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leftcoast
Member
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Posted: Sun Jul 15th, 2007 04:51 am |
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I thought I would start this thread with some advice based on experience. Before I get to the advice part ... a little anecdote -- I had a very long conversation with someone from the financial aid office at my daughter's school this week. Basically, I asked them to talk to me to go over the award and how it was calculated -- I sent an email and pointed out that our expected "family resources" at the Profile schools was $X more than the FAFSA EFC, and while I understood that they took into account other resources, I wanted to get a better understanding of how it was all calculated.
During the phone conversation I asked all sorts of very specific questions -- this was not an "appeal" but an attempt to understand how things were calculated.
However, in the course of the conversation I made a comment about the PLUS loan I am still paying from my son's college. The financial aid counselor commented that was something that had not been considered in my award, but might be -- if I would send documentation. I expressed some surprise, because I knew I had provided details in the Profile. He said that while it was true that I had listed it, that the college needed more documentation of my loan payments to consider it -- and then suggested that I request "reconsideration" of the award and provide that information.
I won't know until next week whether my d's grant will get increased because of those loan payments -- and if it does go up, it won't be by much (I figure we would get another $575 of grant money at most) .... but the point is, it is worth taking the time to talk with the financial aid people in an in-depth, nonconfrontational manner -- because you never know what might come up.
I also got a lot of information from this conversation that is extremely valuable for the future -- but I am going to explain that in a separate post.
Last edited on Thu Jul 26th, 2007 07:13 pm by leftcoast
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leftcoast
Member
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Posted: Sun Jul 15th, 2007 05:31 am |
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Understanding Calculations of Financial Aid at 100% Need - CSS Profile Schools:
I think it is important to understand that the job of the people in the financial aid department at 100% need schools is to provide students with the full aid to which they are entitled, applying the school's specific policies as well as considering FAFSA rules and regulations. For the most part, the policies are well-established - so there is no point in arguing against a policy or expecting them to bend or break a rule.
However, the college-specific policies are not usually well-publicized -- unlike the rules governing FAFSA, you may not be able to find out these policies unless you ask.
So here are some of the questions I asked:
Home Equity: Since I live in California in a very small home with a very big mortgage and a very, very big paper value -- it is important for me to understand how home equity comes into the calculation. The two questions that are most important to me are:
- How does the college determine home equity & market value of the home?
- (In the case of my daughter's college, they rely on the Federal Housing Index multiplier, as published by the US Dept of Education -- see http://www.finaid.org/calculators/federalhousing.phtml -- this is a very favorable determination for me and it is good for me to know)
- Does the college cap the amount of equity considered for financial aid determination in relation to income?
- Many colleges will use a multiplier related to income such as limiting equity to 2.5 times income, which can also protect families with moderate income who live in areas where real estate values have skyrocketed.
Divorced Parents / Noncustodial Parent Income: My biggest problem with financial aid is that my ex husband does not contribute anything toward college costs, and he is self-employed with a fluctuating income -- so each year there is a huge mystery figure that gets added into the financial aid mix. My experience has been that colleges refuse to discuss any details of this with me -- that is, they are unwilling to disclose what dollar figures they use or what portion of the family contribution is attributable to the other parent's income.... which of course makes it very difficult to know how that figure is impacting the financial aid award.
However, I did get answers when I asked very specific questions as to what formulas or calculations were applied to the numbers. In the case of my daughter's college, I learned that I would get a good ballpark sense of how it was being treated if I were to run my ex-husband's figures through a FAFSA calculator, as if he were the custodial parent -- and then of course adding that figure to mine.
Asset/Income Protection Allowance: FAFSA calculations give a parent an asset protection allowance and an income protection allowance -- this is the amount of assets + income excluded from consideration before determining financial aid. However, these figures are quite low, especially for single parents -- for some reason, the asset protection allowance for a single parent is only 40% of the allowance for a married couple. That bothers me -- so I asked what figure my daughter's college uses - and I learned that they were giving me a better number than FAFSA. While the FAFSA asset protection allowance is approx. $21,000 for a single parent my age, my aid was calculated with a $37,000 allowance. This fact is important to know because it can actually bring the Profile EFC below the FAFSA EFC.
Self-Employment Income: OK, this is a tricky one, because we self-employed people file a schedule C every year, and it is in our interest to deduct every expense legally allowable that is reasonably related to our business. Sometimes that means we are deducting expenses that aren't "real" -- like depreciation costs -- or we are writing off expenses that overlap somewhat with personal expenses, such as business use of the home. Profile schools look at those schedule C's and they will add some of the writeoffs back in. So it is worthwhile asking what their practices are.
