How Financial Aid Works -by College Board
How Financial Aid Works -by College Board
by Sheri Schultis
November 09, 2005
How Financial Aid Works -by College Board
The financial aid system works on the idea that everyone should be able to afford college ... that every family should contribute as much as they can .... and that financial aid should make up the difference. How do financial aid programs decide how much your family should contribute? The answer is EPC, or Expected Family Contribution.
Who determines the EFC? The figure is determined by the federal government and used by individual colleges and universities.
What's the EFC formula? The federal government and financial aid offices use "need formulas" to analyze your family's financial circumstances (including factors like income, assets, and family size) and compare them proportionally with other families' financial circumstances.
How much is your financial aid? Financial aid is based on "demonstrated financial need" and you prove that need in your financial aid application. The difference between your EFC and the total cost of college equals your eligibility for need-based financial aid. It works like this:
Total Cost of college - Expected Family Contribution = Federal Eligibility Financial Need
How do you pay your EFC? Most families can't pay the EFC out of their current income alone. But, not to worry -- the formulas assume that families will need their contributions through a combination of savings, current income, and loans.
Information taken from CollegeBoard -- The College Dream, www.collegeboard.com
How Financial Aid Works -by College Board
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