1. What are the financial aid applications that my clients would have to complete if they are to seek in need based financial aid?

All schools require the Free Application for Federal Student Aid, most often referred to by its acronym, the FASFA. The FAFSA determines who will qualify for state and federal aid, and most schools also use a FAFSA results to calculate who receive their own institutional money.

There are 187 undergraduate colleges and universities that use the CSS profile. These schools use the CSS profile to determine who qualifies for their own institutional aid. They are still required to use the FASFA for federal student state aid.

2. Do any public schools require the CSS profile?

Just a handful of public institutions require this aid form. Those schools are currently College of William and Mary, Georgia Institute of Technology, University of Michigan (Ann Arbor), University of North Carolina (Chapel Hill) and the University of Virginia (Charlottesville). In addition, Kutztown University of Pennsylvania requires a profile for international students. The public and private universities using the form can change so it’s best to consult the full list of CSS profile schools on the CSS profile website.

3. When can parents file the FAFSA?

The earliest date to access the FAFSA for high school seniors is always October 1^st. For instance, the first date that parents can file the FAFSA for a child entering college in the fall of 2023 would be October 1^st, 2022.

4. When can I file the CSS profile?

The CSS profile is available beginning on October 1st every year for the families of high school seniors. For students applying to college via Early Decision or Early Action, the deadline to submit the CSS profile is often in November. Each school will have its own financial aid deadlines

5. Should we fill out the FAFSA if our son is only a junior in high school? Or do we wait until the senior year?

You can’t fill out the FAFSA or the CSS profile until your child is a senior in school.

6. If we have two students in college that both require the CSS profile and the FAFSA, can we just fill out the forms once, or do we have to fill out for each child?

The CSS profile and the FAFSA must be submitted for each child. The FAFSA will allow a parent to copy the parent information from the first student to the second student, but they must still complete all the other information for the second student.

7. Can I file the FAFSA and the CSS profile one time or do I have to file every year?

Parents must file every year.

8. What is the significance of the base year for financial aid purposes?

The FAFSA and the CSS profile base income and tax information on federal income tax returns filed during the base year. The base year for students attending College in the fall of 2024 is 2022. When parents are filing the FAFSA and the CSS profile for the 2024-2025 school year, they will use their 2022 federal income tax return. If a family’s base year income is not reflective of their financial situation today, they can appeal to a college’s financial aid office for a professional judgment.

9. What is a professional judgment?

Colleges do have the power to adjust a student’s financial aid package through a process called the professional judgment. This involves a family appealing for a better award based on special circumstances or financial issues that aren’t addressed in the financial aid application. Special circumstances may include anything that had changed since the base year or anything that distinguishes the family from the typical family. For instance, a parent might have recently lost his/her job although the FAFSA and the CSS profile each shows a large salary for the base year. Or the family may have high dependent care costs for a special needs child or elderly parent.

10. If your income is too high and most likely will be ineligible for financial aid. Do you need or should you still complete a FAFSA and CSS?

I wouldn’t assume someone won’t qualify for need-based aid without running a net price calculator for each school and using the College Board’s EFC calculator. Even a high-income student may qualify financial aid at a high-cost college or if multiple children enrolled in college at the same time. But if there is truly no way someone would get financial aid, then the only reason why you would file is if the student or the parents intend to borrow through the federal financial aid system.

11. Who files the FAFSA if the parents are divorced?

For divorced couples, the ex-spouse who has housed the child the majority of the year will continue to complete the FAFSA. They are considered the custodial parent, with the responsibility of completing the FAFSA, based on where the child has physically lived during a 12-month period ending on the day the FAFSA is completed. It makes no difference which parent claim the child on a tax return or paid child support.

If living arrangements are not definitive – as can occur during a leap year or a recent divorce – it goes by which parent provided more financial support. If that does not distinguish, it is the parent with the greater income.

Colleges can and do ask for copies of the divorce decree, separation agreement and child custody agreement. If the parents are going to change the child’s living arrangements to live with a parent with lower income, it is a good idea to get the court documents modified to be consistent with the new arrangement.

