Institutional Methodology To Calculate Financial Need For Non- Fafsa: Fill & Download for Free

I agree partially with Steven Lee . Your student will still qualify for scholarships that are merit based. Often scholarships offered by colleges are based on merit only in order to attract the stronger students. But not always, some or all may have a need component. Outside scholarships often have a need component. Your student may also qualify for scholarships that have a need requirement if your student has unmet need (Need = COA - EFC).As far as the 529 works for your financial aid reporting, if owned by the custodial parent or the student, it is treated like a parent asset which makes the impact on your FAFSA EFC less than if it were treated as a student asset. Depending on your income you may or may not qualify for any need based financial aid. Custodial parent assets contribute 5.6% to the FAFSA EFC calculation.But it gets a bit more complicated. Some private schools ask for additional financial forms, often CSS Profile. The colleges that do this do not use Federal Methodology to determine EFC when handing out their own aid. Each will have their own methodology to calculate Institutional EFC. You would have to ask individual colleges how they treat the 529.And it is a bit more complicated in the case of divorce, where the non-custodial parent own the 529. This won’t be reported on the FAFSA, but withdrawls, unlike the custodial parent withdrawls, are reported as student income and this can have a huge impact on EFC calculation. The custodial parent, for aid filing purposes, is the parent the student lived with the most in the 12 months preceding each year’s FAFSA filing.Here is an article that goes into it.Will Your 529 Plan Hurt Your Child's Eligibility For Financial Aid?

Why do you care who is handing out the money? The better question is, “How is the amount of financial aid a student receives decided?”Colleges and universities prepare a hypothetical budget called the Cost of Attendance (COA). Then the fun begins with calculating Financial Need (FN).Our Federal government has “generously” created the Federal Methodology (FM). This is a formula they use to figure out “who gets what” when it comes to federal aid: Pell Grants, Perkins Loans, Federal Work-Study, William D. Ford Federal Direct Loans, etc.You and your parents enter your financial data into the FAFSA. This data gets massaged by computers using the magic FM formula, and out pops a Student Aid Report with the all-important Expected Family Contribution (EFC) calculation.All the schools you listed on the FAFSA are going to receive this information also. For most schools, this will be adequate. However, there are exceptions to using the FM in calculating institutional aid.Have you heard of the College Board? This is a non-profit that has their hand in all kinds of stuff related to sending hapless teenagers off to college, e.g. the SAT. The College Board came up with the Institutional Methodology (IM) for determining your family’s eligibility for institutional financial aid.About three hundred very selective schools use some form of the College Board’s IM to determine eligibility for institutional financial aid. In addition to the FAFSA, your family will need to complete the CSS Profile form if you want to apply to any of these schools:CSS Profile Participating Institutions and ProgramsThink “financial colonoscopy.” Lucky you. Now you will receive a second EFC, calculated using a different formula. Usually, you won’t receive this until you get your awards letter.The final calculation is:COA-EFC=FNThe “gotcha” is that the schools aren’t required to meet the Financial Need. A few will. Most don’t—or at least without excessive loans.The amount and type of financial aid awarded by schools can vary dramatically from school to school. I’m sure that somewhere there was an eighteen-year-old who was able to figure this out on their own. I haven’t been privileged to meet that young person yet.This is complicated as Hell, and families need to know that it should be “all hands on deck.” To make a success out of college today requires a lot of planning, and financial aid is just one piece of the puzzle.Notes:There is a third approach to the EFC called Consensus. It was developed by a group that goes by the name of Section 568, and the methodology applies to maybe a couple dozen elite schools.568 Group - WikipediaThe “CSS” in CSS Profile stands for College Scholarship Service if you are curious.At first glance, the FAFSA looks intimidating. It really isn’t difficult. Unlike some government websites, this one works well. There is lots of good material on the Internet to lead you through this.When preparing the “real” budget for a college student, I would start with the COA, but I wouldn’t depend on it.Some schools have their own procedures for determining institutional financial aid.

The US government on behalf of public universities, and private universities that give need-based aid to meet 100% of demonstrated need, expects parents to be the main payers (or providers) of their own children’s higher education, within their ability to pay.There are some differences in the case of divorced parents or single parent (never married) households in federal and institutional methodologies to determine that ability to pay. The FAFSA requires only the custodial parent to report income/assets; institutional methodology requires both parents to report.Generally, student assets and income are assumed to be fully available for college (all income and up to 25% of assets each year). But students generally have much less income and assets than parents. Parental income is the primary determinant of expected family contribution. Some parental assets, generally the primary residence and all retirement accounts, are excluded from the EFC. Of the rest of parental assets, up to 4% or so each year are considered available to pay for college.Living within their means, which allows starting college savings early and having current income available for college expenses, is the best way for parents to pay for university. Dependents and living expenses (rent/mortgage) on the primary residence may be considered in calculating the EFC. Personal expenses (non-educational expenses) and personal debt are not considered for the most part by financial aid methodologies. Having to pay for two mortgages, a home equity line of credit, a boat, expensive car payments, or the like, don’t win any reduction in the EFC. But they can and do impact a family’s ability and/or desire to pay for college.Aside from the ability to pay, and the expected family contribution, the rest is highly personal. Is the child a good student who will make the most of college? Have they worked hard in high school to qualify for an elite or top-ranked college? How does the family value education? What will the money be spent on otherwise and what is its value? What is the least expensive choice for university and how does it compare in cost and value to the most expensive or the first choice? Can the child afford to put themself through college at the least expensive but acceptable option?Our personal values were to afford to send our kids to their college of choice, once we and they had considered the alternatives available to them. We were not able to save enough to pay “full freight” for three kids at once, but we calculated early on that they would qualify for financial aid and were definitely able to save enough (with family assistance from their great-grandfather - in a bequest - and grandparents on both sides) to pay the EFC. We made many life choices and a financial plan to make that happen for them (even with family assistance, we paid the majority of the expense). They prioritized education and did well enough to get into schools that had great need-based aid, and one got a merit award at a great public university out of state. One applied and was accepted ED at a school that guarantees to meet 100% of demonstrated need. The other two had multiple offers and the EFC and final costs were similar enough that did not have to be part of their choice.