FAFSA - EFC

[Sam]

So I got the results back for both kids' FAFSA, they are identical:

Based on the information we have on record for you, your EFC is 13227. You
are not eligible for a Federal Pell Grant but you may be eligible for other
aid. Your school will use your EFC to determine your financial aid eligibility
for other federal grants, loans, and work study, and possible funding from your
state and school.

This is the very first time I read a SAR report, so I have no idea how meaninful the above information is.

A) Is $13,227 EFC good, normal, or bad? That's a little over one year's tuition at UT Austin or Texas A&M (~$8,500/year). About half (or less than half) the tuition at a private college.

B) Does EFC include Room & Board or just Tuition & Fee. In other words, my expected share for each kid is $13,227 for everything?

C) Most merit scholarships received so far are larger than $13,227. Does that mean my contribution should be zero?

Thanks

Edit: Correct tuition & fee at Texas A&M and UT Austin

 

[ERD50]

I thought the EFC was the out-of-pocket money they expect *you* to pay before you get a dime of aid.

So, if tuition/fees/room/board are $13,227/year after all scholarships, you get $0 from the feds.


Someone jump in and correct me if I'm wrong, but that is my understanding. It always made those statements 'I can't afford to send my kid to that fancy XYZ college' seem odd - the feds help to pay the costs *above* a certain point. Of course, I also think that most of that aid is in the form of loans - so you do need to pay it back, and it will come out of your pocket.

The one I really don't understand is 'I have X number of kids in college at the same time - oh woe is me!' - Well, according to the formulas it *helps* to have 2 or more kids at the same time, they only expect you to pay X amount per year. Spread those kids out sequentially through college, and you will get less/no aid.

At least that is my take on it - see what others say, I'm far from an expert on this stuff.

-ERD50

 

[Leonidas]

I think the EFC is to determine eligibility for need based government aid:

The formula is Cost of Attendance (COA) – Expected Family Contribution (EFC).

COA includes:

Fees and books
Living expenses
Meals
Transportation
Personal expenses
Dependent care
Computer purchase
Costs related to a disability
Costs for eligible study abroad program
Entertainment

Uncle Sugar figures the EFC and subtracts it from the COA. If the result is a negative number (EFC greater than COA) you’re out of the running for need based grants and subsidized loans:

Pell Grants
Supplemental Educational Opportunity Grants (SEOG)
Perkins Loans
Most college work study
Most state grants
The subsidized portion of the Stafford Loan
Scholarships and tuition waivers

From the way I read it, if you’re kids are going to UT or A&M, then you are not eligible for need based grants because the COA is lower than your EFC. You’re either writing some checks or looking for loans. However, if they’re going to someplace like Baylor or Trinity, then the COA is more than double what your EFC is and you are eligible for need based aid. But, the aid is going to be based on that part of the COA that your EFC doesn’t cover. The amount of aid that is offered may not be exactly the difference between the COA and the EFC. In other words, how deeply you actually go into your pocket is not necessarily the same amount as the EFC. Or so the school websites have told me.

Plus there are things that an aid package might no be immediately available to pay. An example would be expenses outside of the university system (transportation or a computer purchase) which would have to come out of pocket. Although, I think that if there is aid based money left over after you’ve paid the school (tuition, room & board, meals, fees, etc) then they send a check for the balance and you can count that as reimbursement for the out of pocket expenses you already paid.

I’m still learning about merit scholarships, but there seems to be a wide variety in how they work. It seems like most of them come from or through the school itself, and they are first used to pay the bills like tuition, room & board, books, etc., and then anything left over comes to the student in the form of a check. Others are limited to just paying tuition, or half tuition, etc. You have to look at the rules and conditions for each scholarship and the school.

Outside scholarships have their own rules as to how much they pay, what they pay and if they send the money to the school or to the student.

Don’t take my word for any of this though, I’m still in the beginning stages of figuring it out.

Also, outside scholarships can effect need based aid. I’m not sure exactly how that works, but it would seem that the government would just deduct the value of the scholarship from the aid package. A $5,000 scholarship from the Optimists Club would do away with $5,000 of need based aid.

The one I really don't understand is 'I have X number of kids in college at the same time - oh woe is me!' - Well, according to the formulas it *helps* to have 2 or more kids at the same time, they only expect you to pay X amount per year. Spread those kids out sequentially through college, and you will get less/no aid.

