EFC with full tuition scholarship/EFC confusion

Paying for College
1

<p>Okay this may sound like a stupid question but here goes it..</p>

<p>If child is going to a school that COA is 30K a yr ( 20 tuition / 10 K room, board etc) and receives full tuition scholarship of 20K that leaves 10K left to pay. If parents EFC is 15 K than they need to come up with the entire 10K, correct? </p>

<p>BUT if child picked same school @30K COA a yr and received no scholarship the parents would need to come up with 15K a yr to cover the rest. </p>

<p>So essesntially the 20K/yr scholarship amts to 5K a yr savings.<br>
Is this correct?</p>

<p>The other thing I am not clear on- where does the money come from for the difference in COA and EFC? Is it guarenteed no matter the school? If child picks a 52K a yr school vs a 30K a yr school we still only need to worry about 15 K a yr out of pocket regardless???</p>

<p>Sorry first child going to college and this is confusing me.</p>

2

<p>The EFC is NOT what the family needs to pay. It is a figure that determines which federal financial aid the student qualifies for.</p>

<p>Very few colleges and universities will meet the “full need” (COA - EFC) for an applicant. Most will leave a gap that the student and his/her family need to cover. So essentially, your EFC should be considered to be the least amount of money that your family will need to pay.</p>

<p>In your first example, the family would need to come up with the 10k. You are correct that in this case the family would pay less than their EFC!</p>

<p>In the second example, if the child received no scholarship or other need-based aid for the school with a COA of 30K, the family would have to scrape together 30k.</p>

<p>Each college puts together its aid packages as it sees fit. For some students, a school with a sticker-price of 52k can work out to be less expensive than another with a sticker-price of 5k.</p>

3

<p>If child picks a 52K a yr school vs a 30K a yr school we still only need to worry about 15 K a yr out of pocket regardless???</p>

<p>No.</p>

<p>IF the school meets 100% of need ( and MOST schools do not), then your need can be met with any combination of loans, grants & work-study.
So if COA is $30K & they meet need, they might offer a $10K scholarship, & $5K subsidized Stafford loan. leaving you with the $15K.</p>

<p>However, if the school has COA of $30K and EFC is $15K, & they DON’T meet need.
They might offer a grant of $5K, Subsidized Stafford of $5K and leaving your family with $5K of unmet need and $20K to pay.</p>

4

<p>The term EFC is misleading. Yes, it stands for expected family contribution, but the score is reall an index that tells you whether or not you qualify for a Pell Grant. </p>

<p>Most schools do not have to meet full need. THe few that do often use the Profile and thier own formulas for determining need. Those formulas, more often than not, come up with a family contribution that is higher than the FAFSA EFC.</p>

<p>If you go to a school requiring the FAFSA only, it is likely that there will a GAP between the amount of aid awarded and need. So, yes, it is likely that you will have unmet need. In the situations you described, a child at a 30K COA school with no scholarship may well have to come up with more than the 15K EFC. COA-EFC=Need. Need-aid=GAP. </p>

<p>Student loans are packaged as Fin Aid and go to meet need. EFC and GAP need to be met, often, with more loans. And here on the fin aid board you would be advised not to attend a school that expects you a cover a big gap with private or PLUS loans.</p>

<p>Finally, a 20k scholarship may very well result in more than a 5k savings in the scenario you describe. Without the scholarship, fin aid would very likely include Stafford loans. Not only would your “save” 5K from your expected contribution but the amount of your Staffords ($5500 for freshmen). </p>

<p>More confused now? Probably. Once you settle on a school and know your bills, it’s a lot easier to get your head wrapped around fin aid. Right now, while considering multiple offers from places that all package money differently, it is confusing.</p>

5

<p>If you are at the stage of comparing multiple offers, here is a handy tool from our friends at FinAid.org [FinAid</a> | Calculators | Award Letter Comparison Tool](<a href=“Your Guide for College Financial Aid - Finaid”>Award Letter Requirements - Finaid)</p>

6

<p>1) Most schools do NOT meet need. At many schools, they will NOT give you the difference between EFC and COA. Schools do not have that kind of money (except some of the top schools)</p>

<p>2) OOS publics rarely give you much aid, so EFC is often VERY meaningless at those.</p>

<p>3) Even when many schools give you aid, it’s often in loans and work-study…not free money or not much free money.</p>

<p>4) Yes, if the school has a COA of $30k and you get $20k in merit, then you only pay $10. Which is good if your EFC is 15k.<br>
…the above is especially good because your aid (merit) is all free money…no loans or work-study. That means if you have problems coming up with the $10k balance, your child can take out a $5500 student loan and now your “EFC” is less than $5k per year. </p>

<p>5) Schools believe that the primary payers for college is the family.</p>

<p>6) Going away to school is a luxury. When money is an issue, students need to either seek scholarships, hopefully qualify and get accepted to the few schools that meet need, or commute to a local CC or state U.</p>

