Do colleges offer financial aid?
Yes. College financial aid typically consists of grants and/or scholarships that can be based on either financial need or merit. In many cases, college grants or scholarships can significantly reduce a family's out of pocket costs.
For need-based grants and scholarships, colleges use both the federal government's aid application, the FAFSA, and their own application, typically the standard PROFILE form, to determine a child's financial need. The main difference between the FAFSA and the PROFILE is that the PROFILE digs deeper into your family's finances. For example, the PROFILE application may require you to note your retirement balances, your home equity, and the type of cars you drive. Keep in mind that your child's need-based grants or scholarships might fluctuate from year to year as your family's financial circumstances change.
For merit based grants and scholarships, colleges will look at your child's academic record and any other characteristics that are desirable to them as they build their class and look to encourage students to attend. If your child is offered a merit grant or scholarship, make sure to find out whether it's renewable for all four years and the criteria required to maintain it.
One excellent way to get an advance estimate of how much grant or scholarship aid you can expect at a particular college is to use a net price calculator, which is available on every college website. You can enter your family's financial information in the calculator and get a good ballpark estimate of how much grant or scholarship aid your child might receive at that particular college based on his or her personal profile. A net price calculator can be a very useful tool when your child is deciding what colleges to apply to because it allows you to compare what your out-of-pocket cost are likely to be at each school.
On a related note, colleges also receive money from the federal government that is then distributed as financial aid. For example, the Perkins Loan program is a federally funded loan program that is administered by individual colleges. Each college receives a certain amount of money for this program and awards are made on a first-come, first-served basis. Once the funds are dispersed, no more are available until the following year's appropriation. The federal Supplemental Educational Opportunity Grant, known as SEOG, is also administered this way. If you think you will qualify for need-based aid, this should serve as an incentive to submit your application for financial aid as early as possible. And one final note: even if you don't expect to qualify for need-based aid, you should still submit the FAFSA because some colleges may require it before your child is eligible for merit scholarships. Check with individual colleges for more information.
