Financial aid refers to specific borrowed, given, or earned money that can be obtained from various sources to pay for college. There are many types of financial aid, including scholarships, grants, federal work-study programs, and loans, all of which can come from the state or federal government. Most types of financial aid require students to reapply every year.
Sources of Financial Aid
- U.S. Department of Education Office of Federal Student Aid (FSA)
- Illinois Student Assistance Commission (ISAC)
- Colleges and universities (institutional aid)
- Private sources
Types of Financial Aid
- Work study
There are two basic types of financial aid—gift aid and self-help aid. Like the name says, gift aid is assistance received that does not typically have to be repaid. Self-help aid includes work opportunities and loans, and is called self-help because the individual takes responsibility for receiving this type of aid.
Students may receive a single type of aid, or a combination of different types of financial aid. Depending on the type of financial aid programs awarded to the student, funds can be used to pay tuition, fees, books, transportation, study abroad, and housing costs.
CPS provides students and their families with resources and tools to explore financial aid options and to assist with timely completion of applications. School counselors can help students and their families review college financial aid notices and to consider next steps in planning for the responsibilities associated with a postsecondary plan.
The Expected Family Contribution (EFC) is a measure of a family’s financial strength and is calculated according to a formula established by law. Your family’s taxed and untaxed income, assets, and benefits (such as unemployment or taxable Social Security) are all considered in the formula. Also considered are family size and the number of family members who will attend college during the year.
The information you report on your Free Application for Federal Student Aid (FAFSA) or the Alternative Application for Illinois Financial Aid is used to calculate a student’s EFC. Postsecondary institutions use the EFC to determine a student’s federal student aid eligibility and financial aid award.
Note: Your EFC is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. It is a number used by postsecondary institutions to calculate the amount of federal student aid a student is eligible to receive.
For more information about the EFC, see “What’s the Expected Family Contribution (EFC)?.”
Types of Financial Aid
A type of “gift aid” that rewards a student for grades, athletics, a unique skill, a special talent, financial needs or even a specific career interest. Scholarships do not typically have to be paid back, though some scholarships have program requirements and obligations.
A type of “self-help” aid that lets students borrow money from the government, banks or other lending institutions. Since it’s “self-help” aid, it must be paid back with added interest. Loans can be awarded based on financial need (subsidized loans) or not on financial need (unsubsidized loans).
A grant is a type of “gift aid” that does not have to be paid back. The amount awarded is usually based on financial need and is generally provided by the government or the college a student plans to attend.
Federal Work-Study is a need-based financial aid program that allows students to work part-time to help pay for college.
How to Determine Financial Need
Use the formula Cost of Attendance (COA) - Expected Family Contribution (EFC) to determine how much financial aid a student needs to attend a school.
- Cost of Attendance (COA)
Cost varies by school. Each college estimates the COA by adding together the costs of tuition, fees, room and board, transportation, books, supplies, and other miscellaneous living expenses. Most colleges publish the COA on their website.
- Expected Family Contribution (EFC)
Using information you provide on the FAFSA, the federal government calculates the EFC (the amount a student is expected to be able to contribute toward college expenses). This is only an estimate. The EFC is determined by family income, assets, and size. It takes into consideration a student’s and family’s living expenses and the number of family members in college.
- Financial Need
The difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school you attend.