Harvard Summer Institute
on College Admissions
F. Duane Quinn
Financial Aid Specialist
[email protected]
Sally Donahue
Griffin Director of Financial Aid
Senior Admissions Officer
Harvard College
[email protected]
Agenda
 Brief Review of 101
 Calculation of the Family Contribution
 Institutional Vs. Federal
Theory (traditional)
 Parents and students
are responsible for
financing education
costs......…
 Up to their ability.
Theory (traditional)
 The student and her family will benefit the most
from higher education and should pay for it......
 Borrowing
 Saving
 Working
 Financial Aid should offer students Access and
Choice to higher education
Eligibility
less
=
Cost
Family contribution
Eligibility for aid
New for current year, “Prior/Prior”
 In past family reported income from year just ending
 Often “estimated” tax information, then correct after
taxes completed
 17 -18 will use tax data from prior year (2015) filed
taxes
 FAFSA available October 1: Not January 1
 Colleges may alter filing deadlines
Determining the Family
Contribution
 The Eligibility Index (EFC)
 Several variations
 We will concentrate on Dependent Student
 Theoretical Approach
 Contrast the Federal Methodology to the
“Institutional Methodology”
1. Determining the Eligibility
Index (EFC)
Total Parent Income Taxable
and Non-taxable for tax year last filed
minus
Taxes Paid (Fed. State and
Local)
minus
Employment Allowance
minus
Income Protection Allowance ($27,540 4/1)
minus
Title IV Exclusion
equals
“Available Income”
2. Total Parental Assets
Cash, Savings and Checking
plus Other Real Estate / Investments (home?)
plus Business Value (100 or more employees / adjusted)
plus Farm Value
=
“Total Net Worth”
less
“Education Savings / Asset Protection Allowance
(Age 50 = $21,200)
times 12% Asset Conversion Rate
3. Determining Parent Share of
EFC
“Available Income”
plus “Income Supplement”
=
“Adjusted Available Income”
times
Conversion Percentage
divided
Number Attending College
=
Eligibility Index from Parent(s)
4. Determining Student Share
of Index
Total Student Income
less Taxes and FICA paid
less $6420.00 Protection Allowance
times 50%
=
Index Available From Income
=
Total Student Assets X 20%
Index Available from Student Assets
5. Final Step
add
“Eligibility Index from Parent’s
Income and Assets”
plus
“Eligibility Index- Student Income”
plus
“Eligibility Index- Student Assets*
equal
“ELIGIBILITY INDEX” (EFC)
Asset Impact on EFC
An example: 4 in the family, 1 child in college:
Combined
Parent Income
Combined
Parent Assets
EFC
Difference
Family A
Family B
Family C
$75,000
$75,000
$75,000
$0
$75,000
$150,000
$7,819
$10,208
$14,438
$2,389
$6,619
Based on 2016-17 Federal Methodology: Courtesy of MEFA (Massachusetts
Educational Financing Authority)
Income Impact on EFC
An example: 4 in the family, 1 child in college:
Family A
Family B
Family C
Combined
Parent Income
$75,000
$100,000
$150,000
Combined
Parent Assets
$50,000
$50,000
$50,000
$8,798
$17,245
$32,803
$8,447
$24,005
EFC
Difference
Based on 2016-17 Federal Methodology: Courtesy of MEFA (Massachusetts
Educational Financing Authority)
Federal Vs. Institutional
Methodology
 Federal
 Institutional
 Income = AGI from
 Does not recognize
tax return
 Medical, dental,
tuition costs upon
appeal
losses in taxable
income
 Expenses collected on
PROFILE
FM Vs. Institutional Methodology
 Federal
 Institutional
 No credit for
 Credit (per child) for
educational savings
 Income and Assets
combined to
calculate EFC
future higher ed.
expenses
 EFC from Income and
EFC from Assets
FM Vs. Institutional Methodology
 Federal
 Institutional
 Exclude home equity
 Include home equity
(with option to cap)
 No incentive to save
for higher education
(Some in recent act)
 Incentive in (CESA)
Cumulative
Education Savings
Allowance
FM Vs. Institutional Methodology
 Federal
 Institutional
 20% of student assets
 25% of student assets
 EFC divided by # in
college
 60% for 2
45% for 3
 Based upon BLS
 Based upon CES
Eligibility
less
=
Cost
Family contribution
Eligibility for aid
Example of “Packaging”
 COLLEGE “A”
cost
- F.C
= need
$40,000
$ 8,000
$32,000
The Financial Aid Package
The Financial Aid Package
cost
$40,000
$ 8,000.
F. C.
The Financial Aid Package
cost
$40,000
need = $32,000
$ 8,000.
F. C.
The Financial Aid Package
cost
$40,000
grant = $25,000
meet full need
work
$ 3,000
$4,000
loan
$ 8,000.
F. C.
The Financial Aid Package
cost
unmet need “GAP”
grant = $20,000
work
$5,000
$40,000
$3,000
$4,000
loan
$ 8,000.
F. C.