When it comes to financial aid, the first question most students and parents ask is "where do I begin?"

The best place to begin your search is in the high-school guidance office. There you will find numerous guidebooks that will give information on colleges' financial-aid programs. The office will also have many reference books listing various scholarship and financial-aid programs, especially local ones. The school might have a Financial Aid Night with an "expert" speaking. Be sure to attend. The counselors will also no doubt be familiar with state scholarship programs, as well as the financial-aid programs and practices of colleges normally attended by students from your high school.

Next you might contact the colleges to which the student expects to apply. They will not only have information about their own financial-aid programs, but will be able to help you with other sources of aid and perhaps help you to fill out the Free Application for Federal Student Aid and other forms. Usually, although not always, smaller colleges are in a better position to help you than many larger universities.

If you have access to a computer, two suggested sites would be http://www.finaid.org/ and http://www.collegeboard.org, both of which have a "scholarship search," allowing students to look at a variety of categories of scholarships across the country. On both sites the search is free. Both also have a "calculator," which allows parents to determine their Effective Family Contribution (EFC) almost instantly by answering questions about income and assests, etc. This service is also free. These sites also provide information on private alternative loans that could be helpful to parents. Most state scholarship agencies also have websites -- check for yours.

A serious search of financial-aid sources requires the use of your local library. They usually have a section with a wealth of information on scholarships and financial aid, and it's free. Avoid buying expensive books on scholarships, since they are usually not very helpful. One recommended source is The Ambitious Student's Guide to Financial Aid which is inexpensive and contains good information. To order, call 1-703-836-5400. You should also avoid costly "scholarship searches" since these are generally not helpful and sometimes border on fraud. (The federal government recently shut down some of these, accusing them of mail fraud.) Use the "free" version, usually available at your high school.

Whichever of the above routes you take you will no doubt be trying to find answers to the following questions:

1) What are the specific programs that might help me?
2) How do I apply to these programs?
3) What are my chances of qualifying for help?

The vast majority of students attending college with the help of financial aid receive this aid from one of three primary sources:

1) Colleges, universities and other post-secondary institutions - most have scholarships, grants, loans and jobs to help their students pay for their education.

2) The Federal Government - The Pell Grant program currently distributes more than six billion dollars to students attending college and other post-secondary schools.

3) State Governments - All 50 states have a loan program for students and most have a scholarship or grant program. Later in this article, all of these programs will be described in detail.

Beyond these primary sources, other groups such as the Elks, the Knights of Columbus, other service organizations and companies often offer aid to students from a specific community.

The vast majority of students attending college with the help of financial aid receive this aid from one of three primary sources:

1) Colleges, universities and other post-secondary institutions - most have scholarships, grants, loans and jobs to help their students pay for their education.
2) The Federal Government - The Pell Grant program currently distributes more than six billion dollars to students attending college and other post-secondary schools.
3) State Governments - All 50 states have a loan program for students and most have a scholarship or grant program.

All students applying for any type of federal student financial aid must file the Free Application for Federal Student Aid. This form, distributed through high-school guidance and college financial-aid offices, usually may be used to apply to the three major sources of financial aid - the Pell Grant, the state and the colleges. By simply checking the appropriate boxes, the student will automatically be considered for aid from the state and Pell Grant programs. The student can also write in on the Free Application for Federal Student Aid the names and addresses of the colleges to which he or she wishes to apply for financial aid. Thus, in most cases, with one application, a student can generally apply to the three sources of aid that provide the vast majority of aid to college students across the country. These forms should be completed just as soon after January 1 of the student's senior year as possible. When income or tax information is asked for, simply follow directions for estimating these amounts since it is very important to submit these forms early.

Some colleges may require additional forms (usually the Financial Aid Profile which can also be obtained from the high school) for use in awarding their own scholarship money. Be sure to check with the colleges to which you are applying to see what forms are required.

Whether you apply for federal, state or institutional aid, you should be sure to complete all forms accurately and honestly and be sure to submit them before the established deadlines.

As you learn more about these financial-aid programs, you will find that the common requirement for eligibility in most programs is that the student demonstrates financial need for the funds. There are some programs that do not require financial need, but most programs do. We will begin, therefore, by defining financial need and explaining how it is calculated for an individual family.

