FAFSA Question (probably dumb)

Paying for College
1

<p>okay, lets say a college's</p>

<p>out-of-state tuition: $15,000
room and board: $7,000
meals: $3,000
fees: $1,000
total: $26,000</p>

<p>And say I get a $15,000 a year scholarship and my family's recommended contribution is $6,000</p>

<p>Would that be a full-ride?
I don't know how FAFSA works - would $6,000 be the MAX my family would pay or would the government (you taxpayers) pay for $20K and my scholarships pay for the rest?</p>

<p>Thanks,
dtran09</p>

<p>(all #s made completely up)</p>

2

<p>If the COA (cost of attendance) at a school was $26K, your family's EFC was $6K and you received a merit based scholarship of $15K, there would still be a gap of $5K. </p>

<p>If you were attending a school that met full need, then the school would provide you with $5K in additional aid which could include grants, workstudy or loans. (However, an EFC of $6K would probably qualify for Stafford loan of $3500 anyway)</p>

<p>A merit based scholarship will not replace the family contribution, any financial aid will be added to the scholarship, but the family would still be required to pay the $6K.</p>

3

<p>
[quote]
would $6,000 be the MAX my family would pay or would the government (you taxpayers) pay for $20K and my scholarships pay for the rest?

[/quote]
</p>

<p>No. With FAFSA you enter your income and assets and it produces a number called the EFC (Estimated Family Contribution). The EFC is deducted from the school's COA (Cost Of Attendance) to calculate you 'need'. Any merit based scholarships reduce your 'need'. Some schools meet full need. Many do not. </p>

<p>Need may be met by grants (which do not have to be repaid), loans (which do have to be repaid) and work study (where you get a job through the school and work for the money). Sometimes there will be a 'gap' which is a term for unmet need. For instance you may have need of $12,000 but only get aid of $9,000 - $3,000 gap. </p>

<p>Federal grant aid is quite limited and only those with a low EFC (below 4042 this year) will get federal grant money.</p>

<p>Federal Grant aid that is available is:
*Pell *- Max $4731. EFC must be below 4042
*ACG *- Max for freshman $750 - mus be Pell eligible and meet some academic requirements.
*SEOG *- max varies by school up to $4000. Awarded to students with the most need. Very limited availability. Often requires an EFC of zero. The rules for awarding it vary by school.
*SMART *- For 3rd and 4th year students only. Max $4000. Requires Pell eligibility and a major in certain fields.
None of the above would be awarded to a student with an EFC of 6000.</p>

<p>So using your figures. </p>

<p>The COA = $26,000
EFC = 6000
$26,000 - 6000 = $20,000 need.
$20,000 - $15,000 scholarship = $5,000 need.</p>

<p>With a COA of 6000 you would not qualify for federal grant money. Your need of $5000 would probably be met with loans (which you have to pay back) and work study (where you get a job - usually on campus - and earn the money).</p>

4

<p>so basically the EFC is the amount the government pays?
that seems counter-intuitive...
are you responding counting me and my family as one $$ source?</p>

5

<p>No. EFC is the expected family contribution--student and parents.</p>

<p>Swimcatsmom hit it right on.</p>

<p>"So using your figures. </p>

<p>The COA = $26,000
EFC = 6000
$26,000 - 6000 = $20,000 need.
$20,000 - $15,000 scholarship = $5,000 need."</p>

<p>The cost minus the expected family contribution leaves a $20,000 need. Subtract the scholarship and you're left with $5,000 of need. That MIGHT be met through a loans, work study, grants, etc. If your family cannot afford the $6,000 outright, then you maybe able to take out private loans for the amount in addition to any other loans.</p>

6

<p>Let's start over. You file FAFSA. They give you a figure which is your family EFC. That is just a figure that FAFSA generates, and it really means very little. If it is low enough, it makes you eligible for certain government scholarships and loans. Those are the Pell, SEOGH and any state grants. The subsidized Stafford and Perkins loans. Only the Pell and Stafford are guaranteed at given income levels. Also some colleges have money set aside that they give if you qualify for for the Pell or are at a given level of EFC. </p>

<p>However, most schools that use FAFSA only, do not meet full need for most students. It does not usually work out the way you have it. This would be more typical:</p>

<p>COA=$26K
EFC=$6K</p>

<p>If the school comes up with $15k, it is usually a package of loans and grants, starting with the Pell and other government monies, and maybe some of their own funds thrown into the mix. The EFC really has nothing to do with the math here at all, other than to get you eligible for some of those grants and loans. It does NOT mean that the school is going to come up with what you need other than the $6k. It really is an imaginary number in many ways.</p>

<p>So if you have a $15k package from the school, and the cost of the school is $26K, You need to come up with another $11k from somewhere. Either you or your parents pay it out of savings, out of work proceeds, or you borrow it.</p>

