How Do Schools Calculate Your Financial Aid?

One of the questions we receive most often is: “Why didn’t I get more money for school? It’s especially frustrating when you have no idea how a school decided on your aid offer.  Hopefully, this information will shed some light on how schools calculate your financial aid.

It all starts when you submit your Free Application for Federal Student Aid (FAFSA®) form. Once we (Federal Student Aid) process your application (it takes about three days if you submitted it online), we make your information available to all of the schools you listed on it. Each school then uses your FAFSA information to determine how much aid you are eligible to receive at that school. Each school has its own schedule for awarding financial aid. You must check with each school to find out when you can expect to receive an aid offer.

Schools determine financial aid offers based on three factors:

1. Enrollment Status (full-time, half-time, less than half-time, etc.)

Your enrollment status will impact the amount and types of aid you qualify for. For example, Direct Loans are available only to students enrolled at least half-time, and Federal Pell Grant amounts are partially determined by your enrollment status.

2. Cost of Attendance (COA)

Think of this as your school’s sticker price. Your COA is the estimated amount of money it will cost to go to a particular school. This figure is determined by your school and should be available on the school’s website. If your enrollment status is at least half-time, your COA estimate includes

  • tuition and fees,
  • room and board,
  • books, supplies, living expenses, transportation, loan fees, and more.

Find more details about what’s included in cost of attendance.

Keep in mind that your COA will likely be different at each school, since some schools are more expensive than others.

3. Expected Family Contribution (EFC)

The information you provide on the FAFSA is used to calculate your Expected Family Contribution (EFC). The EFC is not necessarily the amount of money your family will have to pay for college, nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate how much financial aid you are eligible for at that school.

The EFC is calculated using a formula established by law. The formula can be difficult to understand; just know that many factors are taken into account—not just income. If you have questions about your EFC, contact the financial aid office at your school.

Schools then use this formula to determine your financial need:

Cost of Attendance (COA)

Expected Family Contribution (EFC)

= Financial Need

Once each school has determined your financial need, you will receive aid offers from the schools you’ve been accepted to. Remember that all of your aid offers will be different. Each school has a different ability to meet your financial need—it all depends on the funds available at each school.

The offers will include the types and amounts of financial aid you’re eligible to receive from federal, state, private, and school sources. If you need help comparing the offers you received from different schools, use the CFPB’s financial aid offer comparison tool.

Be sure you understand what each type of aid is and whether or not it needs to be paid back. If you have any questions about an offer, you should talk to a financial aid advisor at the school. No matter how much aid you’re offered, it is always up to you to decide how much of a student loan you want to accept. The rule of thumb is that you should only borrow as much money as you absolutely need to pay for the school year. You can always tell your school that you want to borrow less than what is offered.

You may also be interested in these 7 options to consider if you didn’t receive enough financial aid.


Nora Onley is a Management and Program Analyst for Federal Student Aid.

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