Do You Know What The Dept. Of Education Considers To Be Your Fair Share Of The Cost Of College?

Colleges and Universities use that figure to determine how much financial aid your student will receive. A family is not expected to pay the entire cost of education, just their fair share, based on the parent’s and student’s financial circumstances. The government thus created financial aid and in order to make sure it is dished out fairly, they developed the federal methodology for determining what a family can afford for one year of college education.

The formula looks at four areas-- the parents' income and taxable assets and the student's income and taxable assets.

Looking at parent’s income, there are allowances given for the number in the household, number in college and taxes paid. After those allowances are deducted from the Adjusted Gross Income figure taken from the previous year’s tax return, the remainder is applied to a percentage scale. That figure becomes the parent’s contribution from income. Parent’s taxable assets are assessed at 12% after an asset protection allowance is subtracted based on the age of the older parent. The value of retirement accounts, life insurance and annuities is not considered. However, any contributions to retirement accounts are added back into income.

The student is treated in much the same way. If they worked during the previous year, their income is reported and allowances are given for taxes paid and an additional $2,200 is taken off the top. Whatever is left is assessed at 50% as the student’s contribution from income. There is no allowance applied to student’s assets. If there is money in their name, it’s assessed at 35%!

Those fours figures come together to determine what is considered to be the student’s fair share for one year of education (tuition, fees, room & board, books, misc., and transportation). That magic number is called the Expected Family Contribution (EFC) and is then compared to the cost of a particular college or university to see if the student establishes need.

The federal methodology is used by public institutions and private as well. Private schools, however, may also use an additional application to collect more financial information which the Free Application for Federal Student Aid (FAFSA) does not ask for. The CSS Profile, administered by the College Board through the College Scholarship Service, asks for home equity information, which can change the EFC calculation significantly if the family has a great deal of equity built up in their home. On the "plus" side, the Profile allows for excess medical expenses and private tuition for elementary or high school to be excluded from the formula. The FAFSA does not. The important factor is the Profile allows the individual college to ask additional questions, of which there are some 60.

The important thing to remember is that the Expected Family Contribution is really an estimate, because once the numbers are at the financial aid office of the college, the financial aid administrator can adjust them for any number of reasons.

Campus Financial can help you determine your EFC, provide strategies for reducing the family’s fair share and assist in talking to the financial aid offices about adjusting the EFC if appropriate.

GET THE FACTS ON YOUR ESTIMATED FAMILY CONTRIBUTION BEFORE YOU APPLY!

Campus Financial has the answers! info@campusfinancial.org