NASFAA Authorized Event Slideshow Handout_Need Analysis 040416_final_mj

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

National Association of Student Cost of Attendance
Financial Aid Administrators
Tuition and Fees
Need Analysis: Federal and Room and board
Institutional Methodology Books and supplies
Transportation
A NASFAA Authorized Event Miscellaneous personal expenses
Presented by
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[Name of Presenter/Association]
[Location]

[Date], 2016

Slide 1 © 2016 NASFAA

Expected Family Contribution

Lesson 1: Measure of student’s Measure family’s
Introduction to Need and family’s ability to financial strength or
Analysis pay postsecondary
wealth
Slide 2 © 2016 NASFAA expenses Assess a portion of
family’s available
financial resources

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Financial Need Evolution of Need Analysis

Cost of attendance (COA)
– Expected family contribution (EFC)
= Financial need

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© 2016 NASFAA 1

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Evolution of Need Analysis

Lesson 2:
The Regular Formula

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Underlying Principles of Need Analysis Federal Methodology
• Uses information provided on the FAFSA
Primary responsibility • Used to calculate nine-month EFC
Based on the family’s ability to pay • Takes into account dependency status

Independent assessment Slide 11 © 2016 NASFAA
Horizontal equity
Vertical equity
Snapshot

Subject to professional judgment

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Formula Models

Model
A • Dependent

FM Model • Independent
FORMULA B
• No dependents
other than
spouse

Model • Independent
C
• Dependents
other than
spouse

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© 2016 NASFAA 2

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Regular Formula Allowances Against Income

Income U.S. income State and Social Security
Assets taxes paid other taxes taxes

Allowances Equal EFC
and Distribution

Assessments

Income protection Employment
allowance expense
allowance

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Income Protection Allowance

12% 30% Food
Housing
11% FM Transportation
FORMULA Clothing & Personal Care
Medical Care
16% Other family consumption

9% 22% Source: U.S. Department of Education’s
2015-16 Federal Student Aid Handbook
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Model Regular Formula Asset Exclusions
A

Parent Allowances Equal Parent
Income and Distribution Contribution

Parent Assessments
Assets

EFC

Student Allowances Student
Income and Contribution

Student Assessments
Assets

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© 2016 NASFAA 3

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Asset Exclusions

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Allowances Against Student Income Model Regular Formula
B

U.S. income State and Social Security tax Student
taxes paid other taxes (& Spouse)

Income Allowances Equal EFC
and Distribution
Student
(& Spouse) Assessments

Income protection Employment Allowance for Assets
allowance expense Parents' Negative
allowance
AAI

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Model Regular Formula Model Regular Formula
A B

Parents’ contribution Student’s contribution from available income (AI)
+ Student contribution from available income
+ Student contribution from assets + Student’s contribution from assets
= Expected Family Contribution (9 month)
FM

= ContribuFtOioRnMfUroLmA AI and assets

÷ Number in college

= Expected Family Contribution (9 month)

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© 2016 NASFAA 4

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

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Model Regular Formula
C

Student Allowances Equal EFC Lesson 3:
Income and Distribution Simplified Formulas

Student Assessments Slide 29 © 2016 NASFAA
Assets

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Model Regular Formula Automatic Zero EFC – Who Qualifies?
C
Model EFC automatically set to zero if parents meet certain federal
• Calculation identical to calculation of the A tax filing and income criteria
parents’ contribution for a dependent
student, except: Model Automatic Zero EFC is not applicable
B
– Table values used to calculate state and local
tax allowance and income protection allowance Model EFC automatically set to zero if student meets (and spouse,
C if married) certain federal tax filing and income criteria
– Asset conversion rate
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© 2016 NASFAA 5

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Automatic Zero EFC: Status Criterion AutoPmatic Zero EFC: Income Criterion

A

Independent Filed or eligible to file 1040A or 1040EZ RIndependent Tax Filer AGI ≤
student E student $25,000
Filed income tax return required for: Nontax
(and spouse, • Puerto Rico, Guam, American Samoa, US (and spouse, if filer Total
if married) earned
or Virgin Islands, Republic of Marshall Islands, Nmarried) income ≤
parent(s) of Federated States of Micronesia, or Palau or parent(s) $25,000
dependent
student Not required to file any income tax return Tof dependent
student

S

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Automatic Zero EFC: Status Criterion

Independent Supplemental Security Income (SSI)
student
Supplemental Nutrition Assistance Program
(and spouse, (SNAP)
if married)
or Free and Reduced Price School Lunch
parent(s) of
dependent Temporary Assistance for Needy Families
student (TANF)

Special Supplemental Nutrition Program for
Women, Infants, & Children (WIC)

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SS57 Simplified Needs Test – Who Qualifies?

Automatic Zero EFC: Status Criterion Model Student and parent assets ignored if parents meet certain
A federal tax filing and income criteria
Independent Dislocated worker:
student • Terminated or laid off, could qualify for Model Student assets (and spouse, if married) ignored if meets
B certain federal tax filing and income criteria
(and spouse, unemployment compensation, and
if married) unlikely to return to a previous occupation Model Student assets (and spouse, if married) ignored if meets
or • Terminated as result of plant closure or C certain federal tax filing and income criteria
parent(s) of substantial layoff
dependent • Employer announced closure within 180 Slide 36 © 2016 NASFAA
student days
• Self-employed, but unemployed due to
economic conditions
• Displaced homemaker

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© 2016 NASFAA 6

Slide 33

SS57 suggested replacement slide that seems less busy, and uses the style of the previous slides