7

<p>dtran09,</p>

<p>It was explained well but I want to give you the bottom line: for need-based aid, you will never pay less than the EFC. That $6K is the <em>minimum</em> your parents will have to pay. It does <em>not</em> include your contribution of summer work (probably around $2K), work-study during the year (another $2K or so) and/ or loans (another $3,500 at least). No school is required to meet your EFC. A few schools meet full-need, but they get to say what your need is and that's usually not as low as your EFC. (Those schools generally also take a percentage of the equity your parents have on the family house too.)</p>

8

<p>
[quote]
With a COA of 6000

[/quote]

That should read EFC not COA. Sorry.</p>

<p>And no the EFC is not what the government pays. It is the portion, calculated based on your your family income and assets, that your family is expected to come up with before any consideration of financial aid. It is deducted *from *the COA and the remaining balance is the 'need' on which financial aid is based (though it is not neccesarily fully met). So using your figures</p>

<p>Schools Cost Of Attendance = $26,000
EFC = 6000 (your family is expected to come up with this from income, assets, or private loans.
(COA) $26,000 - (EFC) 6000 = $20,000 'need'.
$20,000 - $15,000 scholarship = $5,000 need.
The $5,000 'need' is what your financial aid package is based on.
If you did not have the $15,000 scholarship then the $20,000 is what your financial aid package would be based on. WHich, except for certain very competitive schools, does not mean you would get $20k in 'gift' money.</p>

<p>
[quote]
are you responding counting me and my family as one $$ source?

[/quote]
</p>

<p>The FAFSA EFC is based on parent income and assets and student assets and income so technically includes a parent and student portion. If you run your numbers through an EFC calculator like the one at finaid
FinAid</a> | Calculators | Expected Family Contribution (EFC) and Financial Aid
it will show you how much of the estimated EFC comes from the student and how much from the parents. The real EFC the actual FAFSA produces will not split it up this way.</p>

<p>One thing you have to realize is that financial aid is there to help but often will not meet your full need. So if you have an EFC of 6000 and a COA of $26,000 it does not mean you will only have to come up with $6000.</p>

9

<p>I am new to all of this too, (we just sifted through D's aid packages trying to get to the bottom line) but to try to put it in terms of what amount will actually be coming from you and your parents:</p>

<p>Assumption is that you are applying to schools that "meet full need" (many do not - be SURE to find out.)</p>

<p>You will have to pay the $6,000 EFC - out of savings, income, equity, private loans... somehow.</p>

<p>Your aid based on the $5,000 will almost certainly be Stafford and/or Perkins loans of about $3,500 and federal work/study of about $1,500 (the relative amounts may vary, but the whole $5,000 will most likely come from you through a job and loans.)</p>

<p>So the total you and your family would likely contribute (with COA of $26,000, scholarship of $15,000, and an EFC of $6,000) is:</p>

<p>$6,000 cash or private loan
$5,000 in Federal loans and/or work-study.</p>

<p>A TOTAL OF $11,000 FROM YOU AND YOUR FAMILY (Bottom line)</p>

10

<p>^^^^ Good way of putting it alamemom</p>

11

<p>Thanks swimcatsmom!!! You would not believe the number of times I have turned to your posts (and the other experts here on CC) to help figure all of this out. All I know I learned from you!</p>

12

<p>Yes CC is priceless. I was clueless when we started this process a little over a year ago and had no idea what to expect. I wish I had discovered CC a year or so before we started the college app process.</p>

13

<p>Hate to put a monkey in everyone's wrench, but not all schools consider the EFC in the manner so elequently explained above. My institution doesn't. The EFC can be covered by Subsidized or Unsubsidized loans in the student's name. It can also be covered by outside scholarships. We do look at EFC, but only for determining how much need-based federal aid is available.</p>

<p>Then again, based on what I have read in these boards...I am starting to wonder if we should change our methods of providing aid...</p>

<p>On second thought....nope, we'll keep doing it like we do it...who cares if 100% of the COA is covered under grants, school based scholarships, outside scholarships and the sub/unsub loans. Life really isn't all that bad if we don't make the student scramble to find their EFC in private loans or their checking/savings accounts :)</p>

14

<p>Nikkil - that is really interesting. I did not realize federal subsidized loans could ever be used to pay the EFC as I thought they were always a need based award.</p>

15

<p>thanks everyone!</p>

<p>the term "need" as in $20K of need for some reason registered in my head as $20K I "need" to pay instead of "need" to receive in grants/loans.</p>

<p>yes, cc is awesome.</p>

16

<p>I just wanted to say that the name of this thread made me laugh. :)</p>

17

<p>swim,</p>

<p>it depends on what the total cost of attendance is. Take a typical example of one of my commuter students (real example with real figures)</p>

<p>2007-2008 FAFSA and rules:</p>

<p>EFC: 3,355.00
Total COA: 23,260.00
Actual cost (what the std will truly pay: tuition + books): 8110.00
Pell Grant: 360.00
Sub Loan: 5500.00
Unsub Loan: 5000.00 (Independent student)</p>

