Financial Aid Assessments Series – Part 5: Calculated Need Based on Demographics

Financial Aid Series – Part 5
Understand the Calculation
By Jonathan Boulos
Edited by Mary Stange

Understanding the FACTS Calculated Need protects those on the review board from any aspersions of favoritism or bias when it comes to Tuition Assistance. FACTS offers the ability to adjust the set of assumptions used to arrive at the FACTS Calculated Need. For example, you can change the living allowance based on your local demographics while still maintaining a reasonable cap. It is best to exclude 401k contributions, as most would not dip into a 401k to pay for grade school or high school. As income is the only piece of this puzzle that can be verified through submitting your W2 and 1040, it is important to prudently select deductible expenses and their caps. 

When you can trust the need being calculated, you can meet those needs. Using the application view in FACTS, you can create a custom report to help with your assessment. You would want to include helpful information to arrive at unbiased decisions. Once your report is created, it is recommended to hide the names of the family, so that the allocated tuition assistance is truly unbiased. Protect your review board and your principals with this plausible deniability.

  1. What they received previously.
  2. What their FACTS Calculated Need is this year.
  3. Adding information that would determine eligibility for outside funding.
    1. This could be in the form of a family submitted essay answer.
  4. How much the family states that they can pay for tuition.
  5. Ensure the information provided has been verified by supporting documentation.

SJFS worked with a school located in one of the priciest real estate markets in the country. It’s reasonable to assume that anyone sending a kid to the school was in at least a two bedroom apartment, but often they would likely need three bedrooms in a home. The principal told SJFS that she never went by the need in FACTS because it always seemed so different than what she could observe from the families. Sometimes principals say this because they are afraid of tough conversations with families, but going off script exposes the principal to a lot of risk and the school to a reputational hit that can take years to get away from. To determine the root cause we looked at the formula and the school only allowed for $1,300 in housing expenses. I’m not sure if you as a reader have a mortgage or pay rent, but unless you’re in parts of the midwest (which this school certainly was not) no one is living in a home for that much. It turns out the principal’s gut was right, but now she had data to support her decisions and confidence to determine when she could stand firm.

Another time SJFS served a school that was confident in the expense calculations, but just couldn’t reconcile the income and expenses to the the calculated need. A quick review by our team showed the formula assumed families would contribute up to 25% of their retirement for school. That’s a beautiful aspiration, but it’s not grounded in reality. We removed that assumption and had an accurately calculated need.

This report can be exported into excel, or you can work right in FACTS. FACTS offers features to help assess awards and make adjustments prior to notifying the families. For many schools, the amount of need exceeds what they have available in tuition assistance. In this instance, agree upon a figure that can be met for each family, for instance “Two thirds of your reported need can be met by our current funding.” Award letters can be sent and accepted directly from FACTS. For those schools who also use FACTS to track their tuition income, these amounts can be rolled directly into their tuition profile. One step further, is when you use an accounting software that has the ability to link with FACTS, the journal entries will contain this information as well. The information you track in FACTS can be used in future years to track tuition assistance. Your team could do this today! If you’re excited to do it but not sure of your ability to adjust formulas, create valuable and meaningful templates to export into workbooks, or how to turn those Grant & Aid entries to Tuition Management accounts, SJFS is experienced and available to help you navigate adjustments to aid allocation and confident interaction with the data collected.

Recommended Action: Take a look at your formula or ask your rep. Take those expenses category inclusions (discretionary vs. non-discretionary), expense limits, and asset contribution expectations to your finance council to determine if it can accurately calculate a family’s need most of the time without question.