The Financial Aid Package
The Financial Aid Package Formula
The basic formula that every school uses to determine the amount of aid they offer is:
Cost of Attendance (COA) – Estimated Family (or individual) Contribution (EFC) = Financial Aid Package.
What is Estimated Family Contribution (EFC)?
The Estimated Family Contribution (EFC) is calculated based on a family unit's income and assets with a keen eye toward significant expenditures (e.g. another child in college). Other variables include a particular college's admission and aid policies, the amount of aid available at any given college, and what might be termed a philosophical approach towards special financial circumstances. Some colleges offer very creative payment plans, such as paying a fixed sum on a monthly basis.
On average, EFC accounts for 1/3 of college expenses, and with the cost of attending college expected to triple or even quadruple over the next twenty years, saving as much and as early as possible becomes a greater imperative1.
The information to determination the EFC is completely derived from your Free Application for Federal Student Aid or FAFSA.