Awarding Financial Aid
After submitting your Free Application for Federal Student Aid (FAFSA), you will receive an "award letter" from every school you listed on the application outlining the costs of your school and the amount of financial aid available to you.
The amount of each award is based on a myriad of factors, including, but not limited to:
- Institutional or regulatory policies for minimum and maximum amounts
- Amount of funds available to the institution
- Eligibility of the applicant
- Financial status of the applicant
In an attempt to standardize award letters, the Department of Education recently developed a financial aid shopping sheet to help families better understand college costs and financial aid awards. While not all schools are required to use this format, some schools will provide a version of this in a student's financial aid award package.
Let's take a look at an example. Your financial aid award letter will include the following information in some format:
Estimated Cost of Attendance: $16,000.00
Minus your Expected Family Contribution (EFC): $500.00
Expected Parental Contribution: $400.00
Expected Student/Spouse Contribution: $100.00
Equals Your Gross Financial Need: $15,500.00
Predicted Federal Pell Grant: $4,000.00
Student Assistance Grant: $1,822.00
A Bright Student Scholarship: $3,000.00
Federal Direct Sub Loan: $1,500.00
Federal Perkins Loan: $2,093.00
Federal Work-Study: $2,400.00
Total Award: $14,815.00
From the financial aid award package above, a student would still owe a remainder of $685 ($15,500 minus $14,815), which is a manageable cost to make up for.
The sources of financial aid you receive depend strongly on your family's financial resources. A high EFC indicates that according to the formula used by the Department of Education, you're theoretically able to afford a significant portion of the educational expenses without federal financial aid. In certain cases, students have the option to appeal the award through their financial aid office if they feel more aid is warranted.
Still, whether a student’s federal financial aid package comes up short by $1,000 or $10,000, they can receive a private student loan to help fill the gap.
Learn more about the hidden costs of college which are likely not factored into your total cost of attendance.