For any college-bound family new to the financial aid game, one of the most frustrating aspects of the process is trying to understand the mind-numbing jargon:

"If your EFC on the FAFSA is substantially less than your EFC on the CSS Profile, then the FM may be much more favorable to you than the IM, unless the FAO uses the CA."

Believe it or not, the above sentence does, in fact, make sense. But to decode what it means--and then use this knowledge to boost your financial aid packages by many thousands of dollars--we first need to break down some of the inner workings of college financial aid.

The first thing to understand is that the entire financial aid system is based on a simple question: How do your and your family's financial resources compare to the cost of attending your desired school?

To help answer this question, colleges evaluate your Expected Family Contribution (EFC)--an amount that represents, in theory, how much your family can afford to pay for college each year. If your EFC is 10,000, for example, this implies that you and your family are expected to contribute $10,000 toward the annual Cost of Attendance (COA) at a given school.

To calculate this EFC, a college's financial aid office (FAO) seeks to measure four main components of your personal finances: student income, student assets, family income and family assets. This is represented by the following formula:

EFC = Student Income + Student Assets + Family Income + Family Assets

Because all colleges use this basic formula, what distinguishes colleges from each other is specifically how they calculate these four components of EFC. Most schools, in fact, perform these calculations using one (or more) of three standard methodologies: the federal methodology (FM), the institutional methodology (IM) and the consensus approach (CA). The devil, as they say, is in the details.

Federal Methodology (FM)

Because individual schools are required to use the federal methodology when awarding money from the federal government, many colleges and universities (especially public schools) also use the federal methodology when handing out their own financial aid funds.

The basic form used under the federal methodology is the Free Application for Federal Student Aid--more commonly known as the FAFSA form. On the FAFSA, you will be asked questions about wages, investment income, the value of checking and savings accounts, ownership interests in businesses and more.

The federal methodology is also noteworthy in what it omits: Financial data concerning home equity, retirement assets accumulated during prior years, cash-value life insurance policies and the income and assets of noncustodial parents are not considered.

Institutional Methodology (IM)

Several hundred U.S. colleges and universities (usually private schools) use the more stringent institutional methodology when distributing their own funds.

Many of these schools ask families to complete the College Search Service (CSS) Profile form. Although similar in structure to the FAFSA, the CSS Profile is longer and asks more detailed questions.

Unfortunately, some families discover that their EFCs under the institutional methodology may be many thousands of dollars more than under the federal system. Why? It is often due to the fact that the institutional methodology adds home equity as a measurable asset, includes the financial resources of noncustodial parents and features a less favorable treatment of families with multiple kids in college.

Consensus Approach (CA)

The new kid on the financial aid block is the consensus approach—used by more than two dozen of the nation's selective private colleges, including Duke, Cornell, Georgetown, Notre Dame and Vanderbilt.

The consensus approach modifies questionable elements of the institutional methodology so that families receive somewhat reduced EFCs and enhanced financial aid awards. Because the consensus approach doesn’t have its own form, it uses the same core data as collected on the CSS Profile.

The hallmarks of the consensus approach include capping home equity at 2.4 times income, making cost-of-living adjustments for families living in more expensive areas and including an advantageous allowance for a family's existing student loan payments.

So what does all of this fancy jargon really mean? By determining which financial aid methodology a prospective college uses, you gain an insider’s perspective on the hidden formulas they will employ and can take action accordingly.

Your homework assignment, therefore, is a simple one: For each college you are interested in attending, call them up and ask which specific financial aid methodology is being put into practice. The lingo may sound complicated at first glance, but as your financial aid glossary continues to grow, you'll soon discover that the working vocabulary you’ve accumulated is potentially worth thousands of dollars in the bank.

For step-by-step help from Ben Kaplan on how to supersize your financial aid award (including how to strategically appeal if you don't get as much grants as you hoped), see our Scholarship Super Camp.