When considering my list of colleges, it could be vital to know which methodology your choices use when working out how much financial aid they might assign to your student.
There are 3 different methodologies that could be used in the Financial Aid calculation and each one has a different formula that could make or break your ability to send your student to that particular college choice.
In our planning process we work with parents in calculating early – in freshman or sophomore year – what sort of financial aid they could expect from the colleges of their choice based on the calculation required by each particular school.
These calculations could differ greatly depending on what financial assets the family has and where their current money is being stored.
The 3 methodologies are:
- Federal Methodology used on the FAFSA form
- Institutional Methodology used on the CSS profile form
- Consensus Methodology
Federal Methodology
7 different things looked at to work out this formula – Parents income, Parents Assets, Student’s income, Students assets, age of parents, number of students in home, number of people in the household.
Institutional Methodology
Over 350 institutions and scholarship programs use IM in conjunction with the CSS/Financial Aid PROFILE to target their need-based funds equitably to the most deserving students.
IM provides:
- An economically sound approach to determining the Expected Family Contribution (EFC) that is based on current financial indicators and up-to-date consumer research and tax policy.
- A realistic assessment of both parent and student income. Paper losses and income adjustments—perfectly legal in the federal tax system—are not considered in the IM definition of income. Although Adjusted Gross Income (AGI) is important, it is not the sole determinant of genuine income strength.
- A comprehensive evaluationof all family assets—including investments, real estate and equity in the home, farm, and business.
Consensus Methodology
The Consensus Approach deals exclusively with the family’s ability to pay for college. It does not address issues associated with the “packaging” of awards (i.e., the mix of grant, loan, and work components), nor does it concern itself with so-called “merit” awards, whether academic or athletic.
In many cases there could be strategic planning that could maximize your financial aid as well as reduce the cost of college in a number of other different areas. Planning in advance could save thousands of dollars that could go towards retirement instead of college.
ONE BIG FAT MYTH – “I will not get any financial aid because I make too much money” It’s vital that parents talk with someone who is knowledgeable on these things. That’s why we do what we do at College Planning America.
Contact us at davec@collegeplanningamerica.com
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