contribution. The EFC code number you receive after you complete a FAFSA (Free Application for Financial Aid) is the amount your family is expected to contribute for one year (the school year to which the FAFSA applies). While the federal Department of Education uses your EFC to determine Pell ...

What factors affect aid?

Factors That Determine Your Aid. Your EFC is not the only factor that determines how much aid or what types of aid you are qualified to receive. Other factors may affect the amount of aid you receive, including: Whether you plan to attend school full-time or part-time.

What is the federal direct loan cap?

In the federal government's Direct Loan Program, students can receive loans at amounts preset by the government. There are two kinds of Direct Loans: subsidized and unsubsidized. First-year dependent students have a cap of $5,500 in Direct Loans total (both subsidized and unsubsidized).

What does it mean if you have a high EFC code?

It just means that any federal aid you receive is likely to come in the form of Direct Unsubsidized Loans. Just because a school is expensive, don't write them off.

How much is the federal unsubsidized loan?

Federal unsubsidized loan of $2,000. The school gives a flat need-based grant to everyone who is eligible for federal financial aid. In addition, the school adds merit aid to the student's package. The merit aid and need-based grant equal an addition $7,000 to the student's financial aid award.

Does EFC code mean full financial aid?

It's important to understand that just because your EFC code is $0, that does not mean the college will give you full financial aid. For example, this student is eligible for:

Do not procrastinate with FAFSA?

Do Not Procrastinate. Even if you think you will have a low EFC and plenty of financial aid eligibility, do not delay in filling out the FAFSA and any other financial aid forms your school requires to complete an initial financial aid package for you.