How my eligibility for financial aid determined
"How my eligibility for financial aid determined" submitted by SchoolGrantsfor Editorial Team and last updated on Friday 22nd July 2011
Colleges use the processed data to determine your eligibility for financial aid. Whether you complete the FAFSA or the Profile, the Expected Family Contribution arrived at by putting your household, demographic and financial data through a formula is the basis for determining your award.
Well, the data you submit on the FAFSA goes to a place called CPS (Central Processing System) where it is compiled and then a formula is applied. The formula the Department of Education uses to compute your EFC is called Federal Methodology. If you'd like to learn exactly how the data is treated you can request a copy (for free) of The EFC Formula Book by calling 1-800-4FED-AID. Ask for The EFC Formula Book by academic year (ex. "I would like a copy of The EFC Formula Book for the current academic year.")
The EFC is basically what the government is telling us how much you should be able to contribute toward education based on your state of residence, household size, number in college and student and parent income and asset information. Next, the school you attend establishes a Cost of Attendance (COA). The COA is composed of tuition, room and board, fees and estimated expenses (books, supplies, personal).
The EFC and COA are used to determine your financial need. Financial need is calculated by subtracting the EFC from the COA and is a guideline in determining how much need based financial aid you may receive. The equation looks like this:
COA - EFC = Financial Need
The aid office then uses the "need based" resources they have available to try to "meet" your financial need. Next, let's look at an example to demonstrate!
Mary files her FAFSA and a few weeks later receives her Student Aid Report (SAR). She notes that the EFC on the SAR is "01200". Her school has a COA of $18,000. So, using the formula above we find that Mary's need is $16,800.
The financial aid office then uses this information to construct a financial aid package. For example, the college offers the following:
$5,000 Institutional Grant
$1,550 Federal Pell Grant
$1,000 Federal SEOG
$3,500 Federal Subsidized Stafford Loan
$1,000 Federal Perkins Loan
$1,600 Federal Work Study
Total aid: $13,650
What this tells us is that if Mary's need for financial aid is $16,800, the financial aid office was only able to meet $13,650 of that. The difference between the two is called unmet need. In this case, Mary's unmet financial need is $3,250. What that means to Mary is that she will have to contribute more than her EFC in order to meet her educational costs. Unmet need is a common occurrence in financial aid packages. The school is under no obligation to meet your need for financial aid and, in many cases, is simply unable to do so given the types and amounts of funding at their disposal. What the financial aid office does, to the best of its ability, is to meet as much of your need with the resources it has available. Those resources may include scholarships, grants, loans, and work.
Once the college has received your FAFSA data, they may still need additional information to complete your award. If you are selected for verification, the school will request your parents and your Federal Income Tax Returns and W-2 Wage Earnings Statements as well as a Verification Worksheet. You must provide this information. If you refuse, the college will not process your financial aid.
If you plan on taking Stafford or Perkins loans, you will also need to complete promissory notes for those loans. The college you attend will provide you with specific information on how to complete this part of the process.
That's about it. You should also spend some time searching for and applying to EVERY source of outside funding you feel you are eligible for.
Remember, CAREFULLY READ everything the college sends you. Respond promptly to requests and, most importantly, if you have questions or simply don't understand what is being asked of you, phone the financial aid office and ASK! They'll be more than happy to provide a helping hand!