Expert: Andrew Youngker - 1/28/2011

Question
QUESTION: Hello Andrew,My daughter is a senior in high school and was excepted into several colleges but I am lost on the process,her father and I never went.She received a letter stating she would receive a 10,000 dean merit scholarship,I filled out a form to calculate our EFC and it said 6,000.The school is about 35,000 a year.In the letter it said to fill the FASFA form out that she may be eligible for need base assistace.What exactly does this mean and how would we only 6,000 if the school costs 35,000? Also she would need to live on campus,is this something that has to be paid up front?Thank you for any advice it would be much appreciated! Marsha

ANSWER: Hello,
There are several things here, but the most important is to complete the FAFSA. This form needs to be in as soon as possible to get money starting for the fall semester. Without this, most schools will not allow even student loans until this step is completed. The EFC portion is not something that is directly related to the amount of money that you will be spending. This is rather a measure if a student is able to get need based money.

After the FAFSA is completed, and it will have to be completed every year, then go and talk to the financial aid advisor at the school. They will be able to tell you everything there is to know about the process and other money available. A lot of money is given at the state or school level, so the school would be the best source of this.

Everything that is needed for a student is supplied for by the student budget. This is the amount of money the school estimates that a student will need for the academic term. Room & board is counted into here and will be covered as far as dorms go. If the tuition cost is $35,000 there will be a lot of money needed in addition. If $35,000 is the budget amount, you are probably a lot closer to funding.

Currently Pell grants give $4500 per year. Freshman are given about $4000 in Stafford loans for the first year of college. Parent plus loans can make up the rest. As long as she is considered dependent, your income and taxes are taken into account.

Keep all the paperwork handy from the school and books because there are plenty of tax breaks that can be given at the end of the year.

Good luck and feel free to ask another question if you need further explaining on anything.

---------- FOLLOW-UP ----------

QUESTION: Andrew, the tuition is 22,000 the rest (room and board,meals)equal the 35,000 so the 10,000 merit scholarship will cover half of the tuition.Can you explain what the budget amount is and what you mean by alot closer to funding?

Answer
Okay, so the tuition is $22,000 with the other expenses bringing the total to $35,000. The merit scholarship will cover about a third of the total budget cost this year.

The budget is the total amount of money the school anticipates a single student will spend within the year. This number may be different than the actual costs of the school. The tuition is a fixed amount, but the lifestyle choices are the things that can break the budget. For example, if the school budgets a student $1000 a month for living expenses then that is how much they can give you. If you spend more than that with either food, clothes, transportation or any other expense, then that is where the budget will be broken. Bottom line is that the budget is the maximum amount of money a single student is allowed to have during the course of the academic period.

Let's calculate how much the school may cost. $22,00 for tuition and allow about $1500 for books and supplies for the first year. And let's estimate $10,000 for dorms, food on campus, and laundry. Travel back home for holiday periods will be considered extra for right now. That's $33,500 for rough expenses.

The merit scholarship will pay $10,000. If you are eligible, the Pell pays $4500. School or state grants may be available for let's say about $5000 a year (check with the college if they have any school grants). First year Stafford loans are $5500 maximum. Parent PLUS loans would attempt to make up the rest of that amount. Student loans from banks are also available. That would give us roughly $20,000 in money that would not need to be paid back.

That would mean about $13,500 for the first year that would need to come from loans, personal savings, 529 plans or any other kind of source. This amount is of course larger than that $6000 EFC.

Contact the school for full budget information and the final financial aid package as well as your personal cost.

Hopes this helps clear a few things up.