How Do Schools Calculate Their Financial Aid Offers?
FAFSA made all the headlines this past year, with the SNAFU surrounding the roll out of the major updates to the form families use to apply for financial aid, but about 200 schools weathered the storm just fine. How? They require CSS Profile form in addition to FAFSA.
How do colleges and universities use these forms to concoct their financial aid packages? And why do some colleges feel the need to use two?
A Tale of Two Methodologies
The majority of colleges and universities use what’s called the “federal methodology” to determine how much a family can afford to pay each year. They get this number from the FAFSA form, which is created and processed by the Office of Federal Student Aid within the US Department of Education.
About 250 schools and scholarships use the “institutional methodology,” instead, basing their calculations on the FAFSA form and, perhaps, the CSS Profile form. The College Board, the same institution that manages the SAT and AP exams, runs the CSS profile.
Both the FAFSA and the CSS utilize your prior tax returns and current assets to determine the amount of money each family is expected to be able to contribute to college costs each year. The CSS Profile, though, goes into more detail than the FAFSA because the schools that use it hope more knowledge will enable them to more equitably distribute their financial aid funds.
Each form has its own terminology: the FAFSA calls their estimate of the amount you can pay your “Student Aid Index,” or SAI. You’ll see the term SAI come up a lot in discussions of financial aid, so it is worth remembering that acronym. The CSS Profile uses the term “Estimated Family Contribution,” or EFC instead of SAI.
Because the SAI is determined by the federal government, it is the same no matter which school you attend, and you can easily view your SAI on the FAFSA report. The EFC, however, differs by school because each school decides which factors they will utilize when calculating your EFC. Some schools, for example, will not count the value of your family’s primary home or they will give a discount for multiple students in college or for residents of an area with a higher cost-of-living.
Colleges and universities use SAI or EFC to calculate your “Need”; that’s another term you will want to remember. The basic formula is COA - SAI or EFC = your Need.
Ideally, the school would then offer you a financial aid package to fully cover your Need, but we don’t live in an ideal world. Only a handful of schools publicly commit to covering 100% of every student’s Need (keep in mind that the school determines what each student’s Need is by employing either the federal or institutional methodology).
The majority of colleges and universities “gap,” meaning they will cover a portion of your Need. There are a number of ways to check the average percentage of Need a school meets; probably one of the easiest is to search a school on College Data and look under their “financials” tab. Ithaca College, for example, meets 82% of Need on average, whereas Worcester State meets 69%.
Check a school’s financial aid web site to find out whether they require the CSS Profile and their financial aid deadlines. Or you can check College Board’s list of participating schools and programs. Their chart helpfully indicates which applicants need to fill out the form (domestic and/or international students), whether information from a non-custodial parent is necessary for that school, and whether the school requires supporting documentation, such as copies of tax forms, W-2s, etc.
