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college financial aid

If you have children that are college bound at some point you will begin the painful process of calculating how much college will cost for both you and them.  I have heard the statement, “well they will just have to take loans” but what parents don’t realize is loans are a form of financial aid.  Loans are not a given.  Whether your children plan to attend a public college or private college, both have formulas to determine how much a family is expected to pay out of pocket before you even reach any “financial aid” which includes loans.

College Costs Are Increasing By 6.5% Per Year


The rise in the cost of college has outpaced the inflation rate of most other household costs over the past three decades.

college costs

To put this in perspective, if you have a 3 year old child and the cost of tuition / room & board for a state school is currently $25,000 by the time that child turns 17, the cost for one year of tuition / room & board will be $60,372.  Multiply that by 4 years for a bachelor’s degree: $241,488.  Ouch!!!  Which leads you to the next question, how much of that $60,372 per year will I have to pay out of pocket?

FAFSA vs CSS Profile Form


Public schools and private school have a different calculation for how much “aid” you qualify for. Public or state schools go by the FAFSA standards.  Private schools use the “CSS Profile” form.  The FAFSA form  is fairly straight forward and is applied universally for state colleges.  However, private schools are not required to follow the FAFSA financial aid guidelines which is why they have the separate CSS Profile form.  By comparison the CSS profile form requests more financial information.

For example, for couples that are divorced, the FAFSA form only takes into consideration the income and assets of the parent that the child lives with for more than six months out of the year.  This excludes the income and assets of the parent that the child does not live with for the majority of the year which could have a positive impact on the financial aid calculation.  However, the CSS profile form, for children with divorced parents, requests and takes into consideration the income and assets of both parents regardless of their marital status.

Expected Family Contribution


Both the FAFSA and CSS Profile form result in an “Expected Family Contribution” (EFC). That is the amount the family is expected to pay out of pocket for their child’s college expense before the financial aid package begins.   Below is a EFC award chart based on the following criteria:

  • FAFSA Criteria
  • 2 Parent Household
  • 1 Child Attending College
  • 1 Child At Home
  • State of Residence: NY
  • Oldest Parent: 49 year old

income versus financial aid

As you can see in the chart, income has the largest impact on the amount of financial aid.  If a married couple has $150,000 in AGI but has no assets, their EFC is already $29,265.  For example, if tuition / room and board is $25,000 for SUNY Albany that means they would receive no financial aid.

Student Loans Are A Form Of Financial Aid


Most parents don’t realize the federal student loans are considered “financial aid”.  While “grant” money is truly “free money” from the government to pay for college, federal loans make up about 32% of the financial aid packages for the 2016 – 2017 school year.  See the chart below:

grants and student loans

Start Planning Now


The cost of college is increasing and the amount of financial aid is declining.   According to The College Board, between 2010 – 2016, federal financial aid declined by 25% while tuition and fees increased by 13% at four-year public colleges and 12% at private colleges.  This unfortunate trend now requires parents to start running estimated EFC calculation when their children are still in elementary school so there is a plan for paying for the college costs not covered by financial aid.


Michael Ruger

About Michael………

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

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