Typically your school will have an annual budget which will include tuition, books & supplies, living costs, (including rent, utilities, food, transportation, and personal money for the academic year, i.e., ~10 months). From that total amount they will subtract any grants or scholarships. In the worst of situations they will subtract your EFC from what is left and award you loans for anything that is remaining.
However, the loan amounts seem to be somewhat at the discretion of the financial aid office. My EFC is always more than the annual budget for school but they still allow me to borrow tens of thousands of dollars in Stafford loans.
