This is a guest post from Ryan: a recent college graduate who writes about personal finance, real estate, entrepreneurship, mobile living, and personal development at Planting Dollars. In his free time he scuba dives with sharks, builds travel websites, and enjoys frugal living in Hawaii.
Each year incoming freshman beginning the college journey are greeted with the Free Application for Federal Student Aid (FAFSA). This form makes or breaks the student’s ability to pay for their college career. No pressure, right? 
College costs money and without grants and student loans, you’re not going to get very far. There are scholarships, part-time jobs, and of course parents, but what if you don’t have any of that?
The FAFSA is the government’s way of controlling who gets financial aid for their college and who doesn’t. Fair enough, the government should control who’s getting the aid, and it should be based on merit and need, I completely agree.
However, the government also bases this decision by how well off your parents are. This is known as the Expected Family Contribution (EFC). The EFC is based on how much your parents make along with their assets. If your parents don’t make a lot of money, you’re likely to get more money from the government. On the other hand, if your parents make oodles of money, you most certainly will not get any government help. In my college experience, I was the latter.
Is the FAFSA and EFC Fair?
Considering that a person is 18 when they go to college, or soon after, they are no longer under the supervision of their parents or legal guardians. Therefore, those guardians do not have any obligation to pay for their child’s college tuition. So why does the government base how much you get, off how much your parents make?
There is the argument that parents do typically pay for the son or daughters college expenses as illustrated by this statistic by Reuters:
“Parents paid 45 percent of the total costs of college in the 2008/09 academic year using income, savings and borrowing.”
Even so, I don’t agree with limiting the potential of kids who’s parents make a certain amount of money or have a certain amount of wealth and don’t decide to pay for their child’s college. Having had a personal experience with this, it was frustrating on my end, because I still had to pay for a considerable amount of my college without any help from grants or other forms of financial aid. I am not saying that I am any more deserving than any other potential college student, however I’m wondering about the merits of the system and if it’s doing America’s soon to be college students justice.
Enron and the EFC
When I read about the EFC it reminds me of a company called ENRON, ever heard of em? ENRON failed because they based their current level of income off future earnings. The EFC is much the same. The government is projecting that you will be able to pay for your college from your parents wallet. This projection is often untrue and thus these students have to work harder or go belly up much like ENRON.
Actually The Rich Kids Get Some Help… The Scraps From the Table
Recently the government has changed its tune on the EFC… kinda. The quote below is from the FAFSA student handbook.
Although students whose parents refuse support are not eligible for a dependency override, the Higher Education Opportunity Act of 2008 (HEOA) granted that such students may receive unsubsidized Stafford loans only.
This illustrates that the rich babies are able to get unsubsidized loans, but are still not in the running for the good ones like the Perkins loans, Pell grant, or subsidized Stafford loans. Basically they’ve given these kids a few table scraps and that’s about it.
So what do you think? Should the FAFSA have the EFC as part of the criteria?
Are rich kids at a disadvantage if their parents decide not to pay for their college or should they simply stop complaining?
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{ 16 comments… read them below or add one }
The system is pretty flawed. It also is biased against pursuing advanced degrees. With the same income, my EFC as an independent student was $0 for the last year of my bachelor’s degree. And $1800 to start my master’s. Since I didn’t have $1800, I’ve put off graduate school for a few years.
If you can prove that your income is going to change , they will review your application and make an adjustment. A few years ago, my mother had a heart attack and had to quit her job, i.e. household income went down 30%. After my parent’s contacted the Department of Education, they asked for some documentation and adjusted the EFC.
Thanks for caring.
She’s doing a lot better now. She’s lost a lot of weight and exercises now. She wants to go back to work, but now my grandparents are getting to the age where they have lots of doctors appointments and need to be chauffeured.
On the grad school front, I moved to another state and am waiting to become considered a state resident for tuition purposes. I’m currently studying for the GRE and contacting professors to determine exactly what program I want. I am on track to start my master’s in Fall 2011.
I am in a weird situation. This past year 09-10, I qualified for full pell and all my tuition was paid for becuase I didnt make any money in 2008. I had returned to school after a 2 year layoff.
Almost all of 2009, I worked full time and made about 23k for the year. Now I had changed to a part-time schedule from August – Now and will be losing this job next month because they will not work with my school scheduleanymore(they were letting me work 20hrs/weekend) and the commute to work is about 35 miles.
