Defining Financial Aid
There are $55 billion in free scholarship money awarded each year by the Department of Education and colleges as compared to $60 million in college scholarships that are available through private companies, foundations, and civic groups.
A. Financial Aid
Fewer words in the English language cause more confusion and fear for college parents than the terms college scholarships, student grants and financial aid. This is particularly true for parents seeking scholarships for college freshmen, and most especially for those searching for private scholarships. This is because the world of financial aid and university scholarships appear complicated to the uninitiated because of the many undefined terms and definitions. In fact, financial aid is much easier to understand than it might appear. For example, there are many terms such as university scholarships and grants that are interchangeable.
This article will explain all aspects of financial aid, student scholarships and grants.
- How they interface
- Who awards the scholarships
- What criteria is used to award an educational scholarship
- How to apply for
You will find a vocabulary list below that will explain how scholarships for college students and financial aid can help families reduce their overall out of pocket costs.
According to the U.S. Department of Education and colleges, financial aid is defined as:
- Federal student loans
- Federal Student work study
- Free scholarship money
College students need to apply yearly to receive need based financial aid by filing the federal government’s FAFSA form (Free Application for Federal Assistance). The filing deadlines, generally between January and March, are set by the colleges.
What is financial aid?
The financial aid philosophy of the Department of Education and of every college states that parents and students have the primary responsibility to finance their college education. Any help from the Department of Education or colleges is only to supplement the family’s contribution.
The colleges make the determination on how much financial aid a family will receive; they are not required to meet a family’s aid eligibility as determined by completing the FAFSA form. The colleges, in most cases, after determining what they expect the family to contribute, will put together a financial aid package that offers the federal student loan first, the work study second, and free scholarship money in the form of educational grants last. This money comes from the college’s endowment fund.
B. Scholarship Money
All financial aid is administered by the colleges and they give out approximately 97% of all free scholarship money. Before awarding any aid, the colleges are required to verify the information you provide on the financial aid form by requesting a copy of your federal tax return. The federal financial aid forms warn that there are severe penalties for knowingly misrepresenting the facts. It is important to remember that there are many specialized types of financial aid, such as scholarships for nursing students. While much of the focus in scholarships search is on scholarships for college freshmen it is important to keep in mind that there are also specific scholarships for college sophomores, juniors, and seniors in certain majors.
The federal government and colleges combine to give college students $46 billion dollars in free scholarship and student grants each year. To begin a scholarship search in order to qualify for educational financial aid, the student applicant will first need to complete the FAFSA form or any college specific form.
C. College Awarded Scholarships (Financial Aid forms required)
Colleges award federal grants, state scholarships and their own scholarships that are funded through their endowments.
- 1. Federal Grants Awarded by the Colleges
- Pell and Supplements Education Opportunity Grants Awarded to the students with family income of less that $38,000 with no reportable assets
- Federal Academic Competitiveness Grant Awarded to Pell Grant recipients with a 3.0 GPA on a 4.0 scale in their first two years
- National SMART Grant Awarded to Pell Grant recipients in degree programs deemed critical by the Department of Education, who are in their third and fourth years of college
- National TEACH Grant Awarded to students pursuing teaching credentials who agree to teach in high need fields at low-income schools
The TEACH Grant is not a need-based award
- 2. College Need-Based Scholarship
- This is free money
- Awarded to students who meet the college’s criteria for financial aid eligibility and it supplements federal and state funds
- 3. College Awarded Scholarships and Grants (FAFSA form not required)
- College Merit Based Money
- Determining factors• SAT Scores
• Above average achievement in academics, art, etc.
• Ethnic, gender, geographic, or religious group of the student applicant with other students in the college’s application pool
- 4. College Recruitment Scholarships (aka – Discounting) Funds awarded by colleges to increase the likelihood that student will choose to enroll at that school
May have specific requirements attached
- Minimum GPA requirement
- Specific course of study requirement
- Require 5 courses per semester, with no incompletes
Note: 50% of students receiving recruitment scholarships lose the scholarship by senior year because they could not meet the requirements
- 5. Forgivable Loans/Scholarship Loans State and Private loans that may be converted to grants if the borrower works in a specific field such as teaching and nursing
C.O.A.: Cost of Attendance. This includes tuition, room and board, fees, books, supplies, transportation and personal expenses, (aka – comprehensive budget)
E.F.C.: Expected Family Contribution. Measure of what a family is expected to contribute each year as determined by federal government and the college using the Free Application for Federal Student Aid (FAFSA)
Financial Aid (eligibility): Difference between COA and EFC
COA – EFC = Financial Aid Eligibility (including student scholarships and grants