Financial Aid
August 28, 2007
GLOSSARY OF TERMS
When applying for financial aid, parents and students often find themselves overwhelmed with unfamiliar terms and labels that sound like alphabet soup. In order to better understand the information supplied in this section, a glossary of the most commonly used terms is offered along with current information on percentage rates and dollar limits on specific grants and loans.
GRANT � Money given by a college, government agency, or private group that is a gift and does not need to be paid back.
SCHOLARSHIP � Money given by a college, government agency, or private group that is a gift, often based on outstanding academic achievement or a specific talent. The money does not need to be paid back; however, a specific academic grade point average may be required in order renew the scholarship each year.
STIPEND � A monetary award that does not need to be repaid. This term is often synonymous with Grant or Scholarship.
LOAN � Money given by a college, government agency, bank or private group that must be paid back.
NEED-BASED AID � Grants, loans, or scholarships given to eligible students on the basis of demonstrated financial need.
EXPECTED FAMIL CONTRIBUTION � (EFC) The estimated amount that your family will be able to pay towards your college expenses. Your family contribution will remain constant for the year, but your need will vary depending on the college you choose to attend and the total cost at the college. Family contribution must be recalculated each year.
NEEDS ANALYSIS � A standardized mathematical calculation that takes into consideration a family�s income, assets, and other financial circumstances to produce an estimate of the amount the family will be able to pay towards college expenses. The amount of money that a needs analysis indicates a family should be able to pay is often more that the family believes they can afford to pay. It becomes important to list any extenuating circumstances that prevent the family from being able to contribute the recommended amount.
Cost of Education
-Expected Family Contribution
=Financial Need
FINANCIAL AID PACKAGE � The mixture of grants, loans, scholarships, jobs, and other funds that is put together by the financial aid office at a particular college for the student.
FEDERAL STAFFORD LOAN � Formerly known as the Guaranteed Student Loan.
There are two kinds of loans: subsidized (direct Stafford Loan) and unsubsidized (Federal Family Education Loan. The subsidized loans are a need-based loan that accrues no interest until you begin repayment six months after leaving school. The unsubsidized loan is non-need based. Interest accrues upon receipt of the money. Both loans have an 8.25% interest cap.
FEDERAL PERKINS LOAN � Formerly known as the National Direct Student Loan. This is a need-based, interest-free loan administered by the college attending. The current interest rate of 5% and re-payment begins nine months after the student leaves school or drops below half time, but it is administered by the colleges themselves and is limited by their allotted funds. Students may borrow up to $4,000.00 a year.
FEDERAL PELL GRANT � A Federal program offering award up to $3000+ to students who are able to demonstrate financial need. This is the only program where students may be eligible even though they attend school less than half time.
PLUS � Federal Parent Loan for Undergraduate Students. This loan is a way for parents to spread out college payments. It has a 9% interest cap and repayment begins 60 days after the loan is taken out. The amount is based on the cost of attendance at a particular college minus any financial aid received.
FEDERAL SEOG � Supplemental Educational Opportunity Grant. Although federally funded like the Pell Grant, the SEOG is administered by individual colleges and not the government. It is called �supplemental� because it is usually awarded in addition to the Pell Grant to students with substantial need. Awards range from $100.00 to $4,000.00 per year.
FWS � Federal Work---Study. A federal program helping schools provide part-time jobs during the school year for needy students. Students must apply to get the jobs through college. Wages must at least equal the federal minimum wage, but they may be higher.
STATE OF KANSAS STUDENT AID APPLICATION � Application form required to apply for the Kansas Ethnic Minority Scholarship, Kansas Nursing Scholarship, Kansas State Scholarship, and the Kansas Teacher Scholarship.
FAFSA � Free Application for Federal Student Aid. The primary application form determining eligibility for all Federal grants and loans. Some colleges require an additional financial aid form be submitted for their financial aid awards. Other colleges use only the FAFSA. It must be submitted after January 1.
SAR � Student Aid Report. Mailed to parents after a FAFSA is submitted. This report contains the information you give on you FAFSA plus your expected family contribution (EFC). A subsequent form may be needed for some student loans.
PROFILE � A financial aid profile service offered by ACT. It provides the form and questions that must be completed to apply for private aid at schools that use the service. The service costs $5.00 to register and $18.00 for each college that receives the report. The colleges that want this report are listed on the Profile application, but most schools do not use this report.
AMERICAN COLLEGE TESTING PROGRAM � Organization that offers the ACT, PLAN, and other educational programs.
ACT � The college admissions test administered by The American College Testing Program. The test measures achievement in the areas of English, math, reading, and science reasoning. This is the test used for admission and placement decisions by all Kansas schools and most school outside Kansas. It is recommended that students take the ACT in the spring of their junior year and again in the fall of their senior year.
PLAN � The preliminary ACT. This test is used to assess strengths and weaknesses in the four areas of achievement tested by the ACT. It is also used as an interest inventory for career exploration. This test is normally offered in the sophomore year as a preparatory stage before the final two years of high school.
