Understanding College Costs: FAQs About Financial Aid in Practice

For most students, applying for need-based financial aid is a necessary part of the college application process. Your financial aid options can be a deciding factor when you choose where to attend, and a generous financial aid package can make a prohibitively expensive school turn into one that’s within your reach.

We’ve covered the financial aid application process in detail on the CollegeVine blog, from starting your FAFSA to comparing aid awards. But what comes next? How does that award letter and offer of need-based financial aid translate into money in your pocket, a lower bill for your family, or added financial security that you can depend on during your college years?

Here’s what happens after you apply for financial aid, as you choose a college, head to campus, and start your classes. These are the answers you’ll need as you navigate your transition to college and take on the practical implications of financial aid for your first year.

When Do I Find Out About My Financial Aid Award?

Most schools aim to send out financial aid award letters at the same time as admissions decisions or shortly afterward. Financial aid awards are usually only created for students who are admitted, so they can’t be calculated until admissions decisions are nearly final.

If you didn’t turn in all your required paperwork by the appropriate deadlines, your award letter may be delayed. You might also experience delays if a college had to request more information from you about a complex or unusual circumstance, or if you appealed your financial aid award and are waiting for a response.

Colleges understand that your financial aid award can be a major factor in which college you choose to attend, so they make a strong effort to get your award to you before you have to make a final decision. However, they can’t accurately assess your need and decide how much aid to award without your full financial information, so your application must be complete before they can even begin. (This is also why many colleges are reluctant to offer any estimates or guesses earlier in the process.)

When Do I Actually Get My Financial Aid?

Your financial aid can’t actually be disbursed—applied to your account—until you’re officially enrolled as a student on the first day of your first term. Since your bill will be due before you enroll, colleges have come up with a way to ensure that your bill is correct: anticipated aid.

Before you enroll, the financial aid you’ve been offered will be added to your billing account as anticipated aid, which doesn’t technically exist yet, but is expected to be disbursed as soon as you’re enrolled. By subtracting this anticipated aid from your billed costs, the school can calculate how much you and your family will actually have to pay out of pocket by the billing due date before the start of the term.

In almost all cases, nothing will change about the amount and sources of your aid when you enroll. It will simply drop the word “anticipated.” However, you may have to complete additional paperwork and requirements once you arrive at school in order to finalize your aid.

For instance, if you’ve been offered a Federal Direct student loan it will initially appear on your billing statement as anticipated aid so that the amount you owe can be calculated correctly. Once you get to campus, you’ll need to complete your loan entrance counseling and sign your Master Promissory Note (MPN), in which you legally commit to the loan.

After you complete requirements like these, your financial aid is considered final. If you don’t complete the requirements, or if you encounter a problem like realizing you’re ineligible for your anticipated aid award, that award will be removed from your account, and you’ll be responsible for paying back the difference.

If you receive a particularly large amount of financial aid, it may exceed your billed costs, meaning that some of that money will be returned to you personally to pay for things like books or living expenses. If you fall into this category, your financial aid office can provide school-specific instructions for what to do next.

Typically, once you enroll, you’ll fill out a form and a direct deposit or check will be sent to you. This is often referred to as a refund, even if you didn’t pay the college in the first place. Keep in mind that this process takes some time, so you won’t get that money right away, and you should plan your beginning-of-the-year expenses accordingly.  

What Can I Use My Financial Aid For?

Your need-based financial aid is meant to make it possible for you to attend college, not simply to reward you for good performance. It’s meant to be used for the costs you’ll be required to incur in order to attend college.

Of course, you can use financial aid for the direct costs of your education, such as tuition and administrative fees. You can also use it for some necessary but less direct costs associated with attending college. These might include room and board, books, and basic personal expenses that you accumulate while you’re in school.

Your college will calculate your overall cost of attendance, and an itemized list of charges and expenses will appear on your financial aid award letter. Some costs, such as tuition and on-campus housing, will appear on your bill from the college itself. Other costs, such as books and personal expenses, will need to be paid out of pocket, though you might be reimbursed later if you receive enough aid to cover these items as well.

Bear in mind that the information here is a general statement about what need-based financial aid covers. Specific sources of financial aid—for example, a certain university or a certain grant provider outside the university—may have more specific policies about what you can or must spend these funds on. Your financial aid officer will help you manage your sources of aid and ensure that the right funds go to the right places.

For a more detailed explanation of your billed and unbilled costs and what makes up your total cost of attendance, check out our post Tuition vs. Total Cost of Attendance: Understanding Your College Expenses.

What Can’t I Use My Financial Aid For?

You generally can’t use your financial aid to pay for personal expenses in excess of what’s required for your needs to be met. Financial aid is meant to provide for needs, not wants, so if you choose to spend more than you need to spend, it’ll have to come out of your own (or your family’s) pocket.

Your financial aid might help you pay for the computer you need to do your homework, but it won’t cover the whole cost if you want to buy a super-high-end laptop or an additional tablet, because it’s not strictly necessary for you to spend that much in order to meet your need for a computer. It might cover housing by awarding you a specific sum that’s enough to meet your basic housing needs in that area, but if you decide you want to live in a luxury apartment, you’ll have to foot the rest of the bill yourself—the college won’t give you additional funding based on your preferences.