Well, the more kids in college at the same time the lower the EFC will be. My situation is like the scenario you describe, one kid is four years behind the other. Just for the heck of it I redid the FAFSA calculator and showed the second kid attending college at the same time. The result was a EFC that was a little less than half the resulting number for 1 kid at a time. Even so, the COA makes a big difference. If Sam had triplets instead of twins, and they all wanted to go to A&M, his EFC would be about $9,000 and he would still not qualify for need based financial aid. But if had just one kid who was going to MIT, even though his EFC would be around $27,000, the COA would be so high that he would be eligible for need based aid.

Modified to clean up some mistakes and add my own questions:

Is there a budget for need based aid? I mean does the number of kids in the country eligible for need based aid affect how much individual aid packages are? If twice as many kids qualified for aid this year as opposed to last year, would the average aid offer be reduced in half?

As a follow on to that question, is there a limit on need based aid given to students in a region, state or school? Is there a point at which somebody says "We're maxed out on aid for students at UT, but if you are accepted to A&M there is still money available there."?

 

[Sam]

Thanks ERD50 and Leonidas. This thing is so confusing. We should be getting the final financial package from each college in a few months. I'll let you know what the damage will be. May be things will be clearer then.

 

[Moemg]

My sympathy to the parents going through this .I think they intentionally make it confusing .I went through this with both my children and yes an outside scholarship is deducted from the need based grants .When you do get the financial package it's clear what is available .It's usually a mixture of grants and loan money available .My son applied to Rutgers (our state school ) and MIT .The financial package he got from MIT was huge .It ended up being the same amount as Rutgers would have been. My daughter went to U of Mass as an out of state student as was also offered enough grants to bring it down to in state tuition. It is like the travel industry ,many discounts are available . Good Luck !

 

[Sam]

Alright, the first package arrived today. Drexel University.

Total cost = $46,975
Scholarship = $14,750
Grants and Awards = $14,075
Difference = $18,150 per year. OUCH!!!

They also offered Work Study ($1,500), and loans, Perkins $1,000, Stafford $3,000, Unsub Stafford $4,000.

Anyway, bottom line is $18,150 final cost annually. Not too attractive to me at this moment. Waiting for the next package.

 

[SecondCor521]

My understanding is a little different on a few points that have been made here.

First, there are two kinds of need based aid -- that which comes from the federal government and that which comes from the individual universities. The former is an entitlement type program, where the funds are available without limit to all who meet the guidelines. The latter is an issue of the school's budget, and the "funds" (which are really just university issued discounts) are limited by the school's financial condition.

It is my understanding that merit scholarships would not affect federal need based aid. If the COA is $10,000 and your EFC is $5,000 and you get a $5,000 merit scholarship, you can still get a $5,000 subsidized federal loan. Whether you should take such a loan has a moral component, and whether you can deduct the interest on your taxes may be an open question.

One point possibly worth making is that your student generally will get better deals from schools where they have above average GPA's and test scores. There's competition for students, and if your child brings up their average GPA or SAT scores, or increases the number of valedictorians attending, or is a National Merit scholar or something, they will try to persuade you to attend. The student's "stretch" universities are less likely to play ball, as they probably have lots of other applicants who are just as good.

2Cor521

 

[Sam]

It is my understanding that merit scholarships would not affect federal need based aid. If the COA is $10,000 and your EFC is $5,000 and you get a $5,000 merit scholarship, you can still get a $5,000 subsidized federal loan. Whether you should take such a loan has a moral component, and whether you can deduct the interest on your taxes may be an open question.

My EFC $13,227. The merit scholarship is $14,750.

My final cost is $18,500, which is greater than EFC if I exclude work-study and loans.

Including work-study and loans, final cost is $9,000. But loans are loans. Someone has to pay them back eventually. It's still my (or my kid's) money.

SecondCor521, why the moral component on the subsidized loan? What moral component is that?

 

[SecondCor521]

My EFC $13,227. The merit scholarship is $14,750.

My final cost is $18,500, which is greater than EFC if I exclude work-study and loans.

Including work-study and loans, final cost is $9,000. But loans are loans. Someone has to pay them back eventually. It's still my (or my kid's) money.

SecondCor521, why the moral component on the subsidized loan? What moral component is that?

There is a real cost to the federal government to subsidize student loans - they pay the interest on the debt while the student is in school, and I think they pay the lenders additional money somehow.

Rates on student loans can be quite low.

Some students -- and I haven't looked at your numbers to see if this would apply to you and your kid or not -- take the student loans even when they don't need them in order to lower their debt costs. For example, a student might be able to get a 5% subsidized loan and a 6% mortgage. All other things being equal, it makes sense to take more of the subsidized loan and less of a mortgage than vice versa. Alternatively, a student could take a subsidized loan, which would be 0% while they were in school, stick the money in a CD earning 6% for a few years, and pay the loan off when it came due. 6% on college tuition over four or five years is a chunk of change.

