Estimating College Aid Eligibility Part 1

The process of applying for need-based financial aid for college begins by students and parents completing one or two financial aid forms, the FAFSA (Free Application for Federal Student Aid) and/or the CSS Profile. Any college or university that awards federal student aid must require that students complete the FAFSA in order to determine eligibility for federal aid (it works for most state aid too). Most colleges and universities nationwide use the FAFSA as their sole application for need-based financial aid, so students applying for aid at those colleges only need to complete the FAFSA.

However, there are about 300 colleges which require that the CSS Profile also be completed in addition to the FAFSA. Those colleges use the CSS profile to assess the student’s eligibility for the college’s own institutional aid dollars. Typically, “Profile” colleges are very selective private colleges, including the Ivies, but the University of Michigan at Ann Arbor and the University of North Carolina at Chapel Hill are examples of flagship state universities that also require the Profile.

Calculating the Family’s Expected Contribution (EFC)
Regardless of the aid form (s) the student is required to complete and submit as part of the process of applying for financial aid, and after all of the time and information it takes to complete the form (s), it all boils down to three letters, EFC.

You provide your financial information on the aid forms (FAFSA and CSS Profile), submit the forms online to the processing centers for each respective form, and the information from the forms goes into the aid calculations (the Federal Methodology and the Institutional Methodology). The output of those need analysis calculations is the student’s expected family contribution (EFC) toward the cost of college. The student’s EFC is the minimum amount the student is expected to contribute toward the cost of college. Thus, EFC represents a dollar amount. It is the “output” of the aid forms and calculations.

Both of the EFC formulas focus primarily on the assets and income of the parents and student, family size and the number of dependent children enrolled in college in a given year to assess the family’s ability to pay for college using the income and assets that they have. And because the two formulas calculate EFC differently, it’s likely that the student’s EFC under each formula will also be different.

Using a Student’s EFC to Determine the Need for Financial Aid
EFC is used to analyze a students’ need for financial aid using a simple formula that subtracts the student’s expected family contribution (EFC) from a college’s total cost of attendance (Cost of Attendance – EFC = Financial Need). If a student’s EFC is less than a college’s cost of attendance, then the student qualifies for need-based financial aid.


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Before You Do Anything Else…

You and your student have been so busy with the application process for so long that it feels as though you should still be working at it until your student has that acceptance letter in hand. It’s difficult to stop. Here are a couple of things not to do:

  • There is no reason to call admissions to check on the application. The admissions process takes time. Calling constantly to check on the status of the application will not help. Calls from parents especially will not help. Unless there is a major change in some information in the application, do not call.
  • Don’t ask your student if she has heard anything, or whether her friends have heard anything. It’s time to put this on the shelf and let her enjoy high school for a while knowing that the job was well done. Let her live in the NOW.

If you wish to discuss graduation rates with admissions, I’ve found it productive to ask what steps your student can take to increase the chances of graduating in four years rather than asking why the four year rate is low (or low compared to others).

Here are some top reasons why a student might not graduate in four years:

  • Transferring to another college
  • A change of direction or major
  • College not offering enough classes each semester
  • Completing a double major
  • Failing too many classes
  • Artificially raising GPA to keep scholarships by withdrawing from too many classes
  • Low GPA
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Financial Aid Question of the Month

Q. We will need financial aid but can pay for the first year from our savings. We worry that if we apply for aid in our son’s first year of college, his chances of acceptance will go down. Our question is, will we be able to go back and apply for aid for his second, third and fourth years…or even the first year?

A. You are asking two questions. To address the first, generally, the answer is no: applying for financial aid does not have an impact of whether or not your student will be admitted. However, at some of the more selective private colleges if there are two equally qualified students and one needs aid and the other does not, chances are that the one needing less aid (or none at all) will be admitted.

As to the second question, parents who wait to apply for aid after the student has been admitted will find that they will be denied institutional financial aid (i.e., the college’s own funds) though they can apply for federal funds. Further, they will be denied in the second year, too. Many of these colleges will insist that the student have earned up to 64 credits or two complete years before they’re allowed to apply for institutional financial aid.

