Financial Aid Considerations When Shopping for a College: FAFSA vs. CSS Profile
When searching for a college, families need to consider academic, social, and financial fit. Part of the financial fit is understanding aid – that is, any assistance to help a family pay for college. We often talk about the Free Application for Federal Student Aid or FAFSA®. It is the most common tool used to determine a family’s Expected Family Contribution (EFC). The FAFSA is by far the most frequently used financial aid application. However, it is not the only tool used by colleges to do this calculation of need. (Need is defined as the cost of attendance minus what your family can pay). The CSS Profile™, offered by the College Board, is used by about 200 colleges, including many private schools.
The FAFSA and the CSS Profile take different approaches to determining need. A family may qualify for need under one method but not the other. If a family were to qualify for need with the CSS Profile but not the FAFSA, that family would focus their search on CSS Profile schools.
Please note: In January 2021, the US Department of Education announced significant changes to the FAFSA which will impact some of what is below–especially concerning multiple children and divorced family situations. Originally, these changes were supposed to show up on the 2022 FAFSA. However, they have been put on hold so the below information remains unchanged. We will update this article as changes are finalized.
Families interested in more information about how to pay for college should be sure to catch our FREE Smart Money Moves for the College-Bound webinar.
A Quick Introduction to the CSS Profile
The key to understanding these two aid applications is realizing they are looking at the family’s financial picture in different ways.
The FAFSA looks primarily at a family’s income and assets like investments and savings (retirement money is not counted in the amount you could contribute to college). The FAFSA calculation is referred to as the Federal Methodology (FM) because it is used by the federal government as a basis for federal aid, work study, and loans.
The CSS Profile goes a step further and includes some expenses and additional assets (home equity, small business, family farm) in the calculations. This calculation, called the Institutional Methodology (IM), is trying to get a more (colleges would argue) complete financial picture. They can look at federal and state taxes, medical expenses, parents’ student loans, and private school tuition, as well as college tuition paid for other students.
Insert plot twist: It is important to note that not every college using the CSS Profile collects the same information. The name Institutional Methodology is a clue to that…each college can ask for slightly different pieces of information.
It’s not a walk in the park.
Sorry to say, but no one ever said, “YAY! I get to fill out my CSS Profile today!” The College Board estimates it will take anywhere from 45 minutes to two hours to complete. So, grab a cup of coffee (or a glass of wine) and dig in. Get ready by collecting the necessary documents including:
- Federal tax returns
- W-2 forms (or other records of income)
- Records of untaxed income
- Bank statements
- Mortgage information
Did we say mortgage information?
Yes, we did. One of the big differences between the FAFSA and the CSS Profile is how they view the family home. The FAFSA does not consider a family’s primary residence in their calculations. The CSS Profile includes the home equity and the monthly mortgage expense in their figures. They want a clearer picture of how much a family can really afford to pay.
But as with other pieces of financial information, not every college includes home equity. Stanford made headlines in December 2018 when they dropped their home equity from their eligibility calculations. In states like California, home prices have soared and may not reflect a family’s actual wealth.
Another difference between the FAFSA and CSS Profile is the word “free.”
Free is right in the title of the FAFSA—it costs you nothing to fill out and submit to every college on your list. Completing the CSS Profile will cost a family $25 for the application and first college report. Each additional report is $16. If you have three Profile schools on your list, be prepared to shell out $57. Be sure to take advantage of fee waivers if they apply to your family.
Today’s families aren’t necessarily just a married mom and dad living together under one roof. Families may include step-parents and unmarried partners. The FAFSA only wants to know about the custodial parent. Who does the child live with 51% of the year? That person is the custodial parent, and that person is the one whose financial information will be included.
If the parents are divorced and the custodial parent is remarried or is living with someone who contributes to the household financially, the FAFSA will want to know their income. They are part of the household.
The FAFSA does NOT want to know about the non-custodial parent and their spouse or partner.
The CSS Profile takes a different approach. The CSS Profile will want the non-custodial parent’s (and their spouse’s) information. Each parent will complete the application separately. If a parent is not part of a child’s life, a waiver is possible. Not every CSS Profile college will request the non-custodial parent information. Refer to the list of colleges to see which require that info.
You need to complete both the FAFSA and CSS Profile.
The CSS Profile is only used for aid awarded by that particular college. The FAFSA is still needed to be done for federal and state aid consideration as well as for federal student loans and work study. So, if you are filling out the CSS Profile, you will need to fill out the FAFSA as well.
Let’s throw in a monkey wrench.
Remember, just because a student qualifies for need-based aid, it doesn’t mean that a college has money to give that student. Say a family did their CSS Profile calculation, and their Expected Family Contribution (EFC) came back as $50,000. If a college costs $75,000 per year and meets 100% of need, the college would “fill the need” by paying the extra $25,000 for you. That $25,000 is a family’s Demonstrated Financial Need. Usually a college able to do this is one with a large endowment funded by alumni donations.
This article lists recent colleges able to meet 100% of Demonstrated Financial Need. Some colleges can do this without requiring the student take out any loans. Others have certain income thresholds, and still others include loans in their financial aid packages. (Note this list can change from year to year.)
What does all this mean to your college search?
Families need to understand where they fit in financially. You can use this calculator to estimate what your EFC will be for each. However remember with IM schools, they have more discretion and can look at numbers differently, so this calculator is not exact.
If your family is a borderline candidate to qualify for need-based aid, you want to search for those schools that will award you with aid (that will also be a fit academically and socially). Don’t assume you know how “need” is defined. For example, check out this page from Stanford. You might be surprised.
Parents and students learn about successfully finding and applying to college at several of our college planning programs.
You can really go down the rabbit hole understanding the differences between these two methodologies for calculating need. They assess assets differently among other things. This article provides extra detail if you want it.
No doubt, this is a lot to absorb. The key piece to walk away with is this…understand that your unique situation can guide you to certain choices when creating a college list. By understanding where you fit, you can find institutions that will financially benefit you the most.
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