Financial Aid 101: Understanding the Basics

Shelly Humbach • April 27, 2023

What is financial aid?


Financial aid is monetary assistance provided to students and families to help cover the cost of attending college. Aid can come in a variety of forms that we’ll go over in more detail below!


The college financial aid process can be a daunting one but with the rising cost of tuition and other educational expenses, applying for financial aid is more crucial than ever. There is a lot of opportunity out there for financial assistance, but understanding the intricacies can feel like a foreign language. In this post, we will go through financial aid 101 and pull back the curtain on some of the most important terminology to know as you prepare for this process. 


Financial Aid Terminology: A Comprehensive Guide for Students and Families


Before diving in, it’s important to understand key terms to set you up for success. My best advice is to have your college financial aid office on speed dial since after all, they are there to answer your questions. Here are some of the most commonly used terms that will help demystify the process and streamline communication. 


Cost of Attendance

Don’t be fooled by the base price of tuition. The total CoA should include tuition and fees, room and board, books and supplies, personal living expenses, and transportation to and from campus, if needed. So remember to compare total cost breakdowns and not just tuition. 


Student Aid Index (SAI)

The total amount your family is expected to pay toward college is calculated by the FAFSA (see above). Once you fill out your FAFSA form, you will receive a Student Aid Index (SAI) number. This number should be listed on every award you’re granted. The formula is basic but very important, so make sure it’s always represented accurately.  The SAI it is this number that determines the student’s eligibility for federal aid at all colleges, and eligibility for institutional aid at colleges that don’t use an institutional form like the CSS Profile. 



Here’s a quick guide to how FAFSA works


Financial Need

Use the equation above to calculate your financial need for each school and then check your award letter. If the school’s total financial aid award is less than your financial need, you’ll be left with a “financial aid gap.” In this case, you’ll have to pay this gap (in addition to paying your SAI amount) with other sources of funding. Scholarships from community groups or other private sources, personal savings, or private loans are some common examples of how students augment the gap. 


Grants and Scholarships

Scholarships and grants are awarded based on merit, need, or a combination of both, and don’t need to be repaid. There are a lot of grants and scholarship funds out there, so make sure to do your research and take advantage of these opportunities. And as always, make sure to ask the right questions! Are these grants or scholarships renewable, meaning you’ll receive them every year? Or, did the college front-load the financial aid package by offering an attractive scholarship for the first year only? What are the eligibility requirements that must be kept in order to keep the scholarship for future years (a minimum GPA or certain number of credits)? 


Here’s a free tool to take a look at for getting an idea for what’s out there.


Loans

Loans have to be repaid. There are also student loans that are provided by the federal government, banks, and other private lenders, and must be paid back with interest. Here’s a breakdown on how student loans work. Make sure you do your homework. 


FAFSA

FAFSA stands for Free Application for Federal Student Aid. It's a form that students or their parents fill out annually to apply for financial aid for college or graduate school in the United States. The form is used to determine a student's eligibility for federal grants, loans, and work-study programs, as well as some state and institutional aid.


Each person required to enter personal information into the FAFSA is called a contributor. Each contributor will log in to the FAFSA separately and will each need their own Federal Student Aid Identification Number (FSA ID). If you don’t already have an FSA ID, don’t wait until the FAFSA is released in December–it is advisable to get yours now at the FSA ID website. The FAFSA is typically available to complete on October 1st each year, and it covers the following academic year. For example, the 2025-2026 FAFSA became available on October 1st, 2024, and covers the period from July 1st, 2025 to June 30th, 2026.

To complete the FAFSA, you will need to provide information about your financial situation, including your income and assets.


This information is used to calculate your Student Aid Index (SAI), which is the amount of money that you and your family are expected to contribute towards your education. Your SAI is then used to determine your eligibility for different types of financial aid.


Some quick tips for filling out the FAFSA include:


  • Make sure you submit the form by the deadline, which is typically June 30th of the following year. However, some states and colleges have earlier deadlines, so it's important to check with your school to make sure you don't miss any deadlines.
  • In past years, parents had a choice of whether or not to use the IRS Data Retrieval Tool to transfer tax data into the parent section of the FAFSA. The 2024-2025 FAFSA replaces this tool with the FUTURE Act direct data exchange (FA-DDX).
  • Be sure to review your FAFSA carefully before submitting it, as errors or omissions can delay the processing of your application or result in a lower award.


Here’s another quick guide to how FAFSA works


Work-study

A work-study award is potential income that the student may earn by working part-time in a work-study position. Most work-study jobs are on-campus which can make them convenient, but a work-study award does not guarantee a work-study job. You must apply for work-study positions like any other part-time job. And just like other part-time jobs, you will receive a paycheck for your work-study earnings. It is not automatically applied toward your cost of attendance. Contact the university financial aid office to learn about the availability and application process for work-study positions.   




The 4 things you need to know about Financial Aid 


Now that you’re familiar with some of the most commonly used terms and their meanings, let’s dive into the key steps to understanding the process. 


