ABCs of Financial Aid


It’s hard to talk about college without mentioning financial aid. Yet this pairing isn’t a marriage of love, but one of necessity. In many cases, financial aid may be the deciding factor in whether your child attends the college of his or her choice or even attends college at all. That’s why it’s important to develop a basic understanding of financial aid before your child applies to college. Without such knowledge, you may have trouble understanding the process of aid determination, filling out the proper aid applications, and comparing the financial aid awards that your child receives.

But let’s face it. Financial aid information is probably not on anyone’s top ten list of bedtime reading material. It can be an intimidating and confusing topic. There are different types, different sources, and different formulas for evaluating your child’s eligibility. Here are some of the basics to help you get started.

What is financial aid?

Financial aid is money distributed primarily by the federal government and colleges in the form of loans, grants, scholarships, or work-study jobs. A student can receive both federal and college aid. An ideal financial aid package will contain more grants and scholarships (which don’t need to be repaid) and fewer loans.

Financial aid can be further broken down into two categories: need-based aid, which is based on a student’s financial need, and merit aid, which is based on a student’s academic, athletic, musical, or artistic talent. Both the federal government and colleges provide need-based aid in the form of loans and grants. For merit aid, colleges are the main source, and they often use favorable merit aid packages to attract the best and brightest students to their campuses.

It’s worth noting that colleges can vary significantly in their generosity when it comes to merit aid; merit awards are typically related to the size of a college’s endowment and its unique objectives. College guidebooks and marketing materials generally provide statistics on the size of a college’s average aid award (both in dollar amounts and as a percentage of the typical aid package) and the family income thresholds necessary for different aid amounts. If you’re a family researching college options, you can help your bottom line by targeting colleges that offer significant merit aid packages. For example, some colleges have made it a policy to replace loans with grants in their financial aid packages.

In addition to colleges, many businesses, foundations, and associations offer smaller merit scholarships with specific eligibility criteria and deadlines. Various scholarship websites allow your child to input his or her background, abilities, and interests and receive (free of charge) a matching list of potential scholarships.

How is my child’s financial need determined?

Financial need is generally determined by looking at a family’s income, assets, and household information. The federal government uses the FAFSA, which stands for Free Application for Federal Student Aid; colleges generally use the PROFILE form, or their own institutional form. The FAFSA uses a formula known as the federal methodology; the PROFILE uses a formula known as the institutional methodology. The general process of aid assessment is called needs analysis.

Under the FAFSA, your current income and assets and your child’s current income and assets are run through a formula. You are allowed certain deductions and allowances against your income, and you’re able to exclude certain assets from consideration. The result is a figure known as the expected family contribution, or EFC. It’s the amount of money that you’ll be expected to contribute to college costs before you are eligible for aid.

A detailed analysis of the  formula is beyond the scope of this discussion, but generally here’s how it works: (1) parent income is counted up to 47% (income equals AGI plus untaxed income/benefits minus certain deductions); (2) student income is counted at 50% over a certain amount ($6,400 for the 2016/2017 school year); (3) parent assets are counted at 5.6% (home equity, retirement assets, cash value life insurance, and annuities are excluded); and (4) student assets are counted at 20%.

Your EFC remains constant, no matter which college your child applies to. An important point: Your EFC is not the same as your child’s financial need. To calculate your child’s financial need, subtract your EFC from the cost of attendance at your child’s college. Because colleges aren’t all the same price, your child’s financial need will fluctuate with the cost of a particular college.

For example, you fill out the FAFSA, and your EFC is calculated to be $25,000. Assuming that the cost of attendance at College A is $65,000 per year and the cost at College B is $35,000, your child’s financial need is $40,000 at College A and $10,000 at College B.

The PROFILE application (or the college’s own application) basically works the same way. However, the PROFILE generally takes a more thorough look at your income and assets to determine what you can really afford to pay (for example, the PROFILE looks at your home equity and money you may have contributed to medical and dependent care flexible spending accounts).

What factors count the most in needs analysis? Your current income is the most important factor, but other criteria play a role, such as your total assets, the number of children you’ll have in college at the same time, and how close you are to retirement age.

Estimating aid eligibility ahead of time

Getting a ballpark estimate of financial aid ahead of time can be very helpful for planning purposes. There are two ways you can do this.

First, the federal government offers an online tool called the “FAFSA4caster” that you can complete to get an estimate of your EFC. Second, every college offers a tool called a “net price calculator” on its website that you can complete to get an estimate of how much financial aid your child might be eligible for at that particular college based on your family’s financial and personal profile.

