FAQs - SAFE Steps

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FAFSA/CSS

I have heard that private colleges/universities, that typically cost much more than public schools are somehow more affordable. How is that possible?

Unless you qualify for federal and/or state funds, most families receive little to nothing from public colleges. Many private colleges, on the other hand, offer need-based financial aid resulting from your EFC calculation. Private schools offer much more merit scholarships as well.
What is meant by the term “Profile School?”

Only about 10% of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.
I’ve heard it was a waste of time filling out the FAFSA form if you make over $100,000. Is that true?

This is such a common misconception and is absolutely false. Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

Also, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.
Is it better to declare a major when applying to college or to go undeclared?

There’s not a one answer solution for this question. A large number of college freshmen enter undeclared. This is not uncommon, but for a student who has aspirations of entering an impacted curriculum or otherwise selective college within a university and assumes they can “slip in under the radar” by entering undeclared and then transferring late in the sophomore year, they will most often be very disappointed.

The accurate answer to your question is this: The necessity to declare (or not declare) a major depends on a number of factors, including the college, the major, even the student’s academic credentials.
My son has a GPA of 2.5 and is a junior in high school. Should he be concerned about not getting into college because of his grades?

The vast majority of colleges in America are what we call “pay-and-go”. Your son can easily get into many colleges with a GPA of 2.5. These colleges may or may not be the ones he has in mind.

The real concern is if your son should go to college or not? The first question to ask is why he wants to go – if he has a big enough why his GPA will go up and he will be willing to do whatever it takes to make his dream come true.
What’s the difference between Early Action and Early Decision?

There’s one major difference that should be considered. Early Action is NON-committal, while Early Decision IS. You can apply Early Action and in the event that you’re accepted you don’t need to commit until May 1st. However, if you apply Early Decision and you’re accepted, you agree to attend as well as accept the financial aid award offered which may or may not be a good offer.
Should every student go to college right out of high school?

Definitely not. Many students consider taking a GAP year after high school even if they plan on going to college. Higher education, however achieved, is all about planning for a career. What’s important are skills and knowledge. There are many alternatives to achieving this, including:

Community college

Four Year Colleges/Universities

Trade & Technology schools

Military Service

Apprenticeships

Online & Distance Learning programs
How much does it cost to apply to a college?

The cost can vary from approximately $50 to about $80 or so with the high end being $100 with additional costs of mailing, etc.
How many colleges should my child apply to?

Every child’s situation is different but on average probably six (6) as a minimum with approximately 12 as the maximum.
How easy is it to obtain an athletic scholarship?

They are not easily obtained. Athletic scholarships are highly misunderstood. Only a small number of exceptionally talented high school athletes even have a chance of being recruited into a Division 1 college. And for those fortunate ones who are, the vast majority will find only a partial scholarship being offered them. Most often it doesn’t come even close to paying for tuition, not to mention room & board, books, and living expenses. The other thing to keep in mind is that in the event of an injury, the scholarship can be removed.
Can a student go to any college they want debt free?

No, that just isn’t possible. But, with proper planning, by both the student and the parents, any student can achieve higher education; receive valuable skills, and training, without going into debt. There is no one way, one-size-fits-all solution. This is a process that the whole family take part in and is what the SAFE Steps is all about.
Does my EFC (Expected Family Contribution) have anything to do with what I can afford to pay?

EFC is based on the federal algorithms (properly called the Federal Methodology), contained within the FAFSA form and calculates what you are expected to pay and has nothing to do with affordability.
Is my EFC (Expected Family Contribution) the maximum I will have to pay if my child attends a public college?

No, the EFC, as calculated by the FAFSA form should be viewed as a benchmark used by colleges to assess a child’s eligibility for need-based financial aid and not as the yearly amount that you can expect to pay for attending the college.

I normally file for an income tax extension. Will that affect my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.
What are the tax laws regarding an employer-funded scholarship?

This type of scholarship is considered a Scholarship Prize. Such scholarships can be used for any purpose, including a computer, car, travel, etc., even clothes. However, if part or all the funds are used for such purposes, then 100% of the scholarship funds are seen as taxable income.

If a portion of the scholarship is used to pay for college tuition but the rest is used to buy a car, then 100% of the scholarship funds are treated as taxable income. On the other hand, if ALL of the funds are used to pay for qualified educational expenses such as tuition & fees, required books, supplies, etc., then the scholarship would qualify as tax-free income under IRS guidelines.
What are the tax consequences of withdrawing funds from an IRA to fund your child’s college education?

Penalty-free withdrawals from regular IRAs can be made to pay for undergraduate or graduate qualified higher education expenses for the taxpayer, the taxpayer’s spouse, or the child or grandchild of the taxpayer at an eligible educational institution.

The taxpayer will owe federal income tax on the amount withdrawn, but will not be subject to the typical 10% early withdrawal penalty. The penalty-free IRA withdrawal is available only if the withdrawal is used to pay for “qualified education expenses”.

Qualified education expenses include tuition, fees, books, supplies, and equipment. Room and board are also included if the student is enrolled on at least a half-time basis.

Any tax-free item under IRC Section 117 must reduce these education expenses such as, scholarships or grants, IRC Section 135 qualified U.S. Series EE bonds, veteran’s education benefits, and other tax-free educational benefits.
My income is non-taxable. Does this affect how I file for financial aid?

No, FAFSA and CSS do not care whether income is taxable or not. In most cases all income must be declared. There is a section for Untaxed Income.
Is it true that our child will qualify for more financial aid if we stop claiming them as an exemption on our taxes?

No, this is not true. Until your child turns 24, gets married, has a baby, or enters the military, they are considered a dependent student in the eyes of the government and the colleges.

How many types of Financial Aid forms are there?

Financial Aid Forms fall into 3 categories:

The Federal FAFSA Form

College Board’s CSS Profile Form

Institutional Financial Aid Forms (private colleges)

The individual college websites will indicate which of these is necessary. Some colleges require only the FAFSA, while others require the FAFSA and the Profile, and yet others, all three.

For many public colleges, the only “financial aid” offered some families is in the form of loans… the student Stafford loan and the parent PLUS loan. The SAFE Steps strongly advises AGAINST these loans.
Do existing student loans affect a family’s Expected Family Contribution (EFC)?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.
Why are loans considered financial aid?

