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How Expected Family Contribution for College is Calculated

By U.S. News & World Report

California mom Kristina Shurbert was stunned to find out some colleges use the value of your home to calculate your expected family contribution.

“I was shocked to only now realize that Kenyon College has their own method of calculating ‘demonstrated need’ and does not use the FAFSA amount of estimated expected family contribution, EFC,” said Shurbert, whose daughter is a rising senior at the Ohio liberal arts college, in an email to U.S. News.

She says her EFC at the college was skewed higher because home prices where they live in Santa Cruz have skyrocketed in recent years.

[See how to map out your financial aid award letter.]

It’s common for parents to be frustrated with EFC calculations at colleges that use an institutional methodology for disbursing aid, experts say. That’s because the federal government calculates EFC differently than some colleges .

The federal EFC that a family receives from submitting the Free Application for Federal Student Aid — commonly known as the FAFSA — is only for grants and loans from the federal financial aid program. Work-study and the subsidized Stafford loan are two examples of federal financial aid determined by the FAFSA.

But when it comes to handing out institutional aid, colleges often use their own methodology.

While the FAFSA doesn’t take into account the value of a family’s primary residence or small business, a college disbursing its own funds may look at these assets.

Experts say that’s because colleges take a deeper dive into a family’s finances.

“It’s not uncommon for EFC amounts to vary at different colleges,” says Kristen Moon, founder of Atlanta-based Moon Prep. “The reason is that each college sets their own financial aid policy.”

A college with an institutional methodology might ask a family additional questions about their finances or require a CSS/Financial Aid Profile, the additional financial aid application administered through the College Board. More than 400 colleges, universities, organizations and scholarships use the CSS Profile to determine eligibility for grants and awards.

[Explore 10 shattered myths about financial aid.]

When considering a college with an institutional methodology, here are a few facts about how these colleges calculate a family’s EFC.

— The EFC generated from a CSS Profile can vary from school to school. “The profile is a secret formula. They haven’t released the methodology in over a decade,” says Mark Kantrowitz, vice president of strategy at college and scholarship search site Cappex.com .

Through the profile, schools will weigh income and assets differently than other schools to calculate their own EFC.

“Even though two colleges both use the CSS Profile, they can interpret the results differently per their financial aid policy,” says the Moon Prep adviser. “One college might take into a consideration a sibling in graduate school , whereas another college only takes into consideration a sibling who is an undergrad and considers graduate students independent.”

Colleges that use the CSS Profile can also add customized questions and adjust the formula when calculating eligibility for aid, experts say.

— Home equity can increase a family’s EFC on the CSS Profile. “Equity in a primary residence is an asset on the CSS Profile where it’s not considered an asset on the FAFSA. For this reason, it can result in a higher EFC at CSS Profile schools,” says Blaine Blontz, a financial consultant at Financial Aid Coach who advises parents and grad students on how to maximize financial aid awards.

[Weigh whether to use your home to pay for college.]

Blontz says each school that uses its own institutional methodology, such as the CSS Profile, can decide how they want to handle equity in a primary residence.

Some schools will factor in all of a family’s home equity while others will factor in only a portion, says Fred Amrein, a financial advisor and developer of EFC Plus, a software program that helps families plan for and afford college.

Experts say families should ask schools how they calculate home equity before submitting financial aid forms.

— A student’s contribution may increase EFC at a CSS Profile school. The contribution that a student can make toward paying for college is treated differently on the FAFSA compared with the CSS Profile. On the FAFSA, a student’s assets are assessed at 5 percent compared with 25 percent on the Profile, says Kantrowitz from Cappex.com.

He says families should ask a school whether their methodology includes a minimum student contribution or a summer work expectation. “Because that effectively sets the minimum EFC higher and you can expect to get less aid.”

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

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How Expected Family Contribution for College is Calculated originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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