The FAFSA, or the Free Application for Federal Student Aid, is required of all students who wish to be considered for need-based financial aid at any accredited U.S. public or private college or university. As its name implies, there is no charge to file the FAFSA, which may be filed online:

http://www.fafsa.ed.gov/

The FAFSA is used to determine a student’s eligibility for federal loan and grant assistance, including the Pell Grant, Federal Supplemental (SEOG) Grant, the Perkins loan, and the Stafford loan. The FAFSA is based on a student’s (and the student’s parents’) income and asset information for the prior tax year.The magic number of the FAFSA is the Estimated Family Contribution, or EFC. This is what the government believes you should be able to contribute toward a college education, which is based on the financial information submitted on the FAFSA application. For example, if your EFC is determined to be $10,000, and the student’s college has a total cost of education (tuition, fees, room, board, books, supplies, personal expenses, and a transportation allowance) of $20,000, the student would be eligible for up to $10,000 of need-based financial aid.

The Profile application, administered by The College Board:

https://profileonline.collegeboard.com/prf/index.jsp

The Profile is used, generally in conjunction with the FAFSA application, at most private colleges and universities. The biggest difference between the Profile and the FAFSA applications is the inclusion of a family’s home equity (if applicable). The Profile considers home equity in its analysis, the FAFSA does not. At a private (i.e., more expensive) college or university, the FAFSA is used to determine a student’s eligibility for federal grant and loan assistance (Pell, SEOG, Perkins, Stafford programs). The Profile is used to determine a student’s eligibility for school-based aid, often known as “Institutional aid” – funds (generally grant assistance) available to a qualified student, in addition to federal grant and loan aid. Unlike the FAFSA, the Profile is not free, and currently costs $25 to have your information sent to one school and $16 for each additional school.The magic number for the Profile application, often known as an Institutional Methodology Estimated Family Contribution (IM EFC) is less clear – it’s actually quite clear, but it’s not published by The College Board, nor is it advertised by most schools. Why? The IM EFC is almost always more, even for families that have no home equity, which results in a lower aid eligibility than determined by the FAFSA. A student may have a FAFSA EFC of $10,000, but an IM EFC of $15,000. Instead of qualifying for up to $10,000 of aid, the same student (based on the Profile analysis) would be limited to $5,000. Less aid to such a student means more aid (but less of it) to more students.