Starting with the 2024-25 FAFSA., the parent responsible for completing the FAFSA will switch from where the student lived to whichever parent provide more financial support to the student.

12. How does alimony impact financial aid?

The status of alimony changed, starting with 2019 federal income tax returns. For divorces in 2019 and later, or pre-2019 divorces that have been modified in 2019 or later, alimony is reported on the payer’s federal income tax return and not on the recipient’s tax return. This means it will not be reported as income on the custodial parent’s FAFSA. This can increase eligibility for financial aid compared to what occurred previously, when the recipient reporter alimony as income on his or her federal income tax return.

13. What are the rules for same-sex couples when filing the FAFSA?

Federal law requires that married, same sex partners must both include their financial information on the FAFSA. To reflect this change, the FAFSA asks for information for “Parent 1” and “Parent 2”. In the past, only biological or adoptive parents had to share their assets and income.

If the same-sex couple is not married, both partners will have to submit financial data if one of them has adopted the other partners child. If a partner is not adopted the child, only the biological parent will complete the FAFSA.

14. Should you report retirement assets on the FAFSA?

The FAFSA asks about the student and parents’ investments, but your clients should not include any qualified retirement assets such as Individual Retirement Accounts, 401(k)’s, 403(b)’s, KEOGH, SIMPLE, SEP, Roth IRA’s, Roth 401(k)’s, pension plans or annuities for either parents or the student on the FAFSA. Money that is not saved in qualified retirement accounts must be reported even if the parents have reached retirement age. Parents don’t have to report the cash value of life insurance on the FAFSA nor nonqualified annuities. The CSS Profile, however, will count nonqualified annuities and some CSS Profile schools will also count the cash value of life insurance.

15. What if the parents are unmarried and living together? Who files the FAFSA?

Unmarried parents and never married parents who live together previously enjoyed a FAFSA perk. Only one of the parents has had to complete the FAFSA and share his/her financial figures, but this has changed. Both parents, who lived together, are now required to complete the financial aid application jointly.

16. Does the FAFSA have to be filled out to qualify for merit aid? I don’t think we would qualify for any need-based aid but are hoping to get some merit.

It’s not common, but some schools do require filing the FAFSA to qualify for merit aid. Schools that fit into that category include the State University of Georgia. To play it safe, I’d contact the schools in their child’s list and ask.

Parents often underestimate eligibility for need based aid and overestimate eligibility for merit-based aid. Financial aid is based on financial need, which is the difference between the cost of attendance and the expected family contribution (EFC). A student who might not qualify for need based aid at an in state public college might qualify for aid at a higher-cost private college. Also, subtle factors can yield a lower EFC, such as the increase in the number of children enrolled in college at the same time.

17. How does the FAFSA renewal work? Do I have to put in all that data again and should I also estimate and do the renewal right after the New Year again?

You must complete the FAFSA every year if you want need-based aid. The renewal FAFSA will copy some non-financial information from the previous year’s FAFSA. The application is heavily dependent on your income, which must be updated because it can change annually.

18. If we don’t qualify for need-based financial aid, do you recommend filling out the FAFSA anyway?

If you want to qualify for federal student and parent loans, you must complete the FAFSA. Private student loans, however, do not require filing the FAFSA. Some schools do require following the FAFSA to qualify for institutional merit scholarships. Check with your schools on your child’s list to determine if following the FAFSA is necessary.

19. Is following the CSS profile free like filing the FAFSA?

No. While the FAFSA is free, the CSS profile costs $25 for the initial application and college report, and all additional reports are $16 each.

The College Board grants free waivers automatically to some applicants based on information that the family includes on the CSS profile. The income threshold for the waiver is $100,000. The waiver covers the application fee and the reporting fees for colleges and some private scholarship programs.

20. How are parent assets assessed for financial aid purposes?

The FAFSA assesses parent assets at a maximum of 5.64%, and the CSS profile assesses parent assets at a maximum of 5%.

21. How big a role does parental income play in determining if a child qualifies for need-based financial aid?

The FAFSA Formula will use a portion of parent income in its calculations. The formula assesses income on a sliding scale that maxes out at 47%.

