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Types of Financial Aid

Grants are typically based on financial need and don’t need to be repaid.

Scholarships may be awarded based on academics, special achievements or involvement in school or community activities; financial need is sometimes a factor. They are known as gift aid, and do not need to be repaid.

Loans are a significant part of most aid packages. The loan must be repaid, most often not until after graduation. Interest rates are usually lower than other types of loans. The repayment period varies from two to three years up to thirty years.

Work-study refers to part-time jobs on campus; funding is provided through the federal work-study program or 
institutional funds.

Financial Aid Terms

Financial aid package
The combination of scholarships, grants, loans and work-study that a student receives.

Need analysis
Using information provided on the FAFSA form and on other forms a college might require, the income and assets of both parents and student are analyzed. Many variables that affect a family’s financial situation are considered, such as the number of people in the household, children in college, age of parents, and types of assets and savings.

Expected family contribution
The amount the family and the student could reasonably be expected to contribute toward the cost of a college education. This is determined by the need analysis.

Need-based aid
Financial aid award on the basis of the financial need shown by a family, determined by need analysis.

Merit-based aid
Financial aid awarded on the basis of factors other than financial need. This usually consists of scholarships awarded for academic performance or for special talents.

Comprehensive fee
The total cost of tuition, room, board, and student fees charged by a college or university. In addition, other expenses such as transportation and books are added to the comprehensive fee to determine the cost of attendance at a college.

Federal Methodology

The system that drives the process of financial aid for college is called federal methodology. This method is based on a simple mathematical calculation:

Cost of Attendance – Expected Family Contribution (EFC) = Financial Need

Cost of Attendance = tuition, room & board, fees, books, supplies, personal expenses and transportation

Expected Family Contribution (EFC) =  family’s resources that should be available to help pay for college.

This amount is calculated when a family files the Free Application for Federal Student Aid (FAFSA) yearly online at starting after January 1st of the student’s senior year.