<p>*The other thing I am not clear on- where does the money come from for the difference in COA and EFC? *</p>

<p>That’s the thing…the money often doesn’t come. You have to still pay it. Schools don’t have pots of gold to hand out (except the elites). And, again, publics usually don’t have the money at all. OOS publics charge high rates for a reason…they don’t want to cover it with need-based aid.</p>

<p>FAFSA EFC is a MISNOMER. It does NOT really mean your family contribution. That’s a terrible acronym that causes lots of problems. It’s just a number to determine federal aid …which is for low income people. Your EFC has to be below about $5k to get a federal grant. </p>

<p>Schools are under NO OBLIGATION to do ANYTHING with EFC except to see if you qualify for federal aid. </p>

<p>When you think about it. FAFSA is a federal form. The feds have no authority to compel schools to give money to make up “need”.</p>

<p>*<br>
Is it guarenteed no matter the school? If child picks a 52K a yr school vs a 30K a yr school we still only need to worry about 15 K a yr out of pocket regardless???
*</p>

<p>Heavens NO. Many schools would expect you to pay for all or nearly all of that. Most school do not charge a sliding scale based on income. Attending a pricey school is often a luxury choice for which you have to pay for.</p>

<p>Think about it…there are thousands of colleges in the US. They just don’t have the money.</p>

7

<p>Kay…</p>

<p>Your child has the full tuition scholarship at Bama…plus the 2500 per year from eng’g. That may be the best deal because your remaining costs will be much less than your EFC…especially after the first year. </p>

<p>Your payout would average about $9k per year - depending on meal plan and dorm choice.</p>

<p>Plus, your D can lessen your family’s cash payout, by taking out a sub loan of (I think) 2500 or is it 2000?. She could borrow up to 5500 for frosh year, but the rest would be unsub. Or, she could work over the summer to contribute for books and what-have-you.</p>

8

<p>Starting to make a little more sense to me. The EFC is what got me. Since in my mind any loan whether it has to be paid today or tomorrow is part of family contribution. So basically the FAFSA is almost worthless for anyone who has an EFC >5300 and doesn’t qualify for grants???</p>

<p>So my next questions…if DD gets any of the many small private scholarships we have applied for that money can go for room, boards , dining or books?
Our out of pocket costs need to be paid up from each semester or how does that work?</p>

9

<p>I am pretty certain BAMA will be our best bet but now even worrying about affording that. If only we had lived in a state with lower NMF scores :-)</p>

10

<p>More bad news…</p>

<p>Colleges get to decide where the scholarship will be deducted from :(</p>

<p>For example, If your child receives an outside scholarship of $1,000, and the school had offered a financial need-based grant of $5,000 and a loan of $5,000, they can choose to deduct the $1,000 from either the grant or the loan portion.</p>

11

<p>yes…FAFSA EFC is somewhat meaningless for many who have EFCs beyond Pell. Yes, you can get work-study and loans, but not fed grants. And some richer schools will use FAFSA EFC (or CSS Profile) to determine any insitutional grants that they might give.</p>

<p>Your child applied to MIT. which is “full need” as how THEY define your need. It’s unknown what MIT would determine after using CSS Profile. It may determine that your family contribution should be $20k per year (or more). Who knows…MIT isn’t super with aid. Don’t know if MIT includes loans in FA packages, but it they do, then there could be 5500 in loans as well…and 2500 in work-study. </p>

<p>the full need schools often have a “student contribution” of about 2500 that they expect the kids to earn over the summer (which I think is to cover transportation and books). </p>

<p>And the work-study is to cover “personal expenses” . Schools don’t want to give grants to pay for a kid’s toothpaste and shampoo. ;)</p>

<p>*if DD gets any of the many small private scholarships we have applied for that money can go for room, boards , dining or books? *</p>

<p>Depends on the school. At Bama, your D could apply those dollars to room, board, etc since Bama isn’t giving grants to you…it’s giving merit. Another school might use those private scholarships and put it towards your need…not reducing EFC.</p>

<p>*Our out of pocket costs need to be paid up from each semester or how does that work? *</p>

<p>Many schools let you set up a monthly payment plan with a small upfront charge to set that up. I think Sallie Mae or some fed plan also has some monthly payment plan. Bama has a “Bama Plan” that is interest free that you pay your balance over the semester (or over 10 months for the year). I’m sure other schools have a similar deal.</p>

<p>*I am pretty certain BAMA will be our best bet but now even worrying about affording that. If only we had lived in a state with lower NMF scores :slight_smile: *</p>

<p>If your D takes out the full Stafford loans and works over the summer, your out of pocket costs could be almost nothing.</p>

12

<p>Thank you all for the info. We will do what we have to do to make it work somewhere. I have been feeling bad DD can get into her top choices but can’t afford them but I need to look at it as more like buying a car. We would all love a Ferrari but the used subaru can get everywhere you need to go to as long as you drive it right.</p>