Please Clarify; CSS Schools Using FAFSA & CSS to Determine Need Based Aid

I am clear that there are differences in the FAFSA, and the CSS formulas in determining need; i.e. home equity, non-qualified retirement accounts are exempt on FAFSA, but not on CSS, etc. I’m also clear that FAFSA determines need for federal need based aid, and for CSS schools, the CSS profile, which formulas can vary school to school, is used to determine need for institutional based aid.

My question is, at a CSS school, will the school typically consider the demonstrated EFC from the CSS profile when determining ALL need based aid? Or ONLY towards institutional need based aid?

i.e., assuming:

FAFSA EFC = $40,000
CSS Profile EFC = $60,000
COA = $60,000

So:
Demonstrated need per FAFSA = $20,000
Demonstrated need per CSS = $0

In this case, typically, would this school exclusively use the $20k figure when determining the student’s eligibility and amount for any Federal need based aid; and the $0 figure would only dictate that the student not be eligible for any institutional need based aid?

So this student might still be offered $20k, or some portion of that, in Federal need based grants, loans, and/or work programs?

Is this correct?

Filling out the FAFSA just gives you the option to get a student loan (and potentially a Pell Grant). Nothing else. The school will use the CSS info for everything else. You have no demonstrated need and can borrow $5500 as a freshman.

What does this mean? Only qualified retirement account balances are not counted on the FAFSA. If you have your money in some other kind of account…the balance IS counted on the fafsa.

If a school uses the Profile, then the calculations they make based on the information on your Profile is what they use to determine your family contribution. So if a Profile School has determined that your family contribution is $60,000 than THAT is you family contribution for that college…not the FAFSA EFC.

As you noted…the Profile looks far further into your family finances than the FAFSA does.

With a $20,000 FAFSA EFC, your kid would NOT be eligible for any federally funded grant money…at all. Your kid might get a partially subsidized Direct Loan…the max Direct Loan is $5500 for a freshman but only $3000 can be subsidized.

Work study is awarded by the colleges and typically goes to students with financial need at that college. This college has determined you have NO financial need. Not likely your student would be awarded federal work study.

I have to say…if your FAFSA EFC is $40,000, than your annual income is in the $150,000 a year range or so. Right?

Are you by any chance self employed?

That would not qualify your student for need based aid at many places.

PLUS…you must have primary home equity and other assets not on the fafsa that the Profile school considered for them to determine you had $0 in financial need with a COA of $60,000.

Did you really expect to receive need based financial aid?

ETA…to qualify for federally funded grant money, your EFC per FAFSA would have needed to be below $5000.

By non-qualified retirement, I was referring to non-qualified annuities. They are, to the best of my knowledge, not included on the FAFSA, but are on the CSS…

Actually, the #'s I put in the post were not specifically mine, but similar. I was just hoping to clarify how a CSS school uses the CSS & FAFSA together.

Nope, I don’t have a large income. I’m 63 y/o and disabled actually. I’m not in poverty, no complaints. I have a decent sum of money in Annuities which, along with social security, I hope to be able to live off of. The non-qualified Annuities, along with a property sale I made in 2016 after becoming disabled, caused a hugely inflated tax return in 2016, hence a large EFC.

And “No” I did not expect any need based financial aid really. I was just wanting to clearly understand how the process worked so that I’ll better understand what my cost might be.

Thanks for the reply.

@BelknapPoint or @mommdc please help me understand what this poster means by “non-qualified annuities”. …and how they are not counted on th FAFSA…but are counted on the Profile.

Some states also base their need based aid on the FAFSA EFC.

True @noname87 but with a FAFSA EFC of $20,000, I cant think of any state that would award their need based grant money.

But then…this is all “hypothetical”.

I do not know much about annuities, but yearly dividends from the annuity are probably included in the tax return.

I don’t know if the annuity balance is a reportable asset for FAFSA.

Actually, annuity dividends are not included on tax return until a withdrawal is made.

Qualified retirement accounts of any kind (Annuities, 401k, IRA, etc) should not be included on FAFSA or CSS. Non-qualified annuities (even though they are touted as “retirement” accounts) DO need to to be included on CSS, but not FAFSA.

http://www.wealthmanagement.com/college-planning/cracking-financial-aid-forms
https://www.savingforcollege.com/articles/how-7-different-assets-can-affect-your-financial-aid-eligibility?page=3

Gadzooks! Does it help just to use the school’s net price calculator? These NPCs are getting more and more reliable, I hear.

The CSS gives the information to the colleges, which then set their own EFC. Why would they calculate an EFC and then use the federal one? The whole point of submitting the CSS is for schools to get a better financial picture than the FAFSA gives. It’s absolutely possible to have a $0 EFC on the FAFSA (no income) but have very high assets, a home worth millions, several cars and even a second home. The CSS should flesh that out.

@Anthony185 - in the hypothetical you posted above, the student would get no instutitional aid, but would be entitled to a subsidized direct loan (federal aid) because of the $20K gap between FAFSA EFC and COA. The student would also be eligible for work study, but whether that would be awarded or not would depend on college policy – because the federal direct loan system is the same for everyone, but colleges differ in how they manage and allot their work study funds.

You asked,

The maximum for a federal direct loan is $5500 for a first year student; only $3500 is subsdized (interest-free while the student is in school).

A student with a $40K FAFSA EFC (your example) would not be eligible for a Pell grant, so no federal grants.

And as noted, the work study really is discreitionary – in theory, the student could be offered work study, but no guarantee.

My daughter was in the situation of being Pell-eligible for about half the time she was in college, even though the college used CSS profile and expected us to pay about $10-$15 K over and above FAFSA EFC. (non-custodial parent income and home equity were the primary differentials in our case). The college was very happy to accept those Pell dollars, but they did not increase the amount of my daughter’s grant because of that.

That is, in our case it looked something like this:

FAFSA EFC: $3000
CSS PROFILE EFC: $18000
COA: $50K

The college met the $18K EFC with a combination of grants, federal loans, and work study – so federal aid eligibility did not benefit us in any way. It would only make a difference in situations such as your hypothetical-- where Profile EFC shows no need (or very little need), whereas FAFSA EFC shows greater need; or in situations where a college has a no-loan policy and meets the CSS Profile EFC without requiring the student to take a loan – but the student is still eligible for the $5500 federal direct loan because of the lower FAFSA EFC.

Until the award package, you don’t know your actual CSS EFC. The NPC should get you close, depending.

The first issue is: does the college “meet full need?” If not, no matter your Fafsa SAR, you can’t expect significant help based on need alone.

In general, a QRP doesnt get counted in the college’s actual calculation as assets. But your prior year’s contributions to a QRP do get counted as untaxed income, and are added back to your adjusted gross income by the college.

Non-qualified annuities are counted on the CSS Profile. It’s up to you to learn if your annuities are truly QRP. It’s not as simple as that you aren’t taking a dividend in-hand yet.

This may help. https://www.ameriprise.com/research-market-insights/financial-articles/investing/qualified-nonqualified-annuities/

This is not true at all. Many colleges meet full need for some of their students but not all – and colleges that leverage their need based aid can often be very generous, because they have the option to package aid favorably for the student they perceive as most desirable. And that includes the option of interpreting “need” more favorably for some students than for others, or supplementing a need based package with merit money.

If a college is not MFN, one can’t “expect.” Sure, NYU, eg, comes through nicely, for some.