Need vs. Non-Need Aid:
Using federally-approved formulas that place more emphasis on income than assets, a figure called the Expected Family Contribution, or “EFC,” is generated. The EFC, as the name implies, is the dollar amount that the family is expected to contribute annually to the student’s total college costs (tuition, room and board, books, travel, incidentals, etc.). The EFC figure is a constant – that is, it does not change depending upon the cost of college.
For example, a family with an EFC of $18,000 would receive no need-based aid at a college where total annual costs were $15,000/year – but would, theoretically, receive up to $20,000 at a college where total annual costs were $38,000/year.
In other words, at a college costing $15,000/year, the family (including the student) would be expected to pay $15,000, out of pocket – but, at a college costing $38,000/year, the family would pay just $3,000 more ($18,000 total)!
Scholarship? Loan? Or Work Study?
The big question: At the more expensive college, of the $20,000 of need-based financial aid ($38,000 minus an $18,000 EFC), how much is Scholarship? Loans? Work-Study?
Governmental sources of Financial Aid must be need-based. In general, this means public (taxpayer or state-supported) colleges and universities only give need-based aid. (Athletic scholarships at NCAA Division I and II schools are a different story.)
Some Colleges Also Give Non-Need Aid:
Of the approximately 1,540 private colleges and universities, however, all but perhaps 50 also give non-need based financial aid — usually called “grants” or “scholarships”. In other words, most private colleges may give aid beyond what the EFC indicates “need” to be! It is this non-need aid that generally is used to help achieve institutional, not individual or family, objectives.
Non-need aid, other than certain loans, can come from private sources, from funded college sources (endowment) and/or from non-funded college sources (simply a price discount). Non-need aid does not come from the government.
‘Blending’ vs. ‘Stacking’:
When students receive scholarships from non-college sources (Rotary Club Scholarships, local newspaper essay winner, etc.), most colleges calculate at least a portion of the award to reduce the amount of scholarship provided by the college from the college’s own resources. Some colleges actually use written formulas.
Thus, a student receiving a $1,000 scholarship from his/her local newspaper or church may find that the college simply reduces its non-endowment funded award by $1,000! This practice is known as “Blending”; external funds reduce what the college might be willing to offer.
The portion, if any, which reduces the family’s EFC is called “Stacking.” In other words, if a student was previously to receive $20,000 in aid and now, including the $1,000 outside award, receives $21,000 – that award was “Stacked,” not “Blended.”
High School Guidance Counselors recognize that many awards are simply “Blended” and are frequently less than anxious to provide recommendations, transcripts, etc. for a $500 award – knowing that it might not actually change the family’s expected contribution.
Many colleges and universities simply do not have enough government, institutional, or other sources of funding to totally meet individual student need – the difference between the EFC and the total cost of education. This difference, if it occurs, is called “Gapping” – providing less financial aid than the student needs to attend college.
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