Seniors: As you search for necessary information required for the FAFSA, you most likely have ran into the idea of financial aid calculators, but what are they and how do they work?
Generally speaking, there are three calculators that colleges use: the FAFSA, Profile and Consensus, all of which abide by a set of rules:
- Your family’s income and asset amounts are added into a calculator every year.
- A chunk of your parent’s income (a minimal amount based on the size of the household) and a portion of their asset (typically $20,000 to $50,000 based on the age of the oldest parent) are set aside.
- Once the entire calculation is complete, you end up with your “Expected Family Contribution” (EFC), defined as the estimated amount your family is expected to put toward your college expenses.
- In the case that the EFC falls under the cost of college, the difference is your financial aid eligibility.
- Keep in mind, Room + Board + Tuition + Fees = Cost for the child attending college. Your EFC will be lower (not quite half) for each child if you have two children attending college at the same time.
So What About These Three Calculators?
As you’re probably aware, the vast majority of colleges utilize the FAFSA’s financial aid calculator. Another formidable calculator is spearheaded by the College Scholarship Services Profile, which configures income and assets differently, aptly named “the Profile”. While it is less common, about 300 colleges maintain it as their calculator of choice.
Finally, the third arose from a Section 568 Presidents’ Group, but only 24 elite colleges use this calculator. It’s known as Consensus. Considering calculator preferences vary between institutions, you will want to know which is adopted by every college on your list.
|Overall||Far more laid-back when compiling assets.||Stricter.||Stricter.|
|General Assets||Excludes primary home value, along with your farm and small business.||Counts businesses, farms, equity of the home, annuities and 529s.||Includes the same as the Profile, but only considers home equity up to 120% of parental income.|
|Exemption||Exempts a family from asset consideration if parents file a short-form tax return, totaling less than $50,000 of gross income (You should consult your parents about this one).||No exemptions.||No exemptions.|
|Separated Households||Grants leniency toward divorced parents where the low-income parent holds primary custody.||Grants no leniency toward divorced parents (Both incomes are judged).||Grants no leniency toward divorced parents (Both incomes are judged).|
|Parent Assets||Assessed at 5.6% (i.e. for every $100,000 in assets, your EFC is increased by $5,600).||Assessed at 5%||Assessed at 5%|
|Student Assets||Assessed at 20%||Assessed at 25%||Assessed at 5%|
Which One Should I Use?
That all depends upon your desired colleges. While it’s safe to say that you’ll be crunching you and your parent’s numbers in the FAFSA, you may also need to employ the Profile or Consensus. Make sure you know which formula (and financial aid applications) every college on your list uses.
If anything else, estimate your EFC with all three calculators (the FAFSA’s estimator is called the FAFSA4caster). You may be surprised to find out that you may qualify for more financial aid at a college which uses one formula over another.
Westface College Planning can help navigate the financial aid process from start to finish. To learn how we can help you call us at 650-587-1559 or sign up for one of our Tackling the Runaway Costs of College Workshops or Webinars.
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