EFC, the basics

Paying for College
1

<p>Greetings all. Just getting started in the college funding 'game'. I'm getting conflicting info about the EFC and impact of merit aid from our local guidance people so I'm looking for help from the people who REALLY know what's going on -- parents paying for educations!</p>

<p>Doing a quick pass at the calculators, I come up with this:</p>

<p>EFC = $25,000.</p>

<p>Is that the bottom, bottom line number that we're expected to pay per year? </p>

<p>For instance:
Kid accepted at Polukaville State @ $40,000
EFC = $25,000
Need = $15,000.</p>

<p>So the MOST she would be typically awarded on Merit and other grants (Not Staffords, etc.) would be $15,000?</p>

<p>Looking forward to reading and learning lots around here.</p>

2

<p>No! That is not all you have to pay.</p>

<p>FAFSA EFC is just a number colleges use to determine what **federal aid **you’d get. </p>

<p>With an EFC of $25k, you get NO FREE federal money. Only a $5500 student loan. To get federal grants, your EFC has to be low - I think the EFC has to be below about 4600 to get fed grants.</p>

<p>EFC is a misnomer. I know it “sounds” like it’s giving you a minimum number to pay, but it’s not.</p>

<p>Colleges do NOT charge a “sliding scale” based on EFC. That is a misunderstanding caused by the silly name.</p>

<p>FAFSA EFC is just a federal gov’t form and federal number. Colleges aren’t obligated to do ANYTHING with that EXCEPT to see if you get fed grants or fed loans (which are small and don’t pay much for college). </p>

<p>Colleges aren’t obligated to meet need because most don’t have the money to do so. Most colleges ONLY have the small amount of fed aid to give: Small fed grants to low income people and small fed loans to everyone else.</p>

<p>And, most schools do NOT have treasure chests to give out money to fill “need.” Only some of the top schools have those kinds of money.</p>

<p>Merit scholarships are different. Those are based on merit. So, your EFC has nothing to do with that. However, some colleges do look at need for merit awards, but many do not.</p>

<p>So…</p>

<p>EFC = $25k
Cost of Attendance (COA) of a college = $40k</p>

<p>Then “determined need” = $15k</p>

<p>But…if your child is awarded a $20k merit scholarship, then you get the whole amount and then you pay $20k instead of $25k.</p>

<p>And…the top schools that “meet need,” also use CSS Profile to determine “need” and what they will give you. That number can be different from FAFSA EFC.</p>

3

<p>Wanted to add…</p>

<p>So the MOST she would be typically awarded on Merit and other grants (Not Staffords, etc.) would be $15,000?</p>

<p>Staffords could be used towards that $15k need. Loans are often part of Financial aid awards. </p>

<p>Rarely would someone be given a $15k grant to cover a $15k “need”. Usually that would get covered with a Stafford loan ($5500), work-study ($2500), and probably a gap and/or maybe small grant. </p>

<p>Again, most schools cannot meet need because they don’t have the money to give.</p>

<p>And, some schools give better aid packages to students who have high stats for their schools. That is called “preferential packaging.” But, that still doesn’t mean that they will “meet need”. </p>

<p>There is a lot more to aid and merit scholarships. Much will depend on where your child will be applying, what the student’s GPA and test scores are. </p>

<p>Most top schools do not give merit scholarships. </p>

<p>And, out of state publics don’t give financial aid to cover their non-resident costs. However, some will give merit scholarships that cover those costs. </p>

<p>So, what schools are you considering?</p>

<p>What state are you in?</p>

<p>What are the student’s stats?</p>

<p>How much can you afford to spend each year on your child’s education?</p>

4

<p>You EFC is the MINIMUM you will be expected to pay for your kiddo to go to college each year. In the example you gave with your EFC being $25K and the cost being $40K…you need to realize that in the $15K difference the Stafford loan WILL likely be included in that amount. MOST schools will not meet your kiddo’s full need. </p>

<p>All the FAFSA does is compute your kid’s eligibility for federally funded need based aid. With an EFC of $25K, the only federally funded money your kiddo will receive will be a Stafford loan.</p>

