You’ve taken all the necessary steps to apply for financial aid, such as filing the FAFSA early. Time to wait for a response on your financial help package.
You could notice that you received various financial assistance offers from various institutions if you applied to several. Therefore, how is financial aid determined? Let’s look at it.
Who Establishes the Amount of Money You Will Need?
Your eligibility for financial aid is determined by the financial aid office at each college. How do they make this decision? They take a number of things into account. Next, we’ll go into greater detail on this.
Elements Used in Aid Calculations
Your ability to get financial aid is based on a number of variables. Your Expected Family Contribution, the academic year you are in, your enrollment status, and the cost of attendance are all included in this.
Aid that is not based on need is computed somewhat differently. To examine the differences, let’s delve a little deeper.
Cost of Attendance (COA): What Does It Mean?
Your annual college expenses are calculated as your cost of attendance. Your COA is calculated by two- and four-year colleges to represent your cost of attendance for the fall and spring semesters. Various other programs might display your COA for a time frame that is either longer or shorter than a year.
Your COA accounts for all expenses you will incur while studying, not just tuition. For instance, it might consist of:
- Education costs
- meals and lodging
- books and materials
- Fees for transportation loans
- Childcare expenses
- the price of a disability
- study abroad initiatives
- Personal costs
What Should the Family Expect to Contribute? (EFC)
The projected amount your family will give toward your education is known as the Expected Family Contribution. The data you provide on the FAFSA is used to determine your EFC. The figure includes both taxable and non-taxable income, assets, and benefits for your family. It also takes into account the size of your family and the number of relatives the money must provide for.
Your EFC number can be found in the Student Aid Report you get after submitting the FAFSA. The EFC is used by colleges to establish your eligibility for need-based funding.
What Is Aid Based on Need?
Aid based on need is what it sounds like. Students that require financial assistance are given financial aid.
Your school uses the following formula to determine your financial need:
Financial Need = Cost of Attendance (COA) – Expected Family Contribution (EFC)
The first thing the financial aid office does is calculate your cost of attendance at their institution. The COA is then reduced by your expected family contribution. This explains your financial situation and the amount of need-based aid you are qualified for.
Your need for money highlights the disparity between the cost of college and what your family can afford to pay. Your financial aid package from colleges can help close that difference.
Financial aid cannot be given to you in excess of what you actually require. Your financial need is $10,000, for instance, if your COA is $20,000 and your EFC is $10,000. You are not qualified for additional need-based aid than $10,000.
Need-based financial aid is provided to students through a number of federal programs. Here are a few examples:
- Government Pell Grant
- Federally-funded Additional Educational Opportunities Grant
- Government Work-Study
Non-Need-Based Aid: What Is It?
Financial help is not always based on necessity. Non-need-based help is a type of assistance that is not determined by your EFC. Your school subtracts any financial help you have received from your cost of attendance to determine non-need-based funding. Different groups, such as for-profit businesses or private firms, may offer financial aid.
Your non-need-based help is calculated using the formula below:
Financial Aid Awarded Up to Now x Cost of Attendance (COA) = Eligibility for Non-Need-Based Aid
You are qualified for up to $15,000 in non-need-based help, for instance, if your COA is $20,000 and you have received a financial aid award of $5,000.
Additional Information Regarding Financial Aid
While you wait to learn about your financial aid package, keep the following in mind:
- You are not required to have all of your financial needs met by colleges, and they probably won’t.
- Colleges could provide you with a variety of aid options. This may take the kind of grants, scholarships, loans, or work-study opportunities.
- The amount of financial aid your college offers you is influenced by outside scholarships. Your college must decrease your financial aid if you receive an outside scholarship. You should consider whether accepting the scholarship is worthwhile for you. Scholarships, loans, or both may be reduced by your college.
If many institutions have offered you financial help (congrats! ), compare your unmet needs at each institution. This can assist you in choosing which financial aid offer to accept. Always keep in mind that any loans you accept will require repayment.