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fast facts

• Over $90 billion in financial aid awards were given out in 2006.

• Financial Aid consists of ‘free money’ (grant-based aid), government-backed loans and work study programs (where students work for credits).

• FAFSA and CSS are the two main formulas upon which the majority of universities base their financial aid awards

To estimate your Financial Aid awards, try 401kid’s Expected Family Contribution (EFC) Calculator.

Financial Aid

Financial aid is the most misunderstood and complex part of the college planning process, hands down. Why is college becoming so unaffordable and why is figuring out how to finance it so complex?  If you thought doing your taxes was daunting, you must not have ever filled out a FAFSA form. It seems as if there is a conspiracy going on, between schools, government and banks, with purpose of maximizing income for all of these parties while draining families of every last dollar of savings and income, not to mention forcing upon them enormous loans. Let us take a look at what is happening out there right now:

So how is a family to deal with this dilemma?  Well, they can start by understanding the process at least several years in advance. Getting a grasp on the basic concepts, forms of aid, and rules of thumb for maximizing eligibility, is critical to a family's ability to take control of the education financing. 401kid outlines the various components of financial aid as well as the criteria taken into account for determining award amounts. Financial aid may be received in one or all of the following forms:

It should be noted that campus-based grants are finite, meaning that each school has a pool of funds available for the school year to allocate to eligible students.

How to apply

It is recommended that students apply every year, especially since financial circumstances and eligibility certainly change.
Families are granted financial aid based primarily on their Expected Family Contribution (EFC), a calculation performed by the Free Application for Federal Student Aid (FAFSA), which students must submit in order to apply for the following types of federal financial aid:

The College Boards' CSS PROFILE form is required by some private colleges and universities in addition to the FAFSA, for additional information.
Read about the different types of financial aid
Receive Financial Aid Optimization (FAO) services via ESP Wizard college planning software.

Top 3 FAQs on Financial Aid

  • How can I project how much Financial Aid I or my students will be eligible for?
  • How can I maximize my Financial Aid awards?
  • How do my savings and income effect the level of Financial Aid that my students are offered?