Applying for a loan
If you want to be considered for Federal financial
assistance, you must complete the Free Application for Federal
Student Aid (FAFSA). The quickest way to do this is online
at: http://www.fafsa.ed.gov The FAFSA can be filed no earlier
than January 1st of the year you will be attending. However,
the FAFSA may not be the only form you will need to submit.
Incoming freshman may also need to complete the CSS Profile
Application. Many Private colleges require the profile. Why?
Well, it gives financial aid administrators a broader set
of data from which to derive your eligibility for institutional
You also complete the Profile much earlier than
the FAFSA and many schools will provide a financial aid package
earlier than would be possible if you wait to complete the
FAFSA. Check with you college to see if you are required to
complete the Profile. Generally, the Profile application becomes
available in the middle of October. You can register and apply
online at: http://www.collegeboard.org 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. 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. EXAMPLE Sally 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 Sally'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 Sally'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, Sally's unmet financial need is
$3,250. What that means to Sally 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
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. Finally, let's see what else you need to
keep in mind!