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Your Best Strategy® to Pay for College

The four key areas that must be considered in the process of determining Your Best Strategy® to pay for college and save for retirement are: College selection, financial aid, tax aid and personal resources.  To make intelligent decisions in these four areas requires specialized knowledge of college admissions, financial aid, taxes, and financial planning. Even if you have people advising you in these areas, it can be difficult to pull that expertise together specifically for college planning and retirement purposes. Let’s take a look at an example to gain perspective. Parental income is the biggest factor in the calculation of a student’s expected family contribution (EFC), the minimum amount the student/family is expected to contribute toward the cost of college. The most common allowances against income in the EFC formula are: federal taxes, state taxes, FICA taxes, and an income protection allowance.

So the amount of taxes you pay helps reduce the amount of income that gets calculated in the EFC formula. Therefore, the more tax the parents pay, the lower the EFC is. But conventional financial planning strives to help parents pay less tax, not more. So you can begin to see how complicated college planning can be by just looking at two variables.Things like retirement plan contributions, whose names assets are saved in and what types of ac‐ counts those assets are in, are also big factors in determining EFC. The reason that a student’s EFC is so important is because it is part of what is referred to as financial need analysis, where the EFC gets subtracted from a college’s total cost of attendance to determine if the student has “need” for financial aid (Cost—EFC = Financial Need).

So it is safe to say that anything that affects your income, taxes and non‐retirement assets may also affect a student’s EFC, and therefore possibly the student’s aid eligibility. However, note that the first variable in the need analysis formula is the cost of college.Therefore, you can see that college selection may directly affect a student’s aid eligibility because, based on cost, a student with an EFC of $20,000 will demonstrate need at a college costing $45,000, but not at another college costing $18,000 per year. Moreover, the American Opportunity Tax Credit is an example of what we refer to as “Tax Aid”, and is available to some taxpayers when they pay qualified college tuition costs. So college selection, financial aid, tax aid and your personal resources are all interconnected. Which is especially important considering that what parents spend on college they don’t have to save for their retirement. It is fair to say that there is a lot more to college planning than applying to a few colleges and completing a financial aid form. Moreover, the college decisions you make today will create ripple effects for years to come. Hopefully this newsletter will help you make them well.

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Your College Search

What do Lewisburg, PA, Brunswick, ME, Clinton, NY, Gambier, OH; Northfield, MN and Middletown, CT all have in common? They are each home to some of the finest examples of post‐ secondary education in the United States. Bucknell, Bowdoin, Hamilton, Kenyon, Carleton and Wesleyan along with a few thousand others are what make this country so rich, so envied in the global educational hierarchy.  Why, do you suppose, with all of the obstacles presented by endless application requirements, restrictive immigration procedures, out‐of‐sight costs of attendance and all‐too‐often blatant cultural insensitivities, do half a million foreign students per year continue to flock to these shores to be schooled? Simply put, because our schools are the best in the world! Sure, there are Oxford and Cambridge, Polytechnique and HEC, Monash, Keio and McGill, but for sheer numbers and overall quality, no nation on earth can rival ours when it comes to getting a college degree.  That doesn’t mean that college is for everyone, but the majority of high school students that do choose the college path can select from a wide variety of two‐year and four‐year programs to earn an associate degree, bachelors degree, or even pursue a masters or PhD. So there are a lot of colleges, with a lot of majors and degree programs in America from which to choose.  The biggest challenge then often becomes how to navigate through all of those colleges, degree programs and areas of study, without becoming overwhelmed, confused and frustrated. Constructing a narrowed list of potential colleges, investigating them thoroughly, identifying those that best meet your needs and choosing a final grouping which represents the best choices for you or your child is extremely important.  With proper attention, focus and realistic expectations, this is not a terribly difficult exercise. There are, though, a few rules to follow as you embark on this exciting quest.

First, do not play the “name game.”  What is Dartmouth, anyhow? Or Andover or Groton? Or Stanford, Rice or Smith? For one, they are wonderful examples of education at its finest. For another, they are about as different as they can be with very diverse communities, philosophies and pedagogies.  So, if you think you know a place because you’ve heard of it, your friends go there or their basketball team played in the NCAA basketball tournament … well, you don’t. And don’t bother with rankings which purport to rate schools and colleges on some scale by manipulating suspect data and employing meaningless methodologies.  Your mission, remember, is to figure out what works for you and find those institutions which value your unique characteristics. 

