Making Sense of FAFSA and Federal Scholarship/Grant Programs

If you have a child anywhere near approaching high school you are already finding your self considering how you will assist your child in meeting the huge financial obligations of a college education. If you haven’t already heard of the Free Application for Federal Student Aid (FAFSA) you, no doubt, will very soon! If you want your child to be in the running for all the state (NY-TAP) & federal financial aid programs, have the ability to take out federally guaranteed student loans or be considered for work study programs you will be required to submit this document.

The goal of the FAFSA is to determine the student’s “financial need” and ideally the family’s ability to contribute to their child’s education. The formula and outcome determination, like most things in life, is not even remotely fair or accurate in it’s evaluation of what a family can truly afford.

This “financial need” is determined by the U.S. Department of Education, using a standardized formula, established by Congress, to evaluate the financial information reported on the FAFSA and to determine the family’s EFC or Expected Family Contribution (yes, this is what the government is thinking you can afford J).

“The fundamental elements in this standard formula are the student’s income (and assets, if the student is independent), the parents’ income and assets (if the student is dependent), the family’s household size, and the number of family members (excluding parents) attending postsecondary institutions. The EFC is the sum of: (1) a percentage of net income (remaining income after subtracting allowances for basic living expenses) and (2) a percentage of net assets (assets remaining after subtracting an asset protection allowance). Different assessment rates and allowances are used for dependent students, independent students without dependents, and independent students with dependents.”

That’s it folks… basically it’s your W-2’s or 1040’s vs. the number of people in your family. This formula does not take into consideration the family’s enormous debts due to catastrophic illnesses or parents own outstanding student loans, mortgage, bills or the fact that the two other children had to visit the orthodontist 20 times this past year.

After filing a FAFSA, the student receives a Student Aid Report (SAR), or the school receives an Institutional Student Information Record (ISIR), which provides the Expected Family Contribution (EFC). This EFC then assists the college or university in determining what financial aid, state & federal grant programs, or in-house scholarships you might be eligible for.

With this said do not just assume that your child, among the many hundreds that will pass through the financial aid office each year, has been thoroughly and automatically considered for every opportunity. Be sure to ask your Financial Aid Office representative about the following federal programs, and request that they be reviewed specifically for eligibility.

Federal Pell Grant. This is a jumpstart grant to students beginning undergrad work for the first time. Grants for 2008 are approximately $4,731 a year and are based on economic needs and education costs. Based solely on EFC vs. number of enrolled credit hours.
http://www.ed.gov/programs/fpg/index.html

Federal Supplemental Educational Opportunity Grant. The FSEOG is for students with extreme financial need. Lowest income students get first priority for these $100 and $4,000 a year grants. These are “first come first serve” grants and schools will typically start reviewing as early as March/April, so be sure to apply early!
http://www.ed.gov/programs/fseog/index.html

Academic Competitiveness Grant. The AC Grant is a relatively new grant, created to supplement Pell grantees based on their academic aptitude or accomplishment. First-year students receive $750 in addition to the Pell Grant; second-year students with at least a 3.0 grade average can receive up to an additional $1,300 a year.
http://www.ed.gov/about/offices/list/ope/ac-smart.html

National SMART Grant. Third and fourth-year students who qualify for a Pell Grant and have at least a 3.0 grade point average are eligible to apply for an additional $4,000 a year. To qualify, you must be majoring in the sciences, engineering, mathematics, technology, or in a foreign language determined by the federal government to be critical to national security.
http://www.ed.gov/about/offices/list/ope/ac-smart.html

Teach Grant Program. This is the newest grant program, created by Congress’ College Cost Reduction and Access Act of 2007. Students who enroll in undergraduate or graduate-level teacher training programs and who are committed to classroom teaching can receive $4,000 a year in grants toward tuition. You must commit to teach for four academic years in an elementary or secondary school serving low-income students to qualify.
http://studentaid.ed.gov/PORTALSWebApp/students/english/TEACH.jsp

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