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What constitutes need? In order to show need, you don't have to be living below poverty level. The government decides that you need money for college when you and your family—or you alone—cannot finance your entire education. Theoretically, those who need the most money will receive the highest award. The exact calculation of financial need is performed by private companies, such as College Scholarship Service (CSS) or American College Testing (ACT), who calculate these figures for colleges, private institutions, and government agencies. A standard formula used by these companies was developed by Congress under the Higher Education Amendment of 1986. Called the Congressional Methodology, it is used to evaluate parents' income and assets, in conjunction with the number of children in the family who are college-aged and their anticipated college costs.

Organizations that process your need analysis form, such as CSS and ACT, are not the ones that will actually determine how much money or aid assistance you will receive. That decision is made by individual schools, depending on a variety of factors, including the amount of aid funds available at that particular school and how many other students are also applying for aid. For example, if you attend a school in which 90 percent of the student body has applied for federal aid, you may actually receive less than what you are eligible for under federal guidelines. That's because as more students draw government funds set aside for that school, the less there is to go around. Fortunately, the current administration is actively working to increase the total amount of money allocated to each student aid program, which will help everyone receive a larger share from the financial aid pie.

The federal government believes that a family must take some responsibility for putting its children through college. However, if you and your parents can't meet all the costs of higher education, financial aid is available. The Estimated Family Contribution (EFC) is a dollar amount a family must pay toward the cost of college for the coming year before the student is eligible for government assistance. Using the Congressional Methodology formula, families are assigned an amount that they are responsible to contribute. However, everything your parents own is not included in this calculation. The government realizes the amount of assets a family may have is not necessarily a good indication of whether or not they can afford to put their children through school. When the family contribution is calculated, such items as a home, a farm, and a percentage of overall assets are not included to protect your parents' savings.

Parents are not the only ones who are expected to partially finance a college education. The federal government also presumes that a substantial portion of a student's income and savings will go towards her college expenses. On average, at least half of your prospective income and 35 percent of your savings (if you have any) will be included in your estimated contribution. But don't worry, you won't be expected to pay the same amount throughout college. The amount of your estimated contribution changes every year in correlation to your income. For example,

if you made less money your first year in school than you did the previous year, you'd be eligible for more aid the following year.

To help provide you with an idea of what you and your parents will be expected to contribute to your education expenses, we've included instructions and sample worksheets based on the Congressional Methodology. These are the formulas used by companies like ACT and CSS to determine your Estimated Family Contribution figure. Keep in mind that you do not need to complete these worksheets in order to receive financial aid. CSS and ACT will make these computations for you, based on information that you provide, whether or not you complete

these worksheets. And their computations are official. We provide these forms only as a way for you to become familiar with the terms and formulas used in this process and to give you an idea of your level of eligibility. If you would like to know more about the Congressional Methodology formula, write to either of the following addresses for a free booklet on the formula:

Formula Book

Department DED-87

Pueblo, CO 81009

Federal Student Aid Information Center

P.O. Box 84

Washington, DC 20044

The College Board offers an online EFC calculator to help estimate this amount. To calculate your EFC Click Here

When you apply for federal student aid, the information you submit about your financial situation is reviewed not only by government officials, but also by financial aid officers at individual schools. Once the total Estimated Family Contribution has been calculated, the final numbers are sent to the colleges or universities of the student's choice. The financial aid office at each institution analyzes your financial situation in comparison to the total cost of your education. The school then determines if you are still eligible to receive aid, and if so, how much. Each college financial aid office has its own set of criteria for evaluating need, and adjustments are made after an initial number has been determined by either the ACT or CSS.

After you and your family have been assigned an EFC number, financial aid administrators will calculate your potential funding using what is called the "the Need Formula." In its most basic terms, it simply means your cost of attending that school, minus your expected family contribution, equals your financial need.

Total Cost of College - Estimated Family Contribution = Financial Need

To help you determine what to include in making an estimate of total college costs, we've put together this list of expenditures based on the recommendations of financial aid advisors. Be sure to realistically calculate such expenses as transportation and travel, especially if you are attending an out-of-state university. Money spent on trips home for the holidays can add up quickly.

Tuition

+ Books and supplies

+ Housing costs (rent, utilities)

+ Meals

+ Personal expenses (clothing, entertainment)

+ Transportation/travel

+ Support of dependents (if applicable)

+ Any other miscellaneous expenses

= TOTAL COST OF ATTENDANCE

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