Student Financial Planning

Planning for Educational Expenses

Each family considering education beyond high school graduation must begin planning early and plan carefully for the expenses involved in paying for postsecondary education. Four primary steps are involved in planning to need educational expenses.

  1. Prepare for postsecondary education by advance financial planning including savings accounts and other savings programs. Your local bank, savings and loan association or credit union may be able to provide you with available information about various educational savings programs. Students should be encouraged to get a job and save from their earnings toward educational costs.
  2. Determine school year cost of attendance at the institution which meets the student’s educational needs.
  3. Consider what the family can realistically pay to meet these costs.
  4. Apply for various financial aid programs available to help families who cannot pay the full costs of education.

Cost of Attendance

The cost of attendance will vary from school to school but generally includes the following items:

  • Tuition and Fees
  • Books and Supplies
  • Room and Board
  • Transportation
  • Miscellaneour Personal Expenses

And May Sometime Include:

  • Study Abroad
  • Dependent Care
  • Special Expenses for handicapped

Determing Who Has Financial Need

Most financial aid programs are designed to assist families who are unable to pay the full or partial cost for postsecondary education. Therefore, the programs are referred to as need-based financial aid programs.

Philosophy of Financial Aid

To understand how the financial aid system works, you need to understand the underlying philosophy that supports the system.

It is the parents’ and student’s responsibility to pay for higher education expenses to the extent that they are able to do so.

All families must receive a consistent and equitable evaluation of their financial circumstances.

The formula used to determine who has need and who does not is actually quite simple. The following equation is used:
Cost of Attendance - Expected Family Contribution = Financial Need

Federal Methodology

As was noted earlier, the cost of attendance can include tuition and fees, room and board, books and supplies, transportation costs etc. How does a family or the financial aid counselor know what a family is expected to contribute? Families must complete a financial aid application. This application will ask many questions about the families’ income and assets in order to analyze their need. Student financial information is also included in this calculation. The entire application process can be summed up by saying that the application is aimed at trying to determine:

  • Parents’ contribution from income and assets
  • Student’s contribution from income and assets

Add the parent contribution and the student contribution together to get Expected Family Contribution.

Student Contribution + Parent Contribution = Expected Family Contribution

Independent Student

When Are Students Independent?

A student is automatically independent if he or she meets at least one of the following criteria:

  • is at least 24 years of age by December 31, of the award year;
  • is a veteran of the U.S. Armed Forces;
  • is a graduate or professional student;
  • is married;
  • is a ward of the court or both parents are dead;
  • has legal dependents other than a spouse.

In unusual circumstances, a student who does not meet any of these criteria may still be considered independent. The financial aid administrator at the student’s school may use professional judgment to decide that a student is independent. This decision is made on an individual (case-by-case) basis with the financial aid administrator evaluating documentation relating to the student’s actual circumstances. Essentially, the decision depends on establishing the fact a student is independent by necessity rather than by choice.

Students should consult directly with the financial aid administrator at the institution to find out whether to proceed with gathering documentation and what information is required.

To keep things fair and equitable, all families must complete a financial aid application. Families will be asked to provide information on their income and assets which will be processed through a national formula called Federal Methodology.

WHAT is the application called and WHERE can I get one?

All students must complete a Free Application for Federal Student Aid (or FAFSA). This free application form can be obtained from your high school guidance counselor or any postsecondary financial aid office.

Some postsecondary schools may also require to complete a supplemental form called Profile and/or an institutional application form. The Profile requires a fee. Be sure to check with the schools you are considering to see if they require this extra information from you.

You can also file your FAFSA electronically On the web at Check with college financial aid office to see if you can use this quick and easy method.

Where Does Student Financial Aid Come From?

There are four primary funding sources:

  • Federal Government
  • State Government
  • Institutions (colleges/universities)
  • Private Resources (Agencies/Associations)

Who is Eligible For Financial Aid?

Many people are eligible for assistance. Some students receive awards based on merit. Students who excel in academics, sports, leadership, music, art, or dance may receive an award in recognition of their special merit. These types of awards are called merit-based.

Some students will receive awards based on their demonstrated need. By filling out a financial aid application, students may be able to demonstrate that they and their family cannot pay for all of the postsecondary education costs of their own. These students may receive an award based on their need for help. These awards are called need-based. Some students may receive a combination of both types of awards.

What Are Some Important Tips For Student In Completing Financial Aid Applications?

