Demystifying the Financial Aid Process

While January 1 marks the start to each New Year, the date can also represent an overwhelming time for families who have young adults pursuing higher education.

January 1 officially begins the financial aid season, and this creates many questions.

What is financial aid? What is the FAFSA? How do we qualify? Is a loan considered financial aid?

Many questions can be answered easily and with little confusion. As a financial aid professional at Johnson & Wales University, I have helped countless families navigate the financial aid process. Whatever school you are considering, know there are professionals on hand ready to assist you.

The ultimate goal is to help students enroll at their institution of choice and make it affordable. Often, families assume they may not qualify for financial aid; I would encourage everyone to complete the Free Application for Federal Student Aid (FAFSA) as soon as possible after January 1. The FAFSA determines eligibility for federal, state and, often, institutional aid. Many individuals categorize financial aid as grant or gift aid, but financial aid is actually a combination of grants, loans and self-help programs like Federal Work Study.

The Department of Education has campus-based programs including the Federal Perkins Loan, Federal Work Study and Supplemental Educational Opportunity Grant. In addition students could qualify for the Federal Pell Grant or the William D. Ford Federal Direct Loan Program, which offers loan amounts up to $5,500 in year one, $6,500 in year two and $7,500 in years three and four.

The type of funding and amounts offered are based on the financial need of the family. Financial aid eligibility is determined annually, so be sure to complete the FAFSA each year. Even if you are interested in more than one school, you only have to complete one FAFSA. Just be sure to provide each school’s Title IV or Federal Code (you can locate the code on the institution’s web site).

In addition to Federal aid, universities award merit scholarships through the admissions process. These awards are typically based on your high school academic record, special characteristics, high school involvement etc. Some universities also award need-based grants, which are based on the family’s financial need. Often this type of grant is re-evaluated each year.   

What happens next? Upon completion of the FAFSA, students will receive a financial aid award packet, typically in March or April for the upcoming school year. The packet contains an award letter describing the award types and amounts, award definitions, tuition and fees, timelines, and instructions for next steps.  Students who are accepting any Direct Loans in their freshmen year will need to complete a Master Promissory Note as well as a Loan Counseling session; both can be done online at

Some students, not all, are selected for a process called verification to ensure the FAFSA was completed accurately. They are asked to provide tax transcripts and/or other verification documents to ensure the accuracy of information reported in the FAFSA. One piece of advice, make sure you have all your W2s and/or tax returns available when completing the FAFSA to ensure accuracy upfront. Financial aid is finalized once the verification process is complete (if applicable).  If there are major differences from the tax transcript and the information provided on the FAFSA, there is a chance the initial financial aid offer could change.         

In May, most universities will mail a student invoice listing all direct charges for the academic year, such as tuition, fees, room and board, etc., as well as deductions from the financial aid award letter. Within the invoice you will find other payment options to assist with any remaining balance: monthly payment plans, college savings plans, home equity loans, parent educational (PLUS) loans, private education loans, etc.  Most institutions have a payment deadline so keep that in mind when planning how you will pay the net balance.  

College is a notable investment and one to take seriously. While the financial aid process may seem daunting, it is one that thousands of families navigate successfully every year. Being prepared, getting started soon after January 1, and asking questions when you encounter road blocks are some of the best ways to ensure a smooth process for yours.

Lynn Robinson is vice president of student academic & financial services at Johnson & Wales University. She has 25 years’ experience in the field.

Follow Johnson & Wales University on Twitter @JWUProdvidence.

Categories: College, College & Career Advice, Financial Aid & Scholarships