$250,000 in joint gross income is a substantial sum! Is it too much to qualify for need-based financial aid? Not necessarily. Is a 3.0 high school GPA and an 1100 SAT score good enough to qualify for merit scholarships? It might be.

The formula for need-based financial aid is more nuanced than one might think. In addition to obvious considerations such as income and assets, other key variables include number of children in college and which college the student is applying to. Most schools rely on the FAFSA to calculate the dollar amount that a family is expected to contribute towards their child’s tuition each year. This dollar amount is commonly referred to as the EFC (Expected Family Contribution). The FAFSA, or Free Application for Federal Student Aid, is required to be completed each year to determine eligibility for financial aid. It can be completed online for free and consists of a variety of questions related to parental and student income and assets. Many private schools require an additional financial aid form called the CSS Profile, which is used to determine financial aid offered directly by the institution.

Have multiple children headed for college? You may not need to rule out pricier private schools! While a $250,000 joint gross income with some moderate savings might generate a $70,000 EFC for a child’s education, this number is reduced by 40% for each child ($42,000) if two children are in college at the same time or 55% for each child ($31,500) if three children are in college at the same time. However, this reduction only occurs if the institution relies on the CSS Profile for its aid determination.  Starting with the October 2023 FAFSA, there will be no reductions to the FAFSA EFC for parents with multiple children in college at the same time. For the October 2022 FAFSA filing, the FAFSA EFC amount is cut in half if two children are in college at the same time, so there is only one more year to take advantage of this generous aid treatment for institutions that rely on the FAFSA’s EFC. For expensive private institutions whose costs can reach up to $75,000 per year, you may qualify for significant need-based aid (including grants and scholarships).

It’s worth noting that research universities and elite liberal arts colleges, like the Ivy Leagues, generally don’t offer much, if any, merit-based aid. However, high profile private universities and liberal arts colleges generally offer the best need-based aid packages. These institutions are best fits for lower to middle class families with academically gifted children, as well as affluent families for whom cost isn’t a concern.

Merit-based aid is often thought to be only for elite academic students, but out-of-state public universities, masters-level universities, and small liberal arts colleges (who don’t have large name recognition) can be excellent alternatives for affluent families who are not prepared to cover the EFC out of pocket. The academic thresholds to receive merit-based aid at such institutions are often much lower.

An important resource to preemptively determine the true cost estimate of a specific college or university is the Net Price Calculator. Every institution is federally mandated to have one available online. The Net Price Calculator should provide you with an estimate on how much a year of college will cost (netting out need-based and merit-based aid approximations). Note, that some institutions are still using a federal template that can be completed in under a minute. The outputs for these will not be meaningful. It should take fifteen minutes or more to fill out the information necessary to provide a meaningful calculation.

When using an online calculator to determine your EFC for a school that uses the CSS Profile, it’s important to realize that each institution can customize their own criteria and financial aid formulas. This is contrary to the FAFSA, which will generate an EFC that is used across all schools relying on their calculation for determining aid packages. One example that can have a dramatic impact is using home equity as part of the parental asset calculation. While the CSS profile may consider this, it is not included for schools relying solely on the FAFSA.

Approximating your EFC and running different scenarios using a school’s Net Price Calculator can give you a head start on the college selection and financial aid process. If a student is going to qualify for need-based aid, speak to your financial advisor about strategies to reduce your EFC and maximize your aid packages. Do not assume a student won’t qualify for aid. Completing the FAFSA is free and only has the potential to improve a student’s financial outlook. There is no downside to completing it. Nothing ventured, nothing gained.

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