Submitting financial aid applications

The best way to complete the FAFSA is to fill it out and submit it online (it can also be completed manually and mailed to the address listed on the form). The online route is best because mistakes are flagged immediately and electronic FAFSAs take only one week to process (compared to two to four weeks for paper FAFSAs).

The FAFSA is filed as soon after January 1 as possible in the year your child will be attending college. You must wait until after January 1 because the FAFSA relies on your tax information from the previous year. (The official federal deadline for filing the FAFSA is June 30, but many colleges have an earlier deadline.) You should try to submit the FAFSA as close to January 1 as possible because some financial aid programs operate on a first-come, first-served basis. Even if you haven’t completed your federal income tax return, you can submit your FAFSA with estimated tax numbers and then update it later.

Starting with the 2017/2018 school year, families will be able to file the FAFSA as early as October 1, 2016, using their prior year’s tax information. This earlier timeline will be a permanent change.

The PROFILE (or individual college application) is usually submitted at the same time as the FAFSA, but it can be filed earlier, especially if your child is applying to college early decision or early action. The specific deadline is left up to the individual college, so make sure to keep track of it. In addition to the form itself, the CSS Profile will typically require you to submit tax returns, and possibly other financial documents, at a later date. If so, you’ll receive instructions on how to do this.

After your FAFSA is processed, your child will receive a Student Aid Report highlighting your EFC; the colleges that you list on the FAFSA will also get a copy of the report. When your child is accepted at a college, the college’s financial aid administrator will attempt to craft an aid package to meet your child’s financial need. This is done using a combination of the following (typically in this order):

  • Federal Pell Grant (for students with exceptional financial need)
  • Federal Direct Stafford Loan (subsidized for students with financial need)
  • Federal Direct Stafford Loan (unsubsidized for all other students)
  • Federal Perkins Loan, Supplemental Educational Opportunity Grant (SEOG), and work-study (funds for these programs are allocated to colleges by the federal government for distribution to students; whether a student receives any of these funds depends on timing of application, financial need, and availability of funds)
  • College grant, scholarship, or tuition discount (at the college’s discretion)

Keep in mind that colleges aren’t obligated to meet all of your child’s financial need. In fact, it’s not uncommon for colleges to meet only a portion of a student’s need, a phenomenon known as getting “gapped.” If this happens to you, you’ll have to make up the shortfall, in addition to paying your EFC.                    

On the flip side, if a college says it is meeting “100% of your demonstrated need” keep in mind that the college is the one who determines your need, not you, and that you’ll still have to pay your EFC.

Comparing aid awards

In late winter or early spring, your child will receive financial aid award letters that detail the specific amount and type of financial aid that each college is offering. When comparing aid awards, read each award letter carefully and make sure you understand exactly what the college is offering.

The goal is to compare your out-of-pocket cost at each college. To do this, look at the total cost of attendance for each college and subtract any grant or scholarship aid the college is offering. If the grant or scholarship is merit-based, find out if it’s guaranteed for all four years and what requirements must be met in order to qualify for it each year. If the grant or scholarship is need-based, find out whether you can expect a similar amount each year as long as your income and assets stay roughly the same (and you have the same number of children in college), and ask the aid office whether it increases to keep up with annual increases in tuition, fees, and room and board.

The difference between the total cost and any grant or scholarship aid is your out-of-pocket cost or “net price.” Compare this figure across all colleges. Once you determine your out-of-pocket cost at each college, determine how much, if anything, you or your child will need to borrow. Then multiply this figure by four to get an idea of what your total borrowing costs might be. Armed with this information, you’ll be in a position to make the best financial decision for your family.

If you’d like to lobby a particular school for more aid, tread carefully. A polite letter to the financial aid administrator followed up by a telephone call is appropriate. Your chances of getting more aid are best if you can document a change in circumstances that affects your ability to pay, such as a recent job loss, unusually high medical bills, or some other event that impacts your finances. Your chances of getting more aid by asking one college if they’ll match a favorable aid offer from another college is a less reliable strategy, but may be worth a shot if the colleges are direct competitors.

How much should our family rely on financial aid?

With all this talk of financial aid, it’s easy to assume that it will do most of the heavy lifting when it comes time to pay the college bills. But the reality is you shouldn’t rely too heavily on financial aid. Although aid can certainly help cover your child’s college costs, student loans make up the largest percentage of the typical aid package, not grants and scholarships.

As a general rule of thumb, plan on student loans covering up to 50% of college expenses, grants and scholarships covering up to 15%, and work-study jobs covering a variable amount. But remember, parents and students who rely mainly on loans to finance college can end up with a considerable debt burden.


Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information resented here is not specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

A Year-Round College-Planning Calendar for Parents and Prospective Students

students with ipads

Preparing your kids for college isn’t just about the money you’ve put aside for tuition, room and board. It’s about making deadlines, making the right choices and making sure your teen has the proper life and money skills to make college a success.

Consider a college-planning calendar you and your university-bound student can follow. Here are some seasonal activities to consider adding to yours:


No matter how you’ve prepared financially for your teen’s college education, kick off the year with a visit to a qualified financial and tax professional. You might also consider paying for a separate advisory session for your teen so they know how to handle money before they leave for college. January is also a good month to learn about the Free Application for Federal Student Aid, better known as the FAFSA (, as it’s best to fill out the form right after Jan.1 to avoid missing out on available federal and state ( aid going into your teen’s freshman year. That first FAFSA filing will give you an idea of what your Effective Family Contribution (EFC) ( will be.

Consult trusted friends and family members for their advice on affording college and strategies to secure grants and scholarships. Resources like and are good resources for ways to afford college, but it also helps to have face-to-face expertise.

Start evaluating potential schools with your teen. The U.S. Department of Education’s College Affordability and Transparency Center ( features a range of calculators and resources to help you narrow down school choices with the chance for your teen to secure the most scholarships and grants – money that doesn’t have to be paid back.


Springtime is a good season to start talking about summer jobs and internships ( that will make for a more attractive college application. Internship application periods may be year-round with many deadlines happening in the gall. If you are expecting your teen to contribute some part of their earnings or savings for future college costs, it’s worthwhile to review earning, spending, budgeting, tax and savings fundamentals they’ll need to manage money in school.

Also, if your teen hasn’t been exposed to banking on a regular basis, it’s time. Work with them to compare fees and services on various checking and savings accounts and consider whether it might be wise for you to bank with the same institution to allow for easier transfer of necessary funds from your account to theirs. Also encourage them to find an organized way of keeping track of their finances on paper, on computer or online (


Summer is a time for fun, but it’s also a good time to research potential schools and scholarship programs and even take a quick campus tour. The U.S. Department of Education’s scholarship site ( offers basic guidance in finding such money and local companies and organizations – including places where your teen can work or intern – may offer local awards.

If your teen is heading into their senior year, the fall is going to be busy. Get admissions test dates and college admissions deadlines down on your calendar as soon as possible. Also budget for college application fees as well as fees for admissions prep tests and the main SAT or ACT tests (more on that below) which may cost well in excess of $50 based on which test – or tests – your teen needs to take.


Fall is the season for college admissions tests, but for students with extra time before graduation, it’s also the season for test prep ( Higher-scoring students on such achievement tests generally are in a better position for admissions or certain types of financial aid. High-school sophomores take the PSAT as a primary qualification for National Merit Scholarships, but it also gives an early indication of how students may do during their junior year on their ACT or SAT test, whichever they are encouraged to take. Get your student to check directly with the colleges of their choice to see which tests they require.

Finally, the closer your teen gets to freshman year, the more specific the dates on the calendar become. For college-bound seniors, fall is the time for narrowing down college choices after visits, interviews or auditions so applications can be sent. Once acceptance letters arrive, it’s time for parents and teens to evaluate financial aid packages.

Bottom line: Creating a college-planning calendar can help you and your teen target desired schools, learn about money management and break down funding obstacles. Set it up as early as possible.

By Nathaniel Sillin

Make Sure Your Freshman Gets a Money-Smart College Start

moneysmartDoes your college-bound freshman know how to handle money at school?

Campus life can test even the most disciplined young adults on money matters. In the final weeks before you help your student pack up for the dorm, it’s a good time to pack in some money lessons as well.

Start with what college will cost. On average, the Class of 2015 graduated with a little over $35,000 in student loan debt, according to Edvisors ( Depending on your financial situation and how you’ve planned for your child’s college education, start with an overview of how your student’s college costs will impact your finances now and after graduation.

If your child will be paying off personal or student loans once they graduate, discuss how that reality should define financial choices throughout college. That doesn’t mean saving every penny and having no fun at all, but such a talk should reinforce how handling money intelligently, setting priorities and getting a jump on savings can position your child for a much stronger financial start upon graduation.

Train them to budget. If your child hasn’t learned budgeting skills (,it’s time for a crash course. Budgeting is the first essential skill in personal finance. Teaching children to budget now gives them a head start on dealing with post-graduation debt or long-term goals like affording a home or car. Because teens often live their lives on smartphones, familiarize yourself with the growing range of budgeting apps ( to keep their money management on course.

