3. Cracking the aid formulas
by Sarah Max
Federal and state aid is awarded based on the information on a student's Free Application for Federal Student Aid. (You can complete the form online or download it from www.fafsa.org). Public colleges adhere closely to the form, and private schools also factor it into their offers. A second form, the College Scholarship Service Profile, is also used by hundreds of schools and many organizations that offer scholarships. Most people don't submit the form until the fall of the student's senior year of high school, long after the FAFSA, because you must indicate the schools to which you're applying. (Find the CSSP on the www.collegeboard.com.)
Both forms need to be completed every year that you apply for aid. Like filing your taxes or applying for a mortgage, the process isn't complicated, but it will be a good deal smoother if you are organized. Make things easier by saving your key financial information including tax forms, pay stubs, brokerage and bank account statements beginning in the student's junior year of high school.
Once a college has your FAFSA, it calculates eligibility by taking the cost of attending a particular college minus the expected family contribution (EFC). The EFC is based largely on income, but is also affected by your assets, the number of children you have attending college at the same time, and the number of years you have until retirement. (Schools try to avoid ransacking your nest egg if you are within ten or fifteen years of retirement.)
The institutional method used by most private schools is slightly more complicated than the federal formula. It makes allowances for such things as emergency savings and money put aside for younger children. Because private schools have their own money to dole out, they are often more willing to look beyond the numbers and take other situations into account, such as a sibling with a chronic illness or a particularly high cost of living. If your family has special financial circumstances that affect your ability to pay for college but are not apparent in the numbers, consider sending a letter to the college's financial aid office after submitting all the necessary forms.
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