Simply defined, financial need is the difference between what it will cost a student to attend the college of his choice, and the amount that his family can contribute toward his education. In calculating financial need, colleges usually include in their total costs: tuition, room, board, all fees, books, supplies, travel, clothing and recreational expenses. The family contribution is determined by a congressional formula as we will explain later. An important point to realize here is that financial need is a relative figure and will be different at colleges that have different costs. The following is an example of how the financial need of a student whose family can pay $6,000 might be calculated at three different colleges having different costs.

COLLEGE, PRIVATE
Typical Costs: $ 23,500
Family Contribution: 6,000
Financial Need: 17,500

COLLEGE, STATE
Typical Costs: $ 12,500
Family Contribution: 6,000
Financial Need: 6,500

COLLEGE, COMMUNITY
Typical Costs: $ 5,000
Family Contribution: 6,000
Financial Need: 0

From the above, one can see that a student applying to different colleges might get a larger financial-aid award from a more expensive college and a smaller award from a less expensive one. In fact, because of different costs, a student could qualify for, and get, financial aid from one college, and at the same time be ineligible for aid from another college. One key factor, therefore, in determining a student's eligibility for aid is the cost of attending a particular college or university. The other key factor in establishing financial need is the family contribution, combining the parents' contribution and the student's contribution.

The information submitted on the FAFSA is analyzed according to a formula that has been developed by Congress to determine how much parents are able to pay towards their child's education. The formula considers such things as income, assets, number of people in the family, federal and state taxes, number in college and many other circumstances of the family. Given the complexity of the formula, it is impossible to determine accurately the parents' contribution without detailed information on an individual family.

Most high schools today also have computer programs that allow families to estimate their family contribution by simply submitting a few income and asset figures. Check with your guidance office or search the Internet.

The forms do not provide space for a family to explain any unusual circumstances that would affect their financial situation (unemployment, death, etc.). Care should be taken to explain such circumstances completely. Any explanation should be sent directly to the financial-aid office of the colleges the student is applying to.

Once completed, the form is sent to a central agency, which evaluates it and sends the evaluation to the colleges and other agencies requested by the student. Four to six weeks after filing the FAFSA, the student will receive a Student Aid Report. The report will summarize the information you have put on the FAFSA.

Check it for accuracy and make any necessary corrections right on the report. The report will also indicate if you are eligible for Pell Grant, and will include your Effective Family Contribution. Just below the date on the top right corner of page one, you will see the letters EFC, followed by a set of numbers. This number represents the family contribution that is being sent to the colleges and state scholarship agencies, as well as being used by the Pell Grant Program.

When the form is received by the financial-aid officer, the information is reviewed and any necessary adjustments are made to the evaluation. Once the amount the family can pay is finally established, it is matched against the costs of the college, to determine if the student demonstrates financial need. At this point the financial-aid officer would notify the student of his or her financial-aid award or indicate that the student was not eligible for aid.

More and more students enrolled in college today do not come from the traditional 18-21 age group, but rather are older students who have returned to school. These students are often independent of their parents and, in many cases, are married and have families of their own. Such students may apply for financial aid and their eligibility for aid would be based on their own financial circumstances rather than on the basis of their parents' finances. However, in any program using federal funds, a student must meet one of the following criteria to qualify as an independent student:

1) Be at least 24 years old by December 31, 2000.
2) Be an orphan or ward of the court.
3) Be a veteran of the Armed Forces of the United States.
4) Be an individual with legal dependents other than a spouse.
5) Be a graduate or professional student who will not be claimed as an income tax exemption by his or her parents for the first calendar year of the award year (e.g., calendar year 2000 for the award year 2000-2001).
6) Be a married person who will not be claimed as an income tax exemption by his or her parents for the first calendar year of the award year.
7) Be a student for whom a financial-aid administrator makes a documented determination of independence because of other unusual circumstances.

In the case of parents who are divorced or separated, the parent with whom the applicant lives should file the FAFSA. The form should show only the income, assets, etc. of this parent, but must include any alimony or child support payments received from the other parent. Individual colleges however, may ask for information on the other parent for use in awarding their own funds.

If the parent of the applicant has remarried, the stepparent's income must be included on the Free Application for Federal Student Aid if the student lives with the stepparent.