The Useful Difference and the Unpleasant Truth
I give college funding workshops for parents in many different locations. No matter where I am presenting, there is always one common denominator. When I start discussing the FAFSA and CSS Profile I am met with a multitude of very audible sighs. During one workshop in South Carolina, in a church no less, an indignant mother had enough and yelled “Are you kidding me???” You may find it tedious and tiresome to learn about and complete these need-based aid applications but knowing the difference between the two could save you a serious amount of money. This is especially true if you are a divorcee, separated spouse, or in a household situation where you do not live with the other parent of your biological child.
The FAFSA (Free Application for Federal Student Aid) is the form for those who seek federal financial aid or federal student loans for college. You can fill out this form for any college or university you apply to. Some schools also require that you fill out The CSS (College Scholarship Service) Profile. The CSS is used primarily by private and elite state schools to determine whether you qualify for nonfederal aid. Both applications use your financial info to determine your Expected Family Contribution, or EFC. Your EFC, in simplest terms, is an estimate of what the schools expect you to pay. It can drastically vary between the FAFSA and CSS Profile because the FAFSA looks mostly at income, while the CSS goes a little more in-depth into your financial background.
Perhaps the biggest difference between the applications involves divorced or separated parents. The FAFSA only asks financial questions for the custodial parent, almost completely ignoring any income and assets for the non-custodial parent. If the parents share custody, the FAFSA will focus on the parent who provides the most support to the child. Imagine a high school senior applying for colleges. We’ll call her Suzie. Suzie’s mother and father are divorced, and Mom has full custody of Suzie. Mom makes $45,000 per year and received the vacation home in Florida along with a few other assets in the settlement. Dad is a doctor with a thriving medical practice and makes $250,000 per year. The FAFSA overlooks Dad’s very large income and focuses on the custodial parent’s income. Since Mom’s income is less than $50,000 per year, Suzie’s Expected Family Contribution is automatically $0. When Mom and Suzie fill out the FAFSA together, Suzie will be eligible for a ship-load of need-based aid at any “FAFSA only” school in the country. Most industry advisors will emphasize this useful difference and recommend these “FAFSA only” schools for Suzie based on her current family dynamics.
Now for the unpleasant truth. Same scenario, same student, same financials…. but let’s say Suzie has her eyes set on two prestigious schools that also use the CSS Profile. The CSS Profile combines the income and assets (even equity in the primary and secondary/vacation homes) of both parents, not just the custodial parent. Consequently, Suzie’s Expected Family Contribution rises even higher than the annual inflation at colleges. This means she may have to pay close to the sticker price for said prestigious school despite her mother’s income. The average cost of a private four-year college that requires the CSS Profile is about $50,000 per year. In contrast, the average cost for a four-year public university that only uses the FAFSA is about $25,000. The out-of-pocket difference between these is at least $100,000 over four years. And remember, Suzie has an EFC of $0 at the FAFSA schools, so it’s very likely that she would pay significantly less than that $25,000 average cost per year. Moral of the story—if you are divorced, separated, or part of a blended family, understand which forms the schools use before your “Suzie” gets emotionally attached to a school you cannot afford.