Understanding how colleges are funded, and how financial aid is awarded can help families plan for the costs of higher education.
Based on how they are funded, there are 3 types of colleges in the US.
Public or State colleges and universities are funded primarily by taxes paid by residents of that state. These schools charge lower tuition to in-state students.
Private, including faith-based, colleges and universities are funded by student-paid tuition, and by earnings from their investments (endowments).
For Profit colleges and universities are funded by tuition, and exist to generate revenue for the companies that own them.
There are 3 types of financial aid you may be eligible for.
Need Based Aid is awarded based on your and your family’s financial resources.
Merit Based Aid is awarded based on talent, accomplishments, or achievements. Colleges use merit aid to recruit desirable students.
Self Help includes Student Loans (both federal and private), work study employment and student and/or family contributions.
What Should I do First?
Get an Estimate of your Expected Family Contribution (EFC)
EFC is based on 4 Elements reported on the FAFSA and the CSS Profile:
Parent Income from the tax return filed in the Prior Prior Year
Parent Assets on the date of filing
Student Income from the tax return filed in the Prior Prior Year
Student Assets on the date of filing
The Free Application for Federal Student Assistance is maintained by the Department of Education and can qualify students for Pell Grants, Federal Loans and Federal Work Study Grants.
Get an estimate of your EFC based on the FAFSA here.
The CSS-Profile is maintained by the College Board and primarily used by selective colleges to award institutional grants.
Get an estimate of your EFC based on the CSS-Profile here.
If your EFC is lower than the college’s Cost of Attendance (tuition, room & board, required fees, supplies per year), you may qualify for need based aid and merit based aid.
If your EFC is higher than the college’s Cost of Attendance, you may qualify for merit based aid.
Have questions? Want help?
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