What do you mean different colleges have different business models?
If you haven't realized it yet, college is big business!
Schools compete with each other for the best students, and not only grades but the ones that will fit in to the current gaps in the student body of their institution, based on whatever they are trying to look like at the time.
Some schools have large endowment funds that they use to entice students by giving out grants and scholarships to attract them and compete with their neighboring schools. Those grants and scholarships have various names, but in all cases, they reduce the cost that a family must pay for their student to attend.
What is the Biggest Mistake in Filling out the FAFSA (and CSS Profile)?
The biggest mistake that I see, or even hear about for that matter, when families fill out the FAFSA is that they included assets that should be excluded. The way the question on the form is worded, it is asking for All Investments, but what they really want and are asking for is all non-retirement investments. The question specifically states to exclude home equity for your primary residence, and could just as easily limit the confusion by excluding retirement assets, but for whatever reason, they don't and make things confusing. Many families don't end up with the financial aid they are entitled to because of incorrectly filling out the form.
How Are Different Assets Assessed in determining the Expected Family Contribution (EFC)?
Let's start with a definition - Expected Family Contribution (EFC) is the amount that the formula determines that a family can afford and is thus expected to cover toward tuition, fees, books, travel, and room & board on an annual basis.
Who owns those assets makes a difference in how they are factored into the calculation.
If the parents own the asset, it is assessed at 5.64%. If on the other hand, the student owns the asset, it is assessed at 20%. And if the grandparents or someone else owns the asset, it isn't a part of the calculation at all.
On an asset of $25,000, that means that if the student owns it, that is $5,000, but if the parents own it is only $1,410 and it is $0 if the grandparents own it.
What is the #2 Mistake in Filling out the CSS Profile?
The #1 mistake is stated above and applies to both the FAFSA and the CSS Profile, but the #2 mistake is only on the CSS Profile and it has to do with home value and home equity. The FAFSA doesn't include that data, so it only impacts those students and families that are applying to certain private schools. Different private schools have different business models, so not all of them care about home equity either, but for the ones that do, you want to make sure to get this right.
Don't exaggerate or overestimate the value of your home. This may be the only case where you want to use the lowest justifiable value for your home.
What does Expected Family Contribution (EFC) mean?
Let's start with a definition - Expected Family Contribution (EFC) is the amount that the formula determines that a family can afford and is thus expected to cover toward tuition, fees, books, travel, and room & board on an annual basis.
What is the CSS Profile?
The CSS Profile is an additional set of data that is gathered by some private schools that want to dig deeper into the finances of a family.
Should I Complete the FAFSA Even If I Make a Lot of Money?
Yes. Everyone should complete the FAFSA, regardless of income or assets. You never know what the future will bring, and it is good to have a baseline, and who knows, some schools have unusual strategies for funding and your family may be eligible for some kind of financial aid even if you don't think you are eligible.
Who doesn't want a discount?