How Is Financial Aid Calculated?

To get the most aid possible, you’ll want to understand exactly how universities calculate financial need

A college education is one of the most expensive items out there – and we all want to get as much help as possible. However, before you start applying, you need to know how universities figure your need – and how to make that number as high as possible.

Total College Cost

There are a few simple steps that each reviewer will go through. First, they’ll determine exactly how much you’ll need for college.

That’s not just tuition. It encompasses:

  • Room and board
  • Tuition
  • Books and supplies
  • Transportation
  • Personal expenses

As you can imagine, that gives you a much larger number – and one with a few variables. You should check with individual colleges to find out what dorms and meal plans will run, what allowances they make for personal expenses, and how much most students spend for books and other assorted sundries at school.

As you can imagine, this varies wildly – if you’re going to NYU in the middle of Greenwich Village, almost everything will be multiples higher than, say, the University of Indiana in Bloomington.

Expected Family Contribution

Your Expected Family Contribution (EFC) is exactly what it sounds like – the amount your family is expected to put towards college. There’s a rather complex formula for determining your EFC, but the basics are this: the higher your salary, and the more assets you have, the more you’ll be expected to contribute.

There are plenty of ways to reduce your family contribution – see our article, How To Reduce Your Expected Family Contribution.

The reason you want to reduce your EFC is, the less you’re expected to pay in, the more financial aid you’re eligible for. The first step in determining your financial need is subtracting your EFC from the cost of college. But it’s not the last.


After you see how big the gap between your cost and EFC is, you then move on to the next step – grants. These include

  • Federal Pell Grants
  • State Grants
  • Private Grants

There are innumerable grants and scholarships out there, and with any luck, you’ll cover your entire gap here. However, most people don’t – that’s when you move onto the next step.


If you’ve still got a ways to go, you can grab federal loans. Some have great rates – some don’t. Almost all allow you to defer payment until after graduation. Some of the most popular are the Perkins and the Stafford Loans.

However, once you’re receiving loans, you’ll usually be expected to contribute more yourself – through work-study programs. These are usually low-impact campus jobs that help you get your spending money together – though, if you’re very short on cash, they may be paying for core costs like tuition.

That, at heart, is the entire financial aid decision-making process. Cost – EFC = Need. Grants, loans, and work-study programs keep pouring in until your need is met. The higher your need, the more you’re eligible for.

And the more you’re eligible for, the more money you can get for college – and the less you have to shell out yourself.

To your successful college search,

Scott Weingold

Visit’s reports on navigating the financial aid process or simply


Related Articles:

Do 529 Plans Hurt Financial Aid?

How to Write the Financial Aid Appeal Letter: 6 Key Strategies

How to Pick the College That’ll Give You the Best Financial Aid Package

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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News,, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.