Second, cast your net widely.  Research all of those unusual names and places which you may never before have thought much about, and come away with a working file to go forward with.  Now, the real fun begins: the sense of discovery when your list of names takes on shape and size as you delve more deeply into what they have to offer you.  Read the guides, spend time exploring the web sites, take the virtual tours, scan the school newspapers, email a teacher or professor in a field that you find interesting, join the chats, correspond with a student and, eventually, arrange for an actual campus visit.

Third, when you go for a visit do it all. Take the formal tour. Ask questions regardless of how reticent you may be, and listen to the answers. Arrange for an interview where you can, and remember the name of the person with whom you spoke; it’s a good idea to get their card and write a simple thank you note, because you may want to stay in touch. Then go out on your own and really look around campus. Visit a dorm, a lecture hall or classroom, the lounge, café or student center. Summon the courage to ask a student what they like about being there and most will be happy to talk with you.  Now that list of yours has some flesh and blood! When you get around to refining it, you’ll have reasons for why certain schools will remain and why others can be crossed off. It will be your list, for your reasons, and to your specifications. You know what’s good for you.

Now it’s time to talk about how admissions committees know if you are good for them.  Enrollment committees seek to construct the truth about candidates as best as they can. Naturally, as a candidate for admission you have the most to say about who you are and why an institution should desire your presence in its fold. When you say what you have to say, be honest, straightforward and genuine in your presentation of yourself. Occasionally, we lose sight of exactly what college is really all about, that is academics! Sure, there are lots of other activities associated with attending educational institutions, but what matters most to admissions committees is success in the most rigorous curriculum for which you qualify and a showing on standardized testing commensurate with your ability. Nothing can change this reality. Therefore, your most important task will be to soberly and objectively assess your academic performance as it relates to an institution’s profile and make your selections accordingly. Yes, personal statements can be compelling, especially if they emphasize a unique aspect of your character or point out something positive not otherwise apparent in your application. Teacher recommendations can make persuasive arguments as to why you deserve to be seriously considered as a force in the classroom. Athletic, creative or artistic talent can be highlighted, especially where these traits are valued, and exceptional service can be touted, since it describes the potential contribution you will make to your new community.  However, there is no substitute for the highest achievement in the most demanding courses, accompanied by stellar performance on entrance exams. That’s just the way it is, so don’t get too caught up in what you might have read about needing lots of community service or extracurricular activities. You now know what really matters most; academics!

Going to visit some colleges? We can help you estimate your aid eligibility and likelihood of admission, before you visit.

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High School Juniors: The Admission Process

November is the time for high school juniors to begin the admissions process. One thing that often proves useful is sitting for the Myers-Briggs Type Indicator. The MBTI will give you and your student a wonderful insight into how their personality type can help identify careers that will play to their strengths. Another benefit of the MBTI is that students can begin to focus on majors that will help prepare them for their career.

This exercise can prove invaluable in finding the right college fit, too. Colleges have a personality, of sorts, just like people. By finding a compatible match the student can learn in an environment where they will get the most out of their education, not just go through the motions.

Other activities include preparing for standardized tests. Even though you won’t know the results of the PSAT until December, it can take as long as a year to build up a needed vocabulary. One small thing your student can do is to take the initiative and sign up for The Official SAT Question of the Day™ and have math and verbal questions sent to their email. You can be cc’d as well and you know what? It’s kind of fun. This can be a way to stay connected with your student through the process. Of course, it won’t help unless your student checks their email, which too many don’t these days. It’s too bad the questions can’t be sent by text!

Just so you are aware, the SAT, which is more of a reasoning test that many students haven’t been adequately prepared to take, isn’t the be all and end all of standardized tests. There is the ACT, which is more of an achievement test and results are accepted at all colleges and universities. If you have any questions, don’t hesitate to reach out to us for answers.

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