Are You Eligible for Financial Aid?

Want to know whether you're eligible for financial aid? The good news is that most students are able to find some much needed financial support, whether in the form of loans, scholarships, or grants.

The financial information you submit on your Free Application for Federal Student Aid (FAFSA) may help determine your aid eligibility. The amount of aid you receive depends on elements such as asset and income information from you and, if you are a dependant student, your family; available federal and institutional funding; the cost of attending the school of your choice; and other variables. Read on for a simplified overview of how financial aid eligibility is determined.

Determining Your Financial Aid

The three basic components in most financial aid package are:

• Cost of Attendance (COA): the amount the school calculates it costs to attend their institution
• Expected Family Contribution (EFC): based on information submitted on your FAFSA, the amount that you and your family are expected to contribute toward your education
• Financial need: the total anticipated amount of funding you need to meet the cost of attending the institution

The basic formula is [COA - EFC = Financial need]. Within the basic formula, a number of variables determine your precise aid package.

Institutional Cost of Attendance

Each year, institutional financial aid offices calculate what it costs to attend their school for an academic year. The COA, which generally does not cover expenses incurred during academic breaks, includes:

• Tuition and fees: a specific amount, calculated both for in state and out of state residents
• Room and board: an average for off-campus housing and food or an on-campus dorm and dining hall meal plan
• Personal expenses: items such as laundry, clothing, toiletries, and household items
• Books and supplies: an average figure for all academic majors
• Transportation: some schools with high commuter enrollments include an average estimate for transportation

Schools usually have specialized COAs that may include different expenses for undergraduate and graduate students, living on-campus or off-campus.

Determining Expected Family Contribution

Your EFC is calculated using income, asset, and other information you submitted on the FAFSA. If you are a dependent student, your parents' information is also taken into account. A federally-mandated need analysis formula calculates the amount you and your family are expected to contribute toward your education. The EFC includes:

• Parent/Guardian contribution: if you are a dependent student (as defined by criteria on the FAFSA), your parents or guardians may be expected to pay some, or possibly all, of your COA.
• Student contribution: whether you are a dependent or independent student, the amount you are expected to contribute toward your COA is based on your own income and assets.

Parent Contribution

The following factors determine your expected parent contribution:

• Parental income and assets
• Your parents' age (the closer they are to retirement, the more assets are protected)
• How many of your siblings are attending college at the same time
• The number of people in your family

With your financial aid package, you receive information about loan programs, which allow your parents to borrow the parent contribution.

Your Student Contribution

Your expected student contribution is calculated using the income and asset information you submit on the FAFSA, but your school may expect you to contribute a minimum amount to your education. If you don't have sufficient savings or income, you generally have the option of borrowing your contribution through federal educational loan programs. Additionally, many schools have student employment offices that help students find employment and internship opportunities both on and off campus.

Calculating Financial Need

The basic formula, [COA - EFC = Financial need], determines the amount of financial aid for which you are eligible. The following variables can also affect the amounts and types of aid you receive from the educational institution:

• Amount of funding you receive from other sources--federal and state grants, scholarships, VA benefits, and employer financial aid are a few examples of sources that might provide funding
• Available financial aid--some schools may have substantial funding for grants, loans, and scholarships in addition to federal and state funds

Due to the steadily increasing cost of education and the finite amount of funding available to meet those costs, students may find a gap between the cost of education and the grants, loans, and scholarships available. Some types of aid, such as federal grants, are entitlements for which students are eligible regardless of where they attend school. At the institutional aid level, available funding may change yearly, and in most cases, colleges and universities try to target their financial aid funds to those with the highest level of need.

Choosing Your Financial Aid Plan

Be sure to complete your financial aid application at each of your top schools by the appropriate deadlines. Once each school financial aid office has reviewed your completed financial aid application, they will send you a financial aid package prior to the deadline for making a final admission decision. In most cases, your EFC is the same regardless of which school you choose, but other elements of the aid package could depend on the institution's available funds. More expensive colleges and universities generally offer you more total financial aid, but total aid is not necessarily the best measure of which financial aid offer is the best. Higher cost schools often expect you to take out more loans, while lower cost schools may cover more of your financial need with grant funding. Examine your financial aid offers carefully, taking these elements into account, before you make your final decision.