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.
More from U.S. News
Video: Decode Your Financial Aid Package
Declare Yourself Independent for College Financial Aid
10 Shattered Myths About Financial Aid
How Expected Family Contribution for College is Calculated originally appeared on usnews.com