The parent available income subtracts certain allowances from parent income, including an income protection allowance that is based on family size and the number of children in college. (The FAFSA will no longer consider the number of children in college starting with the 2024-2025 FAFSA.)

There is also an allowance for federal income taxes and another for state taxes, as well as an employment expense allowance that varies based on whether one or two parents work. You can obtain the latest FAFSA aid formula by doing a web search for, “EFC Formula 2022-2023”.

The CSS profile’s income protection allowances are similar to the FAFSA’s, but the College Board stopped sharing the proprietary form of several years ago.

22. Will savings for college kill your chances for qualifying for financial aid?

Assets do play a part in financial aid determination, but other factors such as parent income, marital status and the number of students in college simultaneously can play a much bigger role.

Here is an example of how assets often don’t have a huge impact on aid. For every $10,000 that parents save for college, aid eligibility via the FAFSA and CSS profile drops no more than $564 and $500 respectively. That still leaves the parents with $9,436 and $9,500 available to pay for college costs. Every dollar you save is about a dollar less you’ll have to borrow.

Saving for college also expands college choice, allowing parents would send their child to a more expensive college than they otherwise could afford.

23. How is a student’s income assessed for aid purposes?

The FAFSA automatically shelters some of the student’s income. The amount that is sheltered is adjusted every year and can be found in a federal document entitled, The EFC formula. Google the term and you can find it.

For the 2022-2023 school year, a student could earn up to $7,040 without it impacting financial aid. Any money earned above that level would be assessed at a stiff 50%.

The CSS profile does not protect any student income. Most CSS profile schools automatically assume that a student will contribute something to college, called the minimum student contribution or summer work expectation. Each school will differ in what it will expect a student to contribute, though it’s often in the $3000 – $6000 range.

24. We would like to purchase $2000 worth of stock for each of our kids (15 and 13 years old) to teach them about investments. Is it better to NOT put assets in their name?

If there is a chance of attaining need-based aid down the road, it would be better not to put stock in your children’s name since student assets are assessed at a higher rate. A child’s assets are assessed at 20% on the FAFSA in 25% of the CSS profile. In comparison, the FAFSA assesses parental assets at up to 5.64% and the CSS profile assesses them up to 5%.

25. Are assets in a 529 plan considered the child’s or a parent’s assets?

The money in a 529 plan that is owned by a dependent student (custodial 529 plan) or the dependent student’s custodial parent is reported on as a parent asset. Parent assets are assessed up to 5.64% of the FASFA and up to 5% in the CSS profile.

If the student’s parents are divorced or separated and the 529 plan is owned by the non-custodial parent, it is not reported as an asset on the FAFSA, but any distributions count as untaxed income to the student. Since this can have a negative impact on eligibility for need-based financial aid, it is best if ownership with the 529 plan is transferred to custodial parent as part of a financial settlement.

This won’t be an issue, however, beginning with the 2024 FASFA when a non-custodial parent, grandparent or others could help with college costs without impacting aid eligibility. The CSS profile, however, does not adopted this upcoming change.

If the student is an independent student, the 529 plan reported as a student asset.

26. How are assets in a custodial 529 plan treated for financial aid purposes?

Even though assets in a custodial 529 plan are the property of the student, the FAFSA assesses the money inside these accounts as if the parent owned them. In other words, the FAFSA assesses these assets add up to 5.64%.

In contrast, the CSS profile will routinely treat custodial 529 plans as a child’s assets and assess the money at 25%. Some CSS profile schools, however, will assess the assets as a parent’s or in some other way. You should check with individual schools if this will be an issue.

27. How was the Coverdell Education Savings account treated as an asset?

It’s considered a parent asset by both the FAFSA and the CSS profile. Coverdale Education Savings Accounts are treated the same as 529 College Savings Plans.

28. Do contributions to qualified retirement accounts in the base year get counted as part of the family’s adjusted gross income?