Talk through on-campus banking and credit needs. Many parents start their kids with custodial savings and checking accounts at their local bank when they are younger. If your bank has branches in the teen’s college town, that relationship can easily continue. Responsible credit card use is also wise to start in college. Keep in mind that The Credit Card Accountability, Responsibility and Disclosure (or Credit CARD) Act of 2009 requires that anyone under 21 without independent income have a co-signer to qualify for a card. As such, you’ll be able to keep track of your child’s credit use. However, if they default, you’ll be on the hook – so monitor your child’s bank and credit relationships closely until you agree they’re ready to manage them on their own.

Cover credit monitoring and identity theft. With smarter online thieves emerging every day, your child is at risk of identity theft from the minute he or she is assigned a Social Security number. While most teens generally don’t have a credit report until they start earning a paycheck at age 16, be on the lookout for fraudulent activity earlier ( and make sure they get in the habit of ordering the three free credit reports ( they are entitled to each year. Throughout college, consider sitting down with children so you can review their annual credit reports together.

Bottom line: There’s plenty to do in the final weeks before your kids leave for college. Don’t forget to reinforce important money lessons before they go.

By Nathan Sillin

Financing Your Education

It’s that time of year again and, if you’re a student, you may be preparing to head off to college in a few months. Paying for that education is not for the faint of heart, so read on for tips on how to finance it.

Paying for College 101

The U.S. Department of Education provides information on preparing for and funding education beyond high school with details on the federal aid programs. Another source of information on financial assistance is Both sites offer calculators to help you determine how much school will cost, how much you need to pay, and how much aid you will need.

Other helpful college planning tips:

  • Pay close attention to state and federal financial aid deadlines. You’ll want to file well before the deadline though, so you can receive aid before funds run out.
  • Check the Department of Education’s student budget calculator. You can plug in tuition costs, room and board and other expenses along with how much money you have in student loans or grants to get an idea of where you stand financially.
  • Get involved in the process. Visit to learn about managing money in college and how to avoid common scams that target students.

Student Financial Aid

Student Financial Aid is available from a wide variety of sources including the federal government, individual states, directly from colleges and universities, as well as from numerous other public and private agencies and organizations. Whatever the source, all forms of college aid fall into four basic categories:

  • Grants. Gift aid from grants does not have to be repaid and is generally awarded based at least partially on financial need.
  • Work Study. The Federal Work-Study Program (FWS) is a federally funded source of financial assistance used to offset financial education costs. Students earn money by working and attending school. The money does not have to be repaid.
  • Loans. Funds that are borrowed and must be repaid with interest are loans. As a general rule, educational loans have far more favorable terms and interest rates than traditional consumer loans.
  • Scholarships. Offered by schools, local/community organizations, private institutions and trusts, scholarships do not have to be repaid and are generally awarded based on some specific criteria.

Federal Student Aid Information Center

The Federal Student Aid Information Center (FSAIC) can answer your federal student financial aid questions and can give you all the help you need for free. You can also use the FSAIC automated response system to find out whether your Free Application for Federal Student Aid (FAFSA) application has been processed and to request a copy of your Student Aid Report (SAR).

Federal Loan Program Repayment Information 

  • Public Service Loan Forgiveness Program. Offers forgiveness for outstanding federal loans for individuals working full time in public service jobs.
  • Income-Based Repayment Plan. Helps to make repaying education loans more affordable for low-income borrowers.
  • Both programs offer generous benefits, but the rules may seem complex, so it is important to get all of the details. For more information on these repayment options:

CU Student Choice Program

The NASA Federal Credit Union CU Student Choice Loan can help you pay for the education expenses not covered by your financial aid package. Get competitive interest rates and generous repayment terms. Plus, with our fast online application, get the money you need to pay for college quickly.

  • Deferred payments while you’re in school
  • Flexible repayment options
  • Pay no origination fees
  • Get competitive interest rates
  • Apply quickly and easily online or call 1-800-322-8816 to apply by phone


Unprepared for College Tuition? You’re Not Alone!

If you are the parent of a college-bound high schooler who’s starting to look at colleges, but find yourself in the difficult position of not having any savings to put toward the cost of education, take a deep breath.  Sending your child to college without having any savings isn’t going to be easy. It’s going to take more research, more writing and more debt. But, this disadvantage isn’t insurmountable. You and your child are both just going to have to work a little harder to make this happen.

