How College Financial Aid Works

A Financial Aid Example

Gerry Broome/AP Images
The campus of Duke University in Durham, N.C.

As we explained, the Expected Family Contribution calculations and financial aid packaging policies vary from institution to institution. Here's an example of what might happen at Duke University in Durham, N.C.

A family completes and submits the PROFILE and FAFSA no later than March 1. (The school requires tax forms, but those aren't due until March 15.) Duke also invites the family to submit letters that explain any extenuating circumstances that might affect their ability to support educational expenses.

At Duke, students are admitted without reference to their need for financial aid. This policy of "need-blind admissions" means that the school doesn't determine an applicant's aid eligibility until after the student has been admitted. As soon as the financial aid department learns of a student's admission, it pulls together the application materials, determines aid eligibility and prepares awards for those who are eligible. Who will be eligible? The formula Duke uses considers a wide variety of circumstances -- there is no right answer. However, here's an example of a fairly typical applicant's award:

The Smiths are a family of four. Both parents work, and Melissa, the Duke applicant, will be the only one in college next year. Their family income is roughly \$60,000 and their assets are pretty standard relative to their income. They own their own home and have offered no unusual circumstances.

In this case, the parents' contribution would likely range from \$8,000 to \$12,000. Melissa's contribution in this example is \$2,000, with \$1,900 coming from summer earnings and \$100 coming from Melissa's savings. The cost of attending Duke for the 2009-2010 school year is \$53,000. For illustration purposes, let's assume that the parents contribute \$12,000. So here are the numbers (all figures are in U.S. dollars):

 Cost of Attendance \$53,000 Parent Contribution - 12,000 Student Contribution - 2,000 -------------------- Demonstrated Need \$39,000

In addition to guaranteeing need-blind admissions, Duke meets 100 percent of each student's demonstrated need. Here is how this works:

 Demonstrated Need \$39,000 Work Study + 3,510 Loans + 8.970 Grants + 26,520 -------------------- Total Award \$39,000

The number of siblings in school at the same time is important. Parent contributions generally go down by 40 to 50 percent if more than one child is in school. Remember, this is just one example, and your results are likely to be different. For specific details, contact your prospective institution's financial aid office.