  1. Attend a high school financial aid night at your school or a nearby school. Check with the school counselor regarding date and location.
  2. Determine whether you need to file any application in addition to the Free Application for Federal Student Aid.
  3. Determine if you will file a paper application or file electronically.
  4. Determine and observe all deadlines in filing applications for federal, state, private and institutional aid programs.
  5. Read application instructions carefully before beginning to complete the form.
  6. Refer questions to the high school counselor and/or the financial aid officer at the institution you plan to attend.
  7. Complete applications accurately, legibly and thoroughly. Check your social security number for accuracy.
  8. Provide written explanations if there are unusual circumstances. Send these directly to the financial aid office at the postsecondary institution.
  9. Maintain a file to record all applications submitted.
    1. Keep copies of all tax forms and schedules
    2. Keep a copy of the financial statement filed
    3. Record the dates when forms are filed
  10. Submit any additional documentation requested by institutions, programs or agencies in a timely manner. Identify all documentation with your name and social security number.
  11. Respond to award offers from institutions promptly.

Once you have made decisions about what you want to do with your life, you will need to make choices about the training required. Will you need college, trade/technical school, apprenticeship training, who as well as your parents, teachers, labor representatives, and military recruiters may provide information to assist you in making plans. Please read the information listed below.

College: An institution that offers educational instruction beyond high school level in a two-year or four-year program.

University: An academic organization which grants undergraduate and graduate degrees in a variety of fields and which supports at least two degree-granting professional schools that are not exclusively technological (such as medicine, journalism, or agriculture). It is composed of a number of “Schools or Colleges”, each of which encompasses a general field of study.

Liberal Arts College: Four-year institution which emphasizes program of broad under-graduate education. Pre-professional or professional training may be available but is not stressed.

Teacher College: Almost all public teachers colleges have become liberal arts “state colleges” offering majors in the filed of education.

Community College: (Sometimes called a Junior College): Two-year institutions or higher learning which provide vocational training which leads to two-year course of study at another college or university.

Junior College: Two-year institutions of higher learning which provide vocational training and academic curricula often leading into a four-year course at another college or university.

Engineering or Technological College: Independent professional schools which provide four-year training programs in the fields of engineering and the physical sciences. They are often known as Institutes of Technology or Polytechnic Institutes.

Nursing School: A two-year institution which offers terminal occupational programs intended to prepare students for immediate employment in fields related to engineering and the physical sciences. These schools may also offer one-year certificate programs in certain crafts and clerical skills.

Nursing School: There are two kinds of nursing schools. At schools affiliated with hospitals, students receive R.N. degrees upon completion of their training. At schools affiliated with four-year colleges, students receive both a B.S. degree and an R.N. and have possibilities of entering the field of nursing administration.

Military School: Federal military academies prepare officers for the Army, Navy, and Air Force. These institutions (West Point, Annapolis, and Air Force Academy) require recommendation and appointment by members of Congress. Private and state supported military institutes, however, operate on a college application basis. They all offer degree programs in engineering and technology with concentration in various aspects of military science.

Business School: Business schools fall in two categories. At some colleges it is possible to specialize in business administration or in a two-year secretarial course in conjunction with supplementary liberal arts courses. Other institutions offer predominantly the business or secretarial courses

American College Testing an educational testing company that administers the test (ACT) used for qualifications in the Michigan Competitive Scholarship Program and for admissions purposes generally.

College Scholarship Service (CSS) a branch of the College Entrance ExaminationBoard. This organization processes the supplemental PROFILE, a form required by some institutions.

Federal Methodology the approved need analysis formula used to determine the family’s ability to pay for postsecondary education.

Estimated Family Contribution (EFC) the sum of the Student Contribution and Parents’ Contribution for the student’s postsecondary education.

Free Application for Federal Student Aid (FAFSA) the Free Application form students use to apply for all federal programs as well as State of Michigan programs.

Need Analysis the process of developing the estimate of a student applicant’s need for financial assistance to help meet his or her educational expenses.

Financial Aid Package the combination of a variety of financial aid resources to meet the student’s demonstrated need.

Parent Contribution (PC) the amount a student’s parent(s) can be expected to contribute to their son’s or daughter’s education based on an analysis of income and assets

Profile the CSS/Financial Aid Profile is designed to help institutions and programs award their private student aid funds. For many participating colleges, this will mean the reduction or elimination of separate institutional applications. CSS/ Financial Aid Profile is not a federal application. Applicants for federal funds still need to complete a Free Application For Federal Student Aid (FAFSA).

Satisfactory Academic Progress (SAP) requirement that recipients of state and federal aid must make progress toward completing degree within specified time period and by maintaining satisfactory grade point average.

Student Aid Report (SAR) U.S. Department of Education’s report (re: eligibility) to the student who applies for a Pell Grant.

Institutional Student Information Report (ISIR) A report sent to schools. It is the report that has comparable information that is on SAR. Schools can obtain this information electronically.

Student Contribution (SC) the contribution expected from the student toward his or her education. For dependent students, it includes Some contribution from earning, previous savings and any other resources. For independent students, it includes a contribution from taxable and untaxed income, and any other resources.

Verification a requirement in federal programs whereby certain students are requested to provide additional documentation to verify the data on the financial aid application.