This is a great question. Many moms and dads are shocked when they learn that some colleges boast at “meeting 100% need”, with the financial aid award being comprised of nothing but loans.

There are 2 basic categories of student loans: subsidized and UN-subsidized. There’s somewhat of a case to be made that the subsidized loans are financial aid, only because these loans are interest-free to the student as long as the student is enrolled at least half-time in a college. The fact that the government/tax-payers is paying the interest lends itself to categorizing this type of loan as financial aid but it’s still a loan that must be paid back after graduation, and with some level of interest.

Now for the 2nd category of loans… unsubsidized. While the government and many colleges consider these too to be “financial aid”, it’s really a stretch. Granted, the payments are deferred until after graduation, BUT these loans begin accruing interest the day the funds are disbursed to the college. And the federal Stafford loan (the most common/de facto standard) could rise up to the capped interest rate of 8.25%.
Is it true that students who can’t pay back student loans can file for bankruptcy and eliminate the debt?

No, bankruptcy does not eliminate student loan obligations.
What’s the difference between a subsidized and an unsubsidized loan?

While student loans, subsidized and unsubsidized, always offer deferred repayment terms until post-college graduation, subsidized loans are vastly preferred to unsubsidized.

Federal subsidized loans accrue NO interest as long as the student is enrolled in college with a status at least equal to half-time. For students receiving the maximum subsidized Stafford loan of $3500 for the freshman year, even if they were to continue into an advanced degree program (Masters, even Ph.D.), the day they graduate (many years later), the principal on their freshman loan would still be $3500.

Federal unsubsidized loans accrue interest from the moment the funds are disbursed to the college. We advise AGAINST taking out federal unsubsidized loans. Interest rates are uncertain and these adjust each summer. They can potentially exceed 8%.
What loans can a student get without their parent’s co-signature?

The only student loan that is guaranteed to undergraduate college students is the federal Stafford loan. Every freshman is entitled to $5500, sophomores $6500, and juniors and seniors each receive $7500. There are additional education loans you may have heard of including Perkins loans, (parent) PLUS loans, and private loans, but these are not entitlement loans. Adding up the Stafford loan amounts mentioned, students can borrow $27K over 4 years, and if a 5th year (or more) is required to achieve the undergrad degree, an additional $4K (total) is available, maxing the Stafford loan out at $31K.
Is it true that a parent’s Social Security check can be garnished if they fall behind on a federal PLUS loan payment?

Yes, this is true.
What loans can be taken out in order to pay for the entire cost of college?

It is possible to borrow the entire amount for college costs but we at The SAFE Steps advises against this. Here is some information that you may find helpful:

The only “entitlement” loan that a student can expect to receive is the Stafford loan. This amounts to $27K over 4 years. Families who do not receive any financial aid, either Need or Merit based, can choose to borrow the balance in one of two manners:

Federal parent PLUS loan. This is NOT an entitlement and must applied for by EITHER Mom or Dad. Depending on the financial profile of the family, some parents are approved and some are not. You can borrow up to the cost of college, NOT counting financial aid offered. The interest rate for this loan is 7.9% and there is a 4% origination fee.

Private loans. Institutions like Sallie Mae, Chase Bank, Citibank, etc. offer student loans with the contingency that Mom or Dad must co-sign. These loans vary in interest rates as a function of credit history, risk, etc.

How many times may a student take the SAT exam?

There’s no limit on how many times a student can take the SAT exam. Having said that, it’s better, in our opinion to prepare ahead of time in order to limit the number of times the exam needs to be taken. Same situation for the ACT exam. Many students have a clear preference of one of them over the other. If they feel confident that with additional preparation they can increase their score substantially, they should take it once more. This approach works well for most students.
Is there a way to prepare for the ACT or SAT exams?

There are a number of online courses as well as tutor and classroom options available. We would suggest ePrep as a good online option. Click here to check it out.
How long is the ACT exam?

The ACT is just a little shorter than the SAT. There’s an optional essay section. With the essay, the ACT is 3 hours and 25 minutes. Without the essay, it’s 2 hours and 55 minutes. It’s comprised of 5 sections:

English, 1 section

Math, 1 section

Reading, 1 section

Science, 1 section

Writing, 1 section

Each of the 5 sections counts for 36 points and the composite (total) score is the arithmetic average of the 5 section scores, so a perfect score would be 36.
What is the average ACT score?

· English: 20.3

· Math: 20.9

· Reading: 21.3

· Science: 20.8

· Composite: 21.0
How long is the SAT exam?

The SAT is 3 hours and 45 minutes long. It’s comprised of 10 sections:

Math, 3 sections

Critical Reading, 3 sections

Writing, 3 sections

Experimental, 1 section

The Math, Critical Reading, and Writing all count for 800 points each, so a perfect score would be 2400. About half the colleges aren’t counting the essay.
What is the average SAT score?

For 2012, according to Kaplan, the average SAT sub-scores were as follow:

Math: 514

Critical Reading: 496

Writing (Multiple Choice): 488

Writing (Essay): 7.1 (out of 12)

Total Average SAT Score: 1498
When is the PSAT exam given?

The PSAT will be offered in October and November of 2016 to 10th and 11th graders. There are three possible PSAT test dates this year: Primary: Wednesday Oct. 19. Alternate: Wednesday Nov. 2.
How are ACT exams scored?

Here are the 3 elements that define the scoring system for the ACT:

Correct Answer: +1 point

Omitted Question: 0 points

Incorrect Answer: 0 points
How are SAT exams scored?

Here are the 4 elements that define College Board’s scoring system for the SAT:

Correct Answer: +1 point

Omitted Question: 0 points

Incorrect Answer (multiple choice): -1/4 point

Incorrect Answer (non-multiple choice math questions): 0 points

My son has a GPA of 2.5 and is a junior in high school. Should he be concerned about not getting into college because of his grades?

The vast majority of colleges in America are what we call “pay-and-go”. Your son can easily get into many colleges with a GPA of 2.5. These colleges may or may not be the ones he has in mind.

The real concern is if your son should go to college or not? The first question to ask is why he wants to go – if he has a big enough why his GPA will go up and he will be willing to do whatever it takes to make his dream come true.
Where, at the college is it best to inquire about Merit Based Aid – the Financial Aid Office or Admissions?

The Financial Aid Office of a college handles need-based financial aid, but the Admissions Office administers all merit-based financial aid.
Can you appeal an admissions denial?

