Vol 1: Issue 7  |  Home   

VOLUME 1 - ISSUE 7

Table of Contents

  1. Understanding the Federal Methodolgy Systems
  2. Asset Protection Allowance
  3. Income Protection Allowance
  4. Federal Updates
  5. Odds’ n Ends
  6. College Humor

 

Understanding the Federal Methodology System

As the workings of the Federal Methodology system are explained, it would be best to keep in mind, three terms (and their acronyms): The Expected family Contribution, or EFC, the Free Application for Federal Student Aid, or FAFSA, or FWS and the Student Aid Report, or SAR.

The Federal methodology system is designed to determine who is or isn't eligible for SEOG and Pell grants, subsidized Perkins and Stafford loans, a Federal Work-Study Program, and certain school financial aid programs. The aim of this article is two fold: To familiarize the reader with some of the major financial aid points within the FM system which will help in dealing with the school's financial aid office and to provide information of how this ludicrous system functions.

Since about 97% of the families are involved with the regular FM formula, I will focus this article on how it assesses student and parental income and assets. First difference from the IM system, the regular FM formula does not assess the value of your home (but a second home is), second, prepaid tuition plans are not considered and asset, yet conversely, Coverdall ESA's are, as the owner's assets. However, should you live on a farm, claiming on schedule F of the IRS 1040 that you were involved with the farm's daily workings, the farm's equity is not considered and asset. Own a farm, but not be involved with it's daily operations, and presto, the farm's equity becomes an asset.

Your asset protection table is rather unique; the DOE (Department of Education) calculates your assets protection based on the yield, (at the same amount of money), of the present cost of an annuity. This is combined with SSI benefits of an individual at age 65 to determine a moderate level of living for a single person or married couple.

This definition often collides with a family's version or moderate versus Spartan existence. But not to worry, if you do not have many assets you probably will not have to make any contribution at all. Those parents/guardians that do have assets the exceed the asset protection allowance will have to pay, at most, 5.65 % of every dollar exceeding their asset protection allowance.

To the Top

 

Asset Protection Allowance

Age of Oldest Parent in Household

39 or less
40-44
45-49
50-54
55-59
60-64
65 or older

Two-Parent family

$36,600.00
$41,200.00
$46,400.00
$52,900.00
$60,600.00
$70,000.00
$76,900.00

One-Parent Family

$16,800.00
$18,800.00
$21,000.00
$23,600.00
$26,600.00
$30,300.00
$32,900.00

Yet the same cannot be said about student assets... the poor student; you tell to work and save their money only to have it come back and bite them in the buttocks.

Sally works during her junior and senior years in high school and manages to save $3,000.00. Under FM, a whopping 35% of her assets go toward the family's EFC, or to put in more succinct terms, Sally has $700.00 in assets. The best thing to do is either have Sally put her hard-earned money into her parents account, place it in a young siblings account or pull it out of her account and place it in a safety deposit box until she needs the funds.

The FM system becomes even murkier when addressing family and student income. Unlike the IM system, the FM system makes no allowances for medical/dental expenses nor for private school tuition. To let the school know about such expenses you should contact their financial aid office (FAO) and request a special circumstances form so you can explain these expenses and how it impacts your day-to-day living.

The family income protection allowance is incredulous. The following are the actual figures the Federal government thinks families can live:

A family of 5 with one in college can subsist on
A family of four with one in college can subsist on
A family of three, with one in college can subsist on
A family of two, with one in college can subsist on

$26,190.00
$22,200.00
$17,970.00
$14,430.00

The above seems like a financial aid nightmare, and it is, since these figures are based on 1960's poverty line (with cost of living adjustments) and if this isn't bad enough, it fails to take into consideration the cost of living from what part of the United States you live.

Furthermore, income that the IRS did not count as such, has to be thrown back into the mix of reportable income. And what is thrown back into the mix...well just about every thing that was allowed on a Federal Income Tax deduction on IRS form

I've taken the liberty to provide you with a partial list a list of what you probably presumed the FM system didn't count as income, but (unfortunately) does:

  • Untaxed social security income given to the parent for the child and or student,
  • Health insurances payments made by the company/business/industry that employs you
  • Child support received, all children
  • Untaxed portions of a 401 (k) and a 403 (B) plans
  • Earned income tax credit
  • Tax-exempt interest income
  • Workers compensation
  • Welfare benefits save AFDC/ADC
  • Untaxed portions of pensions... and the list continues, but I think the message is quite clear... the FM system basically wants all the Uncle Sam said you could use as untaxed income mysteriously becomes FM income.

