Financial Aid & Scholarships

For most families, the cost of college is the single biggest financial decision they’ll face — larger than buying a car, and for many, approaching the cost of a house. Yet most students spend more time choosing a major than understanding financial aid. AI helps you find money you didn’t know existed and compare offers with clarity.

🔄 Quick Recall: In the previous lesson, you prepared recommendation letters and practiced for interviews. Now you’ll tackle the financial side — making sure cost doesn’t eliminate your best options before you even apply.

Understanding Financial Aid

The Net Price Equation

Net Price = Total Cost of Attendance − Grants & Scholarships

Only subtract grants and scholarships when comparing schools. Loans and work-study are not discounts — they’re debt and labor.

FAFSA: The Starting Point

The FAFSA (Free Application for Federal Student Aid) opens October 1 each year. Every student should file it, regardless of family income — it’s required for most financial aid, including many merit scholarships.

Help me prepare for FAFSA filing:

Family financial situation:
- Household income: [approximate range]
- Number of family members: [number]
- Number currently in college: [number]
- Assets (savings, investments, not including primary home): [approximate]

Help me:
1. List all documents I need to gather before starting
2. Identify common FAFSA mistakes for my situation
3. Estimate my Expected Family Contribution (EFC) / Student Aid Index (SAI)
4. Explain which types of aid I'm likely eligible for
5. Create a FAFSA filing checklist with deadlines

FAFSA tips AI can help you remember:

• File as early as possible (October 1) — some aid is first-come, first-served
• Use the IRS Data Retrieval Tool to auto-fill tax information
• List schools in strategic order (some state aid goes to your first-listed school)
• Both custodial and non-custodial parents may need to file (check each school’s policy)
• The CSS Profile (required by ~200 schools) is separate from FAFSA and more detailed

✅ Quick Check: Your neighbor says they make too much money to qualify for financial aid, so they’re not filing the FAFSA. Why is this a mistake? (Answer: FAFSA unlocks more than just need-based aid. Many merit scholarships, state grants, and federal student loans require a FAFSA on file. Some schools won’t consider you for ANY institutional aid without one. Filing takes 30-45 minutes and costs nothing — there’s no income threshold where filing becomes pointless.)

Finding Scholarships

Scholarship Search Prompt

Help me find scholarships I'm likely to qualify for:

My profile:
- GPA: [GPA]
- Intended major: [major]
- State: [state]
- Background: [ethnicity, first-generation status, any relevant identity]
- Interests/activities: [top 3-4]
- Special circumstances: [parent's employer, community organizations,
  religious affiliation, military connection, health conditions, etc.]

Search for:
1. National scholarships matching my profile (deadline not yet passed)
2. State-specific scholarships in [my state]
3. Major-specific scholarships in [my field]
4. Local/community scholarships (often less competitive)
5. Unusual/niche scholarships I might not know about

For each, include: amount, deadline, requirements, and estimated competitiveness

Scholarship strategy by type:

The hidden strategy: Apply to many local scholarships. National scholarships attract tens of thousands of applicants. Local scholarships from your Rotary club, parent’s employer, or community foundation might have 50 applicants. Ten $500 local scholarships ($5,000 total) are more achievable than one $5,000 national scholarship.

Comparing Financial Aid Packages

Aid Package Comparison Prompt

Help me compare financial aid offers:

School A: [name]
- Total COA: $[amount]
- Grants/scholarships: $[amount]
- Federal loans offered: $[amount]
- Work-study: $[amount]

School B: [name]
- Total COA: $[amount]
- Grants/scholarships: $[amount]
- Federal loans offered: $[amount]
- Work-study: $[amount]

School C: [name]
- [same format]

Compare:
1. True net cost (COA minus grants/scholarships ONLY)
2. Total 4-year cost including loan interest
3. Monthly loan payment after graduation (assume 10-year repayment)
4. Debt-to-expected-salary ratio for my intended major ([major])
5. Which offers are renewable? What are the renewal conditions?
6. Red flags I should ask about (front-loaded aid, high parent PLUS loans)

Red flags in aid packages:

• Front-loaded aid: Generous freshman year, then aid drops. Ask: “Is this aid guaranteed for four years?”
• High loan percentage: If loans make up more than 30% of the package, the “aid” is mostly debt
• Parent PLUS loans listed as “aid”: These are loans the PARENT takes out — they’re not financial aid
• No merit scholarship renewal terms: Get renewal requirements in writing

✅ Quick Check: An aid package includes $20,000 in grants and $15,000 in loans. A parent says “they’re giving us $35,000 in aid!” What’s wrong? (Answer: Only the $20,000 in grants is actual aid. The $15,000 in loans must be repaid with interest — over 10 years at 5.5%, that $15,000 becomes ~$19,500. Conflating grants and loans is the most common financial aid misunderstanding. Your true aid is $20,000, and you’re borrowing $15,000.)

Negotiating (Appealing) Your Aid Package

Most families don’t know financial aid offices expect appeals. About 1 in 3 families who appeal receive additional aid.

Help me draft a financial aid appeal letter:

School I'm appealing to: [name]
Their current offer: $[grant/scholarship amount]
Competing offer from: [school name], offering $[amount]

Changes since filing FAFSA (if any):
- [Job loss, medical expenses, sibling starting college, etc.]

Why this school is my top choice:
- [Specific reasons — program, research, community]

Draft a professional appeal letter that:
1. Thanks them for the current offer
2. Expresses genuine interest (this is my first choice)
3. Presents the competing offer professionally (not as a threat)
4. Mentions any changed financial circumstances
5. Makes a specific, reasonable request
6. Keeps the tone respectful and hopeful

Practice Exercise

1. Run the Net Price Calculator on your top 3 schools — compare the results to sticker prices
2. Identify 5 local scholarships with fewer than 500 applicants (ask your guidance counselor, check community organizations)
3. If you have competing offers, draft an appeal letter using the prompt above — even if you don’t send it, the exercise clarifies your financial priorities

Key Takeaways

• Never eliminate a school based on sticker price — Net Price Calculators reveal the true cost after aid, and expensive schools often cost less than cheap ones after grants
• File FAFSA as early as possible (October 1) regardless of income — it unlocks merit aid, state grants, and federal loans even for higher-income families
• Local scholarships (community organizations, employers) have far less competition than national ones — ten $500 awards are more achievable than one $5,000 award
• When comparing aid packages, subtract only grants and scholarships — loans are debt, work-study is labor, and neither is “free money”
• Appeal financial aid offers professionally with competing offers and changed circumstances — about 1 in 3 appeals results in $3,000-5,000 more

Up Next

In the next lesson, you’ll build a decision framework for comparing your final options — weighing academics, finances, culture, and career outcomes to make a choice you’ll feel confident about.