Financial Aid – An Overview

Here is a 2-minute drill explanation on how the whole financial aid process works, based largely on the first chapter of my book, How to Pay “Wholesale” for College.  Because this is a summary, I am leaving a handful of less-important details.

 Financial aid forms are submitted before you know whether or not your child got into the colleges on his or her list, for the most part.  So most high school seniors submit their ADMISSIONS applications sometime in the fall, say October or November.  Most financial aid forms are submitted in January or February –at least in my little corner of the world!

 Note that this is long before most people file their tax returns. How?  Because you use estimated income on the financial aid forms, then amend te forms once you have actual numbers.  That’s an important point – and highlights a key mistake that many families make.  Don’t delay filing your financial aid forms until after you’ve completed your

Yes, there are exceptions.  If your child applies Early Decision or Early Action, the deadlines for those applications sometimes coincide with the deadline for one of the financial aid forms required by many competitive colleges – the CSS Profile.  Early CSS Profile application deadlines could be November 1 or November 15.  Be sure to research this if you’re applying Early Action or Early Decision.

For the most part, the CSS Profile and the Free Application for Federal Student Aid, or FAFSA, is submitted after the first of the year.

How do colleges determine how much you’ll qualify for?  There are approximately 73 factors that make up the key calculation in the financial aid formulas – the Estimated Family Contribution (

Income is one of the most heavily weighed factors.  Assets are another.  But these are not the only elements that can affect how much you’ll have to pay for college.  Here are a handful of other considerations:

        Your age

        The number of students in college at the same time

        Whether you own a business

        Your marital status

So just because you make a high income – or what you think is a high income –  does not mean that you  should not bother to file. Income is but one of the afore-mentioned 73 factors.

OK, so the financial aid applications are submitted in the beginning of the year.  Sometime thereafter, around February or March, your child will have heard back from all of the colleges she applied to as to whether she was admitted or not.

Shortly afterward – perhaps the middle of March, you will receive a financial aid award letter from each college your child has been admitted to. 

What happens if you’re not happy with the award?  You can try to improve it, because it’s not a “firm” offer written in stone by any means.  It’s only an offer.

Yes, you can appeal your financial aid award letter – this is important to understand.

Next, the dust settles, your child picks the college she’ll attend and you’re happy with your financial aid award.  Summer comes and goes and your child heads off to college.  Are you done with the financial aid process?

Unfortunately, no – you re-file again the next year. 

Why must you suffer like Bill Murray in Groundhog Day? (Murray’s character relives the same awful day over and over…but you probably remember that.)

Because circumstances change – people lose jobs, make more money, come into inheritances and so forth.  Colleges of course want to know about your financial status each year.  If there’s a significant change, they’ll want to know why, too.  So a change in circumstances can work for or against you.

That’s the financial aid process in a nutshell.