You may appeal though the likelihood of the appeal being successful is doubtful. There is always a possibility but it is rare.
What is the most important factor when applications are being reviewed by college admissions?
According to NACAC (National Association of College Admissions Counselors), here are the “Top Factors in College Admissions”:
1. Grades in College Prep Courses
  - AP (Advanced Placement) classes/tests
  - IB (International Baccalaureate) classes/diploma
  - Dual-enrollment Courses
2. Strength of Curriculum
  - Rigor
  - Relevance
  - Quantity & Quality
3. Admissions Test Scores
  - SAT
  - ACT
  - AP & Subject Tests
4. High School GPA

What happens if my child applies Early Decision, gets accepted, and we can’t afford the college due to a lack of financial aid being offered?

It’s very unfortunate that families actually back out of an Early Decision (ED) offer, but it does happen. Applying ED is a serious commitment. It is indeed a binding agreement. You’re agreeing that, if accepted, your child WILL attend. And by implication you’re agreeing to accept the financial aid package, if any, forthcoming.

The Common Application instructions for ED state:

“If you are accepted under an Early Decision plan, you must promptly withdraw the applications submitted to other colleges and universities and make no additional applications to any other university in any country. If you are an Early Decision candidate and are seeking ﬁnancial aid, you need not withdraw other applications until you have received notiﬁcation about ﬁnancial aid from the admitting Early Decision institution.”

Now there is a bit of wiggle-room in the instructions as indicated by this:

Should a student who applies for ﬁnancial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment. The institution must notify the applicant of the decision within a reasonable and clearly stated period of time after the Early Decision deadline.

So if you find yourself in this position, you should request being “released” from your commitment. And by all means get the release notification in writing/email.

How To Avoid This Situation

There are 2 things you can do to avoid back-peddling from an ED commitment:

1) Most highly-selective (private) colleges have a decent Net Price Calculator online to give you a ballpark idea of the financial aid you can expect. Start here to get a rough idea of what an average financial aid award would look like for your family’s profile.

2) If you cannot comfortably “write the check” for the total cost of college for an ED application, then you should request an Early Read from the Financial Aid Office. Different schools have different procedures for this activity. The results of this should be reliable and give you a reasonable idea of how affordable the school is for your family.
Is it better to declare a major when applying to college or to go undeclared?

There’s not a one answer solution for this question. A large number of college freshmen enter undeclared. This is not uncommon, but for a student who has aspirations of entering an impacted curriculum or otherwise selective college within a university and assumes they can “slip in under the radar” by entering undeclared and then transferring late in the sophomore year, they will most often be very disappointed.

The accurate answer to your question is this: The necessity to declare (or not declare) a major depends on a number of factors, including the college, the major, even the student’s academic credentials.
My son has a GPA of 2.5 and is a junior in high school. Should he be concerned about not getting into college because of his grades?

The vast majority of colleges in America are what we call “pay-and-go”. Your son can easily get into many colleges with a GPA of 2.5. These colleges may or may not be the ones he has in mind.

The real concern is if your son should go to college or not? The first question to ask is why he wants to go – if he has a big enough why his GPA will go up and he will be willing to do whatever it takes to make his dream come true.
What’s the difference between Early Action and Early Decision?

There’s one major difference that should be considered. Early Action is NON-committal, while Early Decision IS. You can apply Early Action and in the event that you’re accepted you don’t need to commit until May 1st. However, if you apply Early Decision and you’re accepted, you agree to attend as well as accept the financial aid award offered which may or may not be a good offer.
What is the most important factor when applications are being reviewed by college admissions?
According to NACAC (National Association of College Admissions Counselors), here are the “Top Factors in College Admissions”:
1. Grades in College Prep Courses
  - AP (Advanced Placement) classes/tests
  - IB (International Baccalaureate) classes/diploma
  - Dual-enrollment Courses
2. Strength of Curriculum
  - Rigor
  - Relevance
  - Quantity & Quality
3. Admissions Test Scores
  - SAT
  - ACT
  - AP & Subject Tests
4. High School GPA
How much does it cost to apply to a college?

The cost can vary from approximately $50 to about $80 or so with the high end being $100 with additional costs of mailing, etc.
How many colleges should my child apply to?

Every child’s situation is different but on average probably six (6) as a minimum with approximately 12 as the maximum.

Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment

The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity

Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment

This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY

Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”

Is there a list of colleges that meet 100% of a family’s financial need?

Fortunately, there is. U.S. News does a great job every year in tracking these colleges. According to U.S. News:

“In a 2012 U.S. News survey, 1,164 colleges reported the average percentage of financial need they met for their incoming undergrad students in fall 2011.

64 of those institutions, including both National Universities and National Liberal Arts Colleges, reported meeting 100 percent, on average, of their admitted students’ financial need.

A college that meets full financial need won’t necessarily cover every dollar a family owes, but they will use some form of financial aid to cover the gap between total costs (including tuition, room and board, books, travel, and other expenses) and expected family contribution (EFC).

The calculation of an EFC can vary by institution, as schools may use their own formulas including indicators such as household income, assets, and family size to help determine what they think a family can reasonably pay for college. Schools can also use the federal EFC, calculated from a student’s Free Application for Federal Student Aid (FAFSA).

Once an institution has determined an EFC, the means they use to fill outstanding financial need can vary. While some schools on the list below may make up the difference with scholarships and grants, others may offer subsidized student loans or work-study opportunities. Still others may use a combination of the former (which students won’t have to pay back) and the latter (which will ultimately cost the student either money or time and effort).

Some institutions, such as Grinnell College, have reported meeting full financial need for years, while others, including the University of Notre Dame, are on the list now after not making the cut last year. Only schools that are defined by U.S. News as National Universities or National Liberal Arts Colleges were considered for this report.

