A financial aid package is a combination of financial assistance that a college or university offers to a student after reviewing the student’s financial aid application and other relevant information. Depending on the school and the student’s specific circumstances, this package may include federal grants, work-study, federal student loans, institutional scholarships, state aid programs, external or private scholarships administered by the school, or other forms of financial assistance.
A financial aid package is not determined directly by the U.S. Department of Education. Instead, each school’s Financial Aid Office builds its own package using information from the FAFSA, the Student Aid Index (SAI), the aid programs for which the student qualifies, and the school’s financial aid policies.
How is a Financial Aid Package created?
In general, the process works like this: the student submits the FAFSA; the U.S. Department of Education processes the FAFSA and calculates the Student Aid Index (SAI).
That information is then shared with the schools listed on the student’s FAFSA. Each school’s Financial Aid Office uses this information, together with its own financial aid policies and available funding, to build a financial aid package. The school then sends the student a financial aid offer.
What information do schools use?
Although the SAI is important, it is not the only factor a school considers when creating a financial aid package. A Financial Aid Office typically reviews several factors, including the student’s SAI, the Cost of Attendance (COA), federal aid programs for which the student is eligible, the school’s own financial aid programs and policies, and applicable state aid programs.
1. Student Aid Index (SAI)
The SAI helps measure a student’s financial need under the federal formula. In general, a lower SAI may indicate greater financial need, while a higher SAI may mean the student qualifies for less need-based aid.
2. Cost of Attendance (COA)
Each school establishes a Cost of Attendance for each academic program. COA is an estimate of the cost to attend for an academic year and typically includes tuition, fees, books and supplies, housing, food, transportation, personal expenses, and other reasonable education-related costs.
COA is not necessarily the amount a student will pay out of pocket; it is an estimate schools use to determine financial need.
3. Federal financial aid programs for which the student qualifies
After reviewing the FAFSA and SAI, the school determines whether the student may be eligible for programs such as the Pell Grant, Federal Work-Study, federal student loans, and other federal aid programs.
4. The school’s financial aid programs and policies
This is one of the main reasons financial aid packages can vary significantly from one school to another. Some schools have large scholarship budgets and many institutional scholarship programs. Others prioritize students with demonstrated financial need, while some rely more heavily on loans.
As a result, two students with the same SAI may still receive very different financial aid packages from different schools.
5. State aid programs
Many states use FAFSA information to determine eligibility for state scholarships, tuition assistance, state grants, or other aid programs. If the student qualifies, these aid amounts may also appear in the financial aid package.
How is financial need determined?
Simply put, many schools use the following formula to estimate financial need:
Financial Need ≈ Cost of Attendance (COA) − Student Aid Index (SAI).
For example, if a school’s COA is $40,000 and the student’s SAI is $8,000, the student’s estimated financial need would be about $32,000.
This is a simplified example to illustrate the general principle. In practice, schools also consider their budgets, policies, and the specific aid programs for which the student qualifies.
Are financial aid offers the same at every school?
Each school may send a different financial aid offer, even when using the same FAFSA information and SAI. For instance, School A might offer a Pell Grant, a $15,000 institutional scholarship, Work-Study, and a federal student loan. School B might offer the same student a Pell Grant, a $5,000 institutional scholarship, and a federal student loan.
This is why students admitted to multiple schools should compare financial aid offers carefully instead of focusing only on tuition costs or college rankings.
Do students have to accept the entire financial aid package?
In most cases, students can choose to accept the full package, accept only part of it, or decline certain types of aid—especially federal student loans. For example, many students choose to accept grants and scholarships but decline loans.
Can a financial aid package change?
Yes. A financial aid package is not always fixed for the entire time a student is in school. In later academic years, the package may change if FAFSA information changes, family income changes, the SAI changes, enrollment level changes, the student no longer meets scholarship requirements, or the school changes its policies or budget.
Key takeaways
- A financial aid package is created by each school’s Financial Aid Office, not directly by the U.S. Department of Education.
- The FAFSA and Student Aid Index (SAI) are important sources of information used to build the package.
- The SAI is an input, but it does not determine the final amount of aid by itself.
- Different schools may offer different packages even when a student has the same FAFSA information and SAI.
- Students can usually accept or decline each part of the financial aid offer.
Frequently Asked Questions (FAQ)
1. Are financial aid packages the same at every school?
No. Even when schools use the same FAFSA information and SAI, each school may create a different financial aid package based on its COA, financial aid budget, scholarship policies, available programs, and other funding sources. That is why students should compare financial aid offers from multiple schools before making an enrollment decision.
2. Does a financial aid package have to be repaid?
It depends on the type of aid. Pell Grants usually do not have to be repaid in most circumstances. Institutional scholarships generally do not have to be repaid if the student continues to meet the program’s requirements. Federal Work-Study is earned through part-time employment, so it does not have to be repaid. Federal student loans, however, are borrowed funds and generally must be repaid according to federal loan rules after the student leaves school or no longer meets enrollment requirements.
3. Can a financial aid package change in later academic years?
Yes. Financial aid is typically reviewed each year and may change if FAFSA information changes, the SAI changes, family income or financial circumstances change, the student no longer meets scholarship requirements, enrollment credits change, or the school adjusts its financial aid policies or budget.
For this reason, many students need to complete the FAFSA each year to continue being considered for financial aid.
4. Can I ask a school to reconsider my financial aid package?
In some cases, yes. If your family’s financial circumstances have changed significantly or there are special circumstances not reflected in the FAFSA, you can contact the school’s Financial Aid Office to ask about its review process, often called a financial aid appeal or professional judgment review.
Submitting a request does not guarantee that the school will adjust the financial aid package, but the school may review the situation if the student meets the applicable requirements.