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?
{ 21 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.
All FAFSA stuff aside, how’s your mother doing now?
That’s a slap in the face that pursuing an advanced degree is such a pain. Where do you stand now?
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?
Hey AB -
The most solid advice I can give you and that I’ve seen from this situation is to talk directly with your financial aid office as sometimes you can write a letter to petition your EFC. Stop by the financial aid and ask them if they can help you with this since each school is different.
Best of luck.
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.
AB,
I did some looking around, and it looks like you have to contact the financial aid department of your school to get an adjustment. They have latitude to adjust your EFC or even your cost of attendance based on certain things.
http://studentaid.ed.gov/students/publications/student_guide/2009-2010/english/amieligible.htm
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?
I agree that the system is flawed. I also think this system is creating a tuition “bubble” that is inflating college prices to a level where they are much higher than they should be.
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.
Your story really puts things into perspective. Whenever I want to complain about school or being busy, I need to read over this story.
Do you think your co-worker will be able to increase his income/find work after he’s finished college?
I’m extremely confident he will be fine after college. He’s getting a masters in accounting and then his CPA. I’m also confident in his abilities to actually pass the tests, hes been doing well since he went part time. We live in Utah and the unemployment situation here is far less severe than the rest of the country so the job outlook is pretty positive.
That’s good to hear Edwin. He’s really going to appreciate the money once it starts coming in.
Probably best to stop complaining. Rich kids have so many more advantages to help them get into college and through college than poor students.
Sure, but “rich kids” is not the same as “kids with rich parents.”
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 am a parent who makes a decent income, but also is raising a family in a very high-cost area of the country, with 7 dependents. The fact that this is a very high cost area of the country doesn’t seem to factor into the FAFSA calculation. Our family lives frugally, but we are not in poverty like you see in Haiti. We consider our family as solidly middle class, nothing more. $80k/year income might provide a lot in many rural parts of the country, but in many urban parts of the country, this is barely enough to put a roof over ones head, and food on the table. We have two children entering college next year and our calculated EFC made both me and my wife laugh—what a joke. We are not expecting hand-outs for our children to attend college, just an opportunity for some help, like work-study or low interest loans. No handouts expected here. Anyways, we have no expectation of any need-based help now. We both have come to the conclusion that the FAFSA is simply a tool by the progressives of this country to redistribute income, and not to provide true help to those who are living responsibly.