Other restrictions on what your financial aid will pay for will depend upon your college or your individual source of aid. Institutions and aid sources may disagree about what constitutes a need, or how much you should be allocated for these costs, so you should always read the fine print attached to any financial aid award.

Your financial aid experience may also be different if you study abroad, take summer courses, or take part in other programs that aren’t part of the basic college experience. These opportunities aren’t usually things you need to do, in the strictest sense, but since so many students seek them out in college, your college may still be willing to help you pay for them.

What If My College Costs Are Higher Than Anticipated?

The estimated cost of attendance listed on your award letter is a guess based on the average student’s expenses, so doesn’t always turn out to be 100% accurate for each individual student. For example, books and materials costs vary in different courses, so depending upon your major and course schedule, you might spend more on these supplies than the average student.

If you encounter higher college costs than estimated and are having difficulty covering them, it’s something you should talk about with your financial aid officer, who may have some flexibility to find you aid that better meets your needs.

Remember, colleges provide need-based financial aid because they want to attract qualified, talented, and promising students, regardless of what financial resources they have. With this kind of financial aid philosophy in mind, it wouldn’t make sense for your college to expect you to pursue only the least expensive academic paths.

Your financial aid officer may be able to adjust your personal cost of attendance estimate, which might increase your eligibility for financial aid, or help you find other sources of funding, like loans or outside scholarships. You can also look into rebalancing your budget by reducing your expenses in other areas.

What If I Don’t Use All My Financial Aid Funds?

What you’ll need to do with leftover financial aid depends upon what you’re using those funds for, where they come from, and how much is left over. As usual, different schools and sources of financial aid may have different policies.

If your need-based financial aid awards, when added together, exceed your calculated financial need, you may have to turn down or reduce the amount of some of these awards before they’re disbursed. Often, if you receive a large amount of financial aid from outside sources, your college will reduce its own institutional aid offer to balance the scales.

Your college will likely adjust institutional aid automatically, but you may have to talk to outside aid sources directly to explore your options and adjust your award appropriately. Your financial aid officer can help you figure out whom you need to contact and by when, and may even take care of some of that communication.

Since even financial aid from outside sources is generally paid directly to the college, your college’s financial aid office will help you to manage the different components of your award and coordinate their disbursement.

The situation is somewhat different when your financial aid is paying for indirect and unbilled costs, such as your personal expenses. In those cases, your school will budget a particular amount for you, will award you that amount of funding, and generally won’t micromanage your spending or require you to keep an itemized list of what you purchased.

Let’s say that your school awards and disburses a certain amount of money to you to pay for your estimated personal expenses for the year, from winter boots to shampoo. It’s up to you to decide how to use these funds on a daily basis, and if you find at the end of the year that you have some money left in your bank account, you generally won’t have to pay that back. (Besides, you can’t easily distinguish leftover financial aid funds in your general bank account from money you’ve earned in other ways.)

What If I Encounter A Financial Emergency?

Financial emergencies can happen to anyone, but they can be especially dangerous for students whose family financial resources are already limited. A relatively small amount of money can quickly become a very big deal, or even jeopardize a student’s ability to remain enrolled in college.

I found this out myself when a bout of mono in my junior year of college led to weeks of missed work, but I still had bills to pay, and few options for getting financial help. I managed to scrape by, but the experience was very stressful. I wasn’t able to fully focus on regaining my health and keeping up with my schoolwork as I should have, and other areas of my life suffered for it. 

Later, I found out that I could have applied for an emergency loan from my financial aid office, an option that hadn’t even occurred to me. I now regret not asking for help—a loan of a few hundred dollars wouldn’t have changed my overall student loan total by much, percentage-wise, but it would have made a huge difference to me in that difficult time.

If you’re facing a financial emergency, such as an illness or an unexpected major expense, and you’re heavily dependent upon your financial aid, you may have options through your financial aid office. Some schools offer emergency loans or other resources to students in this situation. Schools differ in their policies, and you may decide not to pursue emergency funding options in the end, but it’s always worthwhile to ask for help when you need it and to consider all avenues.

Even if your school doesn’t offer a specific program for emergencies, your financial aid officer can help you explore and understand the options you might have. Your officer is your best ally in confronting any financial obstacle that could get in the way of your college education.

Will I Get The Same Financial Aid Every Year Of College?

Unless your college or your particular source of financial aid specifically guarantees aid in future years, you won’t necessarily receive the same financial aid each year you’re in college. Your needs and resources will change over time, so you’ll need to reapply for need-based aid and be reassessed each year.

Each spring, you’ll reapply for financial aid using the FAFSA, the CSS Profile, and/or whatever forms your college requires. The process is similar to that for incoming first-years, but the deadlines will most likely be later in the spring. If you submitted certain pieces of information about special circumstances in your initial application, such as a death certificate for a deceased parent, you likely won’t need to do so again.

What you can expect depends, as usual, on your college. At certain schools which guarantee to meet 100% of your financial need for all four years, if your financial situation remains roughly the same as in past years, your aid package should follow suit. Not every school can afford to make this kind of guarantee, however, so you should direct specific questions to that school’s financial aid office.

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