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shpgrlshpgrl Posts: 12Registered Users
No kayak to use, so let me ask different questions with a new thread and a better subject hopefully.

My objective is to learn more about the financial aid: what’s more important, income or asset? what’s counted as asset(I know each school is different)? Do they use DTI? If they do, what is the DTI for each school? I don’t have the real numbers to use, even if I do, it’s not productive to plug in the numbers in more than a couple of sites.

Which aid formula (algorithm) is used at what school? In the Institutional Methodology, items like home and business equity are scrutinized closely (is it true?), often more intensively than in the formula used by most universities, the Federal Methodology. Does the Federal method exclude retirement assets and home equity, while the Institutional method may not?

Is DTI used in college affordability calculation (or other similar ratio to evaluate affordability)? In mortgage world, debt-to-income ratio (DTI) is used. There are two main kinds of DTI: front-end ratio and back-end ratio. For example, conventional financing limits are 28/36. If a mortgage company estimates that one shouldn’t pay more than 28% of income towards housing cost, what does a college expect parents to pay? Maybe, colleges don’t care much about incomes and thus don’t care about DTI.

I did played on few financial aid sites for different schools. Some of them asked home equity, some didn’t. Some of them asked age of the older parents, most didn't. Some of them asked saving accounts separately from the stocks and CD, most of them didn't. I didn’t take notes (I was only playing..) and now don’t remember which is which. I know many of you had gone through this exercise in the past 1-2 years and now are all experts. If you could share any of the formula, algorithms or the attributes that were different amongst those schools, I’d greatly appreciate.
Post edited by shpgrl on
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Replies to: Financial Aid algorithms and attributes

  • BobWallaceBobWallace Posts: 66Registered Users
    edited May 2013
    The easiest formula to figure out is Harvard's - try their NPC and you will see what I mean.
  • entomomentomom Super Moderator Posts: 86Super Moderators
    edited May 2013
    Start here: finaid.org
  • shpgrlshpgrl Posts: 12Registered Users
    edited May 2013
    thanks, mom.

    I actually want to narrow down the discussion. The topic is not about how to pay for college. It's more about financial aid calculator that each college's provides. With all other things equal, what's the difference of each fin-aid calculator from different schools?
  • katwkittenskatwkittens Posts: 15Registered Users
    edited May 2013
    Each financial aid package from each school is as different as each school. My data points were 5 kiddos. Same EFC for each child. Same EFC for all years in school. Same number of children in school. Same income.

    Middle son applied and was accepted to over 34 schools in the same year. Same EFC at all schools. Package differential exceeded more than $20,000 per year from school to school.. So each school uses their own formulas, and it can vary especially if "preferential packaging" is used.

    Each kiddo had different outcomes from year to year and sometimes at the SAME schools as a previous sibling.

    Kat
  • entomomentomom Super Moderator Posts: 86Super Moderators
    edited May 2013
    The topic is not about how to pay for college. It's more about financial aid calculator that each college's provides.

    In your OP you asked several basic questions about how FA works, the website I cited discusses these factors. Yes, this is 'general' information about how FA works, it is not school specific, for the reason that other members have posted: colleges don't release their FA formulas.
  • shpgrlshpgrl Posts: 12Registered Users
    edited May 2013
    Kat, thanks.

    "Same EFC at all schools. Package differential exceeded more than $20,000 per year from school to school"

    "So each school uses their own formulas"

    That's exactly what I'm interested. What are the difference from different schools that you can tell? So we know EFC is one of the factor, but with the same EFC, what are the factors $20,000 per year from school to school? Can you share the ones offered most?
  • shpgrlshpgrl Posts: 12Registered Users
    edited May 2013
    entomom,

    Sorry, my post wasn't clear. my fault.

    I don't think colleges would publish their FA formulas b/c I didn't find much, so I'm asking here at cc. I assumed people learned by doing it and would share some information.
  • happymomof1happymomof1 Posts: 100Registered Users
    edited May 2013
    Many colleges and universities that use the CSS Profile will indeed discuss their particular formulas with families that contact them and ask. However, you aren't likely to get details about preferential packaging for the simple reason that what is preferable this year may not be preferable next year.