In my case, my daughter's college generally adds these expenses back in:- Vehicle expenses
- Depreciation
- Business Use of the Home
- Meals
However -- and this is very important -- if the college has documentation supporting a strong reason for these expenses, they may not add the expenses back in -- so it is worthwhile explaining these things. (See my next post). For example, I knew that my ex-husband, a lawyer, often takes cases outside the county where he lives, and that the previous year he had one where he was required to travel regularly on a weekly basis, driving hundreds of miles for that case. Knowing that his business mileage was extremely high, I had him sign a statement to the college explaining this -- I had thought in terms of the financial hardship it represented to him to have to travel so much that year. Because of that statement, the college made an adjustment and did not add back in those vehicle writeoffs, at least not the full amount. So it is valuable to understand what is in the calculations, anticipate what the college may do, and provide further explanation and documentation where appropriate.
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leftcoast
Member
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Posted: Sun Jul 15th, 2007 06:01 am |
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Documenting Expenses and Special Circumstance:
Here is what I have learned and what is most important -- to get the best financial aid you should document expenses as much as possible and provide a detailed explanation of special circumstances, as part of the financial aid application process. This should be done at the outset.
- If the college is going to require you to submit your tax returns -- and almost all do -- get your taxes done early and give them the full returns as soon as possible.
- Do not assume that the college will read or rely on the comments you put on the last part of the CSS Profile -- write a separate letter or statement to the college detailing the same.
- Do not "whine" or plead an emotional case, but do provide specific factual information as to circumstances that create additional financial burdens for your family.
- You can find a good list of some of the things that a college might consider here: http://www.finaid.org/educators/pj/specialcircumstances.phtml
Keep in mind that some of the special circumstances may also allow the college to make changes to the FAFSA to reduce the family EFC. It is in the financial interest of a private college to qualify the student for federal grant money, if possible -- so if your EFC is low but slightly more than the amount needed to qualify for a Pell Grant, it is especially valuable to provide the college with enough information to make your child Pell Grant eligible. My daughter qualified for a Pell Grant and Academic competitiveness grant her first year in college because she then had a sibling in college, and her college was able to use "professional judgment" to reduce the EFC because of high state taxes we paid -- this is something they pulled from the schedule A on my tax return, where those taxes were included in itemized deductions.
This is also an illustration of the value of providing the college with full financial information -- I had no clue that the college would consider those expenses to reduce the EFC. During the year my daughter applied to colleges, I made the mistake of submitting the tax return only to the colleges that insisted on having it early --- it is very possible that the colleges that did not ask for those returns would have provided stronger financial awards if they, too, had more complete information. So in hindsight, I undermined our ability to get good offers for comparison by not making sure that each college had the same, complete information to work with. It worked out o.k. for us because my daughter's best offer came from a top choice college -- but if she had not been accepted to that college particular college, then it would have been a different story -- it is possible that we could have looked at financial aid awards, deemed them all too weak and opted for the in-state public without ever knowing that there was information in our tax return that would result in a significantly improved award.
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Mezzomom
Member
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Posted: Sun Jul 15th, 2007 04:19 pm |
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Leftcoast, outstanding analysis as usual; I can only reiterate the wisdom of approaching a FA office in a non-confrontational manner. We recently had to file a special circumstances claim, and I spent an unwarranted amount of time waffling about whether to even do this. We met four of the special circumstances guidelines though, so I completed the initial request. The initial request included a form to be completed, as well as a written statement as to why we were requesting a special circumstances review. I kept the letter business-like, factual, and to-the-point.
Within four weeks, our request and tax forms had been reviewed, and our EFC was reduced by 2/3. We did not receive any additional grants (which I never expected because my daughter receives so much in scholarship money from her college), but her Stafford loan was changed to subsidized and she now qualifies for work study. Since work study students have hiring priority (and my daughter WANTS to work on campus this coming year), the latter is huge. The overall result was exactly what I had hoped for and was far less painless than I anticipated.
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leftcoast
Member
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Posted: Thu Jul 26th, 2007 07:20 pm |
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Update -- I just went online to check the bursar's accounting for my daughter and we have credit balance (!). I did not hear back from the financial aid department, but apparently my d's grant has been increased by slightly more than $300 for the year. Not a whole lot -- but every little bit counts.
I'm already thinking about the things I am going to document for next year.....
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