<p>Now…on to merit aid. Merit aid is based on your kiddo’s academic performance and stats (GPA/SAT or ACT score) typically. You should be aware, however, that some merit awards also have a need component. Some don’t. </p>

<p>The most generous merit awards are given to students who are at the tippy top of the applicant pool for a college. VERY generous awards often have a separate application/interview process with an early deadline…so check.</p>

<p>Merit awards can be more than the difference between your Cost of attendance minus EFC. It would depend on the cost of the school…and the amount of the award. </p>

<p>In most cases, if you receive need based aid AND then get a merit award, the merit award will then reduce the amount of your need based aid. In other words if your kiddo got $10,000 in merit aid, your need in your example would be reduced to $5000 and your need based aid would not exceed that amount.</p>

5

<p>Believe me…it’s not unusual for a family with a lowish EFC - say 10k - to have a child attend a school that costs - say $30k - and be given NOTHING but a $5500 Stafford loan and $2000 in work study, even though they supposedly have a “need” of $20k.</p>

6

<p>

You are mixing up need based (EFC matters) and merit based (EFC does not matter unless there is a need component). For schools that do give merit based scholarships the merit awards usually (there are exceptions) do not take into account whether there is need or not. My daughter’s merit award was offered long before the school had any idea what our EFC was. She would have got that same merit based scholarship whether her EFC was 0 of exceeded the COA of the school. One of her friends had no need at all (based on EFC) and got the same scholarship.</p>

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<p>Thank you one and all for this great start. I’m going to immerse myself into this subject over the next four weeks.</p>

<p>Full disclosure</p>

<p>My daughter is an incoming Junior at a very good public school in Bucks County, PA. Her strong suits are language skills, especially french. She’s a b+/a- student thus far but knows she has to kick it up a notch.</p>

<p>We hired an outside college advisor last spring and I’m now frankly wondering if this was a wise investment. It seems he’s better suited to find the aid for the families with a lower EFC.</p>

8

<p>*So the MOST she would be typically awarded on Merit and other grants (Not Staffords, etc.) would be $15,000? *</p>

<p>Swimcat is right. You’re mixing this up.</p>

<p>Our EFC would be too high for any aid (besides loans) because of rental property. But, both of our kids have merit scholarships that pay for most of their college costs. Their merit scholarships do not have a “need” component. So, we have effectively lowered our EFC to a small amount.</p>

<p>However, you can’t use merit money to ONLY reduce EFC if you have some “need”. For instance…</p>

<p>COA = $55k
EFC = $25k
“need” = $30k</p>

<p>Suppose your child gets accepted to one of the few top schools which does meet need. Say the school expects your family to pay $25k and gives your child a grant of $20k, work study of $3k, and a student loan of $7k (Stafford and Perkins). </p>

<p>But…Then your child gets a merit scholarship for $10k. You don’t get to subtract that $10k from your family contribution. Instead the school is going to reduce THEIR aid first…they will probably remove the loan and the work-study.</p>

<p>So, the only way to effectively reduce family contribution is to have the merit scholarship be much larger than “need,” so it wipes away all need and THEN cuts into EFC. </p>

<p>So, if </p>

<p>COA = $35k</p>

<p>EFC = $25k</p>

<p>But your child is given a tuition scholarship of $20k, then you will only have to pay $15k. :slight_smile: You’ve just reduced your costs!!! :)</p>

<p>Does this make sense? If we’re not being clear, just ask for clarification. :)</p>

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<p>*My daughter is an incoming Junior at a very good public school in Bucks County, PA. Her strong suits are language skills, especially french. She’s a b+/a- student thus far but knows she has to kick it up a notch. *</p>

<p>Keep in mind that junior year grades are very important. </p>

<p>Plus, senior year grades are usually posted too late to raise GPA for admission or scholarships. So, tell your D that her junior year grades are super important!</p>

