1 / 18

Need Analysis: What You Should Know

Gain insights into the CSS model and federal methodology for determining financial aid eligibility. Explore topics such as income calculations, asset protection allowances, and expected contribution for dependent and independent students.

ploos
Download Presentation

Need Analysis: What You Should Know

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Session 29 Need Analysis:What You Should Know Dan Madzelan Session 29

  2. News Roundup: 1954 • Brown vs. Board of Education • France Ends Colonial Rule in Viet Nam • TI Begins Producing Silicon Transistors • Elvis Presley Cuts First Record • College Board Establishes a National Need Analysis Session 29

  3. The CSS Model • Parents Have Primary Responsibility for Their Children’s Postsecondary Education • Student Contributes More As the Principal Beneficiary of Postsecondary Education • Families Are Accepted in Their Current Financial Circumstance • A Portion of Discretionary Income Is Available for College Costs Session 29

  4. More on the CSS Model • “Ability to Pay” Calculation • Total Income Plus a Portion of Assets • Less Non-discretionary Expenses • Progressive Assessment of Discretionary Resources • Consideration of Siblings in College • Student Contribution Session 29

  5. Federal Involvement • BEOG Family Contribution Schedule • 1980 Amendments – Single Formula • 1982 Technicals – Not So Fast! • 1986 Amendments – Two Formulas / No Regulating! • 1992 Amendments – Single Formula That Acknowledges Families With Children • 1998 Amendments – Tweaks & Complements Session 29

  6. Federal Methodology Today • Regular Formula • One for Dependent Students • Two for Independent Students • With Dependents Other Than a Spouse • Unmarried Or Spouse Is Only Dependent Session 29

  7. Federal Methodology Today • Simplified Needs Test • Less Than $50,000 AGI* • Not Required To File a 1040 Tax Return • Automatic Zero EFC • Less Than $15,001 AGI* • Not Required To File a 1040 Tax Return • Have Dependents Other Than a Spouse Session 29

  8. Federal Methodology Today • Alternate Expected Family Contribution • Parents of Dependent Students • Pro Rata for Less Than Nine Months • Subtraction Method for Longer Enrollment • Students • Pro Rata for Less Than Nine Months Session 29

  9. Primary Determinants of Ability to Pay • Income • Taxable (Adjusted Gross Income) • Untaxed • Taxes Paid • Household Size • Number in College Session 29

  10. Details – Available Income • Total Income (Base Year) • Adjusted Gross Income • Untaxed Income (Worksheet B) • Less Exclusions (Worksheet C) • Allowances • Taxes (Federal Income, FICA, State Taxes) • Living Expenses • Basic Subsistence • Additional Employment-related Session 29

  11. Income Protection Allowance • 1967 BLS Survey for a Family of Four • Current Value is $20,710 • $6,760 for Food • $4,490 for Housing • $1,960 for Transportation • $2,870 for Clothing and Personal Care • $2,370 for Medical Care • $2,260 for Other Family Consumption Session 29

  12. More Details – Assets • Net Value of Liquid/Non-Liquid Assets • Except Home, Family Farm, Retirement Plans • Part of Business/Other Farm Equity • Allowance for Retirement Savings • Conversion Rate/Income Supplement • Dependent Student: • No Allowance • Contribution Rate Session 29

  13. Education Savings andAsset Protection Allowance P = D (1+f)n+1 (1+L) [ (1+i)r-n - (1+f)r-n ] (1+i)r(i-f) Where… D: BLS Moderate Budget Minus SSA Retirement Benefits f : 6% Annual Inflation (HEA) i : 8% Annual Interest Earnings (HEA) L : 6% Sales Commission on the Annuity (HEA) r : Remaining Life Expectancy c : Current Age of Future Annuitant n : Number of Years to Retirement (65 - c) Session 29

  14. Expected Contribution People With Kids • Available Income • Income Supplement • Marginal Assessment • 22 to 47 Percent • For All Family Members – Except Parents – In College Session 29

  15. Expected Contribution Dependent Students • Total Base-year Income • Allowances: • Taxes • Living Expenses • Negative Parental Available Income • 50 Percent Assessment • 35 Percent of Net Assets Session 29

  16. Expected Contribution Independents Without Kids • Total Base-year Income • Allowances: • Taxes • Living Expenses • Additional Employment-related If Married and Both Work • 50 Percent Assessment • 35 Percent of Available Net Assets Session 29

  17. Professional Judgment • Case-by-Case Basis • Independent Student Status • Adjust Data Elements • Not Limited/Documentation Required • HEA Special Circumstances? • K-12 Tuition • Uncommon Medical/Dental Expenses • Unusual Child Care Costs • Recent Unemployment Session 29

  18. Technical Assistance We appreciate your feedback and comments. You can contact me by: Phone: (202) 502-7816 Fax: (202) 502-7873 Email: dan.madzelan@ed.gov Session 29

More Related