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You’ve done everything on your end to get financial aid, like file the FAFSA early on. Now it’s time to wait to hear back about your financial aid package.

If you applied to different colleges, you might see that you received different financial aid offers from different colleges. So how is financial aid calculated? Let’s take a look.

Who Decides How Much Money You Will Need?

Each college’s financial aid office decides how much financial aid you are eligible to receive. How do they determine this? They take several factors into consideration. We will talk more about this next.

Factors That Go Into Aid Calculations

Your eligibility for financial aid depends on several factors. This includes your Expected Family Contribution, what year you are in school, your enrollment status, and the cost of attendance.

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Need-based aid and non-need-based aid are calculated a bit differently. Let’s dive a bit deeper to see the differences. 

What Does Cost of Attendance (COA) Mean?

Your cost of attendance is the total amount that college will cost you for the year. Two and four-year colleges calculate your COA to show your cost of college for the fall and spring semesters. Other types of programs might show your COA for a period longer or shorter than a year.

Your COA takes into account all costs that you will have to pay for while studying, not only tuition. For example, it may include:

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Transportation
  • Loan fees
  • Child care costs
  • Costs related to a disability
  • Study-abroad programs
  • Personal expenses

What’s the Expected Family Contribution (EFC)

The Expected Family Contribution is the amount that your family is expected to contribute to your education. The EFC is calculated from the information you give when you file the FAFSA. The number takes into account your family’s taxed and untaxed income, assets, and benefits. It also considers your family size and the number of family members that the income must support.

You can find your EFC number in the Student Aid Report you receive after you file the FAFSA. Colleges use the EFC to determine if you are eligible for need-based aid.

What Is Need-Based Aid?

Need-based aid is exactly as it sounds. It is financial aid that is awarded to students who have financial need.

Your school determines your financial need with the following formula:

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

The financial aid office starts by deciding what your cost of attendance is at their school. Then, they subtract your Expected Family Contribution from the COA. This tells them what your financial need is and how much need-based aid you are eligible for.

Your financial need shows the gap between the cost of college and what your family can contribute. The financial aid package that colleges provide you with helps lower that gap.

You cannot receive more financial aid than the amount of your financial need. For example, if your COA is $20,000 and your EFC is $10,000, your financial need is $10,000. You are not eligible for more than $10,000 in need-based aid.

There are several federal programs that award students with need-based financial aid. Here are some of them:

What Is Non-Need-Based Aid?

Not all financial aid is need-based. There is some aid, known as non-need-based aid, that isn’t based on your EFC. To calculate non-need-based aid, your school takes your cost of attendance and subtracts any financial aid that you’ve been awarded. Financial aid can come from a variety of sources, like private companies or non-profit organizations. 

The following formula is used to calculate your non-need-based aid:

Cost of Attendance (COA) − Financial Aid Awarded So Far = Eligibility for Non-need-based Aid

For example, if your COA is $20,000 and you’ve been awarded $5,000 in financial aid, you are eligible for up to $15,000 in non-need-based aid.

Other Things To Know About Financial Aid

There are a few things to keep in mind as you wait to hear about your financial aid package: 

  • Colleges are not required to meet your entire financial need and they likely won’t.
  • Colleges may offer you a combination of different types of aid. This can come in the form of grants, scholarships, loans, and work-study.
  • Outside scholarships impact the amount of financial aid your college offers you. If you win an outside scholarship, your college is obligated to reduce your financial aid package. You’ll want to weigh whether it’s worth it for you to accept the scholarship. Your college may reduce scholarships, loans, or both.

Final Thoughts

If you’ve received financial aid offers from different colleges (congrats!) compare your unmet needs at every school. This can help you make a decision about which financial aid package to accept. Keep in mind that any loans you accept is money that you will need to pay back.