Not to complicate matters (it will anyway), but families do have an income protection allowance and if it works this way...

To the Top

 

Income Protection Allowance

Number of Family Members
Including Student

Number in college

 
2
3
4
5
6

1 2 3 4 5

$14,430
$17,970
$22,200
$26,190
$30,640

$11,960
$15520
$19,730
$23,720
$28,170

$0.00
$13,050
$17,240
$21,270
$25,710

$0.00
$0.00
$14,800
$18,800
$23,240

$0.00
$0.00
$0.00
$16,340
$20790

For each additional family member add $3,460...for each additional post-secondary student, deduct $2460

Now it doesn't take a rocket scientist to see what is wrong above...it makes sense to increase the income protection based on the family's size, however, the more students you have in college, the smaller the amount of income that is protected. You think logic would dictate that income protection would increase with more family members attending school...but then again we are dealing with the Federal Government.

Now we come to the family's table (more accurately parental) for their (the parents), expected contribution from income to the EFC. Having completed this portion of the FAFSA, here is what the family (parents) are expected to give toward the overall EFC...

ADJUSTED AVAILABLE INCOME

TOTAL PARENTS' CONTRIBUTION

less than $-3,409 $-750
$-3409 to $12,900
$12,901 to $16,200
$16,201 to $19500
$19,501 to $22,800
$22,801 to $26,100
$26,101 or more

$0.00
22% of AAI
$2,838 +25% of AAI over $12,900
$3,663 + 29% of AAI over $16,200
$4,629 + 34% of AAI over $19,500
$5,742 + 40% of AAI over $22,8000
$7,062 + 47% of AAI over $26,100

Remember, the above figures are of the Adjusted Available Income derived from the figures plugged in to that portion of the FAFSA that pertains to parental incomes. Let us have some fun (right) and calculate the parents' contribution to the EFC. I'm going to use line two (the reason will be explained when we do student income.

For argument's sake let us say that Mr. and Mrs. Doe's AAI is $11,000.00, which, we then multiply by 22%, leaving us with $2,240.00. Throw in another $260.00 in assets and you have the Doe's EFC at $2,500.00, which would qualify their daughter Sally a considerable financial aid package. HOWEVER, as an incoming freshmen, Sally had earned $4,761.00 (remember she managed to save $3,000.00). Unfortunately for Sally's income, only $2,761.00 is protected, with the remainder assessed at 50%, that's right, 50%. So of the amount over the income protection is $2,000.00, of which the FM formula adds $1,000.00 to the family's EFC.

Combine this with the $700.00 she contributed in assets, and our poor Sally has contributed $1,700.00 toward her family's EFC. This become a dilemma for many families as Mr. And Mrs. Doe's contribution may have been only $2,500.00, qualifying their daughter for some financial aid, it now balloons to $4,200.00, probably making Sally ineligible for certain financial aid packages she would have been eligible for had it only been $2,500.00.

Once the Doe's EFC has been calculated, they will receive their SAR with their EFC printed directly below the date in the upper right hand corner of the SAR.

There are many finer points within the FM system, however, to determine your first EFC, it is the information on the four-page FAFSA and the parents' and student's federal income tax forms that generate the first EFC you find on the SAR.

In closing welcome to the bizarre world of college financial aid!

To the Top

 

Federal Updates

Congressional Earmarking of federal research programs has become so extensive that it can be difficult to tell whether spending by federal agencies for merit-reviewed scientific grants is rising or falling, President Bush's science adviser, John H. Marburger III, said on Thursday at a science-policy meeting here. He said a clear methodology is needed to track how large a bite earmarks take.

In Representation Among The Presidents of community colleges, members of minority groups have made no progress in the last five years, and women have made only slight gains, according to a summary of survey findings released in Long Beach, Calif., on Sunday at the annual convention of the American Association of Community Colleges.

The U.S. Department of State plans to provide $3-million next year to enable students from developing countries to study at American community colleges, a department official told college leaders in Long Beach, Calif., on Monday. The program would concentrate specifically on helping students who wanted to earn associate degrees and return to their home countries.

