Hey, i just need someone to explain to me how exactly financial aid works. I used this online calculator by the college board and it said
Federal Methodology (FM) Results
Parents' Contribution for Student =
$14,173
Student's Contribution =
$0
Total Estimated FM Contribution =
$14,173
Institutional Methodology (IM) Results
Parents' Contribution for Student =
$13,088
Student's Contribution =
$1,900
Total Estimated IM Contribution =
$14,988
What exactly does this mean? Does it mean that the gov. assumes my family can afford 15k a year and do they pay the rest? Like say for example i go to a college where tuition, dorm, living expenses et cetera costs 40k a year. Do we still only pay the 15k while the gov. helps us out with the remaining 25k? Or how does it work.
Thank you
Federal Methodology basically just determines eligibility for Pell Grant and federal loans. I’m not sure how the College Board’s calculator works, but you can use something called the FAFSA4caster to see what you might get in Pell Grant and/or federal loans.
Institutional Methodology is the college’s own outlook on the matter and determines how the college might help you out financially. So in your example, the college expects you and your parents to pay $15k toward college expenses. The college may offer you FinAid for the difference, or part of it. They have no obligation to give anyone FinAid. The FinAid might include work-study and loans. The FinAid might fall short of paying the difference (known as “gapping”). At very, very selective colleges, you would probably get FinAid to cover the entire difference, sometimes without any loans (“meets full need”).
If you’re eligible for Pell and/or federal loans, that will true at any college and will be part of your FinAid package. The IM part is totally variable depending on the college.
There is a Net Price Calculator on EVERY college website. Run your family financials on those. Do,them for each school as the formula varies.
In terms of need based aid…you won’t be awarded need based aid for that almost $15000. Your family will be paying at LEAST that amount for you to attend college. Most colleges do not meet full need…so that family contribution should be viewed as a minimum you will pay.
The net price calculators are specific to each college. Try those.
The federal methodology EFC number is a number that qualifies you for federal or state grants if it’s low enough.
For example for Pell grant your EFC needs to be less than 5,000 I think. In our state PA you can get a state grant up to EFC of 12,000 I believe. But the amount depends on EFC, Pell, amount of unmet need.
Yes, running net price calculators is a good idea to see what aid a school might offer.
But if a school requires the CSS profile expect to have to pay at least $15k, because they might look at home equity as well.
The OP is a classic example of why Federal Methodology needs to get rid of the acronym EFC. It should deal strictly with determining possible Fed aid.
Of course naive folks are going to very wrongly think that “the government” is going to “pay the rest”! It’s not their fault…the wording is misleading.
Imagine how crazy expensive that would be for the taxpayer if students could just pick any school in the country, pay some low EFC and have the taxpayers pay the rest! As if we dont’ already have enough debt!!
Fed aid is not much, and “free money” is for low income…and that’s not much either.
Most schools do not have much money to give, so even the IM predictions are often misleading.