Do You Know How Need-Based Aid Works

January 30, 2012

Money For College - Do You Know How Need-Based Aid Works?
by Dr. Kuni Beasley

Need-Based College Aid is a simple mathematical formula:

The amount it costs to go to a particular college MINUS your Estimated Family Contribution or EFC.

Simple enough, but somewhat more complex when you get into the details. Let's start with EFC.

To determine your EFC, you have to file the Free Application for Federal Student Aid or FAFSA. The window to file this starts January 1 prior to the Fall semester you expect to get funding based on that particular application. This means that if you plan to start college in the fall of 2012, the FAFSA submission window starts January 1, 2012 and goes, theoretically, to the 30th of June, 2012 -- to accommodate the entire school year. It is theoretically possible to apply for aid based on the FAFSA into the second semester of the initial year. I don't suggest you push the theoretical bounds.

Based on the FAFSA data -- which most of which is extracted from your previous year's tax return -- you get a dollar figure for the EFC. This figure is what the FAFSA people compute to be what the family should be able to "contribute" towards the cost of education based on some secret government formula. Now, I don't know anybody who ever agreed with the EFC they received, but that's irrelevant to this discussion.

Now, each college has a "cost" figure computed for it. This figure includes tuition, fees, books, room & board and other living expenses. A separate figure is used for those on campus and those not, based on what you submitted on the FAFSA.

You take this cost figure and subtract the EFC and you get the "Need," the amount of money you "need" to attend that particular college. This "need" figure will vary from college to college based on the established cost for that college.

Examples: If your EFC is $6,000 and the cost of the college is $12,000, your "need" is $6,000. If the cost of the college is $25,000, your "need" is $19,000.

At this point the Finical Aid office at the college assembles a "need" package of financial aid consisting of a possible mixture of grants (you don't have to pay back), loans (you have to pay back, maybe), and/or Student Work/Study where you work and get paid while going to college. The actual composition of the package is based on a whole different set of criteria, where there is some wiggle room you can work with the folks at the college financial aid office.

Regardless of your financial situation, you need to file a FAFSA and see what you might be able to get. Far too many people feel that they won't qualify, so they simply bypass the FAFSA and probably pay a lot more than they should have. FAFSA information is available at

Side note: through proper asset positioning some six figure income families have been able to qualify for need based aid at some colleges.  Talk to us, we’ll let you know if you might be able to qualify for need based aid. There is more in the formula than just financial numbers. Check out the FAFSA guide Line-by-line instruction on maximizing need based aid qualifications under the Parents Tab.

Kuni Beasley, Ph. D., College Professor, High School Dean, and College Counselor.
No matter what I wrote above, it doesn't mean anything if you don't get into the college you want or have to go into debt up to your eyeballs to do so. Contact us to see how we can help 1-888-237-2087 ext. 2.


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