<p>*
We hired an outside college advisor last spring and I’m now frankly wondering if this was a wise investment. It seems he’s better suited to find the aid for the families with a lower EFC. *</p>

<p>I’m not a big fan of these advisors. They seem to work ok for those who are Ivy/elite bound. They don’t often know much about merit scholarships. They seem to be more concentrated on getting kids accepted to top schools rather than being concerned about how it will all get paid for.</p>

<p>You need to decide how much you KNOW that you can pay each year for your child’s 4 years in college. Since your likely EFC is $25k, then you need to realize that you’ll be paying at least $100k over her 4 years unless she gets a big scholarship somewhere. </p>

<p>If you have younger kids, you need to consider that, too. Some parents mistakenly take out loans to pay for the education for child #1, but then they have no money or borrowing power for any children that come later because the earlier loans are still outstanding and they’re still making payments on those loans. </p>

<p>Since your D is only a junior, if you don’t have much saved for college so far, use this year as a guideline for how much you think you could pay “out of pocket” for her education. If by next year you realize that you can only pay - say $15k - then you’ll need to make decisions based on that info. :)</p>

<p>Your D will be taking the PSAT in October. If she does well on that, then she could become a National Merit Finalist and get scholarships because of that. </p>

<p>She should also take the ACT and SAT sometime this next year to determine her weak areas and work on those.</p>

10

<p>There is a sticky at the top of this section of the forum called Financial aid and scholarship resource thread-START HERE. I would suggest you read through the threads contained there. LOTS of excellent information contained there that will help you get started on this venture.</p>

<p>Is your “independent college counselor” really well versed in financial aid? Most are well versed in admissions but not financial aid.</p>

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<p>Cost of Attendance?
Coats of Arms?
Coyotes On Aspirin?</p>

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<p>lol - Cost of Attendance</p>

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<p>Is your “independent college counselor” really well versed in financial aid? Most are well versed in admissions but not financial aid. </p>

<p>In this case, I think it’s the reverse. The reason we picked him is that he said he actually focused MORE on financial aid than on the admissions process.</p>

<p>I have to say when I did the EFC calculator I was really floored. My wife and I make a nice living, have a nice house, etc… As our counselor explained it, it seemed like this was the end all/be all of calculations for what we’re expected to pay.</p>

<p>Back in the stone ages when I attended a state school, I cobbled together about 50 different scholarships, grants, etc. to fund my education.</p>

14

<p>COA = Cost of attendance…that includes tuition, fees, room, board, books, transportation, & misc costs.</p>

<p>Many popular privates have a COA of about $50k - 55k per year.</p>

<p>Many state schools have an instate COA of about $18k - $32k per year (I think PA is one of the states with pricier public COAs.)</p>

<p>Many state school have non-resident COAs of about $30k - 50k.</p>

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<p>Please remember that some of these financial advisers will suggest questionable tactics to reduce EFC. There are certain things you can do legitimately, but beyond that it is what it is. Schools are very good at fretting out misinformation. </p>

<p>Also the other catch here is loans. Let us say your COA is $50,000 EFC is $25,000 and schools gives loans of $15,000 (whatever combination, Stafford, PLUS etc) and grants of $10,000.</p>

<p>The loans are not free money, they have to be paid back tomorrow but paid back with interest. So what you are actually getting for free is $10,000 and rest is what you pay.</p>

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<p>*The reason we picked him is that he said he actually focused MORE on financial aid than on the admissions process.</p>

<p>I have to say when I did the EFC calculator I was really floored. My wife and I make a nice living, have a nice house, etc… As our counselor explained it, it seemed like this was the end all/be all of calculations for what we’re expected to pay.*</p>

<p>Well, the truth is that unless your D has top stats, she won’t likely get accepted to a school that meets full need without big loans. </p>

<p>And, those schools use MORE than FAFSA. They use CSS Profile.</p>

<p>If this advisor considers the EFC as the “end all, be all” then he/she doesn’t know what he/she is talking about. So, buyer beware! Does this person know that most schools cannot meet need? </p>

