Financial Aid Information
Questions and Answers
What types of financial aid are available?
Several types are listed below.
Grants: Gift assistance that, generally speaking, doesn't have to be repaid. (A recipient who fails
to enroll, withdraws, or changes enrollment status may be required to return a percentage of grant monies
received.) Grant awards are usually based on financial need. Scholarships: Gift assistance that doesn't have to be repaid. Scholarship awards are usually based
on skill, ability, talent, or achievement. Waivers: An arrangement offered by some institutions to forego specific higher education
costs for students who meet certain qualifications. Conversion scholarships/loans: Either loans or scholarships which require the recipient to provide
certain services for prescribed periods after completion of a specified academic program or pay back the
funds received with interest. Work-study: Part-time employment which enables a student to earn money to help pay the cost of
education by working either on or off campus. Loans: Money borrowed to cover the cost of education which must be repaid with interest. Military benefits: Financial assistance available to individuals (or to their dependents) who have
performed military service or are preparing to enter the U.S. Armed Forces. National service award: An award received for education expenses in return for national or community
service. Prepaid tuition: Contract purchased to guarantee fully paid undergraduate tuition for a determined
number of credit hours at a participating postsecondary institution.
What is need-based financial aid?
Aid provided to students to help pay educational costs when they can show that their own
resources are insufficient.
Who provides financial aid?
Schools, state and federal governments, and private organizations provide financial aid.
You and your family have the primary responsibility for meeting educational expenses to the best of your
ability.
How is financial aid awarded?
It's awarded on the basis of financial need (needbased) or on the basis of academic
achievement, athletic ability, or other talents or abilities (meritbased). Most financial aid is
need-based but is often awarded in combination with merit-based awards.
Who coordinates the financial aid process?
Generally, the school's financial aid office develops your financial aid package according
to program guidelines and regulations. The financial aid package is usually a combination of grants,
scholarships, work-study, and/or loans and depends on the availability of funds.
Where can I get information about financial aid?
Your guidance counselor, the financial aid officer of the school(s) you're interested in
attending, and financial aid websites are good starting points.
How do I apply?
If you are going to a public or private Alabama college, university, technical college, or
proprietary school, you must file the Free Application for Student Financial Aid (FAFSA) to be considered
for an award from the following major state and federal student financial aid programs: Alabama Student
Assistance Program Grant, Federal Stafford Loan (Federal Family Education Loan Program or Federal Direct
Loan Program), Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal
Work-Study (FWS), and Federal Perkins Loan.
You should check with the school you plan to attend to find out whether additional application forms
are required. Read the instructions on all applications carefully and follow them to the letter.
When do I apply?
It's to your advantage to file early. If you plan to attend an Alabama school and you're a
senior in high school, mail your FAFSA as soon as possible after January 1 when your
family has its tax preparation data. Students who complete and return the FAFSA early have the best chance
of receiving financial aid for which they're eligible. Deadlines for financial aid programs vary. If you
don't know the deadline, check with the financial aid office, your high school counselor, or the contact
for program information.
What is need analysis?
Need analysis is a process used to determine if you have need for aid and, if so, how
much need. Financial need is usually the difference between your cost of education and the amount of money
your family is expected to contribute.
How is my expected family contribution determined?
The financial information reported on the FAFSA is used by institutions and scholarship
services, as well as state and federal financial aid programs, to determine, on a fair and equitable basis,
what you and your family should reasonably be expected to contribute toward your yearly educational costs.
The standard formula established by Congress takes into account your family's prior-year income, current
assets, and certain allowable expenses, such as taxes paid, basic living expenses, and employment-related
expenses. The result is your expected family contribution (EFC), which is the amount you and your family
are expected to provide toward the cost of your education for that particular school year. The EFC of a
dependent student is calculated on the basis of the student's and parents' resources. The EFC of an
independent or self-supporting student is calculated on the basis of the student's own financial resources
(and those of a spouse, if applicable).
How will I know if I am considered a dependent or independent student?
Most students who are entering college straight from high school are considered dependent
students. For the 2002-2003 academic year, you're a dependent student unless at least one of the following
applies to you:
You were born before January 1, 1979. You're married. You're enrolled in a graduate or professional educational program (beyond a bachelor's degree). You have children who receive more than half their support from you. You have dependents (other than your children or spouse) who live with you and who receive more
than half of their support from you and will continue to receive more than half their support from you
through June 30, 2003. You're an orphan or ward of the court (or were a ward of the court until age 18). You're a veteran of the U.S. Armed Forces. “Veteran” includes a student who attended a
U.S. military academy who was released under a condition other than dishonorable.
If you claim to be an independent student, your school may ask you to submit proof before you can receive any
federal student aid. If you think you have unusual circumstances that would make you independent even
though none of the above criteria apply to you, talk with a financial aid officer at the school you plan
to attend.
If my parents claimed me as a tax exemption last tax year but gave me no
money or support, what should I do?
Although you don't meet the federal definition of an independent student, you should
discuss your situation with the financial aid director of the school to find out if he or she can assist
you.
If I have a brother or sister attending postsecondary school, will my family contribution
be less?
Probably. As a rule, if two family members (other than a parent) are in college at least
half-time, the EFC is divided by two.
If my parents are divorced or separated, which one should provide the
information for the parent's portion of the FAFSA?
The parent with whom you lived the most during the past 12 months should complete the
application. If you lived with each parent an equal length of time or lived with neither parent, the parent
providing the most financial support for you during the last year should complete the form.
If I have a legal guardian, does (s)he have to provide financial information on the FAFSA?