Retirement assets do not get counted as assets in the financial aid formulas, but base year contributions to retirement accounts do get counted as untaxed income and these contributions are added back in calculating aid. Aid is based on total income that is comprised of adjusted gross income, untaxed income in any federal benefits.

Here is an example: Let’s say parents have $250,000 in retirement accounts. This money will not impact financial aid when a student applies for assistance. But let’s say the parent contributed $10,000 to a 401(k) account in 2020. When they apply for financial aid for the 2022-2023 school year, that $10,000 in contributions would be treated as the parents’ income.

29. How is the cash value of life insurance treated for financial aid purposes?

Some CSS Profile schools assess the cash for life insurance as a parent asset. The FAFSA does not consider the cash value of life insurance policies. However, the distributions from a cash value life insurance policy will count as income to beneficiary on the FAFSA.

30. How are a parent’s disability payments treated for financial aid purposes?

The FAFSA and the CSS profile assess parent disability benefit payments as untaxed income. Other disability benefits, however, such as Workmen’s compensation, are reported as income on the FAFSA. Untaxed Social Security benefits, including SSI and SSDI, are not reported on the FAFSA.

31. How is the net worth of a family business assessed?

The FAFSA ignores the net worth of the family-owned business if it has less than 100 full-time equivalent workers. The business must be owned and controlled by the family, meaning that the family (not just a family members listed on the FAFSA) owns more than 50% of the business. As a practical manner, if the parents own even a larger family business, it’s probably unlikely they would qualify for need based aid.

32. What is an Expected Family Contribution?

An Expected Family Contribution (EFC) is supposed to be a measure of the family’s financial strength. It is what a financial aid formula says a family should be expected to pay for one year of college. The EFC is based on such factors as the parental and child’s income, their assets, household size, marital status and the number of children in college simultaneously. A family that has an adjusted gross income of $27,000 or lower has an EFC of $0. There is no cap on how high an EFC could be for wealthy families.

Most families will pay more than the EFC because of the impact of gapping (leaving families with unmet need) and most financial aid packages include loans which do not cut college costs, but rather spread out the cost over time.

Starting with a 2024-25 FAFSA, the EFC will be known as the Student Aid Index or SAI. Part of the motivation for the name change is to avoid confusion about what the EFC means, since the “expected family contribution” is a bit of a misnomer.

33. What is the first step that parents should take when contemplating how to manage college costs?

One of the most important things parents can do as they explore college possibilities is to get a preliminary idea of what their financial obligations will be. And excellent way to measure this is obtain their EFC through the College Board EFC calculator. The calculator will produce a federal EFC (it is generated by the FASFA) and also an institutional EFC (it’s generated by the CSS profile).

Another tool available obtain your EFC is the “My College Money Report.”

34. What can you do with the EFC results?

Parents who have a high EFC and aren’t eligible for need based financial aid should look for schools that provide for merit scholarships that are giving regardless of need. The student could also apply for private scholarships.

Parents who have a modest EFC should search for schools that provide excellent need-based assistance. Those parents should look for low-cost colleges, such as their in state public colleges.

Also keep in mind that financial need is based on the difference between the costs of attendance and EFC, so even if wealthy students might qualify for some aid at a higher cost college.

35. When should parents use the EFC calculator?

Parents shouldn’t wait until their child is a high school senior to use an EFC calculator. It’s best to get a ballpark idea of what their EFC will be as early as a child’s freshman year in high school or even in middle school.

36. Is there an income cutoff when financial aid becomes an impossibility?

There is no explicit income cut-off because there are so many variables when determining who qualifies for financial aid. The student’s chances of receiving need-based aid will rise with the price of school. A family that makes too much money to receive aid from a relatively inexpensive state institution could qualify for tens of thousands of dollars at pricey private schools.

Also, the marital status of the parents can have a big impact on a child’s eligibility for need based financial aid. A good way to determine if a will be the possibility is to use an EFC calculator. Compare the price of a school versus the families EFC.

