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Federal Methodology

Module 6. Federal Methodology. Federal Methodology. Method for assessing ability to pay consists of two steps: Measuring the family’s financial strength Assessing a portion of family’s financial resources as a contribution toward educational costs. Federal Methodology.

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Federal Methodology

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  1. Module 6 Federal Methodology

  2. Federal Methodology Method for assessing ability to pay consists of two steps: • Measuring the family’s financial strength • Assessing a portion of family’s financial resources as a contribution toward educational costs

  3. Federal Methodology • Methodology used to calculate expected family contribution (EFC) • Classifies students according to one of three models: • Model A: Dependent student • Model B: Independent student without dependents other than a spouse • Model C: Independent student with dependents other than a spouse

  4. Federal Methodology Each student model has two formulas: • Regular • Simplified

  5. Automatic Zero EFC • If certain criteria are met no calculation is performed, and the EFC automatically is set to zero • Automatic zero EFC is limited to: • Model A: Dependent student • Model C: Independent student with dependents other than a spouse

  6. Simplified Formula • Also known as Simplified Needs Test • Qualifying criteria similar to Automatic Zero EFC criteria and applies to all student models, but income cap is higher • Formula excludes assets from EFC calculation

  7. Simplified Formula • If asset information reported on Free Application for Federal Student Aid (FAFSA), two EFC calculations • EFC from simplified formula is primary EFC • EFC from regular formula is secondary EFC • School must use primary EFC to calculate need

  8. Regular Formula • Full data element formula • EFC calculated for9-month enrollment period • Specified-year income is used • 2012 is specified year for 2013–14

  9. Regular Formula • Allowances protect portions of income and assets • Equal distribution of calculated amount of available family resources among all family members (other than parents of dependent student) attending a postsecondary school at least half time

  10. Rounding Rules • Carry all calculations to 3 decimal places • Round resulting amount to nearest whole number: .001 to .499 round down .500 to .999 round up

  11. EFC Recalculation for Other than Nine Months • EFC must be adjusted for enrollment period other than nine months for all Title IV programs other than Federal Pell Grant and Iraq and Afghanistan Service Grant (IASG) programs • Alternate EFCs on Institutional Student Information Record (ISIR) and Student Aid Report (SAR)

  12. Summer EFC Example: 3-Month Summer Term If enrollment period 9-12 months, SC = $900; alternate 3-month SC = $300 • If package summer and regular academic year together,12-month SC = $900 • If package summer and regular academic year separately,12-month period SC = $1,200 $900 9-month SC + $300 3-month SC = $1,200

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