<p>I was curious if there was a somewhat general way in which financial aid packages were composed.</p>
<p>For example, say a college gives a student $20,000 merit scholarships, and the school costs $50,000. The students EFC however is $20,000. Will the financial aid package bring the school cost down to $20,000, and then apply the merit scholarship to make it look attractive (so in this case the college being free); or is it closer in that the college will try to bring the cost down to $20,000, including the merit scholarship (so $10,000 in college loans/grants (if say the college wanted to meet full financial need)) (resulting in the college costing ~20,000 + loans)?</p>
<p>Almost all colleges will take their Cost of Attendance ($50,000 in your example), subtract the $20,000 merit aid, then subtract the $20,000 EFC and arrive at a “need” of $10,000/yr for the student. </p>
<p>If they meet 100% need and promise no loans (this is only a couple of the highest rated schools), they would give a financial aid package for $10,000 that would probably be composed of at least some work study and then the rest in grants.</p>
<p>For most other schools, they will offer a package that includes a total of $5500 in Stafford Loans, couple thousand in work study, and possibly a small grant. Your actual cost/year would be the $20,000 EFC + $5500 loans + gap (whatever is left of “need” that isn’t covered), and you’d have to work to earn the work study $$s.</p>
<p>I have also seen schools assume more than $5,500 in loans for the student and also summer earnings.</p>
<p>I could see a school covering the entire $10,000 in remaining need from loans, work study, and summer earnings.</p>
<p>If there is a bigger gap than the $10,000 in the example, the school does not necessarily have to put together a package that meets 100% of need.</p>
<p>Exactly. I remember one school in 2006 that offered my child only loans. They offered Staffords and a small Perkins loan and the total was over 7,000 in loans for a freshman!! Ah, at least they showed their true colors freshman year and my son did not accept this offer. Oh, not one dime in grant money from that school either.</p>
<p>Also, another school asked my son to earn so much in earnings that I felt it was not doable. That school meets 91% of need on average, and now I know why it is fairly high. They tell the kid how much he can earn.</p>
<p>This is a great discussion. I’m trying to make sure I understand this right. Our EFC is around $27K and my son has applied for merit aid. If he is awarded at $17K merit award and the cost of the school is $50K, according to mom6350, it sounds like it would work like this: $50,000 tuition - 17,000 merit - 27,000 EFC = $6,000 need. That can’t be right. Can it?</p>
<p>boomie, yes. You can expect loans and/or Work study IMO. There are some schools that will give 1,000 in grants if you just fill out the FA forms. My older son saw that at 2 different schools.</p>
<p>If they’re a combined need/merit program (UChicago comes to mind) they may meet some of that $6,000 need in scholarship. However, for $6,000 it’s most likely that they’ll expect $4,500 or so in Stafford loans, and an additional $1,500 in either work study or summer earnings or some such thing.</p>
<p>But, Stafford loans don’t start accumulating interest until 6 months after graduation (and graduation of grad school if the student goes on to that), so what with inflation and the supposed ability of the student to earn more than they can through work study after they graduate, Stafford (and even Subsidized Perkins) loans are not the worst option.</p>
<p>This has not been my experience. What I have seen from the schools my office has dealt with, the most common application of EFC and merit aid is to include merit money into the financial package to meet family need. If you have a particularly attractive student to the school, your package can sometimes go beyond the family need, but this is not the prevailing standard.</p>
<p>Your need is 50,000-27,000=23,000 (your need)</p>
<p>They have met part of your 23,000 need with 17,000 in merit aid.</p>
<p>23,000-17,000=6,000 in umet need which can be met with loans and/or work study or you could have some gap (unmet need left). If they really want this student they can add some grants rather than loans and/or w/s. Some schools add 1,000 in grants because you filled out the fafsa.</p>
<p>This is a great topic now that the merit offers are coming in. It seems that merit aid is probably most attractive to the full pays. For those of us with mid range EFCs, a student getting an $18,000 merit award doesn’t take away from the parents paying their EFC, but might help the student with loans, less work study, etc. And possibly, it may have been equally as beneficial to apply to schools with need only that meet full need (unless the school has other financial aid policies, CSS Profile, relying upon the non-custodial parent, etc, that affect the final package). Am I understanding this correctly?</p>
<p>I agree that merit aid is most attractive to full pays since it is deducted from need.</p>
<p>If your kid can get into a school that meets “full need” and offers no loans to families with incomes of 160,000 or less, then your kid probably stands a good chance at either a full ride at a state school or third tier, or at least a full tuition scholarship. The reason is that means your kid has super high stats because your B student with 1200/1800 on the SATs is more than likely not getting into schools that meet full need (ie: Ivies).</p>
<p>But, Stafford loans don’t start accumulating interest until 6 months after graduation (and graduation of grad school if the student goes on to that)</p>
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<p>Only partially correct … students can only receive UP TO $3500 in subsidized Stafford loans as a freshman. Unsubsidized Staffords will make up the balance of the $5500 freshman max. They start accumulating interest as soon as they are disbursed.</p>
<p>Our experience with oldest child was all over the map at schools that typically are considered to more or less meet need. All 8 schools came up with a relatively similar EFC, but each had very different packages. My suggestion is to look at the bottom line: Take ONLY the tuition, fees, room, and board charges. Subtract ONLY the “gift” aid. Compare packages on that basis. You may see radically different numbers from school to school … this is your bottom line, folks. D chose her first school based on a large scholarship. After freshman year, she transferred to a school she had originally turned down … one that meets need without loans. We lucked out, because the second school has so much padding in its Cost of Attendance that we made out better than we would have at the first school for future years. As school 1’s direct costs rose, she would have paid more out of pocket. As school 2’s direct costs rise, we receive more grant money. We have a relatively high EFC … not as high as many here, but higher than the cost of our flagship state U. We actually pay quite a bit less than we would at our flagship for the Top 20 she attends.</p>
<p>S is a senior in high school with a high ACT, 3.7 gpa, no school/leadership EC’s. He is doing pharmD, so his school options are narrower than D’s were. Money is going to be a huge factor in which school he attends. The state school is offering an automatic merit scholarship, honors college, and the potential for other scholarships. The private he really likes has not offered a scholarship & we have no clue what the aid package might look like. He may end up at the state school … not his first choice … but that’s the way it is. He will be fine.</p>
<p>Susan gets it just right. Merit aid reduced need, so the people who benefit most are those with no or little need. The advantage to the student is that it can eliminate loans and/or work study which they would have gotten if the money was labeled need based instead of merit. The disadvantage to the student is that most merit aid requires that they maintain a minimum GPA which need based aid does not do.</p>