College Board

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Understanding Financial Aid Methodologies

Applying For Financial Aid

So you know you will be applying for financial aid and you’re hearing something about methodologies.

Well, you’re hearing right. Methodologies is plural. There’s more than one. In fact, there are actually two methodologies for calculating financial aid: federal and institutional.

The federal methodology is used by the federal government when you submit the FAFSA (Free Application for Federal Student Aid) while the institutional methodology is used by individual colleges who require you to submit the CSS Profile, which is actually administered by the College Board.

So, what’s the difference beyond the names?

Good question.

While the FAFSA is required by all schools, only a couple hundred private schools require the CSS Profile. So, if you’re applying to the University of Connecticut, you won’t be required to fill out the CSS Profile. If you’re applying to Wesleyan University, a highly selective liberal arts college, you will be required to submit the Profile and you will then be subject to the more stringent requirements for aid eligibility.

The institutional methodology most often shows that a family needs to pay more for college than the federal methodology due to some of the following reasons:

1. If you own a business, 100% of its equity will be assessed.

2. Assets held in the names of siblings will be considered parental assets and assessed as such

3. Your home equity will be considered an asset

4. Only untaxed social security benefits for the student will be excluded. Benefits for the parent will not be excluded.

5. Pre-tax contributions to flex-plans for healthcare and dependent care are assessed as untaxed income

6. Education tax credits are assessed as untaxed income

Essentially, the federal methodology is much more forgiving than the institutional methodology. Since private colleges are dipping into their endowments to award institutional aid to their best applicants, they want to make sure this money is being used wisely (a very subjective term, here).

So, at the end of the day, take a close look at which schools you are applying to so that you know who is going to require the CSS Profile. Not all private schools will, but the more selective the school, the greater the chance that it will be required. You can find this information on the school’s financial aid website of by visiting the list of participating schools and programs on the CSS Profile webpage.

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Eric Sep 25, 2013 , , , , , , , , , , No Comments
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Applying For Financial Aid

Applying For Financial AidIf your son or daughter is going to college, then you already know that you need to apply for financial aid. What you may not know is that there are two different financial aid applications.

First, let’s talk about the application everyone needs to fill out before we talk about the application some of you will need.

The FAFSA is the Free Application for Federal Student Aid. It’s the application that is required by every college in order to consider and then award financial aid to your son or daughter. The FAFSA is free and while it will take some time to fill out, if you organize yourself ahead of time it will be much easier.

The FAFSA is a smart form which you will find very helpful. Based on the information you enter, the FAFSA customizes the questions so that you only need to answer questions that pertain to your individual situation.

While everyone needs to fill out the FAFSA, based on colleges you are applying to, some of you may also need to fill out the CSS Profile.

The Profile is only required by a couple hundred private schools in addition to some scholarship programs. Unlike the FAFSA, the Profile is not free. It will cost you $16 to register and then an additional $9 per school for each school to which you send the form.

Starting your Profile application is a two-step process. First, you must register. And you must do this in one shot. There’s no saving and going back, so get your documents and information together first, register for the Profile, and then complete the applications.

To help yourself out with the FAFSA and the CSS Profile, you will want to collect the following before you get started:

  • Student’s social security number
  • Student’s driver’s license number
  • Statements for checking and savings accounts
  • Copy of last year’s tax return and W-2’s
  • Statements for any investment accounts
  • Current mortgage statement (Profile only)

Both applications go live on October 1st so it’s important to start your financial aid application planning now. While the college admissions process is about to take center stage for the next couple months, it’s also time to think about the financial end of things. It can get complicated with college visits, prepping for the ACT and SAT, completing applications and looking at the financial picture.

If you want some help and guidance to make sure you’re doing it right, set up an appointment today for a free consultation.

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Eric Aug 28, 2013 , , , , , , , , , , , , , No Comments
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Why You Should Know Your EFC

Last week I wrote a post about understanding the difference between net price and sticker price. Today, I wanted to carry the financial torch a bit further by talking about EFC.

EFC? What’s that you say? Another acronym?

Yup. The world of college admissions and financial aid is full of them.

EFC stands for expected family contribution. It is the amount of money you will be expected to contribute towards one year of your college costs. While it won’t paint the entire picture for you, it will serve as a starting point before you venture into how generous a school is with their aid. You won’t know your official EFC until after you’ve completed the Free Application for Federal Student Aid (FAFSA) and, in my opinion, this is too late. You can’t fill out the FAFSA until after January 1st of the student’s senior year when decisions on where you are applying have already been made.

Rather, you should know your EFC before you start getting too deep into looking at colleges.

Parents of freshmen, sophomores and juniors, I’m talking to you.

For example, let’s say your EFC is $25,000. If you are looking at a college where the cost of attendance is $55,000 you can immediately see that you will be hoping to get $30,000 in aid. Conversely, if the college’s cost of attendance is $30,000, you shouldn’t be expecting much of anything outside of the basic student loan.

In the case of the former, $30,000 is a big difference to make up. The next step is to understand just how generous a school is and if they are going to help you out. Typically, the biggest factor in whether or not a college is going to offer you a financial aid package that meets your need is how competitive you are as an applicant.

Do yourself a favor and obtain your estimated EFC now. Write it down, understand it and use it when you are researching schools and want to know what a school is going to cost you.

If you have questions or would like some help figuring out how to reduce the cost of college, use the comment box below or email me directly at eric@doblercollegeconsulting.com. I would love to hear from you!

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Eric Nov 18, 2012 , , , , , , , , No Comments
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How Much Is That College In The Window?