These colleges claimed to have met 100 percent, on average, of the financial need of their admitted full-time undergraduate students in fall 2011:

School Name	State	U.S. News Rank & Category
Amherst College	MA	2, National Liberal Arts Colleges
Amridge University	AL	RNP*, National Liberal Arts Colleges
Austin College	TX	63, National Liberal Arts Colleges
Barnard College	NY	22, National Liberal Arts Colleges
Boston College	MA	31, National Universities
Bowdoin College	ME	6, National Liberal Arts Colleges
Brown University	RI	15, National Universities
Bryn Athyn College of the New Church	PA	RNP*, National Liberal Arts Colleges
Bryn Mawr College	PA	26, National Liberal Arts Colleges
California Institute of Technology	CA	10, National Universities
Carleton College	MN	8, National Liberal Arts Colleges
Carroll University	WI	43, Regional Universities (Midwest)
Claremont McKenna College	CA	10, National Liberal Arts Colleges
Colby College	ME	18, National Liberal Arts Colleges
Colgate University	NY	18, National Liberal Arts Colleges
College of the Holy Cross	MA	32, National Liberal Arts Colleges
Columbia University	NY	4, National Universities
Concordia College	AL	RNP*, Regional Colleges (South)
Cornell University	NY	15, National Universities
Dartmouth College	NH	10, National Universities
Davidson College	NC	12, National Liberal Arts Colleges
Duke University	NC	8, National Universities
Emory University	GA	20, National Universities
Franklin W. Olin College of Engineering	MA	Unranked
Georgetown University	DC	21, National Universities
Gettysburg College	PA	46, National Liberal Arts Colleges
Grinnell College	IA	22, National Liberal Arts Colleges
Hamilton College	NY	16, National Liberal Arts Colleges
Harvard University	MA	1, National Universities
Harvey Mudd College	CA	12, National Liberal Arts Colleges
Haverford College	PA	10, National Liberal Arts Colleges
Macalester College	MN	24, National Liberal Arts Colleges
Massachusetts Institute of Technology	MA	6, National Universities
Middlebury College	VT	4, National Liberal Arts Colleges
Mount Holyoke College	MA	32, National Liberal Arts Colleges
Northwestern University	IL	12, National Universities
Oberlin College	OH	26, National Liberal Arts Colleges
Occidental College	CA	39, National Liberal Arts Colleges
Pitzer College	CA	43, National Liberal Arts Colleges
Pomona College	CA	4, National Liberal Arts Colleges
Princeton University	NJ	1, National Universities
Rice University	TX	17, National Universities
Scripps College	CA	24, National Liberal Arts Colleges
Smith College	MA	18, National Liberal Arts Colleges
St. Olaf College	MN	55, National Liberal Arts Colleges
Stanford University	CA	6, National Universities
Swarthmore College	PA	3, National Liberal Arts Colleges
Thomas Aquinas College	CA	82, National Liberal Arts Colleges
Trinity College	CT	38, National Liberal Arts Colleges
Tufts University	MA	28, National Universities
University of Chicago	IL	4, National Universities
University of North Carolina—Chapel Hill	NC	30, National Universities
Jonathan	Lollipop	700
University of Notre Dame	IN	17, National Universities
Jonathan	Lollipop	700
University of Pennsylvania	PA	8, National Universities
University of Richmond	VA	28, National Liberal Arts Colleges
University of Virginia	VA	24, National Universities
Vanderbilt University	TN	17, National Universities
Vassar College	NY	10, National Liberal Arts Colleges
Washington University in St. Louis	MO	14, National Universities
Wellesley College	MA	6, National Liberal Arts Colleges
Wesleyan University	CT	17, National Liberal Arts Colleges
Williams College	MA	1, National Liberal Arts Colleges
Yale University	CT	3, National Universities

* RNP = Rank Not Published

According to U.S. News, the financial need data above is correct as of Feb. 11, 2013. For complete financial aid data, full rankings, and much more, access the U.S. News College Compass.”

What happens if my child applies Early Decision, gets accepted, and we can’t afford the college due to a lack of financial aid being offered?

It’s very unfortunate that families actually back out of an Early Decision (ED) offer, but it does happen. Applying ED is a serious commitment. It is indeed a binding agreement. You’re agreeing that, if accepted, your child WILL attend. And by implication you’re agreeing to accept the financial aid package, if any, forthcoming.

The Common Application instructions for ED state:

“If you are accepted under an Early Decision plan, you must promptly withdraw the applications submitted to other colleges and universities and make no additional applications to any other university in any country. If you are an Early Decision candidate and are seeking ﬁnancial aid, you need not withdraw other applications until you have received notiﬁcation about ﬁnancial aid from the admitting Early Decision institution.”

Now there is a bit of wiggle-room in the instructions as indicated by this:

Should a student who applies for ﬁnancial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment. The institution must notify the applicant of the decision within a reasonable and clearly stated period of time after the Early Decision deadline.

So if you find yourself in this position, you should request being “released” from your commitment. And by all means get the release notification in writing/email.

How To Avoid This Situation

There are 2 things you can do to avoid back-peddling from an ED commitment:

Most highly-selective (private) colleges have a decent Net Price Calculator online to give you a ballpark idea of the financial aid you can expect. Start here to get a rough idea of what an average financial aid award would look like for your family’s profile

If you cannot comfortably “write the check” for the total cost of college for an ED application, then you should request an Early Read from the Financial Aid Office. Different schools have different procedures for this activity. The results of this should be reliable and give you a reasonable idea of how affordable the school is for your family.
I heard that we should move all of our child’s money out of their name. Is this true?

You need to first learn your EFC (Expected Family Contribution). If your EFC Due to Parent Income is anywhere near the total Cost of Attendance of the schools your family is considering, then moving assets will NOT improve your child’s financial aid situation at all.
I’m divorced from my child’s mother. Which one of us should file the FAFSA?

According to federal law, whoever maintains the majority of PHYSICAL custody files the FAFSA. If you share custody 50/50 right down the middle, then whichever parent contributed more to the support of your son files. Don’t make the common mistake that whoever claims the child on their federal income tax return is necessarily the one who files the FAFSA form.
What is meant by the term "Profile School?"

Only about 10% of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.
My child will be attending college this fall and all we were awarded were federal loans. Where can we find some of the “free money” we’ve heard so much about?

It is unfortunate, but unless there are some compelling “special circumstances” regarding your family’s finances or some exceptional level of hardship, it’s unlikely that any significant “free money” is available. Forecasting the out-of-pocket costs for colleges before applying is the key to avoiding this common problem. Once a student has accepted the offer for admission, with few exceptions the free money that comes through from the school doesn’t change much from the initial award.
I’ve heard it was a waste of time filling out the FAFSA form if you make over $100,000. Is that true?

