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Do I Qualify for Scholarships or Financial Aid?

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  • 1:29 Merit-Based Aid & Scholarship
  • 3:16 Need-Based Aid
  • 4:03 Determining Need-Based Aid
  • 4:43 Types of Need-Based Aid
  • 6:25 Non-Need-Based Aid
  • 7:03 Maximizing Your Financial Aid
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Lesson Transcript
Instructor: Jamila Nassar

Jamila is a certified school counselor in the state of Indiana. She has worked in education for 15 years.

Financial aid vocabulary and procedures can be difficult to understand. This lesson will help by reviewing the different types of financial aid, how you can determine eligibility and how to maximize your financial aid possibilities.

What Is Financial Aid?

When it comes to paying for college, students just want to know how much financial aid they can get and how to get it, right? But, the world of financial aid is full of unfamiliar vocabulary and acronyms. New students probably feel like they are trying to learn another language. The good news is that when it comes to paying for college there is something for everyone. The question is: what type of aid is out there?

This lesson will help students understand financial aid - what it is and how to get it. In the process, students will become fluent in the language of financial aid.

Financial aid refers to grants and scholarships as well as loans or work-study used by students to pay for college expenses. It is awarded based on merit or need (and sometimes both). Financial aid can come from federal or state governments, colleges, private institutions or non-profit groups.

Throughout this lesson, we are going to follow along with Emily, a student who has recently been accepted to a university and found a way to pay for college using financial aid. We will start by looking at how Emily was able to get one type of financial aid - a merit-based scholarship.

Merit-Based Aid & Scholarships

Merit-based aid, usually in the form of scholarships, is money awarded to students who possess outstanding academic skills, athletic ability and artistic talent. Some scholarships are awarded based on merit and financial need combined. There are also merit-based scholarships intended for students who have certain characteristics, such as single moms, students of a minority group, first-generation college students or those planning to study a particular major.

Scholarships can be provided by a prospective college, individuals, private companies or non-profit organizations. Also, scholarships do not have to be repaid, but students will usually have to maintain a satisfactory academic record to renew a scholarship each year.

Emily has a GPA of 3.75 and is the first in her family to go to college. She plans to study engineering. Emily received a merit- and need-based scholarship for $500 from a local non-profit because of her GPA and due to being a first-generation college student. Emily's high GPA and the fact that she plans to study engineering made it possible for her to win a $1,000 scholarship from a local company that promotes women in engineering.

Students can find scholarships that match their characteristics by starting early and doing the research, like Emily did. She found out about these scholarship opportunities through her school counselor and by doing a little research online. She also checked at the public library and talked to the university recruiters to find out what was available.

Need-Based Aid

Grants, loans and work-study funds given to students who show a financial need are called need-based aid. This type of aid is provided by federal and state governments or by colleges. The amount of need-based aid awarded is determined by the Expected Family Contribution (EFC), which is generated from information you enter into the Free Application for Federal Student Aid (FAFSA).

In January, Emily finished her FAFSA. She found out immediately that her EFC was $2,000. Once Emily's EFC was reported, her college began creating a financial aid package, which is a detailed offer of aid, such as grants, loans or work-study.

Determining Need-Based Aid

Colleges determine the amount of need-based aid that is offered to students by using the EFC, which is calculated by the FAFSA, and the total Cost of Attendance (COA), which is calculated by the college. If the EFC is less than the COA, students qualify for need-based aid.

In Emily's case, the COA of the university is $18,000. Since she has an EFC of $2,000, she has a financial need of $16,000. Let's go into more detail about three types of need-based aid that may help Emily pay for college.

Types of Need-Based Aid

The first type of need-based aid is grants, sometimes called gift aid. Grants are similar to scholarships in that they don't have to be paid back. One of the most common ways to get a grant is through the federal government, but they are also offered to students through their college or the state government. In all three instances, filling out the FAFSA is required.

Emily qualified for a $3,000 Pell Grant from the federal government. Thanks to her excellent academics, Emily also qualified for a generous state grant of $5,000. With the $1,500 in scholarships, Emily now has $9,500 towards her college education and still qualifies for another type of aid called a subsidized loan.

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