How Colleges Award Financial Aid

To figure out how much college will cost, you should know how colleges award financial aid.  Most financial aid is based on need, determined by a specific formula developed by the federal government.  A college's net price is determined by a formula as well.

  • Financial need
  • Net price

Financial Need

Most financial aid is need based.  Each student's need is based on an analysis of student's and family's financial need and calculated using this formula to the right.

It's important to note that while financial aid is based on need, it may not fully cover your financial need.


Cost of attendance (COA) is made up of all the direct and indirect costs of attending a college.

Direct costs are paid directly to the college:

  • Tuition
  • Fees
  • Room and board

Indirect costs are expenses not necessarily paid directly to the college, but are part of attending college. While each college provides an estimate, these costs vary depending on your personal requirements. Indirect costs may include:

  • Books
  • Transportation
  • Personal care items
  • Spending money
  • Dependent care expenses
  • Expenses related to a disability

Because tuition and living expenses differ from college to college, the cost of attendance can vary widely among colleges. 


Expected Family Contribution (EFC)  is the amount of money a family can reasonably be expected to contribute toward the student's college costs.  It is determined by a federal formula incorporating information you provide on the Free Application for Federal Student Aid (FAFSA) including:

  • Your family's income (taxable and untaxable)
  • Assets and benefits (for example, unemployment or Social Security)
  • Family size and the number of family members who will be attending a college

Your EFC stays the same, regardless of the college selected.

 College ACollege BCollege C
COA 5,000 10,000 30,000
EFC 4,000 4,000 4,000
Financial Need 1,000 6,000 26,000


Some colleges provide flexibility for special circumstances, such as unusual medical expenses or unemployment. If you have unusual circumstances, be sure to discuss them with the college financial aid administrator and provide any required documentation.

After completing the FAFSA, you -- as well as the colleges you indicate on your FAFSA -- receive your EFC. Funding from other sources, such as private scholarships, employee tuition assistance or other financial resources may affect your financial need.

Net Price

The actual or net price that you pay for college can be much different than the published or "sticker" price -- because of financial aid.  Net price is determined by the formula to the right.

Before deciding which college to attend, make sure you calculate the net price.  It may be that a college with a cost of attendance that appears to be out of your price range offers more gift aid, making the actual cost affordable.

To help you determine your cost, colleges are required to provide net price calculators.

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