Greetings from Gardner-Webb University! I hope everyone is staying warm during this unseasonably chilly burst of wintry air. As the calendar turns to March, most of us typically associate this time of the year with the NCAA basketball tournament and getting the lawnmower out of the shed and ready to roll for yet another grass-cutting season. However, this time of the year is also significant from its standpoint as the official kickoff of the financial aid season for many colleges and universities across the country. With March 1 typically representing the “priority deadline” for FAFSA completion and processing at many schools, I thought it would timely to review some general financial aid basics.
The Free Application for Federal Student Aid (FAFSA) is the catalyst for much of the financial aid awarding process. The FAFSA, which can be completed online at www.fafsa.gov, is a basic measure of a family’s income and savings and is used to determine a family’s EFC (expected family contribution). This EFC, expressed in dollars per year, represents the US Department of Education’s best estimate of what a given family unit can afford to send one student to school for one academic year. This EFC then serves as a sort of litmus test for determining what sort of need-based aid a student can be eligible for. Generally speaking of course, the lower the EFC, the greater the likelihood of being eligible for need-based aid opportunities. Families can request that their FAFSA results be sent to as many colleges as they would like.
Federal Pell Grant
Since the mid-1960s, the federal government has offered a basic need-based grant opportunity that today is known as the Federal Pell Grant. Students who are eligible for a Pell Grant (as determined by the FAFSA) for the 2014-2015 school year can receive up to $5,645 dollars for the academic year. This money is sent directly from Washington to the designated university on behalf of a particular student. The precise amount of Pell money a particular student receives is determined by a family’s EFC. This aid amount will be identical across all financial aid offers from every school a family selects on the FAFSA and will not have to be repaid.
North Carolina Need-Based Scholarship
For students who are residents of North Carolina and will be attending any college (public or private) in their home state, the FAFSA determines eligibility for the North Carolina Need-Based Scholarship. Enacted recently by the state legislature, this program seeks to do at the state level what the Pell Grant does at the federal level. For eligible students (as determined by the FAFSA), this year’s NC Need-Based Scholarship benefit will range from $1,200-$7,200 dollars for the 2014-2015 academic year. This amount will be identical across all financial aid offers from any North Carolina college (again, public or private) that a North Carolina family designates on the FAFSA and will not have to be repaid.
Direct Stafford Loans
All first-time college students who submit the FAFSA are eligible to accept direct Stafford Loan funds. This is a federally-managed student loan program in which money is sent directly from Washington to the chosen university on behalf of a particular student. Generally considered to be the most basic and simple of all college loans, Stafford Loans come in two forms: subsidized and unsubsidized. Subsidized Stafford Loans function as interest-free loans while a student is enrolled full-time at an accredited US college. Once a student graduates (or drops out of school), a six-month grace period begins. At the conclusion of this built-in grace period, students enter the repayment phase, at which point subsidized Stafford Loans carry a 3.86% interest rate. In contrast, an unsubsidized Stafford Loan begins to accumulate interest (at a rate of 5.41%) from the time of origination. However, much like the subsidized Stafford Loan, students are under no obligation to make payments until six months after graduation (or dropping out). Additionally, these payments can be temporarily deferred for a variety of reasons (including graduate study).
Prior to accepting Stafford funds, students have to complete loan entrance counseling to be appropriately apprised of their rights and responsibilities as borrowers of federal money. Students also complete a MPN (Master Promissory Note) which serves as an electronic contract indicating that they understand what obligations they are under as participants in this program. First time freshman are authorized to borrow up to $5,500 dollars for their freshman year (of which up to $3,500 dollars can be subsidized). Many families find this to be a useful tool in lessening the more immediate out-of-pocket cost associated with sending a student to college. It is also a very practical way for families to allow their students to be personally invested in their academic success at the university level. This amount will be identical across all financial aid packages from every school a student is considering and will have to be repaid.
School-Based Affordability Awards
Many colleges (including Gardner-Webb) incorporate “in-house” need-based/affordability grants as part of completed financial aid packages. The amount of these grants are calculated individually by the respective universities and represent the portion of need-based financial aid that varies radically from school to school. Each college uses their own model to calculate how much (if any) additional need based assistance the student should receive directly from the college itself.
I hope this refresher course in financial aid basics has been helpful to parents and students alike. As we approach the financial aid season at Gardner-Webb University, I hope that all prospective GWU students and their families will reach out to the admissions and financial aid offices with any questions or concerns that may come up during this important time. It is our sincere intention to provide accurate information in a helpful, compassionate, and timely manner.
Thank you for spending a few minutes of your time by traveling firmly “on the right path.” I look forward to checking in again soon!