Until we were in the world of financial aid, we always wondered
how financial aid eligibility is determined. Believe it or not, basic
financial aid eligibility is pretty straightforward. It’s the
college’s packaging policies (the way they award the aid for
which a student is eligible) that get complicated. That’s for
another day. Let’s take a look at how your eligibility for
financial aid is determined.
Colleges use the processed data from the Free Application for
Federal Student Aid (FAFSA) and/or the CSS Profile to determine your
eligibility for financial aid. Whether you complete the FAFSA and, if
required, the Profile, the basis for determining your award is a
number referred to as the Expected Family Contribution (EFC). Your EFC
is determined by your household, demographic and financial data among
The EFC is a measure of your family’s ability to pay for college
based on student and parent income and asset information, your state
of residence, household size, and number of household members in
college. You can request a free copy of the EFC Formula by calling
1-800-4FED-AID and asking for the current SFA Handbook or on the
Department of Education’s IFAP
The school you attend establishes a Cost of Attendance (COA) for
the academic period for which you will be enrolled. The COA includes
tuition, room and board, fees and estimated living expenses including
books and supplies.
COA – EFC = Financial Need
Financial need is a official term for how much need-based
financial aid you’re eligible for. Your financial need is
calculated by subtracting the EFC from the COA. In order for you to
receive need-based aid, your Cost of Attendance must be greater than
your Expected Family Contribution.
The financial aid office at your school will use the need-based
resources they have available to try to meet your Financial Need.
Here is a sample calculation:
Sally filed her FAFSA online on January 15. On February 10, she
received her Student Aid Report (SAR). The EFC on her SAR is
“01200″ (which means $1,200). Her school has a COA of
$24,000. Using the formula above Sally figured out that her Financial
Need is $16,800.
The financial aid office at Sally’s school used this
information to construct a financial aid package for Sally that might
look something like this:
$5,000 Institutional Grant $9,500 Federal Stafford Loan
$1,600 Federal Work Study $1,550 Federal Pell Grant
$1,000 Federal Supplemental Educational Opportunity Grant (SEOG)
$1,000 Federal Perkins Loan Total aid: $19,650
That means Sally’s need for financial aid (after
subtracting the EFC) is $22,800. Since the financial aid office was
only able to meet $19,650 of that, she has an unmet need of $3,150.
Unmet need, a common occurrence in financial aid packages, is the
difference between cost of attendance and the total financial aid
package. In plain language, what that means to Sally is that in
addition to the EFC of $1,200, she will also have to contribute $3,150
for a total of $4,350.
The above is just an example of the kinds of aid that a student like
Sally might receive. You learn more here: Types of Financial
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