Don't make the mistake of thinking that you won't need
financial aid or that you won't be eligible for it. Grad school
is usually a major investment and almost all students need some
form of financial assistance at some point in their academic
career.
To avoid bankrupting yourself in the first year, you should
work out a sound financial plan from the very beginning.
Financial aid programs, both need- and merit-based, fall into two
major categories:
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Gift Aid: does not have to be repaid |
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Self-Help Aid: must be repaid or
earned
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Are You Eligible?
Some programs award aid based solely on a student's need,
while others are based solely on merit. However, there are also
some programs based on a combination of both. Under many
scholarship programs, for example, selection of the recipient is
based on merit, but the award amount will depend on need.
Merit-Based Aid
Merit-based financial aid is awarded on the basis of personal
achievements or individual characteristics. It usually comes in
the form of scholarships or grants. Don't despair. Not everyone
who is awarded merit-based aid is a genius. For example, some
schools, particularly schools that are trying to maintain or
increase their enrollment, may award scholarships to students
with grades or test scores that are not stratospheric.
Need-Based Aid
Eligibility for need-based financial aid programs is determined
by one of two need-analysis formulas that seek to measure a
family's financial strength and ability to pay for school
expenses:
1. Federal Methodology: A need-analysis procedure developed by
Congress used to calculate family contribution (FC).
2. Institutional Methodology: An alternate method of calculating
FC used by individual colleges to determine eligibility for
institutional and non-federal aid.
Federal Methodology, a formula that is specified by law, takes
into account many variables, including expenses over which a
family has no discretion, such as taxes, employment expenses, and
basic needs. There's also an allowance for your parents' saving
for retirement that increases as they get older in recognition
that more of their assets should be available to them as they
near retirement age.
Once your family's assets and income are totaled, these
allowances are subtracted off of the top, leaving an amount over
which your family theoretically has discretion. Your family can
use these resources to buy a car, home furnishings, a boat,
whatever. Or, they could be saved for a rainy day.
Congress believes that the primary responsibility for paying
for education is with the parents and students themselves, to the
extent that they are able. That means that at least a portion of
their savings and income should go toward paying educational
expenses.