Thankfully, due to the good advice here and elsewhere, I’ve saved a good amount to take care of my living for the next entire year in case I cannot find work, assuming I stay in the same apartment and my roommate stays(he will cuz he has about 1.5 yrs left of school, too). I live in an incredibly small apartment 1 mile from school. I am extremely frugal, never spending money on worthless shit, just the bare essentials.
My problem is when I filled out the FAFSA this year my EFC was like 6100 while it was ZERO last time. After it was processed they said I would recieve no federal pell’s this year. I am an independent.
It’s just kind of disheartening because I worked my ass off to get back into school to finish my degree and was hoping I would get some more help for my final 2 semesters.
Now that I am losing my job, I know that money is for sure going to be tight. I just wonder how I would go about getting them to adjust my EFC?
I really appreciate the swift reply.
I am not the kind of person to ask for handouts but getting my degree has been a nightmare. The first two years were just great. Then parents got a divorce, and the one I moved with had a severe financial disaster – so dropped out for 2 years and hustled for work. so hard to get anything solid or decent where I lived at the time. then I got a decent job and started saving, wanted to finish. So I applied and got full grants to go back. I even had some refunded to me(which I am paying for summer school with). Then I reapplied only to find out I wouldn’t qualify. Saddening.
again, thanks a lot for your help. The school has closed down due to a snowstorm(I’m in the south, heh) so I will call them Monday to find out what I can do from here on out.
I had no idea there was even a possibility of adjusting the EFC, I thought I was simply shit out of luck!
I’m sorry you’ve had to deal with that AB and hopefully your financial aid office will help. I found a few petition form examples for different universities by simply Googling “petition letter FAFSA,” which you may also want to do to learn a bit more.
All I will say is THANKS Ryan & Edward! Due to my location I’m not too familiar with the topic and you guys really bailed me out/helped another Studenomics reader.
AB- Any time you have a question just ask away. If I can’t help I’m sure someone reading this can.
When I went to college my parents paid not a single penny. Yet they are middle class (around 80k a year) so the amount of assistance I received was much less than friends in the exact same situation but who’s parents had less money. Of course my person experience is only anecdotal so doesn’t have much impact on how well the system is actually working.
I believe that college should be very attainable to anyone, which it currently isn’t because not only do people have to go through the work of college itself (as they should), but they also have to deal with living a life like anyone else while doing that. This can be helped if they are getting a grant but can be much more difficult if they are working full time.
Thanks for sharing your experience Edwin.
Working full time in college is a huge distraction. In my opinion, I find that money has become way TOO much of a barrier for potential college students. There are many intelligent people out there that are held back because the numbers just don’t add up. I know it’s an investment and all, but some of our peers don’t want to deal with the burden of owing over $30,000 when entering the work force.
Do you know anyone that has been negatively impacted by this system?
The one example I have is a co-worker of mine. He worked at the same place I worked except he was full-time. He was also going to school full-time. Nearly every semester he would get low grades in class because of his crazy work schedule (he is also married with a family and has church obligations). He had to retake about half of his classes the first few semesters because of this. And this guy didn’t do poorly because hes a moron, he just didn’t have the time to dedicate to schoolwork.
He was forced to work full-time because of his family obligations. Granted if he were single and didn’t have a child he probably could have gotten away with part time work. The problem is that we shouldn’t force people into putting their lives on hold just because they want to go to college.
Well now he is nearly done with school finally and a lot of it was thanks to their family moving back to their parent’s house and cutting down expenses like crazy. This allowed him to only work part time and focus the rest on school.
The FAFSA is extremely flawed. I remember in college, my friends who were “poorer” than me got a nice, hefty financial aid package…sure their parents made less than mines but why was it my friend was the one driving the Mercedes and carry around designer bags and here I was with a part-time job because I was doing work-study and wanted to start saving for my post-grad hefty student loan bill. It just goes to show it doesn’t pay to be middle-class because we always get SOL. Even more so, you can’t get financial aid even if your parent refuses to fill out the FAFSA…so too bad, so sad to the students with parents who make money but can’t put anything to their college education.
Like several people here (i.e., Edwin et al.), my parents are middle class but actively chose not to contribute to my tuition. The FAFSA calculates your family’s wealth with the assumption that said financial resource will be tapped. Due to my family’s comfortable status, I didn’t qualify for any aid whatsoever. Thus, I was left to pay $32,000 annually out of my own pocket, even though I had only earned a few hundred dollars in my life at that point! Thankfully, I had about $14,000 in academic scholarships, but it still came up well short.
