Key Takeaways
- Financial aid eligibility is complex: It is determined through a combination of applications, formulas, and institutional policies, including the Free Application for Federal Student Aid (FAFSA), the Student Aid Index (SAI), the Cost of Attendance (COA), and, for some students, the CSS Profile.
- FAFSA vs. CSS Profile: The FAFSA is the primary application for federal, state, and most institutional financial aid, while some colleges — largely private — also require the CSS Profile.
- SAI and COA matter: A student’s financial need is calculated by subtracting the Student Aid Index (SAI) from the Cost of Attendance (COA), and need varies by institution because COA differs.
- Need-based vs. merit-based aid: Need-based aid is awarded based on a family’s financial circumstances, while merit-based aid is awarded based on academic, athletic, or other achievements.
- Net price is what matters most: Net price reflects the actual cost of attendance after grants and scholarships, making it a more accurate comparison than sticker price, and Net Price Calculators provide estimates to help families plan.
Are you in the middle of financial planning for college or just getting started? The process can be confusing, especially with an “alphabet soup” of acronyms to learn. Below are key financial aid terms every family should understand when applying for college.
1. FAFSA (Free Application for Federal Student Aid)
In some cases, the FAFSA is the only application you’ll need to apply for financial aid from the federal government, your state government, and directly from institutions.
The FAFSA is required by all institutions that award need-based financial aid. Submission deadlines are typically in January or February, but possibly sooner if your student applies early action or early decision. Each year, the FAFSA opens on October 1, so it’s best to complete it early (U.S. Department of Education, 2026).
It’s important to note that the first F in FAFSA stands for Free, so any website or service that charges to assist you with your submission is doing something that you can easily do yourself. The FAFSA has recently been simplified, typically taking fewer than ten minutes for students and parents to complete.
2. FSA ID (Federal Student Aid ID)
FSA ID is your electronic signature for the FAFSA. Students and parents need their own separate FSA ID to complete the application. You can create your ID anytime, even before the FAFSA opens. You will need it before completing the application.
3. CSS Profile (College Scholarship Service Profile)
CSS Profile is a financial aid application used by 275 institutions (as of 2026-2027) to determine eligibility for non-federal institutional aid. Most participating institutions are private (The College Board, 2026). Some institutions use it because it collects in-depth financial information from families. Unlike the FAFSA, institutions can add their own questions, allowing for more flexibility when determining eligibility.
The CSS Profile costs $25 for the first institution and $16 for each additional institution. Students may be able to submit it for free if their family’s adjusted gross income is less than $100,000, the student qualified for an SAT fee waiver, or the student is an orphan or ward of the court under the age of 24. The CSS Profile opens on October 1 each year, just like the FAFSA.
4. SAI (Student Aid Index)
SAI is a number used by institutions to assess a family’s eligibility for financial aid. It replaced Expected Family Contribution (EFC) starting with the 2024–2025 FAFSA (The College Board, 2024). SAI is not what you will necessarily pay for college or the amount of financial aid you will receive. Instead, institutions use it to determine financial need. It is calculated using information reported on the FAFSA. Institutions that also require the CSS Profile will use both applications to determine eligibility for financial aid.
5. COA (Cost of Attendance)
COA is an institution’s total cost of attendance for the academic year, including direct expenses (tuition, fees, housing, and food) and estimated indirect expenses (travel, books and supplies, and miscellaneous personal expenses).
6. Financial Need
A student’s financial need, also referred to as financial aid eligibility, is determined by subtracting their Student Aid Index (SAI) from cost of attendance (COA). Institutions use this number to award need-based aid.
Since each institution has a different COA and your SAI is fixed, financial need will vary, which may impact the amount of financial aid your student receives from each institution.
Example:
Cost of Attendance (COA) – Student Aid Index (SAI) = Financial Need
The student’s SAI is $20,000.
Institution A
COA $50,000 – SAI $20,000 = Financial Need $30,000
Institution B
COA $60,000 – SAI $20,000 = Financial Need $40,000
7. Need-Based Financial Aid
Financial aid awarded based on a student’s financial need is considered need-based aid. This type of financial aid can take many forms, including grants, scholarships, federal work-study, and subsidized loans. There are many different sources for need-based aid, including the federal government, state and local governments, institutions, and organizations that award private scholarships.
8. Merit-Based Financial Aid
Merit-based financial aid is awarded to students based on achievements in high school, ranging from academics to athletics. It does not take a student’s financial need into account, and not all institutions offer it. If you are hoping to use athletics to help pay for college, check with schools first.
9. Sticker Price vs. Net Price
Sticker price, also referred to as published price, is an institution’s cost of attendance without financial aid. After discounting through grants and scholarships, the amount you actually pay is called the net price. When comparing college acceptances based on cost, it’s important to use your net price — not the sticker price — for a more accurate comparison.
10. Net Price Calculator
The Net Price Calculator is a free tool all institutions must provide on their website so families can estimate the net price in advance of applying for and receiving a financial aid award (National Association of Independent Colleges and Universities, n.d.). As a reminder, the net price is the amount a family would pay for college versus the listed sticker price.
An institution’s Net Price Calculator may ask questions about family finances and the student’s high school academics, like GPA and test scores, or other activities and achievements. Keep in mind that the Net Price Calculator is only as accurate as the data entered. It is important to be honest and precise when submitting information. For example, reporting “all As” instead of “a mix of As and Bs” can result in an inaccurate estimate.
Sources
U.S. Department of Education. “U.S. Department of Education Takes First Step to Develop the 2027–28 FAFSA Form.” February 13, 2026. https://www.ed.gov/about/news/press-release/us-department-of-education-takes-first-step-develop-2027-28-fafsa-form
The College Board. “2026–27 Participating Institutions and Programs.” April 20, 2026. https://profile.collegeboard.org/PPI/participatingInstitutions.aspx
The College Board. “Expected Family Contribution (EFC) vs. Student Aid Index (SAI): What You Need to Know.” June 12, 2024. https://blog.collegeboard.org/efc-vs-sai
National Association of Independent Colleges and Universities. “Net Price Calculator: An Overview.” (n.d.). https://www.naicu.edu/research/federal-tool-guide/net-price-calculator/
