What is the difference between the FAFSA and the school's own institutional aid formula?

The FAFSA drives federal aid (Pell Grants, subsidized and unsubsidized loans, work-study) and most state aid, using the Student Aid Index. But many private and selective colleges also require the CSS Profile and apply their own "institutional methodology" to award their large pools of endowment grant money. Institutional formulas often dig deeper: they may count home equity, small-business value, non-custodial parent income, and assets the FAFSA ignores. So two schools can look at identical finances and offer very different need-based packages. Always run each college's net price calculator, because that reflects the formula that particular school actually uses. Never assume a low SAI guarantees generous aid at a school that uses its own tougher formula.