How is eligibility for need-based aid determined?

Two major formulas are used to determine eligibility:

  1. Expected Family Contribution (EFC) = Parents' wages/income + Student's wages/income
  2. Demonstrated Need = Cost of Attendance - EFC

    Data on the FAFSA determines the EFC. To estimate your EFC, try the Expected Family Contribution (EFC) estimator.

You must meet the following criteria to be considered for federal and some state financial aid:

  • Complete and submit the Free Application for Federal Student Aid (FAFSA)

  • Be a U.S. citizen or eligible non-citizen
  • Have a valid Social Security number
  • Be enrolled at least half-time or accepted for enrollment in an eligible program and working toward a degree or certificate. You may not receive aid for correspondence or telecommunication courses unless they are part of an associate, bachelor or graduate degree program
  • Have a high school diploma or General Education Development (GED) certificate, or pass a test approved by the U.S. Department of Education
  • Make satisfactory academic progress
  • Register with the Selective Service, if required (males only)
  • Not be in default for any previously received federal student loan

To receive institutional and other need-based aid, be sure to check the specific requirements of the institution or program.

Kathy Ruby is the director of financial aid at St. Olaf College in Northfield, Minnesota. She says some people incorrectly assume that they make too much money to qualify for financial aid.

"They should go through the process to see if they will qualify. They might be eligible," she says.

Another common myth, Ruby says, is that if you save money, you will be penalized and won't receive any financial aid. Families with savings might receive less need-based aid, but most federal aid is calculated based on income and not assets, she says.

"Saving for college is a good thing, and it gives you many more options," she says.

Max Kahlhamer agrees. The University of North Dakota aviation student says that is his main piece of advice for high school students planning to attend college.

"Save -- and don't spend money on stupid things," he says.