Introduction to Federal Student Aid


This is a simple and quick introduction to the Federal Student Aid. Federal government supported Student Financial Aid is awarded upon the need of the student's financial situation. In order to apply for these programs, you must submit the Free Application for Federal Student Aid (FAFSA) at

1. You must be US citizen or US residents with valid Social Security Number. You must have high school diploma or GED. You must enroll in an eligible program seeking a degree or certificate. You must have financial need (This will be determined by EFC)

2. You will need to provide the Federal School code of the colleges you are attending or plan to attend during the FAFSA submission. As a result, Student Aid Report (SAR) will be sent to you and the colleges you have listed. And the colleges will use SAR to determine the financial aid programs just for you.

3. If you are accepted by the college , they will send you the Award Letter with the details on the financial aids available for you. The list should include the Federal Financial Aids and other possible loan programs if the Federal Aids does not fully meet the cost of attendance (COA). You don't have to take all the awards since these are only suggestion. If you are willing to pay yourself, you don't have to take the loan programs.

4. FAFSA has several different types of financial aid.

  • Pell Grant - a grant up to $5,500 for student with low EFC
  • Stafford Loans - a loan with interest rate of 6.8% for unsubsidized loan (you are responsible for the interest rate), or 4.5% for subsidized loan (government will pay the interest rate while the student is enrolled at least half time)
  • The Federal Work-Study Program- a program where students can get part-time work, up to a certain amount, and have 75% of their wages reimbursed by the federal government.

5. Expected Family Contribution (EFC) will be calculated by the FAFSA based on you and your family's income and financial condition. The financial aid office at your college will use information to determine how much financial aid you are eligible to receive.

Each school offers differently according to their NEED MET percentage (NEED MET%). The Financial Need(NEED) is the remainder of Expected Family Contribution (EFC) subtracted from Cost of Attendance (COA). And the "NEED MET%" of this "NEED" will be the estimated amount your college will be responsible.

Here is simple example where "EFC" is 5000 and a college with "COA" is $50,000 and "NEED MET%" of 100.

(COA) 50,000 - (EFC) 5,000 = (NEED) 45,000
(NEED) 45,000 x 100% = 45,000 (FINANCIAL AID)
(COA) 50,000 - (FINANCIAL AID) 45,000 = 5,000 (actual family responsible amount)

You would be responsible for $5,000 for this scenario.

If the "COA" is $20,000 and "NEED MET%" of 60,

(COA) 20,000 - (EFC) 5,000 = (NEED) 15,000
(NEED) 15,000 x 60% = 9,000 (FINANCIAL AID)
(COA) 20,000 - (FINANCIAL AID) 9,000 = 11,000 (actual family responsible amount)

For this case, you would be responsible for $11,000. Therefore it is clear that higher NEED MET% is better. It is recommended to apply the colleges with their average "NEED MET%" is over 75% or your GPA or SAT score is within the top 25% of the college. (Try CollegeBoard to research on the college statistics)

It is very important to have a discussion on the financial aids and loan programs with your parents and have in-dept understanding of general finances. It will help you to establish the basic concept of finances and plan for the future effectively.

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