Financial aid starts with the premise that Cost of Attendance - EFC = Demonstrated need.
There are almost 4,000 colleges in the U.S. However there are less than 75 that meet 100% demonstrated need. It is the overwhelming number of colleges in the country that gap, your financial aid package.
The only thing that the FAFSA really does is determine your eligibility for federal aid.
The only thing that your FAFSA EFC of 0084, means that you are eligible for PELL grants, which are a federal entitlement. Depending on your state, you may be eligible for state aid. IF your school has FWS funds or SEOG Funds, your will eligible for those (however, there is never enough of this funding to accommodate every student who has a need). Unless your child is eligible for merit money, the public university in your home state would probably package your financial aid based solely on what federal and state aid that your family is eligible to receive.
Many schools will use the CSS profile or their own financial aid forms to determine your eligibility for their own institutional aid. Just because the you and the college are not on the same page, does not mean that you were gapped.
A school that meets 100% of your demonstrated need determines what they perceived your need to be.
Because college determines your family’s financial need, there is often there is a disconnect between what the college thinks that you need and what you/your family think you need.
The college looks at your income and assets determine how much you can afford to pay and how much of their money you are eligible to receive.
There is no uniform formula. Harvard has a $34 Billion endowment. this is the reason that they have chosen to fund families making 200k in income and having “typical assets” where University of Rochester with a $2 billion endowment would most likely have this family be full pay. Because Rochester (and pretty much any other college in the country) does not have as much money as Harvard, they can’t give the kind of financial aid packages that Harvard gives.
Some schools do not count home equity, while other schools may consider a multiplier of 1x your salarly, 2x your salary etc. Other schools may feel that the entire amount of home equity can be used as a resource to determine your ability to pay for your child.
With retirement funds, the FAFSA does not look at the amount of money in your retirement account. They only look at the contribution that you make to the retirement account. Some profile schools not only look at what you contribute to your retirement account but they will also ask you how much do you have in the account.
I totally understand your frustration because this process is extremely vexing for families who own their own business, farms, are blended families or divorced/ divorced and remarried families. Princeton only looks at the income of the students natural parents, while Chicago and Vanderbilt only looks at the income and assets of custodial parents. Other schools look at every one, meaning if you are divorced and both you and your ex spouse have remarried, there are 4 incomes being taken into consideration.