Posted on

Winning the College Finance Game: Basic Components to Help Maximize Your Family’s Financial Aid Package

i need financial aid, need-based aid, scholarships, financial aid, college, college funding, college planning

Winning the College Finance Game: Basic Components to Help Maximize Your Family’s Financial Aid Package

First things first – don’t feel ashamed if you’re more than a little intimidated by the college financial aid process. You’re in good company.

More good news – we’re here to arm you with the key educational concepts necessary to navigate this financial maze. You’ll come out the other side aware of all the options, regardless of your income and other financial circumstances.

One of the most important initial distinctions to be made is merit-based vs. need-based financial aid. Merit-based aid is awarded to students based solely on their credentials (think academic, artistic or athletic awards), while need-based aid focuses on the larger family’s financial situation.

A logical starting point for all families when determining which schools will be most cost-effective is to understand need-based aid eligibility. The universal equation schools use to calculate a family’s financial need is:cost of attendance, financial aid, need based aid, merit based aid, college funding, college planning, EFC

Example: a school with a $70,000 cost of attendance (COA) minus a $40,000 expected family contribution (EFC) equals $30,000 of need-based eligibility.

Although I’m sure your brain tends to focus on that ever-growing COA “sticker price,” keep in mind we’re initially less concerned with that number, and more so with the other pieces of the equation. It’s not to say that COA isn’t a key factor, but it is the third most important piece in determining overall cost of college for any given family.

The most important concept is a family’s understanding of the EFC. A close second is the probability of a school actually meeting a family’s need, once determined. Frankly, every college or university meets need differently. Some schools meet 100% of a family’s need, while others may only award up to 80% in financial aid and scholarships.

Thus, why the cost of any school is quite subjective; you can fully expect that sending your student to their top choice school will likely cost your family a different amount (for better or worse) than the folks next door.

At the end of the day, the main objective is to drive down your EFC on paper, resulting in increased family need. So how can you be competitive in this college finance game? What can you do as a family to lower your EFC and increase your level of need in the eyes of schools’ financial aid officers?

Here are five ways to be proactive in limiting (or better yet lowering) your EFC:

1. Know the definition of an asset.

Schools consider anything in a non-qualified account (aka non-retirement savings) an asset when determining your EFC dollar amount. Checking accounts, savings, stocks, bonds and mutual funds all fall into this asset category.

In contrast, 401Ks, IRAs, Roths and qualified annuities are retirement funds, and therefore not considered assets in this college finance equation. You don’t have to worry about these being “held against you.” That being said, you are not expected to include them on the Free Application for Federal Student Aid (FAFSA) when asked to report assets. Less is more!

2. Understand the three key methodologies used to calculate EFC.

Each assesses total family income and liquid, non-retirement assets. However, they vary in consideration of financial assets:

Federal Methodology (used by the government/public schools): excludes home equity in a family’s primary residence

Institutional Methodology (used by most private schools): includes home equity of the primary residence

Consensus Methodology (a hybrid used by a small sampling of the most prestigious private schools): considers home equity, but at a lesser percentage than the Institutional Methodology, and with a cap on the assessable amount

In other words, a public school like The University of California will not consider the equity in your primary residence when calculating EFC. However, a private school such as New York University treats that same home equity no different than a checking or savings account, thus lowering your family’s need-based financial aid eligibility and increasing the amount you’re expected to contribute.

Doesn’t sound fair does it? We’re not saying it’s always a reasonable process, but it is the process nonetheless. Know that as a homeowner with a substantial amount of equity in your primary residence, you will have varying EFCs, depending on where your student applies.

While understanding that home equity is assessable at most private schools, you may be able to tactically position the value and debt on your home to maximize your eligibility.

3. Eliminate the lowest hanging fruit – any assets in your student’s name.

This is the first place schools look, and student assets are valued at a much higher percentage than that of parents. Students also lack what’s called an asset protection allowance, as opposed to parents who can generally have between $15,000-$30,000 of non-retirement assets before schools begin to “count” it towards the EFC.

Many families make the rookie mistake of incorrectly reporting traditional 529 college investments as student assets. Although logical to think of this money as a student asset since it’s been saved specifically for that student’s education, it’s actually a parental asset. Don’t beat yourself up if this is news to you. Just be sure to report your hard-earned 529 savings as yours (a parental asset) on financial aid forms to avoid lowering your need-based eligibility.

4. Make the important distinction between parent income and student income.

Similar to assets, schools put greater emphasis on student income. A key difference between assets and income however, is that students have an income protection allowance just over $6,000. This means that until a student begins making more than that amount annually, their earnings will not be factored into the EFC equation. This distinction is especially important for self-employed families paying their student a salary. That’s a great tax strategy, but if you want to qualify for need-based financial aid, it could prove detrimental.

Furthermore, as a self-employed family, be aware that regardless of how your business is structured, if you have less than 100 employees, you are not required to report business assets on the FAFSA. This is another common mistake, but rest assured, the fine print on the FAFSA advises you to report $0 unless you have more than 100 employees working for you.

