Student Loan Amount
For many students and parents, the student loan amount is very critical. Not all student loans offer full coverage, and many times a student needs to supplement the amount provided by the lenders. For students who seek need-based financial aid, the student loan amount is determined through a few steps.
Expected Family Contribution (EFC)
After you file a Free Application for Federal Student Aid (FAFSA), the Department of Education formulates your information--yes, there’s a special formula to determine your Expected Family Contribution (EFC). The EFC is the amount that the government expects you to contribute yourself toward your education. This amount is based on various factors, like the size of your household, state of residence, the income and assets of your parents, your own income and assets, and more. After the government comes up with the Expected Family Contribution (EFC), the school determines the Cost of Attendance (COA). No one said that determining the student loan amount was an easy task.
Cost of Attendance (COA)
The school considers many factors while coming up with the Cost of Attendance (COA). These include tuition, room and board, other fees, as well as an estimate of additional expenses like those that go toward purchasing books, school supplies, personal items, and more. Both the Expected Family Contribution (EFC) and Cost of Attendance (COA) are then used to reach the amount you would need. A student’s financial need is the amount that remains when the EFC is subtracted from the COA. This number acts as a guideline on which to base the student loan amount. The financial aid office constructs a package based on it. There is always the chance of unmet financial need--even if several types of student loans and other forms of financial aid are offered. The school presents the best possible student loan amount, but it is under no obligation to cover every single expense.