    It also would be possible to put together a number of mock financial scenarios to run through a given institution's NPC and reverse-engineer the formula from the results. Whether you want to expend that much time on this project would be a whole other story.
  • MommaJMommaJ Posts: 14Registered Users
    edited May 2013
    I'm not understanding how any one family's experience would reveal any generally applicable information. @katwkittens has results from 34 (!!!) schools, but that still doesn't clarify how any individual institution of the 34 came up with its financial aid package. In fact, it's quite possible that two schools could provide roughly equivalent aid--the best, the worst, or in between--using very different formulas. And while a family with a particular mix of income and assets may have done better with College A then College B, there could have been many other factors in the mix in each case. It's hard to see how a litany of CC parents' experiences would provide more useful data than the NPC's.
  • CTScoutmomCTScoutmom Posts: 34Registered Users
    edited May 2013
    As a general rule, income is more important than Assets.
    FAFSA is used to calculate your EFC for federal aid. Many schools use it to determine institutional aid as well. But they may or may not meet your need. That's where preferences come into play - and they may even play into HOW your need is met - whether through scholarships and grants, or through loans.

    Schools with large endowments, particularly those that don't use loans to meet need, use the CSS Profile. Each of those schools has its own formula, and looks at assets differently. Some will count all equity in your home, others will count it up to certain point (they don't expect you to borrow against the full value). Business income is treated differently by each school, as well. But as a general rule, parental income is more important than parental assets. (Student income and assets are hit harder than parents).

    DTI does not come into play, except perhaps in terms of your ability to qualify for outside loans, if you need them to pay the expected family contribution.
  • mom2collegekidsmom2collegekids Posts: 216Registered Users
    edited May 2013
    RE: DTI...., schools don't give a rat's patootie what your debt is unless it's from very large uncovered medical issues. Other debt (mortgages, cars, etc) is considered a personal choice.


    If the family's income is about $100k, then schools will expect about a 25% contribution. If the income is about $140k+, then the expectation is about 33%.

    Of course, these would be schools that "meet need."

    MOST schools do NOT meet need. So, if you're applying to UIUC and you're a Calif resident, even if your EFC is only $15k, UIUC will expect your family to pay most/all of the $40k+ to attend. Nearly all OOS publics (and many privates) do not have the money to "meet need" or give much/any institutional aid.
  • GolfFatherGolfFather Posts: 28Registered Users
    edited May 2013
    There is a great chart somewhere on the Internet that lists amount of need-based aid based on income and number of children in college.

    It's simple, direct and very basic. I will look for it and provide a link.

    Yes, every school might be a little different and each family is a little different but it gives a great summary on what the range is.
  • katwkittenskatwkittens Posts: 15Registered Users
    edited May 2013
    It's just not that simple.

    Not only does each school have their own formulas it varies from student to student within that same year depending on what that student brings to the campus. Hence the preferential packaging.

    Within financial aid there can be merit-based and need-based. Some top schools offer only need-based while others offer a combination of both. The "need" can be met with grants, scholarships with/without strings, work study, loans subsidized/unsubsidized, research funds, travel abroad funds, laptop, book vouchers, tuition/fees for other schools here and abroad, waiving family contribution, student summer contribution and my personal favorite, MISC!! Which when placed with the COA can be very ELASTIC!

    Son's freshman year he had 12, yes 12 revisions to his financial aid package.

    How a school can apply outside scholarships also factors in. Does it reduce the school's own grant or does it wipe out the outside loan, federal loan, workstudy or can it go to pay for "other" expenses???

    And once the student matriculates packages can change. Up and down.

    Like I said, it is not that simple and this is for a very straight forward FA app, no small business, no trusts, no farm.......my point was it can vary within the same family AT THE SAME SCHOOL.....based on desirability of the student.

    Kat
  • GolfFatherGolfFather Posts: 28Registered Users
    edited May 2013
    There is a great chart somewhere on the Internet that lists amount of need-based aid based on income and number of children in college.

    What I should have more accurately said was that the chart shows EFC.
  • thumper1thumper1 Posts: 125Registered Users
    edited May 2013
    Shpgrl...for federally funded aid (Pell grant, Direct loan, SEOG if the school has it, federal work study) the FAFSA EFC is used.

    BUT for institutional aid, colleges can use any formula they choose to use...and they don't publicize these formulas, the closest you will get is to use your figures in the Net Price Calculators from each school. This will show you the variance in awards you MIGHT receive from school to,school.

    As noted above, schools,that use the CSS Profile or their own school form in addition to the FAFSA are collecting more information that they use....and they do use much of it.

    In the majority of cases, parent income is the most significant factor in determining need based aid. However, in cases where the family owns their own business, or has real estate properties other than their primary residence, assets can have a huge impact as well. Actually any large assets that are in investments or other places not official retirement accounts can have an impact.

    I have to say...I honestly believe what you are asking is IMPOSSIBLE to answer. The closest you will get to seeing what a school does to award institutional aid is to run those net price calculators.
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