All the financial aid forms you fill out, and any corresponding documentation, are used to determine your ability to pay for your education. Because your ability to pay for school is based on your income and assets, you should inform the financial aid office in writing if you have any other special circumstances that will affect your ability to pay for your education and increase your financial aid eligibility.

A school will put a financial aid package together for you only after you have been admitted. The school will determine what kind of aid you will be eligible for—sometimes, a combination of merit-based and need-based assistance. Merit-based financial aid is awarded on the basis of your personal achievements, academic record, work experience, and other factors. Need-based aid is awarded on the basis of how much money you need to pay for the degree, compared with your financial resources. There are also some loans that do not require you to demonstrate need, including the unsubsidized Federal Stafford Loan.

"Financial need" is the difference between what has been determined to be the amount you can pay toward your education and the total cost of that education. The total cost of your education is a figure that the school determines, and it may be based on a more modest budget than you would create. For example, the school may calculate the cost of your housing assuming that you will share an apartment, or calculate the cost of transportation assuming that you will take the bus to class. It is important to understand that the school expects you to make some adjustments to your lifestyle to attend business school. If you have an expensive car that you are making payments on, the school will likely consider that to be your choice and not something financial aid will cover. Also, consumer debts cannot be calculated into a financial aid budget.

In general, your financial resources determine the amount of financial aid available to you. These resources could include your income—and the income of your spouse, if you are married—and any assets you may have. Because you are a graduate student, most schools consider you to be an independent adult, but some schools may require financial information from your parents or guardians in order to determine your eligibility for some forms of aid.

Look at the financial aid sections of school Web sites to find out what criteria the schools use to determine financial need.

To apply for need-based assistance, you must file one or more need-analysis forms, which are used to calculate your ability to contribute to the cost of your education. All federal student aid programs (in the United States) now require that you file a Free Application for Federal Student Aid (FAFSA). In addition, many schools require an additional application to determine your eligibility for school scholarships, fellowships, and loan programs.

Once you have been approved for financial aid, a school will send you a letter informing you of its decision on aid. You will likely have options in borrowing the money. Some schools will lend the money to you directly, and some will recommend preferred lenders for you to contact. You should study the different choices in lenders carefully and look at such factors as interest rates, servicing agreements, and other features to make the best decision. If you are awarded a loan or loans, you will be required to complete a promissory note for each loan you accept. Some schools certify the loans electronically, whereas others will request that you complete a loan application. In most cases, the lender will send checks directly to your school.

You must reapply for financial aid each year you wish to receive it.

This is an area that can be confusing to students. In most cases, your school certifies your eligibility for the loan, but a bank or another financial institution actually loans you the money. So, in order for you to get a loan, the lender has to approve you as a good credit risk. The fact that you have been accepted to business school may not be enough if you have a credit problem. A lender will look at the amount of debt you already have, as well as your payment history on those debts.

Well before you start applying to business school, you should find out about your credit rating and see if there are areas you need to clear up. You should then take appropriate action to present the best credit history possible. Here are links to the three major credit-reporting agencies to help you check your credit history:

Equifax www.equifax.com
Experian www.experian.com
Trans Union www.transunion.com

Some schools may ask for supplemental documentation such as your most recent income tax form before they will consider awarding financial aid. If tax forms are a specific requirement, be sure to ask which forms are needed and for which year they are requested.

Financial aid information and application forms (including the FAFSA) are available from each school's financial aid office. Most schools also have Web sites on which all the financial aid requirements are listed. It is important to check with each school to which you are applying to find out their instructions for filling out forms. Read the forms carefully before applying, because the financial aid application process can be different from school to school.