Before you begin planning your course of action, get a realistic estimate of costs. The College Board maintains a utility called the Estimated Family Contribution (EFC) calculator. Using this tool, enter your income, savings, and the number of people in your household. At the end of this, you’ll get a dollar amount showing how much the federal government expects you to pay. You can use this number as a target for how much you’ll have to come up with each year.

As hard as it might be to have this conversation with your child, you ought to have it. At some point, your student will have to read and sign the FAFSA (Free Application for Federal Student Aid), which require your income and savings information. This will also help your child make an informed decision about which school to attend.

Once you have a good understanding of realistic costs, it’s time to start planning. Here are three options to consider as you and your child are planning the next steps:

1.) Choose flexible schools

Encourage your child to apply to and visit a few schools where he or she would likely be among the best students. There’s a dirty little secret in the college admissions world. The quality of instruction at most non-Ivy colleges is the same. What’s different is the environment. What makes your student most comfortable: a small, liberal arts school or a big state school? There are many in both categories at all points on the cost continuum.

Many schools in both categories struggle to attract quality applicants. They will be eager to accept a bright and promising young person who can make their school a better place. These schools may offer extensive grants, scholarships, work-study offers, and other tuition breaks.

If your child is reluctant to consider schools that don’t have an elite price tag, you might want to frame the concern as future debt. Use current examples of people who just graduated and can’t find work in their fields. Encourage them to think about the next five or six years of their life, rather than just the next four.

2.) Take a look at loans

If you have nothing saved for college, the unfortunate reality is that you’ll likely have to borrow at least something. The federal government sets a cap on how much they will lend to students, based on EFC, or estimated family contribution. These loans have quite favorable rates and good repayment terms that will help young people stay out of trouble.

The NASA Federal Credit Union CU Student Choice Loan can help you pay for education expenses. Get competitive interest rates and generous repayment terms. Plus, with our fast online application, get the money you need to pay for college quickly. To learn more about NASA Federal’s education loan options, visit the Credit Union Student Choice Loan Center.

Borrowing for college isn’t the end of the world, but you will need to repay all that money whether there is a degree at the end of the adventure or not. This can be a serious burden for a new graduate, even with income-based repayment programs. Don’t give in to “debt creep,” or the feeling that, since you’re borrowing, there’s no reason to borrow less than the most you can. $19,000 in debt is better than $20,000 in debt. Every dollar not borrowed is compounded by the absence of interest on the other end.

Outside of a mortgage, though, a student loan is the safest investment you can make. The earning potential of college graduates is significantly higher than a high school graduate. There’s no need to be ashamed about borrowing to pay for school. Just use it responsibly.

3.) Consider non-traditional options

There’s no rule that says every 18-year-old has to graduate high school and then immediately enroll in college. In fact, in most other countries, the so-called “gap year” is quite common. Students use this time to work at part-time jobs, volunteer, and build their resumes. The difference between a 23-year-old college graduate and a 22-year-old college graduate is negligible. A student working and saving for a whole year could save $10,000 for college. That’s enough to defer the cost of tuition. Plus, building a resume will make it much easier to find work on the other side.

Community college may also be an attractive option. Most community colleges will offer significantly discounted tuition for exceptional students. These institutions offer the same general education courses for a fraction of the price. It’s not a free alternative: you’ll still have to pay for housing and transportation. Yet, the more flexible schedule makes it easier to work a part-time job while going to school, and it costs half as much or less. No employer or grad school will react badly to  two years of community college. Once your child graduates with a four-year degree, that degree will be the same as a four-year student of that school. Community colleges aren’t free, but they’re certainly not as expensive as a residential college.

Having no college savings does set you behind in the education race, but there are many alternative options. Have a frank, honest conversation with your student, and then do what’s best for you and your family. And don’t forget to celebrate the positive – you raised one smart kid.


College Bound? Win up to $7,000!

Announcing the 2015 Mitchell-Beall-Rosen Scholarship Contest

Are you, or do you know, a high school senior gearing up for college next year? NASA FCU has great news! We’re accepting applications for the 2015 Mitchell-Beall-Rosen Scholarship Contest. Through the Contest, we will award scholarships in amounts up to $7,000 to one or more contest winners to assist with the costs of tuition, books and living expenses.

Applicants must be:

  • The primary owner of a NASA FCU account
  • A high school senior with an average grade of C or above
  • Under the age of 21

Scholarships are awarded based on the evaluation of a 1,000 word essay and a personal interview conducted by the Scholarship Committee. For more details and an application, go to or call 1-888-NASA-FCU (627-2328) today. Then, get ready. Get set. Write your essay today! All submissions must be postmarked by February 6, 2015.