Please define “lower income” families. To qualify for Pell, families have to earn less than ~$60k, don’t they? How many families with that kind of income are able to save $40k?
We qualified for some Pell this past year with an overall income of 74k and two kids in college. (5 people in the family)
The amount was $1300, I think.
I ran NPC for estimated income this year with one in college and an income of 66k, and it showed a small Pell of around $900.
Yep, qualified for Pell with 2 in college and 5 in family at higher than $74k^^.
This is a problem for parents owning a home. Their kids will not get aid if they have savings for mortgage payment in case they don’t have jobs in 3-6 months.
As mentioned previously, the change in the APA doesn’t only affect Pell since there are colleges/universities who base their own grants on EFC.
Here’s another one: the Benjamin A. Gilman International Scholarship provides substantial funds for study abroad but only to Pell recipients. This congressionally funded program is sponsored by the Bureau of Educational and Cultural Affairs at the U.S. Department of State.
Over 2,700 scholarships of up to $5,000 will be awarded this academic year for U.S. citizen undergraduates to study or intern abroad. Award amounts will vary depending on the length of study and student need with the average award being approximately $4,000 for fall and spring programs, and $3,000 for summer programs.
I would highly suggest that anyone who has to rely on FAFSA to build your own Excel spreadsheet that reflect the Federal Fornulas and understand what trigger changes. It’s the basis for the online NPC and will be tailored to your own situation. It should require no more than a couple of hours and is pretty easy to do. I did this as a high school student.
Once done, build a “what if table” with the results and play with the variables. Enlightening it is.
I’ve been so concerned about the high cost of college–now less affordable with this crazy formula!–that I’ve begun to look elsewhere for solutions. For those for whom current college is unaffordable because of this, there are cheaper alternatives in Germany. All students attend school for free there and the cost of language-acquisition classes is almost free. Just google “how to go to college in germany” and you’ll see how to do this. I think Germany’s trying to set up a brain drain in their direction. Many schools offer classes in English too. Second, there’s an apprenticeship program in Newport News, VA called the Apprentice School–kids earn money while they learn amazing trades in a 4-year college setting. Something has to change to help the middle class!
Most financial experts recommend that a family keep 3 to 6 months of expenses saved in case of an emergency, in a liquid non-retirement account. This account is not only supposed to be used in case of of a layoff, but also could be needed in case of a major roof leak, major illness, car crash, etc. This new fed policy penalizes people who are able to achieve those savings.
Also, I believe this policy also severely penalizes people who have modest college accounts for more than one child.
In my state of Pennsylvania, the State offers college grants of up to $4,000 a year to many middle income students who are not eligible for Pell grants. However, the eligibility for the state grants is directly calculated using the federal determination of need.
Another article on this issue, with some example calculations of impacts.
Write your congress-person, folks.
I wouldn’t really call that an article - that website is for a fee-for-service company.
FAFSA’s EFC computations are based on national averages of living costs. So if you live in a high cost area, like the CA Bay Area, NYC area, etc, the big income you have which is largely spent on high living costs forces a very high EFC. Unless you commute 50 miles and 3 hours a day to keep your living costs down but accelerates your stress level. While there is no perfect system, the current FAFSA use of average national living costs crucifies families living in high cost areas. Colleges don’t care but it is a key reason why families in high cost areas opt for public colleges over private colleges that give aid based on FAFSA comps.
Actually, I’d guess that some of the private colleges within or near the high cost areas would most likely use financial aid forrnulas that take into account the high cost of living. I’m guessing the publics are more likely to use a computer program with fewer variables, and few of the publics meet 100% of need anyway (especially for out of state students).
Actually, a student living in a high cost area may be best targeting the many many colleges that offer excellent merit aid.
At the same time, students should consider the high cost of living where they will attend college - upper classman housing and food expenses can greatly differ from college to college.
We are already screwed by the 2014-2015 computations. We have very little assets, but our home equity is high so we must borrow on it.
But I’m not sure how this would pertain to current students - would they actually decrease FA based on the 2015-2016 changes if the student is a freshman in 2015-2016?
The formula used to compute FAFSA EFC doesn’t consider home equity, so your home equity was never considered to begin with. Some schools may consider it, but they have their own formulas for assets that are not tied into the federal formula.
Pell and SEOG can certainly be affected by the change (although probably not SEOG, since it usually goes to those with 0 EFC, who typically don’t have assets to consider). Sub loans can be affected. Everything is awarded year-by-year, so yes, these can change. As far as institutional aid, that is up to the school.
From a practical standpoint, the feds might as well just have eliminated the APA, and made filing FAFSA that much simpler.
(Not saying I agree with the reduction – I don’t since its ridiculous – but if an 83% reduction is ‘good policy’, 100% is easier.)
Why do the articles say that the asset conversion rate is 5.64%? This worksheet I found shows this year’s rate at 12% ([pg. 19, number 23](http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf))…if I’m reading it right.
Also, following xiggi’s advice, I built a spreadsheet to look at my situation and put the new APA figures next to the current ones. For married parents, it’s a 78% reduction. Single parents fare somewhat better (for once) and only face a reduction of 52-53%.
Being single and having ‘only a 50% reduction’ would be a good thing if both singles and marrieds were starting at the same place. Singles are being reduced from about $8000 to about $4000. It’s ridiculous to say that a single household should only get half the protection of a married household. Is tuition half as much? Is a home half as much? No, the only asset that might need to be half for a single is retirement, and that usually is protected anyway!
The asset conversion rate isn’t 5.64%, that’s the rate at which assets that aren’t protected are assessed. If you have a savings account with $100 in it that isn’t protected, you’ll be expected to contribute $5.64 of it to tuition.
Oh I agree. Being a single parent myself, I was rather annoyed to see the disparity between APA for singles vs. marrieds. My point was only that 53% is better than 78%.
I guess I still don’t get how the 5.64% figures into the formula…I don’t see it anywhere on the worksheets on page 9-10. The only percentage applied to assets seems to be 12%.
Here’s a link to the fafsa formula. You have to go further in the formula. Parental assets contribute at 12% to adjusted available income(AAI) after the asset allowance. The top rate at which AAI contributes to EFC is 47% per table A6. 47% of 12% is 5.64%.
http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
There was a mistake in the formula. The financial aid community received the info today: https://www.federalregister.gov/articles/2015/08/03/2015-18991/federal-need-analysis-methodology-for-the-2016-17-award-year-federal-pell-grant-federal-perkins-loan.