What is the Federal Methodology?

The Federal Methodology is the formula used by the federal government in calculating a student’s Expected Family Contribution (EFC) which determines their eligibility for financial aid. Students receive their EFC by completing the Free Application for Federal Student Aid (FAFSA) and receiving their Student Aid Report (SAR).

The Federal Methodology is used for calculating the Pell Grant, Perkins Loans, Federal Work-Study, Supplemental Educational Opportunity Grant, William D. Ford Federal Direct Loans, and TEACH Grant Programs. The Secretary of Education announces the Federal Methodology each year in the Federal Register. Because the formula is public, families can get a good idea of their estimate EFC based on the federal methodology.

Individual colleges and universities do not have to use the Federal Methodology for deciding how to award their institutional aid. This is why students applying to some schools will have to complete two financial aid applications-the FAFSA and the form used by the school, usually the CSS/PRFOILE.

This means that the amount of aid awarded by schools can vary dramatically from school to school. Not only will the amount of institutional aid awarded depend on the school, if the amount is large enough, it could reduce the need for students to take out federally subsidized (need-based) loans.

However, regardless of the methodology the institution chooses to use, the Federal methodology is used for all federal aid. Therefore, the amount of need-based federal financial aid a student qualifies for will not vary from school to school assuming the aid amount does not exceed the total cost of attendance.