Financial Aid Myths and Misconceptions

The financial aid process has given rise to a number of myths, misconceptions, and just plain misinformation. You might hear one or many of the following statements. Don't get taken in.

"The only way to know if you qualify for aid is to complete the applications," says Ann Hendrick, director of financial aid at Millsaps College (MS).

Whether you qualify for aid depends on two things: how much your family is able to pay and how much your chosen college(s) cost.

The amount of money that your family can afford to pay is determined by the FAFSA (Free Federal Application for Federal Student Aid). After you submit the FAFSA, you will receive a report telling you what your Estimated Family Contribution (EFC) should be. Colleges may adjust that a little, depending on their own methods. But the EFC is the amount of money the colleges figure you can pay toward the this year's tuition. College can cost anywhere from a few thousand a year at a community college to upwards of $50,000 at a private college.

The magic number in financial aid, then, is the EFC. And the only way to determine your EFC is to apply for aid.

"Only straight-A students get aid"

Sure, the academic (or athletic, or music, or leadership) stars may have a better chance of getting merit scholarships. But most financial aid—and all government aid—is need-based. It is given to students because they need it to pay for college, no matter what their grades are.

"As long as you make satisfactory academic process, you're going to be as eligible for federal student aid as somebody who's on the dean's list," says Bill Ryan, acting director, Student Aid Awareness, Student Financial Assistance (part of the U.S. Department of Education).

"Millions of dollars in scholarships go unclaimed every year"

This old saw has been around for too many years to count. It is not true—and it is used to scam money from unsuspecting students and parents.

The source of this claim is an old study that looked at the theoretical amount of funds available from private organizations—companies, associations, unions, and so forth. Now maybe the scholarship for a left-handed botany major whose father is a member of the Elks doesn't get used every year. But could most people qualify for it?

The truth is, about 70 percent of all financial aid is given by the U.S. government. The rest is a combination of state, private, and college aid.

But don't get discouraged yet. There are still many scholarships for which students can apply. And the Web is one of the best places to look for them (FastWeb or Scholarships.com are good places to start). Other good sources for scholarship leads are the reference section of the library, your high school guidance office, and college financial aid offices. All of these resources are free.

The danger comes when companies ask you for money to either (1) search for scholarships or (2) give you a scholarship.

"Students and parents should be careful about services that charge money for things that are available for free," says Ryan. (For more information on scholarship scams, visit FinAid or Six Signs that Your Scholarship is Sunk).