How Schools Calculate Financial Aid


How do schools calculate financial aid?

For nearly a decade, on of the most popular questions we receive most often is: “Why didn’t this school give my child more money?

It’s frustrating that schools do not have a uniform financial offer document that outlines how a school decided on your aid offer and you are left on your own to decode your award.

Hopefully, this post will provide some insight into how schools calculate your financial aid.

First, it all starts when you submit your Free Application for Federal Student Aid (FAFSA®) form and/or CSS Profile form.  Each school then uses your FAFSA/CSS Profile information to determine how much aid you are eligible to receive at that school.

Each school has its own schedule for awarding financial aid and you will want to check with each school to find out when you can expect to receive an aid offer. 

Financial aid offers are based on three factors:

1. Enrollment Status (full-time, half-time, less than half-time, etc.)

Your enrollment status will impact the amount and types of aid you qualify for. For example, Direct Loans are available only to students enrolled at least half-time, and Federal Pell Grant amounts are partially determined by your enrollment status.

2. Cost of Attendance (COA)

COA = sticker price.  Your COA is the estimated amount of money it will cost to go to a particular school for that year. This figure is determined by your school and should be available on the school’s website. Your COA estimate includes

  • tuition and fees,
  • room and board,
  • books, supplies, living expenses, transportation, loan fees, and more.

Find more details about what’s included in cost of attendance.

Keep in mind that your COA will be different at each school since most schools have different cost structures.

3. Expected Family Contribution (EFC)

The information you provide on the FAFSA/CSS  is used to calculate your Expected Family Contribution (EFC). The EFC is a guidepost schools use to figure out how much aid to give a family.  This number is not necessarily the amount of money your family will have to pay for college. Many families pay more than their EFC because they miss some key steps in the college admissions and college funding process.

The EFC is calculated using a formula established by law or by the institution. There are several methods (three to be exact) used for calculating your EFC and it is important to know which methodology a schools uses.

There are key differences between the federal, institutional and consensus methodologies which are important to understand if you are looking at strategies to increase your aid. 

The formulas can be difficult to understand; just know that many factors are taken into account—not just income. If you have questions about your EFC, contact the financial aid office at your school or please feel free to schedule a free 30 minute call with someone on our team.

Schools then use this formula to determine your financial need:

Cost of Attendance (COA) – Expected Family Contribution (EFC)  = Financial Need

Once each school has determined your financial need, you will receive aid offers from the schools you’ve been accepted to. Remember that all of your aid offers will be different. Each school has a different ability to meet your financial need—it all depends on the funds available at each school.  Many times your first offer is not the best offer since there are other factors outside the formula that go into a schools decision making process.

You should compare all your offers and have your advisor help you evaluate if they are good or could be better. Many times a family is in a position to “appeal” an award based on their situation.

Don’t leave money on the table or overpay on college.  If you have any questions, please feel free to schedule a free 30 minute call.

About the author 

Stuart Canzeri

Stuart Canzeri is a well-respected professional in the world of college funding and financial planning. He's known as the "College Financial Guy" on the internet, where he's helped countless families save significant money on college costs. With more than 20 years of experience in the field, he's become an expert in investment, tax planning, and overall financial management.

Stuart has a strong educational background, which includes a Bachelor of Arts degree from Tulane University, a Master of Business Administration degree from Mercer University, and a Certified Financial Planner certification from the University of Georgia. These credentials allow him to effectively work with a variety of clients, including business owners and corporate executives.


College Financial Award Packages, EFC, Expected Family Contribution

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