How Aid is Calculated

how to calculate loans

So, you’ve filed your FAFSA ®. and you’ve checked your Student Aid Report to be sure all your information is correct, and now you’re wondering how that data is used to come up with the list of financial aid for which you’re eligible.

If I meet the basic eligibility criteria for federal student aid, who decides how much money I’ll get?

Here’s the short answer:

Your eligibility depends on your Expected Family Contribution, your year in school, your enrollment status. and the cost of attendance at the school you will be attending. The financial aid office at your college or career school will determine how much financial aid you are eligible to receive.

  • The financial aid staff starts by deciding upon your cost of attendance (COA) at that school.
  • They then consider your Expected Family Contribution (EFC) .
  • They subtract your EFC from your COA to determine the amount of your financial need and therefore how much need-based aid you can get.
  • To determine how much non-need-based aid you can get, the school takes your cost of attendance and subtracts any financial aid you’ve already been awarded.

If you’d like the long answer, keep reading!

What does cost of attendance (COA) mean?

Your COA is the amount it will cost you to go to school. Most two-year and four-year colleges will calculate your COA to show your total cost for the school year (for instance, for the fall semester plus the spring semester). Schools with programs that last a different period of time (for instance, an 18-month certificate program) might give you a COA that covers a time period other than a year.

If

you're attending at least half-time, your COA is the estimate of

  • tuition and fees;
  • the cost of room and board (or living expenses for students who do not contract with the school for room and board); 
  • the cost of books, supplies, transportation, loan fees, and miscellaneous expenses (including a reasonable amount for the documented cost of a personal computer);
  • an allowance for child care or other dependent care;
  • costs related to a disability; and/or
  • reasonable costs for eligible study-abroad programs.

What’s the Expected Family Contribution (EFC)?

Your EFC is an index number that college financial aid staff use to determine how much financial aid you would receive if you were to attend their school. The information you report on your FAFSA is used to calculate your EFC.

The EFC is calculated according to a formula established by law. Your family's taxed and untaxed income, assets, and benefits (such as unemployment or Social Security) all could be considered in the formula. Also considered are your family size and the number of family members who will attend college or career school during the year. The EFC Formula guide shows exactly how an EFC is calculated.

Your EFC is not the amount of money your family will have to pay for college, nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate how much financial aid you are eligible to receive.

What is need-based aid and how does my school figure out how much I’ll get?

Your college or career school first determines whether you have financial need by using this simple formula:

Source: studentaid.ed.gov

Category: Credit

Similar articles: