filing-the-fafsa-2015-2016-edition

Filing the FAFSA 149
APPENDICES
▶ Differences between Federal and
Institutional Financial Aid Formulas
The financial aid formula used by the FAFSA to calculate the student’s expected family contribution
(EFC) is known as the Federal Need Analysis Methodology or Federal Methodology (FM).
Some colleges use a different formula for awarding their own financial aid funds. This formula is known
as an Institutional Methodology (IM). The CSS/Financial Aid PROFILE form is used by about 250
mostly-private colleges and a similar number of scholarship competitions to calculate an EFC under the
institutional methodology. The PROFILE form gathers answers to many more questions than the FAFSA.
Each college and university that uses the PROFILE form may modify the formula.
The most common differences between FM and IM are summarized in this table:
Financial Aid Formula Components FM IM (CSS/Financial Aid PROFILE)
Net Worth of Family Home Ignored Capped, usually at 2-3 times income
Simplified Needs Test Yes No
Net Worth of Small Family Businesses Ignored Counted
Minimum Student Contribution or
Summer Work Expectation
Paper Losses (Depreciation, capital losses,
business/farm losses, NOL carry-forwards)
No
Counted
Yes
Ignored
Non-Custodial Parent Income/Assets Ignored Counted
Number of Children in College
Equal split of parent
contribution
Smaller reduction in parent contribution
Assets Owned by a Sibling Ignored Counted, if sibling is under age 19 and
not yet in college
Allowance for College Savings None Subtracted from assets
Allowance for Emergency Reserve None Subtracted from assets
Start of Application Season January 1 October 1
Adjustment for Regional Cost of Living
Differences
Assessment of Student Assets 20% 25%
No
Yes