Financial Aid Basics
What is Financial Aid?
Financial aid helps students and families pay for their college expenses, such as tuition, fees, room and board. Generally, there are three categories of financial aid: gift aid, work aid and loan aid. In addition, there are college savings plans and tax benefits available.
Scholarships and grants are considered gift aid, which means you do not need to repay the award. There are four basic types of scholarships and grants: Federal, State, Institutional, and Private.
Loans are funds that you and/or your parent(s) can borrow to help pay for college expenses. Loans must be repaid, usually with interest. Loans also can be classified into four basic groups: Federal, State, Institutional, and Private.
The purpose of work-study programs is to provide students with part-time employment to help pay for college expenses and, if possible, provide work experience in a related field. There are generally two types of work-study programs:
Federal Work-Study - This program is federally funded and need-based. Your eligibility is determined from information provided on your FAFSA.
Institutional Work-Study - Some colleges offer work programs for students who are not eligible for the federal work-study program.
Each college has a different process for participation in the work-study program. Contact the financial aid office at the college you plan to attend to learn the details of their program.
There are many ways to save for college and the NextGen College Investing Plan® is a great way to start. Any amount you save today will help replace debt later. Learn more about
Maine’s 529 NextGen® Plan.
In addition to grants, loans and work-study, the federal government also offers tax benefits to families with higher education expenses. For more information regarding federal tax deductions and benefits, refer to the
Internal Revenue Service’s Publication 970. In addition to the federal tax benefits available, the State of Maine allows a tax deduction for Maine taxpayers who make contributions to any 529 plan. For more information, refer to
Maine Revenue Services.
go to top Who Should Apply for Financial Aid?
Everyone who thinks they may need assistance paying for college should apply for financial aid. Even if you think you may not qualify for financial aid, you should still apply.
To apply for federal financial aid, including Pell Grants, Stafford loans and work-study, you must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is also your application for many state and college financial aid programs.
Go to
www.fafsa.ed.gov to complete the application.
Filing your FAFSA is FREE. Do not pay to complete or submit the FAFSA.
Go to
www.fafsa.ed.gov to complete the Free
Application for Federal Student Aid (FAFSA). The FAFSA is also available in paper; however filing the
FAFSA online will save you time and reduce the possibility of making an error.
If you file your FAFSA online, you will need a PIN (personal identification number).
Having a PIN allows you to sign the FAFSA electronically. If you are a dependent student, you and
your parent must each sign the FAFSA. You will each need your own separate PIN. Go to
www.fafsa.ed.gov to apply for PIN.
A limited number of paper applications are available at your local high school; however it may
take up to 6 weeks longer for your information to be processed if you complete a paper FAFSA.
In addition to the FAFSA, some colleges may also require the CSS/Financial Aid Profile or another type of
school-based financial aid form. You should check with the financial aid office at the college you want to
attend to learn about the forms required.
You can submit the FAFSA after January 1 of the year you will be attending college. For example, if you plan to enroll for the fall 2007 semester, you can complete your FAFSA beginning January 1, 2007.
Many colleges have deadlines as early as February 1, so it is better to file your FAFSA early!
You do not need to be accepted into a college to complete the FAFSA.
You do not need to wait until your taxes have been completed to complete the FAFSA. The FAFSA asks for
information from your federal tax returns; however, you may use estimated tax information if you have not
yet filed a tax return. You will have an opportunity later to make changes to your application after
your taxes have been completed.
go to top What Happens after Applying for Financial Aid?
The federal processor will send you a Student Aid Report (SAR). The SAR is a summary of the information provided on your FAFSA.
You should review your SAR for accuracy. If you used estimated tax information when completing your FAFSA, you can make corrections at this time.
Each college you listed on your FAFSA will also receive the results of your FAFSA. The financial aid office at the colleges may contact you and ask for additional information.
The EFC is the amount a family is expected to be able to contribute to your college education. This amount is determined by information you provided on your FAFSA, such as dependency status, the family’s size, income, assets and the number of family members enrolled in college.
The EFC is not necessarily the amount you will need to pay to attend college for one year. There are many factors that affect the amount you will need to pay the college, including:
- If you receive non-need based financial aid (merit aid).
- If you are attending a college with a price that is less than your EFC.
- If you reject a portion of your financial aid award (usually loans).
- If you filed your FAFSA after the deadline.
- If the college you are attending in unable to meet 100% of your financial need.
To estimate your family’s EFC, use
FAME’s Online Calculator.
Cost of Attendance
- Expected Family Contribution
Federal Financial Need
Cost of Attendance : The cost of attendance is the average cost for one person to attend a college for one academic year. This includes tuition, fees, room, board, travel, books and other personal/miscellaneous costs. The Cost of Attendance varies from college to college.
Expected Family Contribution (EFC): The EFC is the amount that you and your family will be expected to contribute toward your college education. This amount is determined by information supplied on your FAFSA application.
Federal Financial Need: The College will use this amount to determine your financial aid eligibility. Generally, your financial aid award cannot exceed the amount of your federal financial need.
Because the Cost of Attendance will vary from college to college, you can expect your financial aid award from each college to vary.
Each college has a list of preferred lenders. This list may be sent to you with your financial aid award, it may be sent later in the process or it may be available on the financial aid office’s Web site.
Each lender has different incentives and borrower benefits. You should compare lenders’ programs carefully before choosing one. For more information on lenders that use FAME as the guarantor, go to FAME’s
Lender Codes and Programs page for information.
Sometimes families have circumstances that are not reflected on the FAFSA. If you feel you have special circumstances that may affect your ability to pay for your college education, you should contact the financial aid office at the college you plan to attend.
Some of the most common reasons for asking the financial aid office to review your situation include:
- Loss of employment
- Elder care expenses (nursing home fees, etc)
- Death or disability of a parent
- Divorce or separation after the FAFSA was filed
- Loss of child support or alimony
- Loss of social security benefits
The financial aid office will review your case and may require documentation before determining if your situation will result in an adjustment to your financial aid information.