This is such a common misconception and is absolutely false. Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

Also, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.
How many types of Financial Aid forms are there?

Financial Aid Forms fall into 3 categories:

The Federal FAFSA Form

College Board’s CSS Profile Form

Institutional Financial Aid Forms (private colleges)

The individual college websites will indicate which of these is necessary. Some colleges require only the FAFSA, while others require the FAFSA and the Profile, and yet others, all three.

For many public colleges, the only “financial aid” offered some families is in the form of loans… the student Stafford loan and the parent PLUS loan. The SAFE Steps strongly advises AGAINST these loans.
I have heard that private colleges/universities, that typically cost much more than public schools are somehow more affordable. How is that possible?

Unless you qualify for federal and/or state funds, most families receive little to nothing from public colleges. Many private colleges, on the other hand, offer need-based financial aid resulting from your EFC calculation. Private schools offer much more merit scholarships as well.
What assets don’t have to be declared on the FAFSA?

There are only a few assets that do not need to be declared on the FAFSA form. They are:

Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.

Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)

Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

Cash, savings, checking

Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans.
Do existing student loans affect a family’s Expected Family Contribution (EFC)?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.
I normally file for an income tax extension. Will that affect my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.
Are student’s assets assessed the same as parent’s assets?

No, they are not. Student assets are assessed at a much higher rate than parent’s assets.

For the FAFSA form, student assets are assessed at the rate of 20% (versus the max rate of 5.64% for Parent Assets) And for the CSS Profile form, student assets are assessed at the rate of 25%. This is in comparison to the max rate of 5.00% for Parent Assets.
Which EFC is used when a college requires both the FAFSA and CSS Profile forms?

This is an issue that causes mass confusion among families every year. For the approximately 220 colleges that accept BOTH the FAFSA and the CSS Profile forms, the answer is really quite simple. The EFC (Expected Family Contribution) derived from the FAFSA form is used in determining FEDERAL and STATE eligibility for need-based financial aid. Funds like the federal Pell and SEOG grants as well as the subsidized Stafford loan are awarded as a function of the FAFSA EFC computation.

Institutional need-based financial aid is determined as a function of the CSS Profile EFC. Schools take their COA (Cost-of-Attendance) and subtract the EFC from the CSS Profile calculation to determine your student’s legitimate financial need. They then “overlay” their financial aid policies, often including how “desirable” the student is relative to the applicant pool, and award the student money out their own pocket.

It’s a little-known fact among families filing the CSS Profile form that their EFC varies often dramatically from one Profile school to another! This is due to “service options”, instructions provided on a college-by-college basis that supersede the nominal CSS Profile computation that would have otherwise been provided by College Board.
Where, at the college is it best to inquire about Merit Based Aid – the Financial Aid Office or Admissions?

The Financial Aid Office of a college handles need-based financial aid, but the Admissions Office administers all merit-based financial aid.
Who administers the FAFSA form?

The Department of Education administers the FAFSA form. When you submit the FAFSA, it goes to the Dept of Ed who distributes your data and resultant EFC (Expected Family Contribution) to all the colleges listed on the FAFSA. The Dept of Ed is effectively the conduit between you and the colleges. You don’t/can’t submit the FAFSA directly to a college.
When should a family first calculate their Expected Family Contribution (EFC)?

The easy answer is that it’s never too soon but we advise parents to learn it by their oldest student’s sophomore year in high school. Understanding EFC should be an integral component in building the student’s college list.
How much financial aid is available for every student?

Financial aid varies dramatically from student to student, as well as from college to college. An understanding of the “system” is mandatory in order to forecast with any level of accuracy “who gets what”. Every family should understand student’s need-based eligibility as a function of their EFC (Expected Family Contribution) computation as well as merit-based eligibility as a function of student achievement.
When should we file the CSS Profile form?

Unlike the FAFSA form which doesn’t come online until January 1st, the CSS Profile form is available October 1st. The deadline for completion varies dramatically from college to college, so you should check their individual websites and/or contact their respective Financial Aid Offices. For students applying Early Action or Early Decision, the preferred deadline for submitting the CSS Profile form can be as early as November 1st of the senior year.
What is the SAR?

SAR stands for Student Aid Report. This is the resulting document from completing and submitting the FAFSA form. Every submission of your FAFSA… including edits… results in a new SAR being generated and sent to all the colleges listed on your FAFSA.When you submit your FAFSA (or any revisions to it), within 3 days (typically) you’ll receive an email from “Federal Student Aid” informing you that your SAR is ready to retrieve from the FAFSA website (www.fafsa.gov). You should always retrieve your SAR(s), as this is evidence that you successfully submitted your FAFSA. Every SAR includes a permanent time stamp that serves as a “receipt”. Because of the high volume of FAFSA submissions, it’s not uncommon for colleges to claim they didn’t receive the FAFSA. Simply email your SAR as proof.
How easy is it to obtain an athletic scholarship?

They are not easily obtained. Athletic scholarships are highly misunderstood. Only a small number of exceptionally talented high school athletes even have a chance of being recruited into a Division 1 college. And for those fortunate ones who are, the vast majority will find only a partial scholarship being offered them. Most often it doesn’t come even close to paying for tuition, not to mention room & board, books, and living expenses. The other thing to keep in mind is that in the event of an injury, the scholarship can be removed.
What are the tax laws regarding an employer-funded scholarship?

This type of scholarship is considered a Scholarship Prize. Such scholarships can be used for any purpose, including a computer, car, travel, etc., even clothes. However, if part or all the funds are used for such purposes, then 100% of the scholarship funds are seen as taxable income.If a portion of the scholarship is used to pay for college tuition but the rest is used to buy a car, then 100% of the scholarship funds are treated as taxable income. On the other hand, if ALL of the funds are used to pay for qualified educational expenses such as tuition & fees, required books, supplies, etc., then the scholarship would qualify as tax-free income under IRS guidelines.
Do I have to claim the money that my employer contributes to my 401K on the FAFSA form?

No you do not. But you must claim your contribution in the “Untaxed Parent Income” section of the FAFSA form.
I recently remarried. Does my new spouse’s income have to be declared on my child’s financial aid forms?

Yes, all income must be declared in “Household Income” regardless of the length of the marriage.
My income is non-taxable. Does this affect how I file for financial aid?

