To qualify for federal need-based aid, the student must be either a U.S. citizen or eligible non-citizen, including registered aliens, residents of certain U.S. protectorates and political refugees. Foreign students aren't eligible for federal financial aid.
If you demonstrate need, you're eligible for need-based financial aid. Demonstrated need is a simple concept -- it's each institution's cost of education minus the Expected Family Contribution (EFC). So the "formula" looks something like this:
Cost - EFC = Aid Eligibility
If your aid award includes federal dollars -- and most do -- your total aid cannot exceed your demonstrated need. Some institutions will meet 100 percent of your demonstrated need; others will meet only a portion of that need. Regardless of the portion of need that a school meets, almost all package aid offers three types of assistance:
- Loans -- Low-interest student or parent loans that will need to be repaid
- Grants -- Federal or institutional awards that don't have to be repaid
- Work-study --Part-time campus employment subsidized by the Federal government.
The breakdown of funding in each financial aid package varies from one college to another. While grants are everyone's favorite type of financial aid, don't discount work and loan opportunities.
Federal law requires that you reapply for need-based financial aid each year. There are no exceptions. Applications are generally available in early December of each year. Mark your calendar to reapply in December. You don't want to receive your fall bill and discover that you failed to apply for aid. At that point, it may be too late!
In most cases, a school will tell you of your financial aid eligibility at the time that admission is offered. Colleges and universities know that you are concerned about costs and most will not ask you to commit to them until they commit to you.
If you don't qualify for aid in the first year, apply again in the second year. Circumstances change and so does aid eligibility. You may be surprised to find that you receive aid in the second year. And if your circumstances change mid-way through an academic year, most institutions are willing to meet some or all of your newly demonstrated need.
Now let's look at each type of need-based financial aid award, starting with loans.