5. Learn how you may be able to take advantage of tax scholarships.

For exceptionally high-income families who won’t qualify for financial aid, this is another possible way to capture value. Although families are typically only eligible for a $2,500 annual tax credit if making less than $160,000 per year, we’ve discovered a way that wealthier families can take advantage in some creative ways. Over the course of four years, that’s $10,000 back in your family budget!

In short, regardless of your family’s finances, how you present yourself to colleges matters! It’s important to recognize that you’re not merely at the mercy of these educational institutions. Valuable resources exist to help you approach this complex process in the most efficient and effective way possible.

Although we recommend starting with need-based financial aid eligibility, it’s important to understand that many families, regardless of how finances are presented, simply won’t qualify for need-based aid. Once that’s determined, the focus can shift to merit-based aid – this video blog ( Merit Scholarship and Strategies for low-need families) offers a basic introduction on that next step.

Bill Rabbitt 

Partner – College Funding Services

Co-Founder – College Aid Pro

Posted on

Why College Fairs Are Important

Why College Fairs Are Important

Juniors returning from campus trips want to keep the momentum going and continue visiting colleges closer to home on weekends. For those who cannot make any further excursions, college fairs can be the next best option. Here’s how to make the most of them.

Let your son/daughter take the lead

College fairs are meant to be an opportunity for students to confer with admissions reps. Parents, no matter how well-meaning, interfere with that valuable time and may be viewed by the reps as “helicopter parents.” If you have a question or two that you want your student to ask, write it down, and ask him/her to jot down the response.

Head straight to your first choice(s)

Every college fair provides a map of the colleges represented. Because the lines grow quickly, begin with those where you may wait a few minutes to introduce yourself. The less popular schools tend to have shorter lines anyway so you can save those for later.

Be open-minded, explore options.  

It’s only natural to stop at the colleges you’ve heard of, and those already on your list. Yet, college fairs are precisely the place to expand your thinking and to explore alternatives to the few colleges you might already be considering. Widen your net and take a chance on a college rep whose table is quiet. He or she may truly surprise you!

Don’t be shy.  

While it can be difficult to simply walk up to someone and start asking questionsthe reps do want to meet you. It helps to have some prepared questions, but do not ask questions whose answers you can easily find on the college website. In other words, don’t ask how many majors a school offers or if it has club lacrosse. Do ask questions that may be more nuanced – “can you explain how I can get involved in research as a freshman?” or “tell me the most unique feature about X College” or “how would you describe the quintessential X University student?”

Write it down.

 Keep a college notebook with the details that you’ve gleaned and the name of the person you met. Don’t be embarrassed to request a business card (sometimes they’re right on the table) and make sure to send an email thank you to the rep with whom you spoke. When application time comes in the fall, you may interject those details in the supplemental questions on your application. And if you plan to visit a particular college after the fair, email your contact person and let him/her know when you will be on campus.

Always fill out the ‘contact card’

Most college reps give you a card to fill out. These are an expression of your “demonstrated interest” so always hand them back. Many schools monitor how many contacts you’ve made with their college so every connection counts.


Author: Franca Rawitz


Franca Rawitz has been successfully guiding students on their college journey for the past 13 years. She empowers students to take control of their college path and to achieve success in a sensible and strategic way. Through personalized guidance and 24/7 support, she allays student anxieties and parent concerns by organizing the entire admissions process.

Posted on

How I was accepted at Vanderbilt, Carnegie Mellon, NYU, BU, Michigan and more!

College Funding Services - Accepted at NYU, Michigan, Vanderbilt

How I was accepted at Vanderbilt, Carnegie Mellon, NYU, BU, Michigan and more! Take a few minutes to learn what advice Lucy Altus has for college applicants and and how she was able to have so much success in the financial aid and admissions process.









Posted on

You won’t believe how American University treated this family who made a mistake on the FAFSA

College Funding Services - Mistake on FAFSA


Thank you to Magda for sharing her story with the CFS community. Not all schools will conduct themselves as American University did in this situation. Having said that, we always want to shine a light on the fact that, although they are in the world of academia, colleges are very much BIG BUSINESS and are very much concerned about their  own bottom line. Ensure that you are prepared accordingly.

Posted on

The biggest piece of advice from parent’s who have just gone through the college process.

We survey parent’s at the end of every year. Matt shares the biggest piece of advice from parent’s who have just gone through the college process.



Posted on

We don’t qualify for NEED-based aid…what can we do?

College Funding Services - Low Need

If you are a family who will not be eligible to receive need-based financial aid, it is even more important to be strategic with college selection. Be sure some of your colleges also offer merit aid, as that is where you will see your discounts.



Posted on

Class of 2019 July Checklist

Knowledge is power! All CFS clients receive a monthly checklist to stay ahead of the curve and know whats around the next turn. One of the ways we limit the stress, anxiety, and cost of college!