Any long-term employee in just about any business is guilty of using acronyms and buzz words. The financial aid profession is notorious for using both. One buzz word you'll probably hear quite often is "packaging", or "package". You might hear, "we're working on your financial aid package". What does this mean?
After you file the FAFSA, the FAFSA information is sent to the schools you listed on your application. The school then uses that information to determine the best course of awarding financial aid using the Expected Family Contribution (EFC). The EFC is calculated by the Federal Processor, or basically the Department of Education. This indicator is the same for all schools you have chosen on the FAFSA. While it says Expected Family Contribution, it doesn't mean this is what you will be expected to pay--it's a guide to be used by schools.
Schools develop a cost of attendance each year. Depending on the school and your type of enrollment, a cost of attendance could include:
- Tuition and fees
- Room and board (not likely for online learners)
- Books and supplies
- Transportation (again, not likely for online learners)
- Personal expenses
- Loan fees
- Disability related expenses
Each school listed on the FAFSA will use their Cost of Attendance to determine your educational expenses. Then, the school(s) will subtract the EFC to determine your financial need.
Pell Grant is the most common form of federal grant money, and is directly tied to the EFC rather than the financial need. The Department of Education issues guidelines mandated by Congress on how Pell Grant is to be distributed using the EFC. Schools have no discretion in changing eligibility unless changes are made or Professional Judgment is performed.
To bundle your financial aid, schools take their cost of attendance, minus EFC, minus Pell Grant (if eligible), to determine other financial aid eligibility. This is the packaging process. The school will then include any state aid for which you may qualify, and subtract this from your financial need. The remaining balance of you need can be met through scholarships, Campus Based Aid, or student loans.
We'll talk about other financial aid in Part 2.