<p>And, with a highish EFC (CSS Profile calls it "family contribution), you can expect little in “free money” even if your child gets into a top school that “meets need.” As I mentioned earlier, a school that meets need could fill a $15k need with a $5500 loan, $2500 in work-study, and a small scholarship/grant. </p>

<p>Also, keep in mind that GPA is only one part of determining merit scholarships. Test scores are more important.</p>

<p>There is a HUGE pool of applicants that have a GPA of 3.75+. </p>

<p>There is a smaller pool of applicants that have high test scores (scores that would be in the top 10-15% at a particular school)<br>
**
There is even a smaller pool of applicants that have both a high GPA and a high test score. ** These are usually the kids that get the bigger merit scholarships at the schools that give them. Test scores tend to separate the “men from the boys” in regards to GPA. </p>

<p>*Back in the stone ages when I attended a state school, I cobbled together about 50 different scholarships, grants, etc. to fund my education. *</p>

<p>That often can’t be done anymore because the cost of state schools has risen much more than inflation. And, private scholarships are smallish and often for one year. And, some have a “need” component.</p>

<p>So, to get bigger scholarships, you need to target the schools that give them. :)</p>

<p>And, if you think your EFC is higher than you can afford, then you do need to carefully choose schools to apply to. </p>

<p>If your D is an A-/B+ student, then she won’t likely get accepted to schools that meet full need unless she has very high test scores. And, such schools may say that your CSS Profile family contribution is higher than $25k - since those schools have their own formulas.</p>

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<p>I’m glad I’m learning all of this today. Frankly I may have been lulled into false sense of security, thinking that through this guy’s efforts our actual contribution to D’s (and D #2 who is age 14) would be perhaps $12-$15K after his work in finding financial packages. Which, out of pocket, is what I was hoping to fund each year.</p>

<p>That paragraph above probably sounds rather ignorant to you and the other people on this site. I’m questioning my investment in this counselor with each minute.</p>

<p>Your comment:</p>

<p>So, to get bigger scholarships, you need to target the schools that give them. …</p>

<p>…sounds like a great direction to explore.</p>

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<p>Frankly I may have been lulled into false sense of security, thinking that through this guy’s efforts our actual contribution to D’s (and D #2 who is age 14) would be perhaps $12-$15K after his work in finding financial packages. Which, out of pocket, is what I was hoping to fund each year.</p>

<p>If your goal is to pay out $12k-15k per year, then you will need a careful strategy for picking schools. </p>

<p>That doesn’t mean that your D can’t apply to a few “maybe” schools just to see what they might give in a FA package. </p>

<p>To get your family contribution down to your goal amount, then your D will need to apply to some schools that will give her BIG merit. The merit has to be so big that it is bigger than “need” and cuts into EFC.</p>

<p>*So, to get bigger scholarships, you need to target the schools that give them. …</p>

<p>…sounds like a great direction to explore. *</p>

<p>Has your D taken any tests? Perhaps an “unofficial” PSAT or maybe the PLAN test? If so, how did she do? </p>

<p>Hopefully, your D will take the official PSAT in October. Check with her school to find out. The tests are ordered in advance, so make sure your D is tested. </p>

<p>has this advisor mentioned any schools so far? If so, which ones? When you mentioned a school costing $40k, which one were you thinking about?</p>

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<p>I think the bottom line thing to understand early is that if you want to pay less than your EFC, your child will need to attend a school that ranks far below where she could otherwise go. This is difficult for many to accept.</p>

20

<p>

</p>

<p>That paragraph sums it up. Ivy’s and top ranked institutions do not give merit aid (or very little), they give need based aid and they get to decide need. So the EFC from FAFSA may be higher than the EFC from CSS/Profile using the schools methodology. Lower ranked institutions are often more willing to provide merit aid to strong candidate, and the strong candidate is usually one who could have got into a higher ranked institution. </p>

<p>Unfortunately, if a student gets into a top ranked institution and aid is not sufficient, the normal tendency among the parents is “how do we make it work?” rather than “What is the best alternative that we can live with?”</p>