I get tons of questions about strategies for reducing EFC, especially those related to the Asset Protection Allowance. And there are plenty, but sheltering assets is typically the lowest bang-for-the-buck strategy out there: Every $1,000 you shelter will only reduce your EFC by $54. And that assumes that the school will meet your full need. Here are some better options: Continue reading Better EFC Strategies
What do the numbers $7,000, $42,000, $44,000, $56,000, $58,000, $72,000 and $81,000 have in common? Each is a net price estimate (rounded) that we received from a different college, using the same data inputs. That’s one example of why one might reasonably argue that Expected Family Contribution (EFC) is of marginal significance. Continue reading Net Price Matters More
When you start looking at specific colleges, net price calculators are the best tool to figure out how much the school will actually cost– especially since they will show the aid package including self-help aid (loans and work study). Anyone who has gone through this process knows that the net price tends to differ quite a bit from EFC. And only the FAFSA provides an EFC, so you’re definitely going to get a different cost from a school that requires the CSS Profile. Which begs the question, does EFC matter? Continue reading Does EFC Matter?
Last month– as it does every May– the Department of Education released its Needs Methodology for the coming FAFSA. The Higher Education Act of 1965 requires that the Income Protection Allowance, Adjusted Net Worth of a Business or Farm, the Education Savings and Asset Protection Allowance, and the Assessment Schedules and Rates be updated annually for inflation. Continue reading What to Expect in the 2020-2021 FAFSA
Do you have to pay taxes on a scholarship? It depends what the scholarship is for. To understand taxes on scholarships, it’s worth remembering that the IRS defines qualified expenses differently for different purposes. Expenses get more or less the same treatment for taxability of scholarships as they do for education tax credits, so let’s review those. Continue reading Scholarships and Taxes
As conditioned as we are to thinking about college as a seller’s market where schools have all the leverage, the NACAC College Openings Update, published every May, serves as a reminder that for the majority of schools, students are in the driver’s seat. Continue reading NACAC College Openings Update 2019
Every year, about 1/3 of FAFSAs filed are selected for validation, which could be described as FAFSA’s version of an audit. Some FAFSAs are chosen at random for verification, whereas some schools– especially those funding need-based aid out of an endowment– will verify every application. Because verification goes through the school, it’s not unusual for students to first learn about their verification status when they receive an acceptance and financial aid award. Being selected for verification does not typically mean that you’ve done anything wrong, just that you need to provide additional information. Continue reading FAFSA Verification
Many financial aid awards include work study. Typically work study is awarded in a dollar amount per academic term, for example $1,000 per quarter. Which leaves a lot of people wondering what it means and how you get it. Continue reading What is Work Study?
Students who are waitlisted at their top-choice school should understand how waitlists work, because they can a little bit like Lloyd in Dumb and Dumber: “So you’re telling me there’s a chance!”
Here is a great article explaining how waitlists work. The key takeaway from a money perspective: Waitlists tend to be “need-aware” so waitlisted students who require financial aid to attend should instead focus on the schools at which they’re already accepted. Remember that in addition to the likely lower aid package, you will have to pay a nonrefundable deposit– typically in the $500-$1000 range– at your backup school to retain your spot there since waitlisted students typically are not notified of their acceptance until after May 1.