Paying for College 101: The CSS Curve Ball

The last post in the “Paying for College 101” series goes over the importance of properly positioning your assets when you complete the Free Application for Federal Student Aid (FAFSA). We recommend reading them first! They’ll provide understanding of how a student and parent’s income(s) and assets affect the FAFSA calculation and how these calculations dictate the Estimated Family Contribution (EFC). They also highlight that you may be able to attend a more expensive college at a lower net cost than a public university if you analyze how they supplement the Federal and State aid programs through their own endowments.

So, what else do you need to be ready for if you wish to attend one of the 250+ schools that also require the completion of the College Scholarship Service Profile (CSS/Profile)?

CSS Financial Aid

The CSS is a financial aid profile that is more intrusive than the FAFSA. As a reminder, the FAFSA is a free application found at www.fafsa.ed.gov. The FAFSA dictates how federal funds are awarded. The CSS can be found at www.collegeboard.org, and there is a fee to process your information. At the same time, the CSS asks many more questions than the FAFSA. You’re paying for the right to be probed more thoroughly!

So why would you pay the additional money and complete the CSS profile? The answer is to receive the most aid possible at schools that require the profile. Many of the 250+ schools requiring the CSS are also the same schools that provide a high percentage of aid to the qualified needy student. For example if your FAFSA shows that you should pay $6,000 (EFC) for college, you may have an unmet need of $45-50,000 to attend one of the “Ivy” schools. As we’ve gone over, you may actually be able to attend one of these schools at a cost that is lower than your local state college.

There is one caveat. Before these prestigious schools give you the additional money, they’re going to make certain you deserve it. In short, they’re going to ask you more about your family financial situation and count assets that FAFSA doesn’t. Interestingly, the College Board and the Federal Government have a slightly different interpretation of which assets you should be using to pay for college.

How It Differs from FAFSA

So, then, what does the CSS Profile count that FAFSA does not? Here are a few examples:

• The equity in your home
• Non-qualified Annuities
• Income and assets of a non-custodian parent
• Two years of Income and Assets
• Business Value
• Assets held in name by another family member may be counted
• Assets repositioned within two years

The differences between the FAFSA and CSS are important for you and your financial advisor to understand. If you’re planning on applying to a CSS Profile Institution, you need to take action more than 2 years before applying.  This is because they require two years of returns and asset statements. You also need to be careful of how much you have in your home’s equity or business value to be eligible for the most aid possible.

The CSS schools consider this equity as eligible for school cost. Moving assets to an annuity to reduce your profile will also not work on the CSS as they will count this asset, whereas the FAFSA does not. Currently, the cash value of your life insurance will often be excluded on both calculations. If you have an older “equity oriented” life insurance policy, you may wish to maximize your contribution to minimize the CSS Profile.

Should You Go for CSS?

As you can see, the CSS can trip many people up when they don’t prepare well in advance. For this reason, I recommend that people sit down with their advisor or specialist in the areas of College Financial Aid planning when the student is in 9^th or 10^th grade. Of course, it doesn’t hurt to take action earlier as preparation is never a waste of time.

Todd Rhine is the owner of Todd Rhine Planning (http://www.toddrhine.com). He sports an impressive roll of financial certifications (including CWC, CFP®, RFC®, CLU, ChFC, IAR). This post is part of a series of articles relating to financing college.