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How Is Financial Aid Awarded
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Article on How Is Financial Aid Awarded
The majority of students in the United States have to depend on one form of financial aid or the other to foot their college education bills. In view of this, the subject of applying for and securing financial aid is a very important one. There are several processes involved in securing financial assistance for schooling and a thorough understanding of these points is important. As such, an answer to the question “how is financial aid awarded?” helps in elucidating the subject of financial aid since it is broken down into several steps.
Step 1: Collation and Consideration of all Applications
Before financial aid award letters are issued, all the applications received by the Department of Education are collated and processed in order to determine the appropriate aid for each applicant. This process is a rather tedious one; hence it is advisable to begin early. To qualify for federal aid, all applicants must fill the Free Application for Federal Student Financial Aid (FAFSA) and submit the completed forms early. This is important as it is the basis for the complex calculations used to determine the amount of financial aid each student qualifies for. FAFSA is available online and information regarding this can be obtained from the financial aid department of each school.
Step 2: Calculation of Financial Need
The second step in answering the question “how is financial aid awarded?” is the determination of each applicant’s financial need. This process requires complex financial calculations but in summary, the financial need is determined by subtracting the EFC from the COA. EFC stands for Expected Family Contribution and it represents the amount that the student and/or his or her family are able to contribute towards the cost of education. The COA is the Cost of Attendance and it represents all the expenses required for an academic year in a particular school. COAs vary from school to school and include tuition, board, books and supplies, and miscellaneous expenses.
Step 3: Determination of Eligibility Status for Financial Aid
Once the applicant’s financial need has been calculated, the next step in answering the question “how is financial aid awarded?” is to determine the amount of financial aid available to the applicant. There are basically two types of aids: self help aid (which the student has to pay back) and gift aid. Available self help aids include Federal Work-Study, Federal Stafford Loan (subsidized and unsubsidized), Private Student Loans and PLUS (Parent Loan for Undergraduate Students). Gift aids include Grants (from governments, institutions and private organizations) and scholarships.
Award of Financial Aid
This is the final step in answering the question “how is financial aid awarded?” Once the amount of financial aid available to the applicant has been determined by the school’s financial aid administrator in conjunction with the Department of Education, the Financial Aid Award Letter containing the relevant details is sent to the student. After receiving this letter, the student is expected to accept or decline the award after careful consideration of the terms.
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