Financial Aid: What You Need to Know

The closer you get to your senior year of high school, the more “college talk” you’ll hear.

“So what are your plans after graduation?”

“What career do you see yourself in?”

“Have you applied for financial aid?”

That last question finds most students stammering anxiously, palms sweaty and heart hammering. I mean, sure, we all have an idea of where our passions lie, what we’d just love to do. And with the endless university and college choices in the United States, there doesn’t seem to be a wrong answer. But financial aid? What even is that? Where do I begin?

Despite its scary exterior, financial aid can be easily broken down into more sizeable pieces that even the most unsure student can confidently manage. The first step is to complete the FAFSA.

To apply for aid in the United States, every student (and I do mean every student) must fill out a FAFSA, otherwise known as the Free Application for Federal Student Aid. Go to and click “Start a New FAFSA”. That easy. You know your birthday and social security number right? That’s all you need to know! The website walks you through the rest.

Step one done. See? Told you it’d be easy!

The next step is to find out your EFC. Your EFC means Expected Family Contribution–it is just what it sounds like. It is the amount that the government believes your family is capable of contributing to your education. They look at a variety of factors to determine that amount, from your parents’ annual income to how many other children they have. This step is actually hidden in the FAFSA itself. Your parents will put in their income tax information from the most recent year (good news–they can import this information straight from the IRS into the FAFSA) and your EFC will be calculated.

Once the FAFSA is completed and your EFC is calculated, the government will decide whether you are eligible for grants. Grants are different from loans in that they are free money. Plain and simple. You will never be required to repay a grant. Well, if it’s free money, how is a grant any different from a scholarship? you may ask. That’s a great question! Grants are most often need-based while scholarships are merit-based. All this means is if you fall within a certain minority or income status, you are often eligible for grants. Whereas, pretty much anyone can apply for a scholarship.

So you’ve finished your FAFSA, found the grants you’re eligible for and sent off a few scholarship applications. You are well on your way to being a Financial Aid expert!

The next step is to determine if you want to take out any student loans. Keep in mind, every loan you take out must be repaid in full. And loans include interest. Now there are several different kinds of student loans.

  • Direct Subsidized: these loans are only given to students that demonstrate financial need. The benefit of these loans is that while you are in school (and for six months after graduation), the government pays all the interest.
  • Direct Unsubsidized: any student may take out these loans regardless of their need. In this case, the loan collects interest no matter if you are still in school or not.
  • Direct PLUS: for any remaining cost of attendance that is not covered by grants, scholarships, or either of the two loans above, the parents may take out a PLUS loan to cover it.
  • Perkins: this loan is only for students with extreme need. The government actually partners with the school to dispense this loan making the school the lender.

If you decide you have no choice but to take out a loan, your best option is to get as much direct subsidized loans as you can before trying for the rest.

After the end of the process, when all grants, scholarships, and loans have been opened to you, be sure to only take what you need. For example, if your program costs $20,000 a year and you received $5000 in grants, $10,000 in scholarships, and $10,000 in loans, only take $5000 of the loan! You don’t want to worry about paying back $5000 you don’t really need.

See? Financial Aid isn’t so hard after all!

Let your dreaM counselor know if you have any questions! That’s what we are here for. To help YOU achieve your dreaMs!


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