<p>The federal law makes sense. They don’t allow anyone to get federal funds for need, when they are not needy by federal formula. So if a school’s forumula shows need, but FAFSA does not, then it’s quite simple; school can give what such a student what their aid formula dictates and subtract out what would have been covered by federal funds since they are not permitted to give those. Doing that would not mean giving anymore than they would if the federal formula had come out exactly to what the institutional formula did. If they really wanted to be generous, they could meet need the way they define it. </p>
<p>So the law does not say you cannot give aid beyond when FAFSA is lower than PROFILE. It just takes federal funds out of the picture. There is some exception to this for PELL, however, I think, so all a kid would lose out on is subsidized loans and work study.</p>