The financial aid application process is designed to determine a family’s contribution to the cost of college attendance: tuition, room, board, fees, and—in many college budget computations—transportation, books, supplies, and spending money. This figure is then compared with the total cost of attending the college. If the “family contribution” is less than the college’s cost for a year, the difference is the “financial need.” Some colleges will meet the full demonstrated financial need figure with an aid “package.” Many colleges are not able to meet full need, but will offer aid at some percentage level of need. This practice is called “gapping.” We encourage utilizing online calculators to gain a sense of what a family will be expected to contribute towards a college education. Beginning in October of senior year, it is crucial to discuss the specifics of outside scholarships with your counselor.
Using the data provided on the FAFSA and PROFILE, aid offices analyze a family’s ability to pay for college costs. The formulas used to determine ability to pay are similar from college to college, but each aid office can use professional judgment in its analysis, resulting in differences among financial aid awards. Financial need is calculated using two methodologies for needs analysis:
Federal Methodology (FM)
The federal government uses the FM to award all federal and state aid, including grants, loans and work-study. This formula uses both parent and student information from the FAFSA to determine need. Income, number in the family, number of students in college, and assets are considered in this formula to determine the Expected Family Contribution (EFC).
Institutional Methodology (IM)
Institutional Methodology is a formula used by many colleges to award their own institutional funds. Some schools will use the PROFILE and/or their own financial aid application, in addition to the FAFSA, to determine aid. Formulas will vary school by school. Many factors may be taken into account, such as medical expenses, elder care, high cost of living areas, past educational debt, and other individual circumstances, which are not considered in FM. This formula often includes home equity as an asset.