1. Harvard Summer Institute on College Admissions

2. F. Duane Quinn Financial Aid Specialist duane201@charter.net

3. Sally Donahue Griffin Director of Financial Aid Senior Admissions Officer Harvard College sdonahue@fas.harvard.edu

4. Agenda Brief Review of 101 Calculation of the Family Contribution Institutional Vs. Federal

5. Theory Parents and students are responsible for financing education costs......… Up to their ability.

6. Theory 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

7. Eligibility Cost lessFamily contribution =Eligibility for aid

8. New for 2017 – 2018, “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 filed taxes FAFSA available in mid fall: Not January 1 Colleges may alter filing deadlines

9. Determining the Family Contribution The Eligibility Index (EFC) Theoretical Approach Contrast the Federal Methodology to the “Institutional Methodology”

10. 1. Determining the Eligibility Index (EFC) Total Parent Income Taxable and Non-taxable minusTaxes Paid (Fed. State and Local) minusEmployment Allowance minusIncome Protection Allowance minusTitle IV Exclusion equals“Available Income”

11. 2. Total Parental Assets Cash, Savings and Checking plusOther Real Estate / Investments (home?) plusBusiness Value (100 or more employees / adjusted) plusFarm Value =“Total Net Worth” less“Education Savings / Asset Protection Allowance (Age 50 = $48,800) times 12% Asset Conversion Rate =“Income Supplement”

12. 3. Determining Parent Share of EFC “Available Income” plus“Income Supplement” =“Adjusted Available Income” timesConversion Percentage dividedNumber Attending College =Eligibility Index from Parent(s)

13. 4. Determining Student Share of Index Total Student Income lessTaxes and FICA paid less$6000.00 Protection Allowance times 50% =Index Available From Income Total Student Assets X 20% =Index Available from Student Assets

14. 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)

15. Based on 2016-17 Federal Methodology: Courtesy of MEFA (Massachusetts Educational Financing Authority) Family AFamily BFamily C Combined Parent Income $75,000 Combined Parent Assets $0$75,000$150,000 EFC$7,819$10,208$14,438 Difference$2,389$6,619 An example: 4 in the family, 1 child in college: Asset Impact on EFC

16. Family AFamily BFamily C Combined Parent Income $75,000$100,000$150,000 Combined Parent Assets $50,000 EFC$8,798$17,245$32,803 Difference$8,447$24,005 Based on 2016-17 Federal Methodology: Courtesy of MEFA (Massachusetts Educational Financing Authority) An example: 4 in the family, 1 child in college: Income Impact on EFC

17. Federal Vs. Institutional Methodology Federal Income = AGI from tax return Medical, dental, tuition costs upon appeal Institutional Not recognize losses in taxable income Expenses collected on PROFILE

18. FM Vs. Institutional Methodology Federal No credit for educational savings Income and Assets combined to calculate EFC Institutional Credit (per child) for future higher ed. expenses EFC from Income and EFC from Assets

19. FM Vs. Institutional Methodology Federal Exclude home equity No incentive to save for higher education (Some in recent act) Institutional Include home equity Incentive in (CESA) Cumulative Education Savings Allowance

20. FM Vs. Institutional Methodology Federal 20% of student assets EFC divided by # in college Based upon BLS Institutional 25% of student assets 60% for 2 45% for 3 Based upon CES

21. Eligibility Cost lessFamily contribution =Eligibility for aid

22. Example of “Packaging” COLLEGE “A” cost$40,000 - F.C$ 8,000 =need$32,000

23. The Financial Aid Package

24. cost $40,000 F. C. $ 8,000.

25. The Financial Aid Package cost $40,000 F. C. $ 8,000. need = $32,000

26. The Financial Aid Package cost $40,000 F. C. $ 8,000. loan $4,000 work $ 3,000 grant = $25,000 meet full need

27. The Financial Aid Package cost $40,000 F. C. $ 8,000. loan $4,000 work $3,000 grant = $20,000 unmet need “GAP” $5,000