The way financial aid is awarded may seem like a mystery. In many ways, it is. But understanding how the different steps work may help demystify the process:
Most colleges and universities require you to fill out the U.S. Department of Education's Free Application for Federal Student Aid, commonly known as the FAFSA. In order to apply for federal student aid, you must meet certain eligibility criteria, such as being a U.S. citizen and enrolled in a degree program at least half-time. It's important to remember to visit the financial aid website of any college where you apply in order to understand other requirements they may have, such as submitting another application like the CSS PROFILE in addition to the FAFSA. All institutions have different requirements for distributing their financial aid, so make sure you know exactly what you must submit.
In terms of how much money you'll get from a college, again it varies by school. Eligibility will be dependent on something called your Expected Family Contribution (EFC). When you fill out the FAFSA, behind the scenes it calculates the EFC, so once you submit it, you'll know what your EFC is. The financial aid administrators at your school then take your EFC and subtract it from the Cost of Attendance (COA) of the school, which determines your financial need. This helps establish how much need you have and whether you will qualify for federal need-based aid, such as the Pell Grant or subsidized loans. If you're interested, the Department of Education explains in detail how the exact formula for calculating EFC works.
You may be curious what Cost of Attendance (COA) includes. This is a calculation by your school of how much it will cost to go there for the school year. This includes an estimate of tuition and fees; room and board (or living expenses if you don't live in residence); books and supplies; and transportation. Depending on your situation, it can also include allowances for childcare and costs related to a disability.
Institutions will award their own institutional aid dependent on their calculations. A good resource to use to figure out what your aid package might look like at a specific school is College Abacus, which uses data from institutional net-price calculators to help give personalized estimates of aid packages.
And lastly, most institutions will not meet your full financial need, or if they do, it will be through student loans. So, for example, you could have an EFC of $0, an indication that the federal government has calculated your family is unlikely to be able to contribute monetarily to your education. But if you apply to a school that is $40,000, you could still face a steep bill after federal financial aid and other aid sources are taken into account. For this reason, you should carefully consider which schools to apply to, and try to apply to a few schools at different price points to keep your options open.
Trying to keep track of all the different financial aid terms? Refer to Noodle's Financial Aid 101, a glossary of the essential vocabulary you need to know when applying for aid.