Financial Aid vs. Merit Scholarship

College is expensive! Figuring out how to pay for it can be overwhelming. A 4-year college education, without scholarship, can cost anywhere between $60,000 to $250,000. If do not have $250,000 sitting in the bank, you need to get educated on the metrics of different college tuition price points (public vs. private, instate vs. out of state) financial aid, loans and merit scholarships. While highly selective schools; Princeton, Harvard, Yale, have unlimited financial aid, they also have acceptance rates of less than 10%.  Better shop elsewhere…

We highly recommend the book “Right College, Right Price, The New System for discovering the BEST COLLEGE FIT at the BEST PRICE” by Frank Palmasni. It is an excellent tutorial on how to pay for college.

Two types of Financial Aid — Financial Aid vs. Merit Scholarship          

1. Need Based Financial Aid – “Gee it’s expensive, you need help paying for this!”

Colleges determine if you will be awarded Financial Aid based on your FAFSA (Free Application Federal Student Aid) application, Cost of Attendance and the EFC – Expected Family Contribution. Some colleges will require you to fill out additional forms including CSS Profile.  The aid may be federal, state and institutional aid, which could include loans and grants.

2.  Merit Awards – “Gee you’re great, we have a gift for you!”

Merit awards and Scholarships are usually awarded by colleges and community groups for academic, volunteerism or athletic performance. A college may offer scholarships to attract a high caliber student who will raise the student body profile. To increase your chances of receiving an academic scholarship your GPA and test scores (ACT or SAT) should be in the top 20%  of the incoming class

Show me the Money! 

There are many colleges who offer Academic Scholarships that students may be eligible for due to GPA and SAT scores. Check each college’s “Scholarship” page. Some schools will automatically consider you when you submit your application, such as University of Miami. Other may require lengthy additional applications. Scholarship Applications are often due before the January 1 deadline of a regular application.  Website  offers a directory of merit scholarships from colleges across the country. Apply Early!

The Definition of “Need”

Your financial need varies depending on the school you attend. It’s the   Cost of Attendance (COA), less the Expected Family Contribution (EFC) determines the Financial Need.  This is determined by completing the FAFSA form. Once your financial need is determined, the college will award you what they consider an appropriate package. Some schools will meet 100% of need, others might be less generous and only meet 30% of need.

COA (Cost of Attendance)
– EFC (Expected Family Contribution) determined by FAFSA)
= Financial Need

The EFC is based on Parents Income and Assets, Student’s Income and Assets, number of family members in the household and number of children in college.

What is the FAFSA?

The FAFSA, Free  Application Federal Student Aid,, may be submitted on January 1 of senior year. It is recommended to submit online and to prepare a preliminary FAFSA worksheet in the fall so you are ready to answer the questions accurately and timely. Inaccuracy, which is very common, will delay your application and possibly eliminate an award.

A PIN number is required to complete the FAFSA form. Allow yourself 3-5 days to be issued a PIN number. Go to  to register for your PIN. 

Why Everyone should complete the FAFSA…

It is recommended that everyone should file a FAFSA since many of the loans available will require and some colleges which award merit scholarships*  require it be submitted. *One student  received a $12,000 scholarship but lost the award because the family did not realize this school required them to submit FASFA. This oversight is more common than you think.

What is the CSS Profile? 

The CSS Profile,, uses a Institutional methodology in determining financial need. It is often required by smaller private colleges and some scholarship applications. The fee to file is $9 registration + $16 for eachl school requesting it.  In most cases, this needs to be submitted (in addition to the FAFSA form) before you are notified of acceptance.

What is a Direct Loan?

Direct Loans (formally called Stafford) are another form of self-help financial aid. They may be subsidized, which means the interest is paid by the federal government while the student is still in college. Unsubsidized Direct Loans means the student is responsible for interest that accrues while enrolled in school.

The interest rates on both the unsubsidized loan and a subsidized loan are the same. The rates are no longer fixed they are now variable. And the current rate (2014) is less than 4%.

What is a Pell Grant?

Pell Grants range from $400 to $5,565, with an average grant of approximately $3,600. The average family income of 48% Pell Grant recipients (who are dependent on their parents) in 2011-12 was $50,000 or less.  A Federal Pell Grant, unlike a loan, does not have to be repaid.

Additional Resources

Right College, Right Price” by Frank Palmasni $16.99; an excellent tutorial on how to pay for college. – College Board –  Fin Aid! “The SmartStudent Guide to Financial Aid” – National Association of Student Financial Aid Administration