To the Top

 

Odds N' Ends

Jason Johnson, the student who was suspended this month from the Baptist-affiliated University of the Cumberlands, did not expect to attract national attention when he came out on his Web page. The university, which has agreed to let him finish this semester's course work, is attracting attention, too -- which may affect state funds it was to receive for a pharmacy school.

The University of California's Hastings College of Law can deny student-activities funds and official recognition to a Christian student group that does not allow gay and lesbian members, according to a ruling this week by the U.S. District Court in San Francisco.

Rekindling a Controversy that many academics thought had ended more than a year ago, a scientific publisher has rejected two papers because of their authors' connections to Iran. In letters rejecting the papers, the American Association of Petroleum Geologists cited a U.S. Treasury Department restriction that applies to authors who are part of the Iranian government.

The University of Vermont is negotiating with Union Institute & University to buy the institute's 32-acre campus in Montpelier, Vt., and three of its graduate-level programs in the fine arts, the Cincinnati-based institute has announced.

The National Science Foundation has chosen Emmanuel J. Candes, a professor of applied and computational mathematics at the California Institute of Technology, as the winner of the Alan T. Waterman Award for 2006. The award carries a $500,000 prize for continued research.

More Than Half of The Experts who prepared the "Diagnostic and Statistical Manual of Mental Disorders," an influential guide in the psychiatric field, have undisclosed financial ties to the pharmaceutical industry, a study has found. Officials associated with the manual, however, say there is no evidence of industry influence.

Employers Expect to Hire 14 percent more new college graduates in 2005-6 than they did in the previous year, according to a report issued this week by the National Association of Colleges and Employers.

A Popular Professor at Syracuse University has resigned after an investigation found that he had physically and emotionally abused multiple individuals and engaged in "grossly inappropriate conduct toward students," according to university officials. The university has reported its findings to local law-enforcement officials, who have begun their own investigation.

In the States: A review committee says the University of Wisconsin at Madison failed to show it had just cause to discipline a former vice chancellor over allegations of sexual harassment. Missouri's public colleges may have to certify that they have not knowingly admitted illegal immigrants. For details, and more news from the states, see "State Digest."

The Federal Bureau of Investigation said on Wednesday that it would ask the Justice Department to take action if the government cannot reach an agreement with the family of the late Jack Anderson to search through his papers. The journalist's archive is now held by George Washington University.

In the Defamation Lawsuit filed by John R. Lott Jr. against a rival economist, Steven D. Levitt, much will hinge on exactly what Mr. Levitt meant by the words "replicate" and "peer refereed." And if the lawsuit succeeds, scholars might get an unpleasant reminder that they can defame someone in a single e-mail message.

Faculty Salaries failed to keep pace with inflation for the second year in a row, according to a report scheduled for release today by the American Association of University Professors. The Chronicle's coverage includes charts, tables, and a database containing seven years of average faculty salaries at more than 1,400 colleges.

A California State Judge has ruled that legal challenges against the constitutionality of the state's $3-billion stem-cell initiative have no merit. However, bond sales for the project cannot take place until after any appeals are exhausted.

College Leaders and Lobbyists thought they had won a victory last month when the U.S. House struck a provision from a key bill that would have given the government more oversight over transfer-of-credit policies. But a drafting error in the bill may throw the measure into doubt.

The University of California at Los Angeles is planning what appears to be the world's first online, peer-reviewed encyclopedia devoted to ancient Egypt. The comprehensive work will include material in Arabic as well as English.

The Colorado Institute of Technology, founded just six years ago with the ambition of rivaling powerhouses like Caltech and MIT, will close its doors at the end of this month, a casualty of a diminished high-tech job market.

A Top Academic Dean at the University of Medicine and Dentistry of New Jersey allegedly falsified financial statements to obtain a bonus, while a trustee pressured university officials into a real-estate deal that benefited a political contributor, according to a federal report released on Monday.

University of California Officials failed to properly disclose some of the compensation the system has provided to many of its senior managers over the past decade, or to seek required approval for it, according to an independent audit that was released on Monday.

The Ford Foundation will put $75-million more into its International Fellowships Program, it is expected to announce today. The program, which pays for students from Russia, Africa, Asia, and the Americas to attend graduate school, is designed to educate leaders for the developing world.

Charles J. Carlsen, who had been president of Johnson County Community College in Overland Park, Kan., for 25 years, stepped down last week following allegations that he had sexually harassed a college employee.

