What Determines Amounts of Aid Received

The main thing that determines the amount of financial aid you receive for college is the degree of need. The higher the need, the higher the financial aid package. The formula for determining financial need is as follows: the Cost of Attendance (tuition, room and board, and other expenses) minus the family contribution equals the financial need.

You may need to determine the Cost of Attendance on your own. Each family will have different Cost of Attendance than others. For example, one family may have to factor in unique medical expenses or commuter costs. These may not be factored into the college's standard Cost of Attendance figure, so it is important to itemize your own expenses before determining what can be spent yearly on college expenses.

The same goes for determining financial contribution. If you have a set yearly salary that you expect to remain constant, your job is much easier. However, if your finances fluctuate on a yearly basis, this will have some bearing on financial need. Self-employed workers will have to submit additional tax forms in order to prove financial need.

The two different ways to determine financial need are the Federal Methodology and the Institutional Methodology. The Federal Methodology (FM) is determined by your FAFSA application. The FAFSA will take into account your income, taxes, expenses, and other issues, to declare financial necessity. The Institutional Methodology (IM) is set up by the college or university itself. This will be necessary if you are not applying for federal aid.

Determining Your Need

After all that is sorted out, the federal government or college financial aid office will then determine how much to award each family. Generally, the more you need, the more you'll get. Additionally, the more you need, the more you will receive that does not need to be paid back. A financial aid award letter will outline how much you receive in grant money, in addition to what is covered by loans. A loan can be paid over several years, so only minimum payments should be subtracted from cost of living expenses.

In order to prove financial need, you will need to submit tax forms, salary history, proof of expenses, and other financial information. Even if you do not have an overt financial need, you can still apply for private student loans. If the Cost of Attendance and Financial Aid package do not line up, you can also apply for a private student loan in order to fill the gap.

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