Financial Aid Methodologies
Emory uses a variety of tools to determine student and family eligibility for need-based financial aid. We conduct a thorough review of each application, taking care to thoughtfully assess your family’s financial circumstances. Keep reading to learn more about how Emory determines how much financial aid applicants receive.
Federal Methodology
The term "federal methodology" (FM) refers to the formulas used to determine a student's eligibility for federal Title IV funds. The formulas take into account income, some assets, expenses, family size, and other factors. FM is written by Congress, rather than a peer community assessment, and is not updated regularly.
Aid from federal programs is offered based on a student's financial need using information reported on the FAFSA form.
To determine your federal financial need, Emory will subtract the expected family contribution (EFC) and other financial aid you'll receive from your cost of attendance (COA). If any amount is left over, you're considered to have additional financial need for federal student aid.
Institutional Methodology
Your responses from the CSS Profile application are used to arrive at an expected family contribution (EFC) using Institutional Methodology (IM), a formula developed by financial aid professionals, in consultation with economists, to measure a family's ability to pay for college. The result of this formula help us determine how much institutional need-based aid to offer you. The EFC produced by the IM is not the same as the figure calculated by the federal government to determine eligibility for federal student aid dollars.
Under IM, a family's capacity to pay is based on their income and assets. After subtracting appropriate allowances from these sources, a portion of the remainder is assumed available to pay college costs. The basic equation used to determine a student's financial aid eligibility, or need, is as follows:
Click below to learn more about how a family's income and assets factor into IM.
The Institutional Methodology uses adjusted gross income (AGI) from your federal income tax form as the starting point in determining family income. Untaxed income from social security, child support, and other sources also count toward your total income. Incomes for both the student and their parent(s) are evaluated annually; parent data is required until the student reaches age 26.
Under IM, the following six allowances are subtracted from income:
- Mandatory taxes: Federal income taxes paid; allowance for state and local income, sales, and property taxes; and FICA tax.
- Medical and dental expense allowance: For exceptionally high medical and dental expenses reported by the family on Schedule A of the tax return.
- Employment expense allowance: For expenses related to working outside the home if both parents are employed or if the parent is single.
- Annual Education Savings Allowance (AESA): Recognizing that a family must save for the educational expenses of younger children at the same time they are sending older children to college, this allowance is designed so that families that save the specified portion of their income each year (about 1.5 percent up to a maximum of $1,800) will have saved about one-third of their expected parent contribution for a private, four-year college by the time their child enrolls. IM assumes that the family will finance the remaining expected contribution from current income, assets, and/or borrowing.
- Income Protection Allowance (IPA): This allowance represents the income level below which a family has no discretion about how it spends its income, using the lower living standard as defined by the US Department of Commerce. Parents with incomes at or below the IPA are not asked to make any contribution at all to their children's educational costs. Those with higher incomes have more choices about how they spend their income and are expected to use some fraction of their discretionary income to pay for their children's education.
- Elementary/Secondary Tuition Allowance: Accounting for expenses paid by the family for private elementary or secondary school tuition.
The Institutional Methodology considers assets in determining a family's ability to pay for education because families with assets are in a stronger financial position than families with the same income but no assets. A family's expected contribution is somewhat higher if there are assets than it would be if the family has none. IM considers only a very small percentage of a family's assets as available to pay for college, then applies relevant allowances to its total asset calculation. Here’s how it works:
- Savings and investments, including parent assets held in the names of the student’s siblings, are assessed, as is the equity in other financial assets such as the home, other real estate, and business and farm assets.
- Then, before determining how much of a family’s net worth should be available to pay for college expenses, your asset valuation is adjusted using the Emergency Reserve Allowance and the Cumulative Education Savings Protection Allowance.
- The Emergency Reserve Allowance (ERA) protects assets for unanticipated expenses such as illness or unemployment. The amount is based on family size and represents six months of average family expenses as reported in the federal Consumer Expenditure Survey.
- The Cumulative Education Savings Protection Allowance (CESA) recognizes a family’s need to save to finance their children’s college expenses. The CESA protects an amount of assets equal to the amount the family would have accumulated if they had saved a specified percentage of their income each year for each child.
Please note: The Office of Financial Aid makes all final determinations of a student’s eligibility financial aid and the amounts offered in their aid package. Their decisions are based on uniform and consistent treatment of family circumstances and availability of funds.