Financial need is easy to calculate – right? It’s the Total Cost of Attendance (COA) minus your Expected Family Contribution (EFC). COA – EFC = Need!! That’s straight-forward and easy to understand – right? Wrong!
It is true that COA – EFC = Need is the basic formula used. However, there is a huge variable: your EFC. The amount that a student and family are expected to "contribute" each year can vary by thousands of dollars from institution to institution. Why? Basically because of the way financial information is gathered and how it is interpreted by each institution.
There are two basic formulas used for gathering information and determining your EFC. One formula has been developed by the federal government; and the other by the College Board. The government’s formula is used in the Free Application for Federal Student Aid (FAFSA) and the College Board’s formula is incorporated into the CSS/Profile. All colleges require the FAFSA and approximately 350 of the nation’s most selective colleges also require the CSS/Profile in addition to the FAFSA.
Seems pretty easy so far – your financial information is gathered, calculated, and your EFC is determined. Wouldn’t it be great if it was truly that simple? Unfortunately, it’s not!
After your original EFC is determined (either from the FAFSA, the CSS/Profile, or a combination of both), then it is each school’s job to determine how much money a family can actually contribute and how much money a student really needs to attend. The school’s Financial Aid Officer (FAO) makes that determination.
The college’s FAO uses "professional judgment" to decide what amount of funding each student should receive. How the three building blocks of funding (assets, income, and expenses) are evaluated has a huge impact on the amount and type of financial aid a student is offered.
After all the data has been collected, each school’s FAO then looks at their institution’s own "need" formula. Simply put, this is how bad the school wants an applicant based on their academic accomplishments and other similar qualifications. The FAO then has the "option" of changing the student’s award package as they see fit.