READ THIS FIRST!
How Financial Aid Works
Grants and ScholarshipAlso called gift aid, grants don't have to be repaid and you don't need to work to earn them! (YEAH!). Grant aid comes from federal and state governments and from individual colleges.
Loans
Most financial aid comes in the form of loans - aid that must be repaid. Loans are common, making up nearly 54% of all financial aid. Most need-based loans are low-interest and sponsored and subsidized by the federal government, which means no interest accrues until after graduation.
Work-Study
Student employment and Work-Study aid help studetns pay for education costs such as books, supplies and personal expenses. Work-Study is a federal program that provides students with part-time employment.
The Family's Contribution
In calculating financial aid, the formula says that the follwing percentages of income and assests be used for college expenses in any single year:Formula to calculate finances:
Student's Assets.............................35%
Student's Income...........................50%
Parent's Assets..............................2.6% - 5.6%
Parent's Income............................22% - 47%
The percentage contributions for parents vary depenidn gon their economic status and age. Lower-income families and older parents are expected to pay less; higher-income familes with younger parents are expected to pay more. ** This formula shows that it is far better for any savings to be in teh parent's name than in the student's name.
Source: Student Loan Buying Guide, April/May 2010 How financial Aid Works pp 15.
