Who needs analysis?

I talked recently with a parent, who, quite understandably, did not comprehend the murky world of determining how the federal government (and the aid office, by extension) can arrive at what seems to preposterous amount of expected contribution. She provided me with a spreadsheet which showed all family income being consumed by household expenses, with nothing left to pay for higher education. She could not understand why we could not accept her own “need analysis.” Unfortunately, that is not how the contribution is derived.

There is no question that the expected contribution from the FAFSA does not reflect reality for many families. However, it is designed to measure relative, not absolute, ability to pay. A family with a $150,000 income is relatively in a better position to provide for education expenses than someone with $50,000. As a result, the formula becomes a rationing device designed to get limited aid dollars in the hands of those least able to pay.

While the elements of the formula (family size, number in college, income, and assets) are fixed, we do have some latitude in how we address individual applicants. The base year for need analysis is the previous calendar year, which is 2014 for the 2015-16 school year. However, we are sometimes able to use estimated 2015 income, if the family has circumstances such as unemployment or high medical expenses. However, the changes have to fit into the formula. We cannot simply make a determination that the expected is unreasonable.

See you next time.