Somewhere on the loan paperwork I think you are supposed to certify that you're borrowing the funds for school. I am not sure exactly how that is spelled out or defined.

The moral question is whether it is OK to take a benefit that is available to you even though in doing so you may be breaking the letter or the spirit of the law or both. I don't think there are school-based subsidized loans, but if there were, the concern would also be one student taking the funds available away from someone else who needed it more.

2Cor521

 

[Sam]

Alternatively, a student could take a subsidized loan, which would be 0% while they were in school, stick the money in a CD earning 6% for a few years, and pay the loan off when it came due.

Agreed. Quite an opportunist, this student.

 

[TromboneAl]

Including work-study and loans, final cost is $9,000. But loans are loans. Someone has to pay them back eventually. It's still my (or my kid's) money.

I understand your point, but I don't see it that way. I think it's reasonable that my kid should shoulder a portion of the bill, and since she doesn't have money now, it makes sense for her to have a loan (with great terms).

Having to pay only $9,000 per year for a college that expensive is fantastic! Quicken tells me that we've spent $64,000 for the first two years (37K for first year and 27K for second).

 

[TromboneAl]

VERY IMPORTANT:

The award amount you get from the school is negotiable.

 

[Sam]

VERY IMPORTANT:

The award amount you get from the school is negotiable.

Thanks. Did you negotiate? And how successful were you?

 

[ChrisC]

Thanks. Did you negotiate? And how successful were you?

Well, I think you're in a very good position to negotiate with Drexel if your EFC was about $14K. My youngest child got admitted to Drexel several years ago, and she got some generous merit aid from Drexel but Drexel wouldn't negotiate with us since our EFC was around $44K, which essentially means we would not get any meaningful federal financial assistance and the only aid we could get would be merit aid at the schools. We were hoping for a full-ride from Drexel under one of its merit scholarship programs, but the aid Drexel offerred would only cover tuition. In the end, my daughter wound up at UVa, with no financial assistance -- need or merit based -- but as an in-state student it is still cheaper than attending Drexel, where my daughter was primarily interested in the graphics design program there.

If you try to negotiate with Drexel, I would use any aid package you get from other schools as leverage with Drexel. These schools like to be very competitive and will sometimes match more generous offers from other schools that are competing for the same students.

Good luck.

 

[Sam]

Thanks ChrisC for the advice and for sharing your experience with Drexel.

 

[TromboneAl]

I didn't negotiate for freshman year, because I didn't know that it was reasonable to do so. After we received our award package for Sophomore year, I sent this letter, and our aid was increased significantly.



We're grateful that Wash U has increased the amount of J's scholarship. However, I am writing to appeal the amount of the financial award for 2006-2007. To summarize the reason for our appeal: although WUSTL increased her award to cover the increase in tuition, our FAFSA-estimated EFC has dropped from $31,160 (2005-2006) to $21,234 (2006-2007). With the current award, instead of contributing $21,234, we will need to contribute $40,440! She has received no other scholarships.

Why our EFC has Decreased

Our EFC decreased for two reasons. First, changes in my business caused my income to drop for 2005. I expect to see a further decline this year. Second, we have all but used up J's assets and assets saved under her name.

Lack of Other Scholarships

You mentioned that WUSTL does not replace other scholarships. I don't understand that policy completely, but the fact that the $4,240 that J received in one-time scholarships last year was used for freshman tuition means that we will need to contribute more. We're not asking you to replace these, I'm bringing this up to show you why the $40,440 is such a financial burden.

Transferring to Another University

J is very happy with Washington University, and wants to complete all four years there. I, on the other hand, am questioning the wisdom of spending $40,000 per year compared with, for example, University of California at San Diego, which would cost approximately $17,000.

So I hope that J's need for a larger scholarship can be reevaluated. Please let me know if there's anything else I need to do to appeal her current award. Thanks.

Sincerely,

TromboneAl

 

[Sam]

TromboneAl, thank you very much for your detailed answer. Geez, you guys (and gals) are great!

 

[Fireup2020]

Al, you rule! I was impressed as I was laughing!

Depending on what state you live in, there is state money for unemployed students to attend classes with - yes full time too - just need to register at late registration. It can be a gamble with huge payoffs! Rutgers, TCNJ, UMDNJ and all the other state schools participate in this tuition waiver program.

Best of luck with traditional funding! (scholarships, loans, your funds, grants, etc)

 

[Bimmerbill]

I don't know how they come up with EFC. I have free college to all state schools thru the National Guard but need to do the FAFSA to get the free money.

My EFC was $22,500 this year! No way I could come up with that kind of $ unless I cleaned out my savings account.