When parents and students complete financial aid and scholarship applications, they hope the end result provides a significant amount of funding. Net price calculators and other tools can help predict a student’s projected cost of attendance. But too often, families wait until the initial financial aid award letters arrive from colleges and then wonder how to finance the gap between what was offered and their own resources.
Help the families you serve by familiarizing yourself with the most common methods used by colleges to award financial aid. By reviewing a college’s website, talking to a school representative, or even taking a campus tour, you can gain knowledge about the institution’s approach to helping families fund a college education.
Colleges tend to award financial aid in one of six ways.
1. Standard Package
Colleges in this category offer the majority of their students only the federal funds they can receive at any properly accredited and Federal Student Aid eligible institution. Information on the school’s website is usually geared toward very high-achieving students. Look for clues online: Do students have to achieve a 3.5 GPA or higher to be able to apply for the limited number of scholarships offered by the college? (Some schools also offer a few additional scholarships for students with a GPA of 3.0 or above and a high score on the ACT or SAT.) In addition, many colleges that offer standard packages include links to national scholarships on their websites.
2. Institutional Commitment Package
These schools have decided on their own to try to cut the cost of a higher education. Students who meet certain criteria are offered significant funding. On their websites and when meeting with students, college officials say they will meet “full need” or refer to their institution as a “limited loan” or “no loan” college.
Funds from the school are awarded to students in addition to any federal funds they receive. Typically, colleges that use institutional commitment packages have a large number of applicants. These colleges also tend to be highly selective and admit a small percentage of the students who apply for admission.
3. Upfront Discount Package
These colleges tend to use their webpage to advertise the scholarships they offer. A chart showing scholarship options may be available, and college officials may even provide prospective students with an early estimate of their financial aid award based on family income. This can help take the guesswork out of the scholarship process. While being a top academic achiever can help applicants win funding at these colleges, students may also be awarded scholarships based on other factors. Schools following this method show parents what to expect and manage expectations before the first financial aid award letter is processed.
4. We Will Negotiate Package
Colleges that use this approach know their competitors and want to enroll students they feel are a great match for the institution. They are aware of and attempt to accommodate the financial needs of students and families. In addition to federal financial aid, these colleges may provide scholarships or grants from their own funding source. Some schools in this category may even advertise up front that they will negotiate with students who have been admitted to one of their competitors.
5. Heavy Borrowing Package
Colleges in this group tend to have a high cost and limited scholarship funding. A small scholarship may be offered that does not make a significant contribution toward the total cost of attendance. Students usually have to borrow maximum loans and parents are also routinely asked to also take out a loan. Some schools in this category offer monthly payment plans. They may also award additional institutional funds to those students who bring local scholarships to the college.
6. Low-Cost, High-Quality Institution Package
Some institutions — including community colleges and some state universities — are affordable because their tuition and fees are lower to begin with. It is this distinction (not the institution’s financial aid packages) that typically make these colleges attractive to families. Institutions in this category tend to follow the standard package model. Students have access to federal financial aid, but applicants are less likely to receive institutional grants or scholarships. Scholarship information on college websites is usually targeted at high-achieving students. Links to national scholarships may also be made available.
Kenneth McGhee is an instructor and community outreach academic advisor at Northern Virginia Community College — a NACAC member institution. He has worked in the financial aid profession since 1995.
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