No, FAFSA and CSS do not care whether income is taxable or not. In most cases all income must be declared. There is a section for Untaxed Income.
How much money can my child earn before it affects need-based financial aid?

This number is called the student’s “Income Protection Allowance” and is subject to change year-to-year. For the 2015-2016 FAFSA form, the number was $6,310.00.Any amount greater than $6,310.00 will be assessed at 50% and be applied to the Expected Family Contribution (EFC).
I am divorced and my child lives with me but is claimed by my ex-spouse for tax purposes. Who files the FAFSA?

Whichever parent has physical custody of the child for the majority of the base year files the FAFSA form regardless of who claims the child on their taxes.
Does increasing your 401K contribution increase financial aid?

No, this will not increase your financial aid. While it’s true that 401(k) contributions will decrease your AGI and therefore your EFC (Expected Family Contribution), any contributions to qualified retirement plans… 401(k), 403(b), even IRA’s are added back on the financial aid forms, so it’s a “net-zero” effect.
Is it true that our child will qualify for more financial aid if we stop claiming them as an exemption on our taxes?

No, this is not true. Until your child turns 24, gets married, has a baby, or enters the military, they are considered a dependent student in the eyes of the government and the colleges.
What is the affect on FAFSA when you have more than one student in college at the same time?

It can be advantageous as the EFC (Expected FAMILY Contribution) is divided by the number of kids in college for the given school year, and the resultant EFC is the number used for the individual student’s need-based financial aid eligibility.
Is it possible to learn your EFC (Expected Family Contribution) before you actually have to file the FAFSA form?

Yes, that’s a great way to get prepared and informed. You can use the FAFSA4caster on their website.
My ex-spouse and I share custody of our child 50-50 – who fills out the FAFSA form?

If your child’s physical custody is indeed 50-50, then whichever parent provided the majority of their support in the base year (the year before entering college) should fill out the FAFSA. The other parent should NOT declare anything on the form, unless child support was provided to the majority provider. Child support received has a separate line on the FAFSA.
Does a Grant have to be paid back?

No, grant money is considered “free money.” Grants typically refer to need-based free money and are offered primarily by three entities:• Federal government• State governments• Private colleges
Does my EFC (Expected Family Contribution) have anything to do with what I can afford to pay?

EFC is based on the federal algorithms (properly called the Federal Methodology), contained within the FAFSA form and calculates what you are expected to pay and has nothing to do with affordability.
Is my EFC (Expected Family Contribution) the maximum I will have to pay if my child attends a public college?

No, the EFC, as calculated by the FAFSA form should be viewed as a benchmark used by colleges to assess a child’s eligibility for need-based financial aid and not as the yearly amount that you can expect to pay for attending the college.
What is the Asset Protection Allowance?

The Asset Protection Allowance is one of the FAFSA calculations. It varies from family to family and is a function of the age of the older parent. It’s approximately $1,000 for every year of age of the oldest parent.

If the older parent is 50 the Asset Protection Allowance will be in the vicinity of $50K. If the assets claimed on the FAFSA are less than or equal to the Asset Protection Allowance ($50K for our example), then there is no assessment against the family’s assets relative to the EFC (Expected Family Contribution) calculation.

Everything above the Asset Protection Allowance amount is assessed up to a max of 5.64%. So if the declared assets for the family are $150K in cash, saving, checking and investments, the Asset Protection Allowance of $50K is subtracted from that amount resulting in a difference of $100K.

The $100K is assessed at 5.64% which equals $5,640, and this is considered the Parent Contribution due to Assets. The total EFC calculation is the sum of 4 components:

Parent Contribution due to Income

Parent Contribution due to Assets

Student Contribution due to Income

Student Contribution due to Assets
Who qualifies for the Cal Grant?

The Cal Grant is for California students attending California colleges. There are 3 criteria in order to be eligible for the Cal Grant:

Income less than the income ceiling – which varies based on family size

Assets less than the asset ceiling

Student GPA of 3.00
How does our child being the beneficiary of an irrevocable trust affect financial aid eligibility?

The account value of the trust must be declared on financial aid forms as a student asset. The FAFSA form assesses this at the rate of 20%, while the CSS Profile form assesses at 25%. This applies even if the trust funds can’t be accessed until after college graduation.

For example, if the trust is valued at $100K, the FAFSA form would assess the value of this asset at $20K, and this would be added to your son’s EFC (Expected Family Contribution) thereby decreasing his need-based financial aid eligibility by $20K. CSS Profile would assess the value at $25K.
What is the “base year” as it applies to financial aid forms?

This is a financial aid term that applies to both the FAFSA and CSS Profile forms. The base year is the year whose income must be declared on these financial aid forms. It’s the calendar/tax year BEFORE the student enters college as a freshman.
Why are loans considered financial aid?

This is a great question. Many moms and dads are shocked when they learn that some colleges boast at “meeting 100% need”, with the financial aid award being comprised of nothing but loans.

There are 2 basic categories of student loans: subsidized and UN-subsidized. There’s somewhat of a case to be made that the subsidized loans are financial aid, only because these loans are interest-free to the student as long as the student is enrolled at least half-time in a college. The fact that the government/tax-payers is paying the interest lends itself to categorizing this type of loan as financial aid but it’s still a loan that must be paid back after graduation, and with some level of interest.

Now for the 2nd category of loans… unsubsidized. While the government and many colleges consider these too to be “financial aid”, it’s really a stretch. Granted, the payments are deferred until after graduation, BUT these loans begin accruing interest the day the funds are disbursed to the college. And the federal Stafford loan (the most common/de facto standard) could rise up to the capped interest rate of 8.25%.

Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment
The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity
Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment
This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY
Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”

Is there a list of colleges that meet 100% of a family’s financial need?

Fortunately, there is. U.S. News does a great job every year in tracking these colleges. According to U.S. News:

“In a 2012 U.S. News survey, 1,164 colleges reported the average percentage of financial need they met for their incoming undergrad students in fall 2011.

64 of those institutions, including both National Universities and National Liberal Arts Colleges, reported meeting 100 percent, on average, of their admitted students’ financial need.