THE COLLEGE BOARD � A non-profit membership organization composed of over 2,500 colleges, school systems, and education associations. They run the Admissions Testing Program that offers SAT I and SAT II, AP tests, PSAT, and the Financial Aid Profile Service.
SAT I � The Scholastic Aptitude Test. The college admissions test administered by The College Board. The SAT I measures aptitude in the areas of verbal and mathematical reasoning. This admissions test is used primarily by highly competitive schools and schools nearer the East and West coasts. Most students will not need to take this test.
SAT II � Achievement tests administered by The College Board and some competitive schools. Students need to check to see what achievement tests are requested by the schools to which they are applying. The schools who require subject level tests usually want three tests, including one in English proficiency and one in math.
PSAT � The Preliminary Scholastic Aptitude Test. This is administered by The College Board and is a shortened version of the
SAT I. It is given in the fall of the junior year in high school so that a student can assess his/her strengths and weaknesses in order to better prepare for the SAT I. It is also the entry-level test for the National Merit Scholarship Competition, the National Hispanic Scholar Program, and The National Achievement Scholarship Program for Outstanding Negro Students.
The process of applying for financial aid can be very confusing, even to those who have had experience in this area. There are many forms to complete, very specific steps to follow, and deadlines to meet. It is not overwhelming if you follow the process one step at a time. Whatever you do, don't assume that you are not eligible for financial aid. Many students receive some type of assistance with college expenses, including students whose families fall within the "middle" income range. You will never know if you are eligible for assistance unless you apply, and many people are pleasantly surprised with the assistance they receive. Most schools also require that a FAFSA be on file, even if the student has received scholarships that are not based on financial need.
The first step in applying for financial aid is to apply for admission to the schools that interest you. Most colleges require that you be accepted for admission before they will offer you financial aid and will want you to apply for aid when you apply for admission.
The second step is to complete and submit the FAFSA. The FAFSA collects information about your family's financial situation: income, assets, family size, number of family members in college, etc. Colleges must have this information to perform a needs analysis. The form comes with detailed instructions. You will want to refer to your parent's current income tax return(s). Those tax returns must be completed as soon as possible after January 1. If it is not possible for you to complete the returns by the required deadlines, call the financial aid office at that particular college and ask them what they would like you to do. Some will have you estimate for the year and then later send a corrected form. It is important that you be aware of the deadlines, for they vary from school to school. Most Kansas schools have a deadline for filing for financial aid around March 1. Some private, out-of-state schools may have deadlines as early as January 15. Be sure and keep copies of every application you mail.
The third step is to meet with your school counselor and discuss your educational plans. Review your strategies for financing your post-secondary education. Check the scholarship bulletin regularly, for it is your responsibility to look for scholarships and financial aid. The guidance office is an important resource, so use our services often.
The fourth step is to check with the colleges to which you have applied to see if they have an additional financial aid/scholarship form of their own they want submitted. Some colleges want only the FAFSA, some want the FAFSA plus their own form, and some want both the FAFSA and the Profile.
Once you've sent in your applications for admission and financial aid and you're waiting to hear back from colleges, watch your mailbox. When processing is completed, you will receive a Student Aid Report from FAFSA. Review the SAR carefully to make sure it's correct. If you don't need to make any changes, photocopy the entire SAR for your records and submit the original SAR to the financial aid office at the school you have chosen. You may submit copies to other schools if you have made multiple applications. The financial aid analysis takes approximately four weeks from the time you send in your financial aid application until the SAR form is mailed to you. Many colleges will request copies of your tax returns later on to verify the information you report on the FAFSA. Remember, the information you report is strictly confidential. Only those colleges and programs you designate will receive a copy of your application form.
If the colleges or programs selected need additional information from you, they will usually mail you a card indicating the documents they have not yet received but need in order to offer you financial assistance. When the schools have completed their own review of your financial aid application forms, they will then mail to you a Financial Aid Package. This may contain offers of scholarships, grants, loans, work-study opportunities, or a combination of any of these. You do not have to accept loans with the package, but you may need to accept the remaining awards or the work-study in order to receive the total package. Be very careful about accepting loans. Remember, grants and scholarships do not need to be repaid, but loans follow you throughout college.
Loans can accumulate faster than expected, and a heavy financial burden that must be repaid shortly after college can be a formidable task to undertake. If possible, it is better to reserve loans for graduate school if you plan on continuing your education beyond the Bachelor's level.
You will have a period of time, approximately two weeks, to review the financial aid offers at the schools to which you have applied. Schools that are more expensive often have larger endowment funds and will offer you greater assistance. Obviously, that is counter-balanced by the greater price tag on tuition and other expenses at those schools. When you have made up your mind what school you would like to attend (and where you can truly afford to go - these often are not the same), you will need to notify not only the school you will be attending, but also those schools you have chosen not to attend. The other schools need to know as soon as possible that you are not going to accept their financial aid package in order to offer that money to another student.
