How do the college
financial aid offices decide who is offered need-based aid? Every college
in the United States uses what is called 'Federal Methodology' to determine
need. The Needs Analysis Formula is below. Student and parent contribution
are determined from income and asset information provided on the FAFSA form.
For independent students (over the age of 24), parent information is no
longer required. In the case of families where a separation or divorce has
occurred, all parent data is provided by the custodial parent. The non-custodial
parent is not required to provide any data on the FAFSA. If the custodial
parent re-marries, the step-parent is required to provide financial information.When the Estimated Family Contribution is subtracted from the total cost of education, any amount that remains is 'Indicated Financial Need.' The financial aid office is responsible to prepare and offer a financial package that meets financial need. It is important to ask college financial aid offices what percentage of financial need they are able to meet as some colleges meet less than 100 percent. Percentage of need met should be considered when selecting a college. It is also important to ask what percentage of the average financial aid offer is Gift Aid (grants and scholarships) and what percentage is Self Help (work study and loans). Ideally, colleges should offer 50% or more of the package in Gift Aid. One other issue relates to how private scholarships are treated. If a student receives a private scholarship it should always replace loans first. Other Gift Aid should never be replaced while student loans remain in the package.