These colleges claimed to have met 100 percent, on average, of the financial need of their admitted full-time undergraduate students in fall 2011:

School Name	State	U.S. News Rank & Category
Amherst College	MA	2, National Liberal Arts Colleges
Amridge University	AL	RNP*, National Liberal Arts Colleges
Austin College	TX	63, National Liberal Arts Colleges
Barnard College	NY	22, National Liberal Arts Colleges
Boston College	MA	31, National Universities
Bowdoin College	ME	6, National Liberal Arts Colleges
Brown University	RI	15, National Universities
Bryn Athyn College of the New Church	PA	RNP*, National Liberal Arts Colleges
Bryn Mawr College	PA	26, National Liberal Arts Colleges
California Institute of Technology	CA	10, National Universities
Carleton College	MN	8, National Liberal Arts Colleges
Carroll University	WI	43, Regional Universities (Midwest)
Claremont McKenna College	CA	10, National Liberal Arts Colleges
Colby College	ME	18, National Liberal Arts Colleges
Colgate University	NY	18, National Liberal Arts Colleges
College of the Holy Cross	MA	32, National Liberal Arts Colleges
Columbia University	NY	4, National Universities
Concordia College	AL	RNP*, Regional Colleges (South)
Cornell University	NY	15, National Universities
Dartmouth College	NH	10, National Universities
Davidson College	NC	12, National Liberal Arts Colleges
Duke University	NC	8, National Universities
Emory University	GA	20, National Universities
Franklin W. Olin College of Engineering	MA	Unranked
Georgetown University	DC	21, National Universities
Gettysburg College	PA	46, National Liberal Arts Colleges
Grinnell College	IA	22, National Liberal Arts Colleges
Hamilton College	NY	16, National Liberal Arts Colleges
Harvard University	MA	1, National Universities
Harvey Mudd College	CA	12, National Liberal Arts Colleges
Haverford College	PA	10, National Liberal Arts Colleges
Macalester College	MN	24, National Liberal Arts Colleges
Massachusetts Institute of Technology	MA	6, National Universities
Middlebury College	VT	4, National Liberal Arts Colleges
Mount Holyoke College	MA	32, National Liberal Arts Colleges
Northwestern University	IL	12, National Universities
Oberlin College	OH	26, National Liberal Arts Colleges
Occidental College	CA	39, National Liberal Arts Colleges
Pitzer College	CA	43, National Liberal Arts Colleges
Pomona College	CA	4, National Liberal Arts Colleges
Princeton University	NJ	1, National Universities
Rice University	TX	17, National Universities
Scripps College	CA	24, National Liberal Arts Colleges
Smith College	MA	18, National Liberal Arts Colleges
St. Olaf College	MN	55, National Liberal Arts Colleges
Stanford University	CA	6, National Universities
Swarthmore College	PA	3, National Liberal Arts Colleges
Thomas Aquinas College	CA	82, National Liberal Arts Colleges
Trinity College	CT	38, National Liberal Arts Colleges
Tufts University	MA	28, National Universities
University of Chicago	IL	4, National Universities
University of North Carolina—Chapel Hill	NC	30, National Universities
Jonathan	Lollipop	700
University of Notre Dame	IN	17, National Universities
Jonathan	Lollipop	700
University of Pennsylvania	PA	8, National Universities
University of Richmond	VA	28, National Liberal Arts Colleges
University of Virginia	VA	24, National Universities
Vanderbilt University	TN	17, National Universities
Vassar College	NY	10, National Liberal Arts Colleges
Washington University in St. Louis	MO	14, National Universities
Wellesley College	MA	6, National Liberal Arts Colleges
Wesleyan University	CT	17, National Liberal Arts Colleges
Williams College	MA	1, National Liberal Arts Colleges
Yale University	CT	3, National Universities

* RNP = Rank Not Published

According to U.S. News, the financial need data above is correct as of Feb. 11, 2013. For complete financial aid data, full rankings, and much more, access the U.S. News College Compass .”

I’m divorced from my child’s mother. Which one of us should file the FAFSA?

According to federal law, whoever maintains the majority of PHYSICAL custody files the FAFSA. If you share custody 50/50 right down the middle, then whichever parent contributed more to the support of your son files. Don’t make the common mistake that whoever claims the child on their federal income tax return is necessarily the one who files the FAFSA form.
What is meant by the term “Profile School?”

Only about 10% of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.
I’ve heard it was a waste of time filling out the FAFSA form if you make over $100,000. Is that true?

This is such a common misconception and is absolutely false. Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

Also, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.
How many types of Financial Aid forms are there?

Financial Aid Forms fall into 3 categories:

The Federal FAFSA Form

College Board’s CSS Profile Form

Institutional Financial Aid Forms (private colleges)

The individual college websites will indicate which of these is necessary. Some colleges require only the FAFSA, while others require the FAFSA and the Profile, and yet others, all three.

For many public colleges, the only “financial aid” offered some families is in the form of loans… the student Stafford loan and the parent PLUS loan. The SAFE Steps strongly advises AGAINST these loans.
What assets don’t have to be declared on the FAFSA?

There are only a few assets that do not need to be declared on the FAFSA form. They are:

Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.

Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)

Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

Cash, savings, checking

Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans.
Do existing student loans affect a family’s Expected Family Contribution (EFC)?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.
I normally file for an income tax extension. Will that affect my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.
Are student’s assets assessed the same as parent’s assets?

No, they are not. Student assets are assessed at a much higher rate than parent’s assets.

For the FAFSA form, student assets are assessed at the rate of 20% (versus the max rate of 5.64% for Parent Assets) And for the CSS Profile form, student assets are assessed at the rate of 25%. This is in comparison to the max rate of 5.00% for Parent Assets.
Which EFC is used when a college requires both the FAFSA and CSS Profile forms?

This is an issue that causes mass confusion among families every year. For the approximately 220 colleges that accept BOTH the FAFSA and the CSS Profile forms, the answer is really quite simple. The EFC (Expected Family Contribution) derived from the FAFSA form is used in determining FEDERAL and STATE eligibility for need-based financial aid. Funds like the federal Pell and SEOG grants as well as the subsidized Stafford loan are awarded as a function of the FAFSA EFC computation.

Institutional need-based financial aid is determined as a function of the CSS Profile EFC. Schools take their COA (Cost-of-Attendance) and subtract the EFC from the CSS Profile calculation to determine your student’s legitimate financial need. They then “overlay” their financial aid policies, often including how “desirable” the student is relative to the applicant pool, and award the student money out their own pocket.

