College Fundamentals: Financial Aid 101

College Fundamentals: Financial Aid 101


Make learning about financing your education a part of earning your degree

This article was written by BE Smart Contributor Chelsea L. Dixon, M.S., M.A.T. See her bio at the end of the article.

What Is Financial Aid?
Financial aid is monetary assistance that helps students and their families pay for college expenses. It is distributed based on a family’s financial need and is calculated based on the difference between the cost of attendance and what the family is expected to pay (also referred to as the Expected Family Contribution, or EFC). Students and their families are responsible for the student’s education; financial aid is intended to supplement what students and their families pay and the total cost of attendance (COA), which includes tuition and fees, room and board, books, and other expenses, and refers to the total yearly cost of going to college.

[Related: 10 Ways to Find College Scholarships]

Expected Family Contribution
Shortly after you apply for financial aid, your EFC is determined. If a school’s cost of attendance exceeds the EFC, the student will qualify for need-based aid and receive an aid package. Be aware, however, that the vast majority of colleges include loans—which must be paid back—in their aid packages. About 50 U.S. colleges have committed to meet their students’ full financial need and have omitted loans from their award packages.

Need-Based Versus Merit-Based Aid
Need-based aid is awarded based on a student’s demonstrated financial need; merit-based aid is awarded based on skill, ability, or exceptional grades. Financial aid is need-based; academic scholarships are merit-based, though some merit scholarships are awarded based on athletic achievement.

To apply for federal and state aid and some institutional aid, you must complete and submit the Free Application for Federal Student Aid (FAFSA) online or on paper. Completing the form online will get your application processed faster. Note that new FAFSA rules will go into effect for the 2017–2018 school year.

The FAFSA requires you to provide demographic (name, address, date of birth, Social Security number, etc.), financial, and other personal information, as well as documentation. It should be completed and submitted the same year you want to receive a financial aid award and as soon after Jan. 1 as possible, since some aid is allocated on a first-come, first-served basis.

After submitting your FAFSA, you will receive a Student Aid Report (SAR), which is a summary of the information you put on the FAFSA. It will not contain information on the amount of financial aid you may be eligible to receive. However, you will be able to review the information you submitted and correct any mistakes. If you provided an e-mail address on your FAFSA you will receive instructions for accessing your SAR online.

CSS Financial Aid Profile
A number of private colleges and universities require the College Scholarship Service Financial Aid Profile, or CSS Profile, by which eligible students can apply for non-federal, institutional aid. Completing the FAFSA is free, but to complete and submit the CSS Profile, which can be submitted as early as Oct. 1, you will be charged a fee of $25 for the first school and $16 for each school after that. However, fee waivers can be granted to first-time college applicants from low-income families.

Compared with completing the FAFSA, filling out the CSS Profile is more complex—it asks questions that are specific to the institution and takes longer to complete. However, some private colleges and universities have billions of dollars in financial aid to distribute, making it worth the time and effort to fill out. Set aside a few hours to do it. Afterwards, reward yourself.

Once you submit a CSS Profile application, you will receive an acknowledgement of payment, which will provide further application information and the chance to update your CSS Profile.

In the first year that you apply for financial aid you may receive multiple award letters from colleges. It will be up to you to compare them and decide which works best for you. Also, be aware that you will need to apply for financial aid each year, since awards are distributed on a yearly basis only and can change every year.

Chelsea L. Dixon, M.S., M.A.T., is founder and CEO of GamePhox Unlimited L.L.C.  A motivational speaker who has lectured at various high schools, colleges, professional youth sports foundations, and youth groups, Dixon is the author of Bridging the Gap: A Simple Guide to College. She earned a B.A. in sociology from Boston College, an M.A.T. in secondary education from Trenton State College (now the College of New Jersey), and an M.S. in sports management from the University of Massachusetts – Amherst. Learn more about her at or