How College Financial Aid Works

Formulas and Applying for Financial Aid

Are You Divorced?
The custodial parent must complete both the FAFSA and PROFILE. Some schools that require the PROFILE will also require that the non-custodial parent complete a Divorced and Separated Form. This document will be included in the PROFILE and should be submitted directly to the college or university. If it's inappropriate for the non-custodial parent to complete the form, or if he or she refuses, the custodial parent should write to the school to request an exception to this policy. If the custodial parent has remarried, the stepparent must also complete the FAFSA. There are no exceptions. PROFILE schools will often require information on stepparents as well.

Both the Department of Education and the College Scholarship Service apply "need analysis" formulas to the information your financial aid applications supply. The government's formula is called the Federal Methodology and the CSS/PROFILE formula is called the Institutional Methodology. Both formulas --which were designed by Congress and by the educational community respectively -- differ in important ways, but each estimates how much your family can provide toward educational expenses in the upcoming year.

In general, the Institutional Methodology considers more sources of income and assets than the Federal Methodology. Examples include home equity, non-custodial parent income and expected student earnings from summer jobs. For this reason, the Estimated Family Contribution calculated by the Institutional Methodology is often higher than the EFC calculated using the Federal Methodology.

Both the FAFSA and the PROFILE are available through guidance counselors' offices and both can be completed online. Either way, each form takes about an hour to 90 minutes to complete. You must complete and submit each form once every year. With each form, list all of the colleges to which you intend to apply. The Department of Education and the College Scholarship Service will take care of the rest by sending copies of your form to the institutions you have listed. Even after you are enrolled in college, you must complete and submit a new form for every year you want to receive financial aid.

Would you like to see how this all plays out? Head over to the next page.