Financial aid can help many families meet college costs. Every year millions of students apply for and receive financial aid. In fact, almost one-half of all students who continue their education beyond high school receive financial aid of some kind.

Financial aid is designed to help individuals meet their educational expenses when their own resources are not sufficient. A student who believes that his own and family resources are not sufficient to pay for all the costs of attendance (tuition, room and board, books, transportation, campus activities, etc.) should apply for financial aid through the Financial Aid Office of the institution he or she plans to attend. Three types of aid are available:

• Grants and Scholarships - Gifts that do not have to be repaid.
• Loans - Money borrowed to cover school costs, which must be repaid (usually with interest) over a specified period of time (usually after the student has left school or graduated).
• Work Study Programs - Employment which enables a student to earn a portion of school costs.

Grants and Scholarships
Grants and scholarships provide aid that does not have to be repaid. However, some require that recipients maintain certain grade levels or take certain courses. See the article: Grants and Scholarships.

Loans
Loans are another type of financial aid and are available to both students and parents. Like a car loan or a mortgage for a house, an education loan must eventually be repaid. Often, payments do not begin until the student finishes school, and the interest rate on education loans is commonly lower than for other types of loans. For students with no established credit record, it is usually easier to get student loans than other kinds of loans. See the article: Parent and Student Loans.

What is Family Contribution?
The expected family contribution (EFC) is the amount of money the family of a student is expected to contribute toward college expenses. The family includes the student and the student's parents in the case of a dependent student, or the student (and spouse if any) in the case of an independent student. The amount the family is expected to contribute is calculated by a standardized formula that takes into account the family's financial resources (income and assets), family size, and basic living expenses.

The calculation of family contribution is based on information provided by the student's family on a standardized need analysis form. All students applying for Federal financial assistance are required to complete the Free Application for Federal Student Aid (FAFSA). There is no charge to the student nor the student's family for the processing of this form or for determining the student's eligiblity for Federal financial assistance.

What is Financial Need?
The financial need of the student is the difference between the student's educational expenses and the amount of money the family is expected to contribute. In general terms, the formula to determine financial need is Cost of Attendance minus Family Contribution minus Financial Aid.

What is the Financial Aid Process?
The financial aid process is designed to serve equitably over 15 million applicants at more than 7000 postsecondary educational institutions. The scope of the financial aid system requires that the application process be standardized. Describing special circumstances or needs, therefore, may require additional effort on the part of the applicant. Applicants who have special needs, such as disability related expenses, should express those needs to the aid administrator at the postsecondary institution. Because of the complexity of the system, however, they must take care to express those needs within the context of the system. Students must reapply for financial aid each year.

What is a Financial Aid Package?
A financial aid package is a combination of financial aid resources (grants, loans, work) put together by the college financial aid administrator and designed to meet, as closely as possible, a student's individual financial need. The amount and types of assistance in a package depend on the cost of attendance at a particular institution, the student's need, availability of fund at the institution, and funds available from outside sources. Thus, a student may be offered two different financial aid packages if he or she applies to two different schools. It pays for a student to shop around and compare not only the dollars offered, but also the composition of the financial aid package each institution offers.

In addition to comparing the total dollars offered in aid by each school, students also need to consider the level of indebtedness, terms of repayment, and the school's policy on how the aid packages are constructed in subsequent years. From year to year financial aid administrators may vary the combination of grant, loan, and work-study money in a student's aid package, emphasizing loans for freshmen and work-study or scholarships in later school year - or the other way around. There might not be a uniform policy on financial aid package combinations over time. It is definitely appropriate to ask the financial aid administrator what the school's policy is beyond the first year of study.

Work-Study Programs
Many students work during the summer or part time during the school year to help pay for college. Although many obtain jobs on their own, many colleges also offer work-study programs to their students. A work-study job is often part of a student's financial aid package. The jobs are usually on campus and the money earned is used to pay for tuition or other college charges. See the article: Work Study Programs.

Merit vs. Need
The types of financial aid discussed above can be merit-based, need-based, or a combination of merit-based and need-based.

Merit-based Financial Aid
Merit-based assistance, usually in the form of scholarships or grants, is given to students who meet requirements not related to financial needs. For example, a merit scholarship may be given to a student who has done well in high school or one who displays artistic or athletic talent. Most merit-based aid is awarded on the basis of academic performance or potential.

Need-based Financial Aid
Need-based means that the amount of aid a student can receive depends on the cost of the college and on his or her family's ability to pay these costs. Most financial aid is need-based and is available to qualified students.