The other day I was working with a student who ended up learning a lot about the difference between sticker price and net price. The student in question was interested in architecture but assumed that schools who offer the program would cost him too much.  In fact, he was prepared to give up on the idea of architecture and pick a different major altogether so that he could attend a local state school here in Connecticut just to save money.

While this is not meant to be a knock on our state schools (I’m a product of two of them), this is a knock on a system that had so far prevented this young man from truly understanding his options.

I proceeded to pull up the College Board website so that I could show him the difference between sticker price and net price. Since he wanted to stay in the Northeast, we narrowed his search down to several schools in the New England and Mid-Atlantic region. For the purpose of this blog, I randomly selected three schools from the list we generated: Lehigh University, Temple University, and Philadelphia University.

Going by the assumptions the student was making about sticker price, one year of college would cost him $55,515 at Lehigh, $38,935 at Temple and $46,282 at Philadelphia. Each one of them a prohibitive cost. But then I showed him the Paying tab on the College Board website and how he needed to look beyond the sticker price of each institution. Upon doing so, I was able to show him that Lehigh’s average first year financial aid package is $34,773 making their net price $20,742. Temple’s average package was $15,373 bringing the net price in at $23,562. Philadelphia University gives freshmen $28,220 to bring the true price down to $18,062.

All of a sudden, not so prohibitive.

Seeing as how this student’s grades and SAT scores fell within the top 25% of admitted students for each school, it’s a safe bet to say he’s probably going to receive the average package from each school. In fact, he may receive financial aid packages that are better than the average.

Another way to figure out what a school is going to cost you is to use a net price calculator. Colleges are now required to include one on their website, though some are easier to find than others. These calculators will ask you to enter some personal information and will then compute an estimated net price. Not all calculators are created equal so be sure to pay close attention to the breakdown of loans, grants and merit money when you get your net price results.

At the end of the day, as this student learned, it pays to do your homework.

If you have questions about net price or would like some help figuring out how to reduce the cost of college, use the comment box below or email me directly at eric@doblercollegeconsulting.com. I would love to hear from you!

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Eric Nov 11, 2012 , , , , , , , No Comments
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Must Have Items On Your College List – Part II

Two weeks ago, I talked about how to build a great college list and then last week I introduced the first four of eight “must-haves” you should consider when creating a college list. Today, in Part II, I’m going to cover types of admission, chance of admission, graduation rates and cost.

Types of admission
There are several types of admission and how much you love a school will often dictate how you end up applying. Here’s a rundown of the major types of admission to consider:

1. Regular decision is the process by which you apply by each college’s published deadlines. By doing so, you will receive an admissions decision by April 1st though there is no obligation to commit until the May 1st response deadline.

2. Early decision, also known as ED is where you can apply early and receive your decision early – typically by mid-December. The price for this early decision is that you commit to attending the college and agree to withdraw all other applications. You can only apply ED to one school and, since this is a binding acceptance, you better know that this school is the right one for you on all fronts.

3. Early action, or EA, also allows you to apply early though, unlike with ED, you are under no obligation to accept the offer of admission. You can submit other applications, wait for their responses and then make a decision by May 1st. Essentially, you can play the field. There are variations of EA policies, so be sure to check with each school individually on their restrictions.

4. Rolling admissions is where students are admitted on a regular, or rolling, basis. The schools will make decisions until they have met their requirements for the new freshman class.

We’ll talk more about these different types of admission in a week or two.

Chance of admission

It’s important to get a feel for your chance of admission so that you have appropriate expectations about each school before you add it to you list.

That’s right. BEFORE.

Do your research by using websites like the College Board’s Big Future to understand whether or not you are a competitive applicant when compared to students who have previously been admitted. You know Harvard and Yale are a reach for just about everyone, but do you know if Quinnipiac is a reach? By selecting the SAT & ACT Scores tab on the Applying section, you would see that the middle 50% of admitted and enrolled students score within 520-590 on the Critical Reading, 540-610 on the MATH and 540-610 on the Writing. Under the Academics tab, you can compare your high school courses against the courses Quinnipiac expects to see from its applicants. Now, where do you stack up and what do you think of your chances?

Graduation rates

College is supposed to be the best four years of your life, right? Well, for the most part, graduation rates are actually quoted for six years instead of four. So, if you’re planning a budget based on four years’ worth of tuition and fees, you want to know that the schools you are adding to your college list can actually help you accomplish this. Want to know the four, five or six-year graduation rates for Boston College? You can find them at College Results Online. Want to know how Boston College’s peer institutions fare in the graduation rate category? You can find that information by simply clicking on the Similar Colleges tab.

Cost

There’s a lot to say about cost and the factors that go into it, but for today I want to talk about understanding that the price in the window, is not necessarily the price you end up paying.

Tuition and fees have risen over 400% since the early 80’s. But like everything in your college search, doing some homework ahead of time can really help.

What’s important to understand is that a lot of schools discount their tuition– especially private schools. This adjusted cost is called net price and it can, and will, be different for families based on the qualifications of each applicant, how much money a school typically throws at its new students and your EFC. EFC stands for “Expected Family Contribution” and it is the amount a college will expect you to contribute towards your cost. The higher your EFC, the more you will be expected to contribute and the less aid you can expect to receive. Since last fall, colleges have been required to host net price calculators somewhere on their website. You can use the calculators to enter your personal information and get an idea of what the net price might be for you.

The calculators are far from perfect, but if a school’s cost is going to be too much for you, it’s always better to be disappointed before you apply rather than after you have been accepted.

If you have any questions about building a great college list, please use the comment box below – I would love to hear from you!

You can also email me directly at eric@doblercollegeconsulting.com.

 

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Eric Jul 30, 2012 , , , , , , , , , No Comments