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.
ERD50 said:
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."?