Paying for College: Understanding Financial Aid

There are many financial aid resources for a low-income students to help you pay for any college you plan to attend. However, the amount of financial aid will vary per college, depending on each college’s ability to meet your financial need.

Every year you are in college, you need to reapply for financial aid. This means that every year your financial aid package may be slightly different. Changes to your family’s income, assets or other circumstances can affect your financial aid package.

Determining your Financial Aid

The first important step in determining your financial aid is figuring out how much you and your parents can reasonably pay per year toward your college education. This sum is called the Expected Family Contribution or EFC.

To determine your EFC, you must fill out the Free Application for Federal Student Aid or FAFSA. The FAFSA asks questions regarding topics like how much your parents earn, how many people live in your home, how much savings your parents have, etc. From this form the Department of Education determines your family’s EFC.

Many private colleges also require the CSS/Financial Aid PROFILE. This is a financial aid application that is offered by the College Board. The PROFILE asks for detailed financial and household information and costs $25 to file plus $16 to send to each individual school you select. Fee waivers are available for students from low-income households. You can file the PROFILE here. Schools that require the PROFILE will also determine an EFC based on the information in the PROFILE.

Based on your EFC your college will determine the financial aid for which you are eligible. The amount of financial aid for which you are eligible is the difference between how much your family can pay (the EFC) and how much the school costs to attend. This amount is your “financial need.”

Aid from the Federal Government

By filing the FAFSA your college can consider you for all the Federal financial aid for which you are eligible. The government has several financial aid programs:

Grants: These are awards that you don’t have to pay back; they are the best type of financial aid There are several types of Federal Grants. The most common grant for low-income students are Pell Grants and they range from $1 to over $5,500 depending on your EFC.

Student Loans: This is money that students borrow from the Federal Government to pay for college. Loans need to paid back to the government over time with interest, usually starting after you graduate. The Government generally offers the best student loans with the most favorable borrowing conditions, including the Direct Subsidized Loan, a loan that does not accrue interest while you are a student. You can find more information about Federal Student Loans here.

Parent Loans: This is money that students’ parents can borrow from the Federal Government to pay for college. Parent loans need to be paid back with interest over time. The main parent loan is the Federal PLUS loan.

Work-Study: This is a program where you can work on campus or sometimes in the local community and have your wages partially paid by the Federal Government while the employer pays the remainder. The money you earn from your work-study job can be used to pay for your school expenses, such as books and supplies.

Aid from your State Government

Most state governments provide financial aid to their in-state students. For example, the Cal Grant is available for California residents attending college in state. Check with your guidance counselor to see if your state provides any special financial aid and how to apply.

Aid from your College

Many colleges will also contribute aid to help meet your financial need. Some colleges use the FAFSA to determine their award to you, but many also use the CSS/Financial Aid PROFILE (commonly referred to as the CSS Profile) or their own financial aid form. You will need to determine what financial aid forms your college requires.

Many colleges have scholarships and grants awarded based on financial need and/or merit. In some cases, you will need to complete supplementary forms to be considered for the college’s scholarships and grants. Scholarship and grant funding from your college can be a very significant resource in helping your family pay for college.

Additionally, some colleges may offer their own loan programs through which you can borrow money from the college directly. These loans are paid back to the college over time, usually after you graduate. Be sure to check the borrowing conditions, including the interest rate, repayment terms and qualifications.

Aid from Private Sources

The other major source of financial aid can be scholarships and grants from private sources like foundations such as the Jack Kent Cooke Foundation, corporations like the Coca Cola Company and community groups such as your local Rotary Club. There are many private scholarships available for students from a wide range of backgrounds and qualifications. Your guidance counselor may be able to help you identify scholarship opportunities from local organizations. Additionally, there are scholarship search engines that can help you locate these opportunities. See our section on Outside Scholarships for more information.

For more information about financial aid terminology, please see our Financial Aid Glossary.