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{"id":888,"date":"2013-08-23T21:41:00","date_gmt":"2013-08-23T21:41:00","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/2013\/08\/have-you-ever-really-looked-at-the-financial-aid-formulas.html"},"modified":"2013-08-23T21:41:00","modified_gmt":"2013-08-23T21:41:00","slug":"have-you-ever-really-looked-at-the-financial-aid-formulas","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2013\/08\/have-you-ever-really-looked-at-the-financial-aid-formulas.html","title":{"rendered":"Have you ever really looked at the financial aid formulas?"},"content":{"rendered":"\n<\/head>

It all hinges on the Expected Family Contribution \u2014 if you\u2019re just out of high school, your family is expected to provide a significant portion of your tuition and expenses.\u00a0 How much?<\/p>\n

In case you\u2019ve been wondering, here are the official federal financial aid formulas for the \u201cexpected family contribution\u201d<\/a>.\u00a0 Here\u2019s the math:<\/p>\n

First, parent\u2019s income:<\/p>\n

The AAI, or total parents\u2019 income (including contributions to 401k) less deductions for federal, state, and Social Security taxes and an \u201cincome protection allowance\u201d which presumably represents basic living costs \u2014 29,740 for a family of 5 with one college student, and a range of 16 \u2013 35K for family sizes of 2 to 6 \u2014 is multiplied by a set of marginal rates\u00a0much like the tax table rates:<\/p>\n

AAI up to $14,600 \u2014 22%
thereafter up to $18,400 \u2014 25%
up to $22,100 \u2014 29%
up to $25,900 \u2014 34%
up to $29,600 \u2014 40%
above $29,600 \u2013 47%<\/p>\n

Second, parents\u2019 assets:<\/p>\n

total all assets except for the house and pension savings (this differs for some private colleges, who add in home equity), subtract an \u201casset protection allowance\u201d (ranges from $46,600 at age 50, $53,400 age 55, 71,000 age 65), and multiply by 12%.<\/p>\n

Third, student\u2019s income:<\/p>\n

total income less tax allowances and a 6,000 \u201cincome protection allowance\u201d\u00a0multiplied by 50%.<\/p>\n

Fourth, student\u2019s assets:<\/p>\n

total assets times 20%.<\/p>\n

Which all means that it feels very easy for a middle-class family that saves diligently\u00a0to reach a very high EFC, without actually having enough assets\u00a0and income to feel comfortable forking over that much for college.\u00a0 In some cases, the family will suck it up and take out supplemental loans; in other cases, no matter what the calculator tells them they can afford, they\u2019ll just decline to fund the kid\u2019s tuition, and that kid then has no recourse \u2014 financial aid offices have little to offer but the business card of a private loan officer, since subsidized loans (or even guaranteed loans, I think) are only available to cover \u201cdemonstrated need.\u201d<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"