37. I used an EFC calculator and was shocked at how much I am expected to pay for college. Who created these formulas?

A family’s EFC often won’t be a true indicator of what parents and students can afford to pay for college. The College Board created the institutional EFC formula and Congress created the federal formula that is linked to the FAFSA. The EFC is more of a rationing system than a realistic assessment of the family’s ability to pay for college.

38. What is the average tuition and room/board price at state and private colleges and universities today?

Every year, the College Board released a study that provides these statistics. The average private institution was charging $51,690 for the 2021-2022 school year. The average public university was charging $22,690 for in state students and $39,510 for out-of-state students.

The cost of the tenants will be higher because it is also includes books and supplies, transportation and other expenses. Those figures are a $55,800 for private school, $44,150 for nonresidents at state universities and $27,330 for in state students at state universities.

You can learn a great deal about college pricing by reading the College Board’s annual Trends in College Pricing.

39. Are room and board charges increasing at the same rate as tuition?

While parents are discouraged as the cost of tuition continues to outpace inflation, they shouldn’t overlook the room and board charges. Average room and board charges, according to a report by the Urban League, are increasing about two percentage points above inflation every year.

40. What is the biggest source of college money for affluent students?

The largest source of merit aid for affluent and wealthy students will typically be from the schools themselves. State universities are aggressively recruiting well-off students with merit scholarships and so are private institutions. From the college’s perspective, offering a slight discount to get a full pay student to enroll yields more net revenue than they get from low-income students.

41. Don’t you have to be as top student to receive a merit scholarship?

Students definitely don’t need to be among the top students to receive merit scholarships. At private institutions, nearly everyone (80%) receives either merit aid or need based financial aid from their schools. Except for the most elite institutions, colleges is a buyer’s market, which means schools need to provide discounts to attract enough students.

42. My daughter has been getting literature from Ivy League schools and other top universities. Does this mean she has a good chance of getting into these elite institutions?

You shouldn’t get excited about all this attention. To increase their rejection rates, schools routinely court students through marketing materials and social media that they have no intention of accepting. Some institutions have also made it easy for students to apply via streamlined online applications, which are referred to in the industry as fast apps. Schools use this strategy to increase the size of their student body, as well as bump up their rejection rates which U.S. News rewards. In other words, they really, really want her to apply so they can most likely reject her.

43. How could I learn more about the real story regarding S. News college rankings?

I’d highly recommend an excellent, in-depth article about U.S. News college rankings that Malcolm Gladwell wrote for The New Yorker’s February 14th, 2011 issue.

44. Are private scholarships a promising source of college money?

When many parents contemplate how they are going to pay for college, they envision their children hustling for private scholarships that are offered by foundations, charities, companies and civic groups. Private scholarships, however, represent the smallest source of college money. For most students, it’s likely that the other chief source of college aid from state and/or federal governments and the colleges themselves will provide much greater financial help.

45. Are private scholarships only for high school seniors?

No. Private scholarships exist for younger students, as well as current college students.

46. Should students begin looking for private scholarships after they know what college they will be attending?

No. If a high school senior waits until January or later to start looking for scholarships, they will miss the deadlines for many of them. Some deadlines for high school seniors are early as August or September.

47. Are there any hidden caveats when colleges award merit a scholarship?

There are often grade point average requirements for maintaining an institutional merit scholarship with some specifying a certain minimum GPA. My students don’t maintain a minimum GPA, they could lose their merit scholarship.

48. What percentage of students receive athletic scholarships at NCAA colleges and universities?

Athletic scholarships aren’t nearly as plentiful or lucrative as many families assume. About 2% of seniors who competed in high school sports win sports scholarships at NCAA institutions.

49. What sports offer the highest odds of getting a full ride athletic scholarship?

The best chance for a full-ride athletic scholarship is to compete in one of Division 1’s head count sports. An athlete who competes in one of the six head-count sports will either capture a full-ride or nothing. Here are the six head count sports and the total number of scholarships:

Men’s Sports

• Football (85 scholarships)
• Basketball (13 scholarships)

Women’s Sports

• Basketball (15 scholarships)
• Tennis (8 scholarships)
• Gymnastics (12 scholarships)
• Volleyball (12 scholarships)