<p>If the student received outside scholarships, we would not reduce any of the funding unless the total exceeded 23,260.00. Instead we would advise the student that they could reduce the Stafford Loans, or completing cancel them. Since the actual cost of this program is relatively low, but the COA is relatively high...it truly can mean a lot in extra funding that they really do not need, but we always leave the decision up to the student.</p>

<p>Now, this is one of our non-traditional students, who is not eligible for institutional aid because they are going through our specialized working adult program. Our adult program is relatively new...so we do not have the scholarships available that our traditional students have. However, most of our traditional students are receiving at least 50% of their actual cost (which is higher than this example, as the actual cost would include room and board, which our commuter students do not pay) in the form of scholarships. Then they receive Pell, when eligible, SEOG, Perkins, Stafford Loans and Parent PLUS loans.</p>

<p>Theirs would looks something like this:</p>

<p>EFC: 3355.00
Total COA: 23,260.0
Actual cost: 23,260.00</p>

<p>Dean's Scholarship: 8000.00
Pell Grant: 720.00
VTAG: 3200.00
Subsidized: 5500.00
Perkins: 2000.00
Parent PLUS Loan: 3840.00 (might be less depending on SEOG funding, I don't have those figures available at home tonight)</p>

<p>Total free aid: 11920.00
Total student loans: 7500.00
Total Parent Loans: 3840.00
Total Aid Package: 23,260.00</p>

<p>If this student received outside scholarships, we would first reduce the PLUS loan, then the Subsidized loan, then the perkins, then the Deans scholarships.</p>

<p>Then again, as I've said in other postings....it seems like we are unique in how we handle financial aid funding.</p>

18

<p>In every case I have seen, Nikki, the parent PLUS loan is a possible OPTION that a family can use to meet the EFC. It is not considered part of the financial package, because the FA office cannot award it; the parents have to apply and be approved credit wise just as they would any other loan. Any of the financial aid info given by College Board or US News data does not include outside loans or parent loans including the PLUS when giving financial aid data. Your package is gapping the the family $485 and letting them know that the parents an take apply for a PLUS loan for that amount in addition to the EFC. You are NOT giving the kid more than the COA; you are, in fact, gapping him.</p>

<p>So, of course, the PLUS loan would be reduced by the outside scholarship since that is an "outside" loan. What is interesting, though is that you allow the student to use the outside scholarship towards the EFC. I did not know that was allowed. I thought that if a kid got a scholarship, that the reductions would go towards just the part of the PLUS loan that was covering the gap, then the loans, and then the scholarships. Question: does the federal government allow a Pell grant or other federal money to remain in the pot if the kid gets an outside scholarship that is greater that the need that is defined by FAFSA? I know that it is the choice of the college to allow the student to keep any scholarships given by the school to exceed need, but I did not know if that would apply to PELL, SEOGH, subsidized loans.</p>

19

<p>Even though some people do not want to recognize Parent PLUS loans as financial aid, it doesn't change the fact that it is. First, Parent PLUS loans are not guaranteed to everyone...regardless of credit standing. I have seen MANY traditional students denied Parent PLUS loans even before the credit check has been performed. The denial was due to the student's COS being covered before PLUS loans were considered. Also, Parent PLUS loans are regulated by the Government, just like Stafford Loans. In my traditonal student example, if the student had a better GPA, or better SAT or ACT test scores, the results would be totally different...maybe this will help you understand what I was saying:</p>

<p>EFC: 3355.00
Total COA: 23,260.0
Actual cost: 23,260.00</p>

<p>President's Scholarship: 12,000.00
Pell Grant: 720.00
VTAG: 3200.00
Subsidized: 5340.00 (might be less depending on SEOG funding)
Perkins: 2000.00
Parent PLUS Loan: 0.00 </p>

<p>Total free aid: 15920.00
Total student loans: 7340.00
Total Parent Loans: 0.00
Total Aid Package: 23,260.00</p>

<p>If an outside scholarship were received, again, we would reduce Stafford, then Perkins, then Institutional (President's) scholarships, etc. </p>

<p>Regarding your other question...need is determined by:</p>

<p>Total COA - Pell grant, institutional aid, outside scholarships, discounts, reimbursement, SEOG, etc. So there really isn't a way for an outside scholarship to exceed need as defined by FAFSA...unless the scholarship was for 100% of all tuition, fees, room, board and books.</p>

20

<p>I disagree with you about the PLUS, Nikki. First of all, it is a loan option for the PARENTS, not the child whereas other aid, including loans are for the child in financial aid packages. Also, a school cannot offer the PLUS, it can only suggest it, and the parent then has to apply for and go through a credit check process as he would for ANY other kind of loan. The only difference is that the government is involved. </p>

<p>I guess my question is if any outside scholarship is granted that starts covering the EFC, is it required that Pell and other federal monies be reduced? Can these federal funds be continued if the total aid package including outside scholarships and school awards covers the EFC? I know that they cannot be continued if they exceed COA, but I am thinking in terms of EFC.</p>