The Financial Aid Process

By: K.W. Abbott

The financial aid process is comprised of the following four steps:

(1) After applying to college, the student must file the appropriate financial aid applications. The two basic types of financial aid applications are the FAFSA (Free Application for Federal Student Aid) and the PROFILE (the Financial Aid Profile Form).

FAFSA

There are 3 ways to file a FAFSA: (1) by manually completing the form and mailing it to the FAFSA processor; (2) by filing electronically through the college (not all colleges have this capability); and (3) by filing on the internet by contacting:

http://www.fafsa.ed.gov

To receive aid from the federal student aid programs the student must:

* Show financial need

* Have a high school diploma

* Be enrolled in college

* Be a U.S. citizen or eligible noncitizen

* Have a valid social security number

* Make satisfactory academic progress

* Certify the aid will be used for educational purposes

* Not be in default of a federal loan

* Be registered with selective service

* Not be convicted of possessing or selling drugs

PROFILE Form

The Financial Aid Profile form is used by some private colleges to calculate the Institutional Methodology EFC (Estimated Family Contribution). The PROFILE may require the applicant to answer questions in addition to the basic application questions. These questions are known as "Section Q Questions" and unfortunately, there are no instructions on how to accurately answer these questions.

(2) Receive and review the Student Aid Report (SAR). In 4 - 6 weeks (1 - 2 weeks when electronically filed) after filing the FAFSA form, a student should receive the SAR form. The SAR form indicates the student’s EFC on the upper right corner of the first page. Errors or estimated tax information must be immediately corrected or updated on this form and the form re-filed.

(3) Verification of the applicant's information s required of at least 30% of the financial aid applications filed. If a student is picked for verification, there will be an asterisk accompanying the Expected Family Contribution (EFC) amount on the SAR. Verification can vary from merely providing a tax return to sending in detailed family financial information (at some private colleges). Using estimated numbers on the FAFSA or inconsistency of data submitted on the application may lead to an increased chance of being verified.

(4) Receive and review the colleges' Award letters. The Award Letter states the amount of the financial aid and types of financial aid offered to the student. A student may accept, deny, or appeal, any part of award letter.

                                                                                                             National Institute of Certified College Planners

The College Admission Process

By: K.W. Abbott

Students must apply to be accepted at a college. That is pretty obvious, right?? You would be surprised what is overlooked during the college admission process! There are several ways in which a student can be informed early of their admission status:

Early Action - The student can apply to a college by an early deadline (set by a particular college) to guarantee admission without obligating the student to attend that college. The student then usually files for financial at the college under the same deadlines as a regular student applicant.

Early Decision - The student can apply to a college by an early deadline to guarantee admission, but is obligated to attend that college under a binding contract. Early decision applicants file for financial aid early and are offered a financial aid award at an early date. Some colleges make "early decision" binding only if the financial aid offer is mutually agreeable.

Early Notification - The college notifies the student of their admission status as the admission office makes its admission decision. The student applies for financial aid in the same manner as would a regular financial aid applicant.

Early Read - The college computes the student's Estimated Family Contribution (EFC) early and estimates the student's financial aid award. Since this computation usually takes place early in the fall of the year, the student must submit estimated financial information to the college.

                                                                                       National Institute of Certified College Planners

Federal VS. Institutional Methodology EFC Formula

By: K.W. Abbott

There are two formulas by which the Expected Family Contribution (EFC) of a family can be computed: The Federal Methodology and the Institutional Methodology.

All colleges use the Federal Methodology (FM). It is used as the basis for distributing federal financial aid funds. The Institutional Methodology (IM) is used by some private colleges. It is used as the basis for distributing the individual college’s private funds. Federal financial aid funds are distributed on the basis of the FM, even though the college uses the IM to distribute its own private funds.

The Institutional EFC is usually higher than the EFC calculated using the FM formula. The IM takes into consideration items such as the personal residence and family farm assets. The financial aid office also has the discretion to add back certain income items such as depreciation or business losses. The financial aid office can also add back asset items that have been disposed of prior to the filing of the financial aid application, but were in the family’s possession during the year.

The IM formula gives several options to the financial aid office at the university. The family’s EFC should be calculated using both the FM and IM formulas. This is to prevent an unpleasant surprise for the family that calculates its EFC using the FM formula and has a student who attends a college that uses the IM formula to calculate a higher EFC.


                                                                           National Institute of Certified College Planners