To summarize, the following are the steps
you need to follow in applying for financial aid. Read this
checklist carefully and contact your counselor if you have any
questions. Remember, it takes planning and perseverance to
uncover all of the financial assistance you may need for school,
and you will be responsible for this task. The guidance
office, your counselor, and the financial aid officers at the
schools are all your best resources, so go to all of these people
for help. Keep your eyes open and search for scholarship
opportunities through your church, civic organizations, places of
employment, and the newspaper. Also, be open to alternate
methods of financing your education such as lump sum tuition
payments or tuition payment schedules. Colleges are offering
many innovative and creative ways for parents and students to
finance educational costs.
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For more information and definitions please visit this website. www.finaid.org
Scholarship Scams
- Application fees. Beware of any "scholarship" which requests an application fee, even an innocuously low one like $10 or $20. Most legitimate scholarship sponsors do not require an application fee.
- Other fees. If you must pay money to get information about an award, apply for the award, or receive the award, it might be a scam. Beware of 900 number telephone services, which charge you a fee of several dollars a minute for the call. There are many legitimate scholarship search services that charge students a fee to compare the student's profile against a database of scholarships. It is, however, very difficult to distinguish between legitimate services and scam imitators, because the services are often small operations that pay fees to search one of a handful of national databases. Remember, FastWeb, FinAid, Discover, and other sources all have free scholarship searches.
- Guaranteed winnings. No legitimate scholarship sponsor will guarantee that you will win the award. Also be wary of guarantees that you'll receive a minimum amount of financial aid � usually such guarantees are counting the federal student aid programs and private student loan programs, for which most people are eligible.
- Everybody is eligible. Scholarship sponsors do not hand out awards to students simply for breathing.
- Unsolicited opportunities. Most scholarship sponsors will only contact you in response to your inquiry. If you've never heard of the organization before, it is probably a scam.
- Typing and spelling errors. If the application materials contain typing and spelling errors, or lack an overall professional appearance, it may be a scam.
- No telephone number. Most legitimate scholarship programs include a telephone number for inquiries with their application materials. Be careful if the application materials do not include a telephone number and directory assistance does not have a listing for the organization.
- Mail drop for a return address. If the return address is a mail drop (e.g., a box number) or a residential address, it is probably a scam. Some scams may attempt to disguise a mail box as a suite number. (It is illegal to misrepresent a mail box as an office.) If a legitimate scholarship program uses a mail box, they almost always include their street address (and telephone numbers) on their stationary.
- Operating out of a residence. Since when did a major nonprofit corporation operate out of a home or apartment? This isn�t a sure sign of a scam, because there are legitimate home-based businesses, but a residential address can tell you something about the size of an organization.
- Time Pressure. If you must respond quickly, and won�t hear about the results for several months, it might be a scam. A scholarship scam might say that grants are handed out on a "first-come, first-served" basis and urge you to act quickly.
- Unusual requests for personal information. If the application asks you to disclose bank account numbers, credit card numbers, calling card numbers, or social security numbers, it is probably a scam. All a scam operator needs to know in order to withdraw money from your bank account is the name of the bank!
- Notification by phone. If you have won a scholarship, you will receive written notification by mail, not by phone. Even if the sponsor calls to congratulate you, they will follow up with a letter in the mail. If the phone call asks you for money, hang up.
- High success rates. Overstated claims of effectiveness are a good tip-off to a scam. For example, less than 1% of users of scholarship search services actually win an award. If the service claims a 96% success rate, they are probably counting the number of clients who were successfully matched to awards in their database, not the number of clients who received money. If something sounds too good to be true, it probably is.
- Excessive hype. Scams try to get you so excited that you�ll ignore your natural sense of caution. If the brochure or advertisement uses a lot of hyperbole (e.g., "free money", "win your fair share", and "everybody is eligible") or mentions the "6.6 billion in unused scholarships", be careful.
- Disguised advertising. Don�t believe everything you read or hear, especially if you see it online. Unless you personally know the person praising a product or service, don�t believe their recommendation. They could be an employee of the company or a friend or relative of the owner. Sometimes the person making the recommendation will be earning a commission on every client they direct to the company. A "department" number in the address, an offer number, or a telephone "extension" number is used to identify which agent should get the commission. (Not all uses of such numbers are signs of fraud; some legitimate companies use department numbers to track the effectiveness of advertising.)
- A newly-formed company. Ask the company how long it has been in business. If it was formed recently, ask for references. Most philanthropic foundations have been established for many years.
- A Florida or California address. A disproportionate number of scams seem to originate from Florida or California addresses. If you were a scam artist, would you live in Minneapolis, where it�s freezing, or in Florida or California, where it�s warm and sunny? (This does not mean that all offers from Florida or California are scams, but that of the suspicious scholarship offers, the majority seem to come from these states.)
- "You are a finalist!" Beware notification form organizations that contact you in a competition you never entered. It�s flattering to think some organizations pored through records of individual across the nation and selected you without your knowledge, but there�s usually a fee involved� in some way they are trying to make money off of their contact with you.
If you receive information about a scholarship or notification that you have been selected for a scholarship that you knew nothing about, check it out with your guidance counselor. If you have any suspicions, it�s better to find out the facts that invest money for scholarships or scholarship searches that could be better spent on your college tuition bill.
