We’ve all heard the old adage —there’s no such thing as a free lunch. In other words, we can’t expect to get something for nothing. Unfortunately, popular media can lead families to believe that college financial aid is a way to get an education for free if they can just figure out the system. Thousands of families are shocked to receive their financial aid letters and see the most popular form of financial aid – student loans.
Before I explain more about financial aid, let me make an important clarification – merit scholarships are NOT financial aid. When I’m referring to aid, I mean the money a college allocates to cover the gap between what a family is expected to pay and the cost of attending a particular school. I know some colleges offer “scholarships” as part of a college financial aid package, but these are really a method for the school to discount the cost.
Merit scholarships can help with the cost of a college education, but shouldn’t be considered financial aid because these scholarships are given based on a student’s talent – not financial need. Athletes may receive merit scholarships that cover part or all the cost of their education. I have a number of students who have been offered academic scholarships because their grades and SAT scores make them desirable candidates for a particular university. Then there are countless other programs offering large and small scholarships for any number of talents or circumstances – making a prom dress out of duct tape, tall Texans, students with asthma, etc.
Financial aid is based on numbers not ability. With the rising cost of a four-year education aid is not limited to low-income families. Many middle class families qualify for some type of assistance. Financial aid is intended to cover demonstrated financial need—the difference between what it costs to attend a particular school and the amount it has been determined that the student and his or her family can afford to pay.
Too many people hear the words “financial aid” and think “free money.” In some cases, college financial aid packages may include funds that do not need to be repaid. But if your family qualifies for financial aid, you have not just won the lottery; you should expect to see work-study and some loans as part of your award. Yes, colleges are trying to make a four-year education accessible and they are sensitive to the growing debt-load many graduates face, but financial aid doesn’t mean free.
As my dad liked to say, “Ed McMahon isn’t coming!” (I guess this dates those of us who remember Ed McMahon on TV delivering giant checks to the doors of Publisher’s Clearinghouse winners.) So start thinking about how your family will pay for the cost of a college education. Your plan may include savings, selecting a less expensive college, working summers, and maybe financial aid. But you won’t be mislead into thinking that if you can only get the right financial plan, or hide your assets, or discover the secret system you will get four-years for free.