A Muslim-Rights Group has called on Michigan State University to discipline a professor who sent an inflammatory e-mail message to the campus's Muslim Students' Association in which he called Muslims "dissatisfied, aggressive, brutal, and uncivilized slave-trading Moslems" and encouraged them to "return to your ancestral homelands and build them up yourselves instead of troubling Americans."

The American Academy or Arts and Sciences announced on Monday the election of 175 new fellows and 20 new foreign honorary members. The 195 men and women are prominent figures in scholarship, business, the arts, and public affairs.

To the Top

 

College Humor

A Revolutionary Tradition

It's a pain in the rear, but the doughnut makes it all worthwhile. Each year on the first weekend of daylight-saving time, unicycle enthusiasts from Harvey Mudd College ride 8.7 miles, all for a single doughnut.

That, and the joy of traveling "on wheel."

Unicycles are a tradition at the science-and-engineering college, and this year marked the 30th anniversary of "Foster's Run." Participants pedal to Donut Man (formerly Foster's Donuts), in Glendora, Calif., where the owner, Jim Nakano, rewards them with his specialty: a large doughnut, sliced open and filled with the best strawberries available in this strawberry-rich region.

"It's just a lot of fun to see them come down," he says. "They're a great bunch of kids."

The riders don't eat until they've performed "the Foster's shakedown": They dismount, form a circle, and jump up and down while spinning in place. The point, says Erik Shimshock, co-president of the college's Gonzo Unicycle Madness club, is to "help put back parts that have been scrunched up by the journey."

Students aren't the only ones who make the ride. Each year alumni come from as far away as the East Coast to take part.

Once revived by the pastry, the hardier riders this year just five of the 18 who rode to the doughnut shop remount their unicycles and ride back to the campus.

Presidential Posts

It seems like everyone has a blog these days - even college presidents. Some are snores. But here are a few that are not.

William G. Durden, president of Dickinson College

This president's blog delivers on its title, Doc Durden's Guide to Good Grammar: Personal Pet Peeves Presented for Public Perusal. Each entry lists a common grammatical error, like confusing "between" and "among," and explains why it's incorrect.

Mr. Durden, who began the blog after noticing the same mistakes again and again in e-mail messages from students, says the good-natured ness of the blog was lost on some people when he started it last year. One early comment read, "It is discouraging to see the college resorting to a blog to conduct remedial-English efforts. For $160K over four years, one would think that this should be remedied in the classroom, and preferably prior to enrollment at Dickinson." Mr. Durden, who updates the blog sporadically, says that since then most readers have lightened up. A more recent comment states, "This blog is a grammar nerd's dream come true. Keep up the good work."
R. Albert Mohler Jr., president of Southern Baptist Theological Seminary

Hugh Hefner, the Paris riots, Halloween this blog has it all, and all from the viewpoint of a Baptist minister. Perhaps the most prolific of all presidential bloggers, Mr. Mohler's entries at least three a week are typically more than 20 paragraphs and are peppered with interesting tidbits. For instance, a reader can find out that Playboy was originally titled Stag Party, and that 80 percent of all lottery tickets are bought by only 20 percent of purchasers.
Richard F. Celeste, president of Colorado College

"From time to time I have something on my mind, and it's kind of like an itch that I feel I want to scratch," says Mr. Celeste, explaining why he blogs. His blog, entitled Flow of Ideas, includes thoughts on his family and his college, along with opinions on the relationship between the United States and India. (Mr. Celeste is the former U.S. ambassador to India.) In one of his more philosophical entries, he uses the lyrics to an Alison Krauss song, a talk about immigration, and his participation in an effort to chart ancient human migrations using DNA samples to ponder humankind's instinct to explore.
William E. Brown, president of Cedarville University

This blog's one-liners would make Henny Youngman proud. After writing that his wife hit a deer with her car, he discloses that "the deer didn't have insurance." Recollecting his trip to Paris, he writes about seeing the Venus de Milo and informs everyone that "there is no Serena de Milo." Judging from the number and tone of comments he receives, it appears that Mr. Brown keeps one of the most popular presidential blogs. On one entry, a commentator simply said, "Awesome post, Dr. Brown. That was great!"

To the Top

 

Home


about FAJ FAQ Customer Support

©2018 eFinancialAid.com, Inc. All rights reserved.