I know this is a bit old, but I would like to say, it’s not always “rich kids” that are labeled as such. My parent’s make a livable amount of money, a few thousand above poverty, but also have their own student loans they are still paying. Because of this, I have no aid from them when it comes to college,but the FAFSA has determined my parents make too much for me to get more than 2 thousand in aid. I am not able to obtain a loan, even with a cosigner, and I have no scholarship, nor am I able to get a job. :/ I can not attend college till I personally get a job, and then use the money from said employment to begin building credit. Only then can I take out a loan of the money I need for school.
I’m having some of the same issues. My father lost his job to outsourcing a couple years ago and because of the low income I received quite a bit of help from FAFSA. However, this last year he was finally forced to take out money from his 401k (way prematurely) to keep from going under before he gets settled as a freelancer. Problem is, you still have to report that income on the FAFSA so my EFC went skyhigh despite the fact that my financial situation is actually even worse since I’ve moved out on my own, thus rendering me ineligible for anything but loans. I don’t understand why I can’t label myself as an independent. After all, I pay all of my bills myself, and work several jobs to do so. My brother, who is officially independent, however, is fine. FAFSA covered just about as much as he needed, meanwhile I’m not getting anything because I’m too young.
Ouch I’m sorry to hear that Steph. I’ve hear many negatives about FAFSA. I wish I could comment more, but I live in Canada.
Among my boyfriend, my best friend, and I, I have seen first hand the flaws in the FAFSA. I have actually thought about complaining to someone at a government level to see if someone can bring up the flaws and have them fixed. Don’t get me wrong, I appreciate that we live in a country that will help us go to school and get our lives together, but it really makes me ill that the government help doesn’t help the people who really need it, and its given to those who don’t. I am about to graduate with an Associates Degree from a Community College and transfer to my dream school in Missouri to go to one of the best Equestrian programs in the US. I stayed home for two years to save money and ended up saving about $80,000. I couldn’t afford to move to Missouri as a Freshman because I had NO help what so ever from my family. My dad is VP of a tobacco company and my mom is an secretary at the college I am attending, and they make together about $100,000+ a year. Because my family is middle class and makes a good amount of money the FAFSA just expects that they are going to give it to me to pay for my college. What the FAFSA doesn’t realize is my family has their own bills to pay and that money is spoken for. I will be 21 by the time I am in Missouri and I am getting no government help because I am STILL considered a dependent until I am 24. It really frustrates me. To make matters worse my boyfriend, who decided to move with me to go to a different college, is 22 and filed the FAFSA on his mom’s tax papers (because his parents are divorced) and she filed for bankruptcy and they still gave him NO HELP. So, no help for me, no help for him. Then later this past semester, I get a phone call from my best friend who tells me she was just standing in line trying to figure out why they cut her financial aid, and the African American girl in front of her was talking about how she got $5000 to go to a college that cost about $1000, because of her financial aid. I am not racist or anything like that but to get more money because of your skin color is CRAZY to me. Especially in a place that you aren’t really a minority. Our government needs to stop basing things on race and on who your parents are. I just want enough money to go to school and I really don’t want to be paying back student loans the next 20 years in an economy that I may not be able to get a job in.
Thanks for letting me vent!
Mel,
I read your story and I really feel for you. If I were you, I would wait until you are 24 because then you are not considered a dependent anymore. You may be able to get more government help. If you do not get enough money through the government then you should start searching for scholarships. Try Google’ing scholarship search engines and scholarships for your specific state and area of interest. I have applied to scholarships on Fastweb, Zinch, etc. Also, try finding scholarships at different businesses. Credit Unions and other businesses give out scholarships yearly and that could really help you! As far as student loans go, you could find out if you could defer payments while you are in school, and you could also consolidate your new loans with your old loans after you graduate to make it one payment instead of two. Try to get loans through the FAFSA that are through the government instead of private student loans. Another idea I had is take classes that are set up for working adults. I know there are some Health and Business Administration programs in my area that offer classes like once a week or all online to work around an adult that works full time. It may take you a little longer, but then you could get the degree you want while still being able to pay your bills and support yourself. T College is hard, but if your determined then you will make it. My boyfriend is 22, works full time in construction (which can be over 80 hours a week sometimes), pays all his bills and supports himself, and goes to school full time some semesters, all because he knows what he wants- which is a better life. I think the key will be just be patient, take a few classes at the time, and still work to pay your bills.
Hope this helped some. I really hope everything works out well for you and your future.
Jenn