Financial Aid Notes

Needs-based financial aid programs are awarded to students and families who display a financial need.

The government calculates financial need based upon the following formula:

+ (add) Total cost to attend college (tuition, books, housing, etc.) - (minus) The "Expected Family Contribution (EFC) " towards the cost of education for 1 year     = (equals) Eligible Financial Need

To be considered for needs based financial aid, both parent and student must submit the FAFSA form

The FAFSA form is completed by both parent and student for dependent status; and by the student and spouse for independent status.

The FAFSA form collects information about your financial position and compares it with your filed IRS forms.

Step 2 has more information about the FAFSA form

The government uses the submitted FAFSA form to calculate "Expected Family Contribution" (EFC)

The EFC is a measure of the family's financial strength and the amount of resources the family has available to pay for education.

The government looks at 5 areas to calculate EFC:

1. Assets
   includes stocks, mutual funds, annuities, trusts, US savings bonds, bank cash accounts, 529 plans, prepaid tuition plans, investment real estate, and other family holdings
   
   parent assets are assessed at 5.6% of the value
   student assets are assessed at 35% of the value
   
   
2. Income
   how much money the parents (or spouse) AND the student make
   
   Certain amount of the parent's income is protected based on the size of the family. Anything over that amount is then assessed on a sliding scale.
   
   The student's income is protected to a certain level. Anything over that amount is assessed at a higher rate, usually around 50%.
   
   
3. Household Size
   the number of dependents in the home that are being supported by the parent or student
   
   
4. Number in College
   the number of people within the household who are attending college
   
   
5. Age
   how close are the parents age to retirement
   
   
   

Your assets and income are the factors that have the biggest impact in calculating EFC.

The EFC is calculated according to a formula established by Congress.

• About Assets:
  parent assets are assessed at 5.6% of the value
  student assets are assessed at 35% of the value
  
  If the parent's assets are valued at $100,000, about $5,600 will be added to the formula that calculates EFC.
  
  If the student's assets are valued at $10,000, then about $3,500 will be added to the formula that calculates EFC
  
  
• About Income:
  a certain amount of the parent's income is protected based on the size of the family. Anything over that amount is then assessed on a sliding scale.
  
  The student's income is protected to a certain level. Anything over that amount is assessed at a higher rate, usually around 50%.
  
  These income assessments are then added to the formula that calculates EFC.

Download the EFC booklet for more information:
information on EFC (PDF file)

The financial aid office of the school you will be attending calculates the total cost of attendance

and then subtracts the EFC that the government calculated based on your FAFSA form.

The remaining cost left over (if any) is the amount of financial need the student qualifies for, adjusted by other financial aid assistance the student expects to receive (such as school scholarships, grants, etc.).

+ (add) Total cost to attend college (tuition, books, housing, etc.) - (minus) The "Expected Family Contribution (EFC) " towards the cost of education for 1 year     = (equals) Eligible Financial Need

The financial aid administrator will put together a financial aid award package

That comes as close as possible to meeting your need — since funds are limited, the amount awarded may not cover the full cost of college.

Students often must consider other forms of financial aid assistance (such as loans and work study) to supplement the difference between financial need and financial aid awarded.

Examples: see student financial aid options

Some college institutions (mostly private institutions) may use their own methodology in calculating financial need:

You need to check with your college to determine what methodology that is in use —

link for more information and an application: information on CSS® Profile from www.collegeboard.com