Financial aid is distributed to millions of college students every year through a well-meaning but complex process. There are a number of decisions made along the way and it doesn’t seem like much of a negotiable deal. This not necessarily true, however, especially at times of great financial hardship. It may be possible to upgrade your award, but it helps to know first exactly how financial aid is calculated and distributed.

How Federal Financial Aid Is Determined

The amount of federal financial aid you can get is based on a pre-set federal formula that factors in your income, assets, employment benefits, household size, number of dependent children, and number of family members in college. The formula is applied to the information you provided in the FAFSA (Free Application for Federal Student Aid). The resulting number is called the Estimated Family Contribution, or EFC. The EFC is what the federal government’s formula has calculated that you and/or your family can contribute to paying for your year in school.

A school’s Cost of Attendance is an approximate amount of money that your school estimates it will cost you to attend for one year. The COA usually includes tuition, fees, books and supplies, room and board if you’re going to live on campus, transportation if you’re not, and other personal or living expenses while in school. It may not include all of these items or it may include more than this.

The only pieces of the COA that are paid directly to your school are tuition and fees and on-campus room and board (if applicable) but as you can see, the total COA encompasses more than just school tuition and fees alone.

Your eligibility for financial aid is determined by subtracting your EFC from your school’s Cost of Attendance. The difference between the EFC and the COA is called “Unmet Need.”

$15,000 School’s Cost of Attendance (COA): tuition + fees + expenses
–$5,000

Expected Family Contribution (EFC), from your FAFSA
=$10,000 Unmet Need

How Federal Financial Aid Is Distributed

The amount of financial aid you qualify for is based on your unmet need. But ultimately, how much financial aid you actually get depends on the amount of need-based financial aid is available to you and your school, beginning with federal financial aid. And the final amount of financial aid you get could be different from school to school, depending on each school’s COA and financial aid policies for assessing financial need and awarding financial aid.

Some colleges may fully cover the unmet need of only those students who meet additional criteria, such as academic achievement. Other schools may only be able to offer federal financial aid, but not school grants. Still others may not be able to meet the full unmet need of any students.

A school’s COA plays a big role how financial aid is distributed. Your EFC will be the same for every college, but not all schools have the same COA. Some colleges may include a lab fee or a gym fee in their COA, while others do not. It’s the difference between the two — the amount of the unmet need — that determines how much federal aid you qualify for.

Another factor that affects how much federal financial aid you get is funding from outside sources. If your EFC qualifies you for a Pell Grant but then you win a scholarship covering your entire COA, obviously, you’re not going to get the Pell Grant.

The smaller the difference between your EFC and your COA, the less you will have to rely on financial aid.

The 2009 year is getting off to a shaky start, as state grants that thousands of students were counting on for their last piece of financial aid fell through. Many schools have stepped up to cover the gap. If yours was not one of them, talk to your financial aid office about an appeal for more federal aid.