It’s a little-known fact among families filing the CSS Profile form that their EFC varies often dramatically from one Profile school to another! This is due to “service options”, instructions provided on a college-by-college basis that supersede the nominal CSS Profile computation that would have otherwise been provided by College Board.
Who administers the FAFSA form?

The Department of Education administers the FAFSA form. When you submit the FAFSA, it goes to the Dept of Ed who distributes your data and resultant EFC (Expected Family Contribution) to all the colleges listed on the FAFSA. The Dept of Ed is effectively the conduit between you and the colleges. You don’t/can’t submit the FAFSA directly to a college.
When should a family first calculate their Expected Family Contribution (EFC)?

The easy answer is that it’s never too soon but we advise parents to learn it by their oldest student’s sophomore year in high school. Understanding EFC should be an integral component in building the student’s college list.
When should we file the CSS Profile form?

Unlike the FAFSA form which doesn’t come online until January 1st, the CSS Profile form is available October 1st. The deadline for completion varies dramatically from college to college, so you should check their individual websites and/or contact their respective Financial Aid Offices. For students applying Early Action or Early Decision, the preferred deadline for submitting the CSS Profile form can be as early as November 1st of the senior year.
What is the SAR?

SAR stands for Student Aid Report. This is the resulting document from completing and submitting the FAFSA form. Every submission of your FAFSA… including edits… results in a new SAR being generated and sent to all the colleges listed on your FAFSA.

When you submit your FAFSA (or any revisions to it), within 3 days (typically) you’ll receive an email from “Federal Student Aid” informing you that your SAR is ready to retrieve from the FAFSA website (www.fafsa.gov). You should always retrieve your SAR(s), as this is evidence that you successfully submitted your FAFSA. Every SAR includes a permanent time stamp that serves as a “receipt”. Because of the high volume of FAFSA submissions, it’s not uncommon for colleges to claim they didn’t receive the FAFSA. Simply email your SAR as proof.
Do I have to claim the money that my employer contributes to my 401K on the FAFSA form?

No you do not. But you must claim your contribution in the “Untaxed Parent Income” section of the FAFSA form.
I recently remarried. Does my new spouse’s income have to be declared on my child’s financial aid forms?

Yes, all income must be declared in “Household Income” regardless of the length of the marriage.
My income is non-taxable. Does this affect how I file for financial aid?

No, FAFSA and CSS do not care whether income is taxable or not. In most cases all income must be declared. There is a section for Untaxed Income.
How much money can my child earn before it affects need-based financial aid?

This number is called the student’s “Income Protection Allowance” and is subject to change year-to-year. For the 2015-2016 FAFSA form, the number was $6,310.00.

Any amount greater than $6,310.00 will be assessed at 50% and be applied to the Expected Family Contribution (EFC).
I am divorced and my child lives with me but is claimed by my ex-spouse for tax purposes. Who files the FAFSA?

Whichever parent has physical custody of the child for the majority of the base year files the FAFSA form regardless of who claims the child on their taxes.
What is the affect on FAFSA when you have more than one student in college at the same time?

It can be advantageous as the EFC (Expected FAMILY Contribution) is divided by the number of kids in college for the given school year, and the resultant EFC is the number used for the individual student’s need-based financial aid eligibility.
Is it possible to learn your EFC (Expected Family Contribution) before you actually have to file the FAFSA form?

Yes, that’s a great way to get prepared and informed. You can use the FAFSA4caster on their website. Click here to go there.
My ex-spouse and I share custody of our child 50-50 – who fills out the FAFSA form?

If your child’s physical custody is indeed 50-50, then whichever parent provided the majority of their support in the base year (the year before entering college) should fill out the FAFSA. The other parent should NOT declare anything on the form, unless child support was provided to the majority provider. Child support received has a separate line on the FAFSA.
My child turns 24 early next year and then will attend college in September. Will they be considered an independent student?

Yes, they will qualify as an independent student and your income as a parent will not be declared on the FAFSA form.
Does my EFC (Expected Family Contribution) have anything to do with what I can afford to pay?

EFC is based on the federal algorithms (properly called the Federal Methodology), contained within the FAFSA form and calculates what you are expected to pay and has nothing to do with affordability.
Is my EFC (Expected Family Contribution) the maximum I will have to pay if my child attends a public college?

No, the EFC, as calculated by the FAFSA form should be viewed as a benchmark used by colleges to assess a child’s eligibility for need-based financial aid and not as the yearly amount that you can expect to pay for attending the college.
What is the Asset Protection Allowance?

The Asset Protection Allowance is one of the FAFSA calculations. It varies from family to family and is a function of the age of the older parent. It’s approximately $1,000 for every year of age of the oldest parent.

If the older parent is 50 the Asset Protection Allowance will be in the vicinity of $50K. If the assets claimed on the FAFSA are less than or equal to the Asset Protection Allowance ($50K for our example), then there is no assessment against the family’s assets relative to the EFC (Expected Family Contribution) calculation.

Everything above the Asset Protection Allowance amount is assessed up to a max of 5.64%. So if the declared assets for the family are $150K in cash, saving, checking and investments, the Asset Protection Allowance of $50K is subtracted from that amount resulting in a difference of $100K.

The $100K is assessed at 5.64% which equals $5,640, and this is considered the Parent Contribution due to Assets. The total EFC calculation is the sum of 4 components:

Parent Contribution due to Income

Parent Contribution due to Assets

Student Contribution due to Income

Student Contribution due to Assets
How does our child being the beneficiary of an irrevocable trust affect financial aid eligibility?

The account value of the trust must be declared on financial aid forms as a student asset. The FAFSA form assesses this at the rate of 20%, while the CSS Profile form assesses at 25%. This applies even if the trust funds can’t be accessed until after college graduation.

For example, if the trust is valued at $100K, the FAFSA form would assess the value of this asset at $20K, and this would be added to your son’s EFC (Expected Family Contribution) thereby decreasing his need-based financial aid eligibility by $20K. CSS Profile would assess the value at $25K.
What is the “base year” as it applies to financial aid forms?

This is a financial aid term that applies to both the FAFSA and CSS Profile forms. The base year is the year whose income must be declared on these financial aid forms. It’s the calendar/tax year BEFORE the student enters college as a freshman.

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METHODOLOGY #1: 5% Assessment

METHODOLOGY #2: Cap The Equity

METHODOLOGY #3: NO Assessment

SUMMARY