Institutional vs. Federal Methodologies?

Paying for College
1

<p>Does anyone have any experience with what methodologies (IM vs. FM) that need-only private schools are using to calculate financial aid? As an example, I entered in our family's finances at Amherst's FA calculator. The school displayed our EFC based on both IM and FM methodologies. It showed our EFC was $3K higher based on the FM rather than the IM method. (Perhaps it is usually the other way around, like I've seen on other posts). </p>

<p>I'm not that concerned about the difference in EFC since I know the two methods are different. The interesting this is that Amherst also showed what a typical award would be if you were admitted. It showed their CoA and our EFC to calculate our need. And, the EFC they used was the larger amount based on the FM method. So, it looks this particular school chose to use the EFC method that yields the larger family contribution. </p>

<p>Has anyone else experienced this? I thought we were going to be "better off" with a private school since our EFC was lower based on the IM method. But, the above example shows that even at a private school, it chose to use the EFC based on the FM method. </p>

<p>Any insight or experience from others would be appreciated!</p>

2

<p>With ours the FM was also higher than the IM, based on income alone. Once the contribution from assets was added in, along with the contribution expected from student summer income, then the IM total EFC went up to a couple thousand above the FM. But, yeah, based on income alone our FM was actually higher than our IM.</p>

<p>It's not that the school went with the higher of the two income-only based figures, but because of the other things they added in, the total came to a higher amount in IM.</p>

<p>Did you print out the fully detailed information from the online calculator?</p>

3

<p>Dear RentOf2,</p>

<p>Did you specifically mean the Financial Aid Calculator from Amherst's site. Yes, I did do a detailed printout although I have to pour over the results to see where the differences are. </p>

<p>Even when I use the finaid estimators from Collegeboard's website, I do get the same results. I can also get a detailed printout. However, I don't know of any grounds that I have for asking a prviate school to use the (lower in this case) EFC fromthe IM method vs. the larger amount from the FM method.</p>

4

<p>Yes, I was talking about the Amherst online calculator. Williams has a similar one, but it uses their own methodology. (It can be an interesting exercise to do both and compare.)</p>

<p>I think --but I don't know for sure, of course!-- that you'll find they're not really using the higher FM amount. It's just given all the other calculations in their IM, the bottom line figures, even with their lower income-based expected contribution-- will end up being higher than the bottom line FM figure.</p>

<p>It's hard to explain, but compare it line-for-line in the detailed report and it should become clearer. But, no, I don't think that what's happening is that they are choosing the higher FM amount to base their offer on.</p>

<p>I found the Amherst calculator to be fairly accurate in reflecting the financial aid they offered my son. More accurate than the CollegeBoard calculator, because it uses Amherst's own methods for arriving at the EFC.</p>

<p>I wish all schools that offer only needs-based aid would be so transparent about their formula for calculating both need and aid. It would in one fell swoop undo much of the unfairness about advantaged kids being able to apply ED. If kids needing aid could have reliable knowledge about what they'd be getting into before applying, then they could know one way or the other if an ED application was a sensible thing to do.</p>

<p>Props to Amherst and Williams for laying it all out like that. All schools should do it. I know it wouldn't work for schools offering merit aid, but for needs-based aid only, there's no reason they couldn't make their formula for allocating aid public... at least by having a school specific calculator available online. If they're serious about not advantaging the advantaged with ED application options, it would make much more sense to demystify the money from the get-go, than to eliminate ED which is the one sure way for a student to signify their level of committment to attend.</p>

5

<p>Federal Methodology is used to determine eligibility for all federal funds, such as Federal Pell Grants, Federal Academic Competitiveness Grants (ACG), Federal National Science and Mathematics Access to Retain Talent (SMART) Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Stafford loans, Federal Perkins loans, and Federal Work-Study.</p>

<p>Schools that distribute their own institutional funds use an Institutional Methodology and their professional judgment to determine eligibility for their school’s scholarship funds. </p>

<p>Two distinct formulas assess information reported in the aid application process. The traditional institutional methodology (IM), developed by the College Board and refined annually by economists and aid administrators, determines the expected family share of costs. IM is the dominant standard among selective national colleges. Most schools that use an institutional methodology to disburse their own funds use either the CSS profile or their own FA form.</p>

<p>The federal methodology (FM) through the filing of determines eligibility for federal aid. All schools require students who are U.S. citizens or permanent residents to at minimum file the FAFSA if they are requesting FA. The only thing the FAFSA does is determine one's ability for federal aid, (pell grants, seog, stafford and perkins loans).</p>

<p>Differences between the IM and FM models include:</p>

<p>IM collects information on estimated academic year family income, medical expenses, elementary and secondary school tuition and unusual circumstances. FM omits these questions.</p>

<p>IM considers a fuller range of family asset information, while FM ignores assets of siblings, all assets of certain families with less than $50,000 of income, and both home and family farm equity.</p>

<p>FM defines income as the “adjusted gross income” on federal tax returns, plus various categories of untaxed income. IM includes in total income any paper depreciation, business, rental or capital losses which artificially reduce adjusted gross income.</p>

<p>FM does not assume a minimum student contribution to education; IM expects the student, as primary beneficiary of the education, to devote some time each year to earning money to pay for education.</p>

<p>FM ignores the noncustodial parent in cases of divorce or separation; IM expects parents to help pay for education, regardless of current marital status.</p>

<p>FM and IM apply different percentages to adjust the parental contribution when multiple siblings are simultaneously enrolled in college, and IM considers only siblings enrolled in undergraduate programs.</p>

<p>The IM expected family share represents a best estimate of a family’s capacity (relative to other families) to absorb, over time, the costs of education. It is not an assessment of cash on hand, a value judgment about how much a family should be able to use current income, or a measure of liquidity. The final determinations of demonstrated need and awards rest with the University and are based upon a uniform and consistent treatment of family circumstances.</p>

<p>Except in the most extraordinary circumstances, Colleges classifies incoming students as dependent upon parents for institutional aid purposes, even though some students may meet the federal definition of “independence.”</p>

<p>Students enrolling as dependent students are considered dependent throughout their undergraduate years when need for institutional scholarships is determined.</p>

<p>For institutional aid purposes a student may not “declare” independence due to attainment of legal age, internal family arrangements, marriage or family disagreements.</p>

<p>Keep in mind that Amherst and similar schools calculates your financial aid using a combination of both the federal and institutional methodologies.</p>

<p>My Daughter attends Dartmouth. (She was also accepted to Amherst & Williams and I must say the Williams FA calculator was on the money as far as the EFC and the FA award that came to our house), Dartmouth states:</p>

<p>If the contribution calculated using the federal need analysis is higher than Dartmouth's calculation, the higher figure must be used.</p>

6

<p>Schools have different ways to do this, but my limited experience is, that like the OP, our expected contribution <em>from income</em> was higher in the federal methodology than it was in Amherst's methodology. Nonetheless, using their own formula (including their lower expected contribution from income) the TOTAL EFC was higher (due to assets and expected student contribution) than the total expected in federal methodology.</p>

<p>But if the OP examines the detailed printout, they'll be able to tell what is the story in their particular case.</p>