Delving into how Kids' Chance organizations can support students using a flexible funding model that maximizes the benefit to the student means understanding the official definition of Cost of Attendance (COA) and its intersection with financial aid and scholarships.

During the June 24, 2020 Kids Chance National Conference webinar, Kim Stezala, Senior Partner, Design Group International, discussed how scholarship providers’ funds interact with other types of financial aid and opportunities and constraints for private scholarship providers in meeting a student’s COA at college.

Key Take-Aways

Start with the Basics

‍Looking broadly at financial aid, it’s best to start with a primer on COA, net price, Expected Family Contribution (EFC), Student Aid Report (SAR), and timing.

Cost of Attendance (COA) is a figure based on eligible expenses defined by the federal government. It is the sticker price before any discounts or financial aid are applied. Students can use financial aid toward covering their COA and each university must publicly post its COA.

Net price encompasses the “real” cost of college vs. the sticker price (the college’s published cost of attendance). When arriving at the net price, don’t look at the COA minus financial aid. Financial aid could include student loans (which have to be paid back) and should be considered as part of the COA. Instead, look at the COA minus any “free money” or non-self-help financial aid such as grants, tuition discounts, and scholarships. Note that students often don’t know their net price until all forms of financial aid are packaged and accounted for.

The Expected Family Contribution (EFC) is the amount of income and/or assets that the federal government’s methodology has determined that a family is able to put towards a student’s educational expenses for the academic year. The EFC is calculated by the government based on the financial and situational information students provide in the Free Application for Federal Student Aid (FAFSA). Note that students attending college in August 2020 were able to complete the FAFSA starting October 1, 2019, based on 2018 reported income information (so think about how different that income might look now in light of the COVID-19 pandemic).

The Student Aid Report (SAR) lists the student’s EFC. Generally speaking, the lower the EFC, the greater the need.

As for timing, financial aid policies vary depending on the type/intent of the aid – is it need-based or merit-based? College financial aid officers have extensive rules to follow and financial aid is a dynamic, not static, process. Generally speaking, key dates include:

• October 1: Earliest a student can complete the FAFSA
• January 1: Some colleges’ admissions deadlines
• March 1: Many colleges’ and states’ financial aid deadlines
• April 1: Award letters, financial aid packaging, decisions
• May 1: National Candidate Reply Date (also called SIR)

How This Applies to Kids’ Chance Scholarships

‍An ideal way to “reframe” Kids’ Chance scholarships is to allow them to cover students’ COA. Remember, according to StudentAid.gov, “COA is the estimate of tuition and fees; the cost of room and board (or living expenses for students who do not contract with the school for room and board); the cost of books, supplies, transportation, loan fees, and miscellaneous expenses including a reasonable amount for the documented cost of a personal computer; and costs related to a disability.” There are a number of benefits in broadening the applicability of Kids’ Chance scholarships to align with this COA definition, especially when factoring in the effects of the COVID-19 pandemic:

• Maximizes all sources of aid
• Prevents overlap or doubling up of tuition-only scholarships
• Allows the student flexibility
• Reduces reliance on student loans
• Supports most vulnerable students who need to pay for rent, food, transportation, and incidentals

Also be aware that more states, especially at the community college level, are testing free tuition for low-income students. So, for instance, in thinking of the support you as a parent might provide to your child in college, beyond tuition, it becomes clearer how a scholarship can be applied to ease the financial burden in a more holistic way. Lastly, always remember that private scholarship providers are not government entities, so use the power of private philanthropy strategically.

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