1. Who is eligible for financial aid?


To be eligible for financial aid, students must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is used to determine a student's financial need, which you can learn more about here. While it may seem daunting, it’s best to work on this as soon as possible so you have the best understanding and most clear view of what to expect when it comes to available need-based assistance. 


2. When should I apply for financial aid?


Students should apply for financial aid as soon as possible, preferably in October or November of their senior year of high school. Many colleges and universities have early deadlines for financial aid applications, and some scholarships and grants are awarded on a first-come, first-served basis. It is important to meet all deadlines and submit all required documents, including tax returns and other financial information. Lean on resources at the financial aid office and in your community. Here’s a great guide for this process.



3. How much financial aid can I receive?


The amount of financial aid a student receives depends on several factors, including financial need, academic achievement, and availability of funds. Scholarships and grants can range from a few hundred dollars to full tuition, while work-study programs provide students with part-time jobs to help cover educational expenses.


4. How do I compare financial aid packages from different colleges?


You should compare financial aid packages from different colleges based on the total cost of attendance, including tuition, fees, room, and board and travel expenses. It is important to weigh the benefits and drawbacks of each financial aid package and choose the one that best fits your financial situation and academic goals.


The college financial aid process can be overwhelming, but it is an important part of the college admissions process. By understanding the basics of financial aid, including eligibility requirements, application deadlines, and the types of financial aid available, you’ll have the power to make informed decisions about how to finance your education. Remember to apply early, meet all deadlines, and compare financial aid packages from different colleges to find the best fit for your needs.











 

No Phone, Ditch the Shoes, Let’s Connect

By Shelly Humbach • September 11, 2025
In June, I hosted my annual Senior Essay Writing Workshop. This was the first in-person workshop since 2019. I bet you can guess why. I was elated to meet my students face-to-face after months, even years, of connecting through the screen. Imagine my surprise at their height, super-smiles, and warm laughter. Dang, it was wonderful. So, essentially, all my in-state seniors gather at my house for a three-hour intensive workshop on crafting a killer college essay. As I was preparing for the event, it occurred to me that I might be in competition with their PHONE. Classic directness (this is probably a character flaw) led me to inform my students and their parents, in advance, that this would be a no-phone gathering. My messaging went something like this, Important: Phones are placed in a basket at the door and retrieved at noon. No exceptions. Parents: If you need to reach your student during the workshop, text me directly at **********. Now, I am fully on board with the phone-free movement. I support it, advocate for it, and live it (I brilliantly quit all personal media last November). And I thought: my event, my rules. I was a little concerned about how this announcement would land. Turns out my concern was mainly about the parents. The kids? Not so much. In fact, research indicates that students crave phone-free learning environments. Suffice to say, the workshop was a smashing success. Not a single student pushed back against the policy. One poor soul forgot to retrieve her phone and left it sitting all alone in the basket. Not to worry, though. She didn’t get far before turning back to grab it. Here’s the truth: We don’t have to bow down to every technological whim or societal pressure. As adults, we know the phone is a problem, and it’s our job to foster healthy, happy individuals. So let's keep this momentum going. As Maya Angelou wisely said, “When you know better, do better.”

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3 Priority Action Items For Every Parent of a College-Bound High School Senior

By Shelly Humbach • December 7, 2022
Incredibly, another year has come and gone; another year of navigating life in the midst of Covid and now flu and RSV. Such fun. Thankfully, many high school seniors are still college bound. Here are three priority action items every parent or guardian should take long before their student launches. FAFSA and Net Price Calculators Complete the FAFSA (Free Application for Federal Student Aid) . Even if you know or suspect your family will not qualify for federal aid, you should file the FAFSA. Why? ~In case circumstances change. Hello, pandemic. ~Just because parents weren’t eligible to receive financial aid one year doesn’t mean that they wouldn’t be eligible in a subsequent year, if their financial situation has changed. ~If you think you may require financial aid at any point in your child’s education. ~Anyone who expects to have more than one child in college simultaneously. Filing the FAFSA opens the door for all kinds of aid. Federal grants do not need to be repaid, federal student loans have low interest rates and work-study programs can be a convenient way to simultaneously fund an education and build a résumé. Complete the Net Price Calculator for each school on your student’s list. This calculator is found on every college website (search it). By providing personalized estimates, net price calculators offer a more informed way of deciding which colleges you can afford. Knowing your net price gives you the best idea of what you’ll pay for a particular college; makes comparing colleges easier; and widens your choice of colleges so you can focus on fit instead of price. Mental Health Care in College Make plans to have proper, sufficient and accessible mental health care support in place for your student before they leave for college. Let’s face it, the launch is just around the corner. Take advantage of the luxury of time and plan to have support firmly in place. Do not assume that colleges have the mental health care support your child may need. They are literally buckling under the weight of demand and negligible funding. Many times, care and support must be secured off-campus. Support Your Student Applying to college in 2022 is beastly and requires serious stamina and perseverance. College admissions deadlines are voluminous and fluid. The pandemic has wreaked all kinds of havoc on the process, requiring more diligence and follow through than ever before.
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