Susan Shogren, 3/22/2016

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

SimPplified Needs Test: Income Criterion Recalculating and Prorating the EFC
• EFC is distributed proportionately to a
A
student’s actual enrollment
RIndependent Tax Filer AGI ≤ • EFC must be prorated for periods other than
E student $49,999
Nontax 9 months
(and spouse, if filer Total
earned – Does not apply to Pell Grant or IASG
Nmarried) income ≤
or parent(s) $49,999 Slide 40 © 2016 NASFAA

Tof dependent
student

S

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Slide 38 © 2016 NASFAA Recalculating and Prorating the EFC

• Use of alternate EFC could result in double
counting the student contribution

• Express periods of enrollment as full
months

– School may round up or down to full month
– Cannot exceed 12-month EFC in a 12-month

period

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Sample ISIR

Lesson 4:
Recalculating the EFC

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© 2016 NASFAA 7

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Double Counting of the EFC Enrollment Periods Less Than Nine
Months: Independent Students
• For enrollment greater than nine months:
Recalculate • Divide 9-month SC by 9
– Student contribution does not change student’s • Multiply 1-month SC by enrollment
– Only a parent contribution is adjusted
– Round up or down, but never exceed 12 months contribution to
obtain the EFC
9-month academic year + 10-week summer term
9-month student contribution Slide 46 © 2016 NASFAA

9-month parent contribution + additional contribution for 2 (or 3) months

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Enrollment Periods Less Than Nine Enrollment Periods Greater Than Nine
Months: Dependent Students Months
• Student’s contribution to EFC does not
Recalculate • Divide 9-month PC by 9
parents’ • Multiply 1-month PC by enrollment change
• No EFC adjustment for independent student
contribution
enrolled for a period greater than nine
Recalculate • Divide 9-month SC from AI by 9 months
student’s • Multiply 1-month SC from AI by enrollment
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contribution from
available income

Add results to • Add prorated PC to prorated SC from AI
student’s assets to • Add SC from assets

obtain the EFC

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© 2016 NASFAA 8

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Enrollment Periods Greater Than Nine Alternate Approach – Summer Trailer
Months: Dependent Students
• Example:
Determine • Add $4,940 to parents’ AAI
alternate PC • Use Table A6 to determine alternate AAI – Total enrollment = 12 months
• Divide alternate AAI by number in college – Alternate EFC for 12 months = 10,542
– Fall through Spring 9-month EFC = 10,230
Determine PC • Subtract 9-month PC from alternate PC
adjustment • Divide result by 12 and multiply by months 10,542 12-month EFC
̶ 10,230 9-month EFC
of enrollment exceeding 9 = 312 Summer EFC

Add PC adjustment • Add PC adjustment to 9-month PC Slide 52 © 2016 NASFAA
to 9-month PC and • Add result to 9-month SC from AI
9-month SC from AI • Regular Formula: add SC from assets

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Calculation of Parents’ Contribution for a Student Enrolled MORE than Nine Months Alternate Approach – Summer Header

B1. Parents’ Adjusted Available Income (AAI) (from line 25) 53,395 • Example:

B2. Difference between the income protection allowance for a + 4,940 – Total enrollment = 10 months
family of four and a family of five, with one in college – Alternate 1-month EFC for Summer = 326
– Fall/Winter/Spring/Summer 10-month EFC = 7,543
B3. Alternate parents’ AAI for more than 9-month enrollment (B1 + B2) =
7,543 10-month EFC
B4. Total parents’ contribution from alternate AAI (calculate using Table A6) ̶ 326 1-month EFC
= 7,217 Fall/Winter/Spring EFC
B5. Number in college ÷
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B6. Alternate parents’ contribution for student (B4 ÷ B5) =

B7. Standard parents’ contribution for the student for 9-month enrollment – 9,595
(from line 28)

B8. Difference (B6 ̶ B7) =

B9. Divide line B8 by 12 months ÷ 12

B10.Parents’ contribution per month =

B11. Number of months student will be enrolled that exceed 9 ×

B12.Adjustment to parents’ contribution for months that exceed 9 (B10 x B11) =

B13.Standard parents’ contribution for 9-month enrollment + 9,595

B14.Parents’ contribution for MORE than 9-month enrollment =

Student’s contribution from available income for 9-month enrollment + 333
(from line 44)

Student’s contribution from assets for 9-month enrollment (from line 50) + 17

Total EFC for MORE than Nine-Month Enrollment =

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Calculating EFCs for Summer Monthly EFC Share Approach

• Often optional for students Monthly = Alternate EFC
• School chooses award year from which Share Total months enrolled

student will be awarded Monthly Number of = Summer
• Packaging depends on whether student will Share X months enrolled EFC

be enrolled: in summer

– Summer only; or Number of
– All or part of regular academic year + summer
Fall-Spring EFC = Monthly X months enrolled
• Avoid double-counting student contribution Share fall through

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© 2016 NASFAA 9

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

Formula Differences: FM vs. IM

Lesson 5:
Institutional Methodology

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Factors Considered in Using Formula Differences: FM vs. IM
Institutional Methodology
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• Institution’s mission and enrollment goals Slide 59 © 2016 NASFAA
• Desire to distribute institutional resources more

accurately
• Impact of student financial aid on student

access, enrollments, and retention
• Competition among peer institutions and

resources available to recruit qualified students
• Limited institutional resources available to assist

in meeting students’ financial need

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Formula Differences: FM vs. IM Formula Differences: FM vs. IM

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© 2016 NASFAA 10

NASFAA University Authorized Training

Need Analysis: Federal
and Institutional Methodology

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Question and Answer Segment
11
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Thank you for
joining us!

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© 2016 NASFAA