Understanding Financial Aid for University in the USA
Updated: Apr 6, 2020
After putting up all the holiday decorations and doing some baking, it's time to get a study in the USA blog posted! This week’s blog is all about financial aid. There will be a couple more blogs following this one that will dive more into scholarships and preparation, but I want to give you a broad overview of how financial aid works in the USA. As an international student, understanding the finances of studying abroad is complicated, and in my opinion, it’s the most important thing you need to learn about after the admissions process. In this article, we’re going to talk about determining the cost of attendance for university and also learning how to factor in financial aid. Get your calculators ready!
First things first. What is financial aid?
Financial aid can be offered in the forms of loans or grants. Loans are money given by a financial institution (bank or credit union) and students are required to pay this money back, typically with interest. University websites will provide information about federal student aid. Unfortunately, international students do not qualify for federal aid. Grants are money offered to students and does not have to be paid back. Grants can come from the government, schools, or donations and are typically dedicated towards a cause or purpose. A third type of student aid is federal work study, and international students cannot qualify for this either. This was covered in the article about student visas in the section about working while abroad (click HERE to read).
Another important thing to know is if the schools you are applying to are need-blind or need-aware. While this is in some ways related to admissions, it can help give you an idea right away if the school is sensitive to international student and lower-income family finances.
Need blind means that the school does not consider your ability to pay during the admissions process. Need aware means that the school will request and review financial information about you before providing an admissions decision. This means you may or may not be admitted based off financial capability.
The upside of need blind is that the school is not going to reject you based off of your financial abilities. The downside, however, for international students is that often they do not realize the gap that is left even if they receive quite a large scholarship. The gap is the amount of money left after all deductions have been applied to the cost of attendance.
Let’s use an example:
James applies to Top University. Top University costs $50,000 for one year. James receives a $15,000 USD scholarship. The gap is determined by subtracting the scholarship from the total cost. This means that to attend Top University for one year, James will have to pay $35,000.
The gap becomes a problematic result of the need blind process, because often students do not realize that the school is unlikely to fill the need they might still have to attend.
All post-secondary institutions will offer various forms of financial aid. How much financial aid they offer to international students will vary depending on their funding sources and commitment to internationalizing their campus.
You can find financial aid information on the university website. Typically, the website will have a banner for Admissions > International Admissions > Financial Aid. The website may also use subheadings like “Paying for School”, “Understanding the Finances”, or “Cost of Attendance” where they will list the financial information.
Websites will often list information in a general “Financial Resources” space, so be careful to make sure that it is applicable to you. Things like the FAFSA (Free Application for Federal Student Aid), which helps students get federal loans to pay for school, is not applicable to international students. I hate hearing when students or families spent hours filling out forms that they don’t qualify for. One thing that many schools will have for international students to complete is the CSS Profile. The CSS profile is an application for financial aid that takes into account the student’s financial situation.
It’s important to note that the CSS profile often does not meet full need. This means that even if your family can’t afford to contribute any money to your education abroad (their EFC or Estimated Family Contribution is zero dollars), most schools cannot fill the entire gap for students. Learn more here.
Often student do not consider the possibility of applying for student loans from their home country. While this is not an option for all countries, many countries will allow students to apply for loans to study in university, even if they choose to study in the USA. Remember that these loans have to be paid back with interest.
In the USA, federal student loans do not start repayment until after the student finished university, but it’s important to check with your international loan provider to make sure you don’t have to pay while you are still studying.
Hopefully this helps clear up financial aid questions about studying in the USA. The next thing I was to talk about is the cost of attendance.
There are several moving pieces to consider when thinking about the cost of attendance. In general, you should factor the following into account:
Tuition and Fees
Room and Board (housing and food)
Health insurance (required for all students in the USA on an F1 visa)
*Note that some of the costs are paid to the school, and some of the costs you will be responsible for taking care of on your own each semester or month. So what’s the best way to estimate your cost of attendance for a university?
Let’s set up a scenario:
Susan has applied to seven universities in the USA. They are a mix of public and private. She has gotten six acceptance letters so far, and she’s waiting on the final acceptance letter. She wants to know how much each school is going to cost.
One recommendation that I have used for years with international students is to create a table. Create a table that has several columns, including School Name, Tuition and Fees Cost, Room and Board (or off campus cost estimate), Book Estimate, Personal Expenses, Travel to and from school, and Insurance Costs. See example:
Next, create a second table listing the Total Cost, any Financial Aid or Scholarships received, and the Out of Pocket Cost, or what you would have to pay to attend. See example:
Phew. I know it’s a lot of work, but I promise it’s worth it. As you can see from the example, the most expensive costing school provided the most scholarships or aid, making it the least out of pocket expense to the student. This is an invaluable tool when looking at the cost of attendance for schools in the USA. I hope you use it and find it super helpful during the school selection process! Stay tuned next week as we dive into the scholarship search and learning how different types of scholarships work.
Until next time!