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    #246320 - 11/17/19 03:33 PM How Expected Family Contribution is calculated
    Bostonian Offline
    Member

    Registered: 02/14/10
    Posts: 2592
    Loc: MA
    FAFSA Says How Much You Can Pay for College. It’s Often Wrong.
    By Tara Siegel Bernard
    New York Times
    November 15, 2019

    ...

    Colleges use the E.F.C. to determine a student’s financial need — the difference between the college’s cost of attendance and the family’s expected contribution.

    ...

    For a family of four, the so-called income protection allowance — or the amount shielded from the formula — is $29,340. For a single parent with one child in college, it’s a mere $19,080.

    “It’s a very harsh assessment of the ability to pay,” said Mark Kantrowitz, a financial-aid expert and publisher of Savingforcollege.com. “The assumptions they are using to calculate all of this have no connection to reality.”

    The income protection allowance is subtracted from the family’s adjusted gross income, along with some other items (like taxes), while other items are added back (retirement savings contributions, for example). The final figure is the family’s so-called adjusted available income.

    Using a progressive table similar to tax brackets, the formula assumes parents should dedicate anywhere from 22 percent to 47 percent of that amount to college costs each year. Many middle-class families and above are assessed at 47 percent.

    (Families earning less than $26,000 a year can qualify for an “automatic zero” E.F.C., if they meet certain requirements.)

    The formula also considers parents’ and students’ assets — and some allowances have actually become less generous over the years. Retirement savings and home equity are excluded from the federal formula, but the amount of other savings that parents can shield has plummeted over the past decade.

    Take, for example, a 48-year-old parent, the median age of a person with college-age children: That parent was able to shelter $52,400 from the formula in 2009-10; now, the parent can shield only $6,000. Mr. Kantrowitz said that meant a parent with at least $52,000 saved would have an E.F.C. that is about $2,600 higher now than a decade ago.

    ******************************************************

    In an idealized case where a college reduces grant aid dollar-for-dollar as the Expected Family Contribution, a family that has a marginal EFC rate of 47% effectively faces a "college income tax" of 47% on top of Federal and state income taxes. The "income protection allowance" of $29K is low in general and very unrealistic if the family has a mortgage, as most do.

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    #246325 - 11/18/19 10:22 AM Re: How Expected Family Contribution is calculated [Re: Bostonian]
    nicoledad Offline
    Member

    Registered: 05/26/12
    Posts: 235
    Read this article on a College site and parents ripped on the article on such things as:

    This article assumes that the parents had no idea that their kids may go to college.
    You shouldn’t pick a $55,000 college if you can’t afford it.
    the woman contradicted herself by saying what they were expected to pay and then later said we would be thrilled by our expected family contribution
    Don’t choose a Mercedes if every cent is allocated to other expenses
    They ended up taking loans. Didn’t they learn?
    Animation companies employ kids from community colleges
    There were other comments that weren’t flattering.

    I will say this. Having a high school senior in the process of picking colleges has made me more knowledgeable. If I had read this a year ago I might been sympathetic but not now. The article just doesn’t tell the whole story.

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