Colleges have become more expensive than ever. The annual costs of attendance has been increasing year after year. It is difficult for many families to bear such cost of education. In such a condition, many students are not able to afford their education without financial aid even if they get accepted to their top choice college.
Accessibility of many of the best and most popular colleges in the US can be attributed to their substantial offers of financial aid to students. However, when you’re making your college plans, it’s important to recognize that even if financial aid is available, you may not end up receiving enough to attend your school of choice, and that can leave you with some very difficult decisions to make.
This article will explain you about how financial aid gap is a problem for you and how you can cover or avoid such gaps.
What is a Financial Aid Gap?
Colleges follow a procedure in providing need-based financial aids to applicant students. First of all your college determines how much money you actually need. The college does this by collecting your family’s financial details through financial aid application forms.
Using the collected data, your college calculates Expected Family Contribution (EFC) which is the amount that the college expects to be affordable by your family in your education in the college. The difference between your EFC and the actual cost of attending that college for a year is your demonstrated financial need.
Then the college finally decides on how much financial aid you should he offered. The problem lies here; financial aid offer from a school may not match your demonstrated need. In a need-based financial aid system, needier students might have a better chance of getting aid, or might receive a larger amount of aid, but unless the school specifies otherwise, that aid is not guaranteed to actually meet their need.
If the amount of financial aid a college awards you is less than your demonstrated need, the difference is known as a financial aid gap. If you end up with a financial aid gap, you’ll need to find a funding source to bridge that gap in order to attend that college.
Financial Aid Gap as a problem
Financial aid gap can be troublesome for students and their families. You have limited ways and time to think about solution to this gap since it is left after the financial aid application has been considered and an aid award has been calculated.
Many colleges simply don’t have the financial aid budget to meet the full demonstrated need of every single student. The amount of institutional financial aid a particular school has offered you may be all that they can afford to offer, and the rest of the aid budget has likely been assigned to other students already. There are chances that you may have already exhausted your financial aid options.
Federal student loans may also not be an option to bridge the gap. Some colleges include such federal loans you’d be eligible for while calculating your financial aid. In such case, you cannot take federal loans, federal loans amount, eligibility and yearly and lifetime totals are limited.
On top of these complications, financial aid awards aren’t determined until after admissions decisions are made. By the time you receive your award and are made aware of the gap, it’s already quite late in the process. You won’t have much time before the May 1st response deadline to review your options, seek other sources of funding, and make a decision.
In some cases the financial aid gap can even prevent students from attending colleges. However, there is always a way, even so late in the game. You still have options. If you and your family can find a way to cover the financial aid gap with funds other than institutional aid, you may still be able to attend a college that hasn’t offered you enough financial aid.
How Can Families Cover the Gap?
First and foremost, if you didn’t receive enough financial aid, you may want to consider submitting a financial aid appeal. A financial aid appeal is a formal request to your college to reconsider your financial aid application, and it can sometimes result in you being awarded more aid.
Talk to the financial aids office before you submit the financial aid appeal. There are conditions for accepting such appeals and colleges have varying submission processes which can take some time. You need to make sure from your talk with the financial aid office that you have the chances of being reconsidered for an aid. There is no meaning of financial aid appeal when there is not enough funds with the college.
You need to look for every possible way to cover the gap. Whether you submit a financial aid appeal or not, you cannot miss the college after being accepted. Every student’s situation is different, but here are some of the funding sources you might look into.
Outside Scholarships and Grants
Grant aid you receive from sources other than your school can be a big help in covering a financial aid gap. Hopefully, you’ve been applying for outside awards throughout the admissions process; many scholarship applications are due well before award letters are sent out. You’ll also want to check your college’s policies for applying outside scholarships to your bill.
Private Student Loans
If you’ve maxed out your government loan eligibility (if any), you may be able to take out student loans from private sources, like banks. The terms of such loans are stricter and less favorable than government student loans, and securing a loan may require a credit check and a cosigner. Banks can be serious to delay in repayment of loans and you may fall into legal troubles if you are not careful enough.
Parent Loans
If your parents are able and willing to do so, they might choose to take out their own loans to help you pay for your education. Parent loans can come from government or private sources, and like all loans, they come with certain risks and aren’t appropriate for every family.
Student Income
Money that you earn during the summer or the school year could help cover a financial aid gap, depending on the size of the gap. Remember that most colleges already account for a certain amount of student income when making financial aid calculations and determining your EFC, so you would have to earn more than that amount to make a difference.
Other Family Financial Resources
These resources will depend upon your individual situation; perhaps your family could downsize their home, sell assets, or seek help from other family members. Only you can determine what options you have, if any.
How can students prepare avoiding such financial aid gaps?
Prevention is better than cure. First of all there is no guarantee that you will get admitted to a certain college, financial aid is a secondary matter. However, there are a few things that can be generalized while suggesting you to avoid financial aid gaps.
Learn about your financial situations in the final years of your high school. Many students are not told about their family’s condition when they are young. Knowing your situation better is actually knowing what you need. Here are some specific tips for remaining alert to and heading off the consequences of a potential financial aid gap.
Do Your Research
Research is preparation to your whole journey to and with your college education. Check out the financial aid policies of the college of your choice and check the average financial aid provided to the students. When a college offers financial aid, it does not necessarily mean that all of your need will be met by the aid offered. When you’re making your college list, make sure that you include multiple schools that you anticipate being able to afford.
Don’t Miss Applying To Outside Scholarships You Are Eligible for
Give yourself the best possible chance at having multiple funding sources that you can use to cover your financial need. Start early and be aware of deadlines. It’s better to have outside aid that you don’t need than to need outside aid that you don’t have.
Communicate With Your Parents
Need-based financial aid is almost always based upon your parents’ income and assets, not just yours, and parents often end up paying a large portion of college costs. In order to make wise financial decisions regarding college, you need to understand your family’s resources, options, and limitations. These discussions can be tough, but they’re necessary.
Make Multiple Plans Based on Probabilities
What if you get accepted in your dream college, but you do not receive enough aid? What if a school that you just kept as a safety offered you a package that could cover all your need? Would you consider taking a gap year in order to collect money for your college study? Ask such questions to yourselves and make plans. Also think about alternative plans that can be used when the original plan fails.
It is better to think about multiple possibilities in multiple circumstances. Planning is the key to avoiding problems.