No. Financial information from an applicant's legal guardian is not collected, even if that
guardian has been directed by a court to support the applicant. Applicants who have legal guardians but
who also have at least one biological or adoptive parent still living must include the parent's
information on the FAFSA, unless the applicant is independent based on one of the other dependency
criteria. If warranted, however, a financial aid administrator may use professional judgment to make the
student independent. Check with the financial aid office at the school you plan to attend to determine
how to complete the FAFSA.
What if I don't qualify this year?
Reapply each year you plan to attend. Factors regulating financial aid change; because
you're not eligible one year doesn't mean you won't be eligible the next year.
What is “satisfactory academic progress” mentioned in the eligibility criteria of
some financial aid programs?
To continue receiving aid under these programs, you must make satisfactory academic
progress according to your school's policy. Federal regulations require institutions to monitor financial
aid recipients to ensure they are making measurable progress toward a degree or certificate. The school's
policy for students receiving financial aid must be at least as strict as the policy used for students who
do not receive financial aid funds. It must include both qualitative (i.e., grade point average) and
quantitative (i.e., hours attempted-hours earned) measures. The law also specifies that by the end of the
second academic year, the student must have a “C” average or its equivalent or an academic
standing consistent with the institution's graduation requirements.
What does financial aid cover?
Financial aid must be used to pay the costs of education, which may include direct costs
(tuition, fees, books, and supplies) and living expenses (transportation, housing, food, and personal
expenses).
How much can I get?
The total amount of need-based financial aid can't exceed the school's total cost of
education minus the EFC.
You and your parents can get an estimate of how much financial aid you can receive and how much
you might be expected to pay toward college costs by using the interactive
College Aid Calculator,
developed by Think Ahead, Inc., of Dresden Maine. The calculator can be used to estimate those figures
for children of any age and for residents of any state.
To use the College Aid Calculator, parents and students enter information about their financial
situation without having to enter any identifying information such as a Social Security number. The
information is deleted as soon as the EFC is calculated.
Families should remember that the calculator provides only an estimated EFC. The exact EFC for
each student will be calculated when the student applies for federal and state financial aid by filling
out the FAFSA. Parents and students should make the school's financial aid office aware of any special
circumstances that may affect their need for assistance.
When will I know how much I will get?
If you apply for state and federal aid between January and April, you should be notified
of your award(s) during the late spring or early summer.
What are Federal Family Education Loans and Federal Direct Loans?
Federal Family Education Loans are student loans made by lending institutions and generally
insured by state agencies (such as KHEAA) or private, nonprofit entities. Your loan application is
certified and your loan disbursed through the higher education institution.
Federal Direct Loans are made under a federal program financed by the U.S. Department of Education
using funds it borrows from the U.S. Treasury. The program is administered by the higher education
institution.
By law, terms such as interest rates, fees, etc., are generally parallel for both programs.
Under which program must I borrow?
Each school that participates in a student loan program has an agreement with the U.S.
Department of Education to offer Federal Family Education Loans and/or Federal Direct Loans. The type of
loans available to you will depend upon the school you attend. Check with the financial aid office of the
school you've selected for more information.
When do I pay the costs of higher education?
Most schools require you to pay tuition and fees no later than the first day or week of
each term. If you are receiving financial aid, the school will usually deduct costs from the aid you
receive. Many schools have payment plans that let you pay costs in installments. Check with the schools
you're interested in attending to see if extensions and payment plans are available.
What is the school's refund policy?
Every school that awards federal student aid must have a written refund policy and must
give you a copy of that policy if you request it. It's important to find out before you apply for
admission if you can get a refund if you withdraw from school before you get your degree or certificate.
What is an enrollment contract?
Some schools use an enrollment contract to explain what you can expect the school to give
you for your money. Read the contract carefully before you sign it. A representative of the school may
promise you things that aren't in the contract, such as help finding a job. If the school's representative
makes you a promise, ask him or her to write the promise on the contract and sign and date it. If necessary,
the school can add a separate sheet of paper to the contract, with the title “Addendum to [name of
contract].” A promise is usually not enforceable in court unless it's in writing.
Are scholarships taxable?
Students attending college on scholarships should double-check the tax status of any
financial assistance with their personal tax advisor before deciding whether to ignore the income or
report any of it on their tax return.
The requirements for a scholarship to be tax free are that the recipient be a candidate for a degree at
an educational institution and that the grant is a qualified scholarship. In the case of an individual who
is a candidate for a degree, the exclusion from income does not apply to the portion of a scholarship
that represents payment for teaching, research, or other services in the nature of part-time employment
required as a condition of receiving the scholarship.
A qualified scholarship is any amount used for tuition and enrollment fees or other required fees,
books, supplies, and equipment. These items must be required of all students in the same course of
instruction to be tax free. Any amount received for incidental expenses is not a tax-free, qualified
scholarship. Incidental expenses include expenses for room and board, travel, research, equipment, and
clerical help.
For more information, call the Internal Revenue Service (IRS) at (800) 829-1040 or visit
http://www.irs.gov/pub/irs-pdf/p970.pdf to download the
free Publication 520 Scholarships and Fellowships. This and other free publications are also available from
the IRS by calling (800) 829-3676 or by visiting
http://www.irs.gov/formspubs/index.html.
How can higher education tax benefits help me?
There are several federal tax benefits, including the Hope Tax Credit and the Lifetime
Learning Credit, that may be available to you if you are saving for or paying higher education costs for
yourself or another student. IRS Publication 970
explains these benefits in detail, including eligibility criteria and other important information.
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