Financial Aid

Financing Reed

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The Financial Aid Handbook has information for continuing Reed students.

Determining financial need

Cost of attendance
The expected parent contribution
Student contribution
Undergraduate Independent Student Definition
Non-custodial parent contribution
Siblings in college

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The Reed financial aid office uses the information you submit on the FAFSA, CSS Profile, and IRS income tax returns to determine your eligibility for financial aid. The federal need analysis formula (FM) is used to determine eligibility for all federal financial aid programs. To achieve equity and consistency in awarding institutional grants, the college uses the nationally standardized need analysis formula, Institutional Methodology (IM), developed by the College Board, to calculate your expected family contribution (EFC).

Your family's ability to pay, not willingness to pay, is measured by the IM formula. The purpose of IM is not to produce an estimate of available cash or to reflect how parents may wish to use their income, assets, and borrowing power. Rather, its function is to calculate similar contributions for families in similar circumstances, and to expect families with different circumstances to contribute appropriately different amounts. Your family's current circumstances (particularly family size, income, and assets) form the basis for determining your family's ability to pay for educational expenses. Similar to other major purchases such as a home or car, your family may choose to finance this resulting contribution from savings, current income, or future income (borrowing).

The formula used to calculate your expected family contribution is fairly complex. Four resources are considered when determining your expected family contribution: parents' income, parents' assets, your income, and your assets. The following sections will provide a brief overview of how your expected family contribution is calculated using these four resources. Generally, the college uses the Institutional Methodology (IM) formula to determine your expected family contribution and calculate your demonstrated financial need. Occasionally, the federal need analysis formula will produce a higher expected family contribution than the institutional formula. In these cases, the federal expected family contribution is used to calculate your demonstrated financial need. Other deviations from the IM formula are noted in this section.

Your expected family contribution is subtracted from the cost of attendance, and the result is your demonstrated financial need. The college attempts to meet your full demonstrated need as long as you are making satisfactory academic progress and file the appropriate applications by the established deadlines.

Cost of attendance

The cost of attendance is what the college estimates it will cost you to attend Reed for one year. Included in the cost of attendance are your direct costs of tuition, fees, room and board (if you live on campus), and indirect cost estimates for books and supplies, personal expenses, and transportation. If you live off campus, a standard allowance for room and board is included and is determined by surveying students living off campus to determine the average amount that is spent on living expenses. If you live in campus housing, but do not contract with the college for board, your actual room charges and the off campus board allowance will be included.

The expected parent contribution

The analysis of your parents' income begins with their adjusted gross income (AGI) from their IRS (tax) return. To determine the total income to be used in the need analysis calculation, however, adjustments are made to the AGI, such as disallowing certain losses allowed by the federal income tax system, and adding income not taxed by the federal government.

Examples of such untaxed income includes, but are not limited to, child support, some federal benefits, and current year contributions to tax-deferred pensions and savings plans. For a complete list of untaxed income used in the calculation of your expected family contribution, see the instructions included with the CSS Profile and FAFSA. Next, allowances are subtracted from your parents' total income to reflect non-discretionary expenses. Allowance against income include child support paid, federal income taxes, state and local taxes, FICA taxes, and medical or dental expenses. An employment allowance is calculated for single parents or when both parents work, and an annual education saving allowance is calculated for families with pre-college age children.

Finally, there is an income protection allowance, based on the size of your family, that reflects basic subsistence – that is, the level below which a family has no discretion about how it spends its income. After subtracting these allowances from total income, a percentage of the remaining available income is calculated, and the result becomes your parents' contribution from income.

The analysis of your parents' assets includes the amount of any cash, savings, and checking accounts; the equity they have in their home; the equity they have in any investments, real estate, business or farm; and assets held in the name of your siblings, including pre-paid tuition plans. Retirement savings, including IRA accounts and pension plans, are not included as assets in the need analysis formula. As with income, allowances are made to exclude a portion of your parents' assets from the need analysis calculation.

An emergency reserve allowance, which is based on the size of your family and represents six months of average family expenses, is calculated to protect assets in case of unanticipated events such as illness or unemployment. A cumulative education savings allowance recognizes the need for a family to save to finance their children's college expenses and is calculated, based on parental income and family size, to protect 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. This allowance is designed to prevent families who have conscientiously saved for college from being penalized in the need analysis system. Finally, a low-income asset allowance is calculated for families with very low income to recognize that those families may need to draw on assets to cover basic living expenses. After subtracting these allowances from your parents' income, a percentage of the remaining available assets is calculated, and the result becomes your parents' contribution from assets.

Student contribution

As with parental income, your taxable and non-taxable income is considered in the need analysis formula. Allowances against your total income include federal income tax, state and other taxes, and FICA tax. After subtracting these allowances from your income, 50 percent of the remaining income becomes your contribution from income.

Your student contribution from income is compared to the college's minimum student contribution from income. The college includes a minimum contribution from each student when determining eligibility for institutional financial aid. The minimum contribution is currently $2000. If your student contribution from income is greater than Reed's minimum contribution, then your contribution from income is used. If your calculated student contribution from income is less than Reed's minimum contribution, the minimum contribution will be used in calculating your eligibility for financial assistance.

The college uses 25 percent of the current value of your savings, stocks, bonds, and other assets as your contribution from assets. If you enter Reed with more than $10,000 in assets, your contribution from assets will be established at the time you enter Reed for your subsequent years of financial aid eligibility. For example, a student with $20,000 in assets would have a contribution from assets of $5,000 for the freshman year, $3,750 for the sophomore year, $2,813 for the junior year, and $2,109  for the senior year. If you enter Reed with less than $10,000 in assets, your contribution from assets will be 25 percent of the current value of the assets listed on your financial aid application each year.

Undergraduate Independent Student Definition

Reed College Financial Aid (Reed Grant):

For the 2013-14 academic year, you will be considered to be an independent student, for the purpose of determining eligibility for institutional financial aid (Reed Grant), only if you meet one of the following two conditions:

  • Born before January 1, 1989; or
  • Ward of the court or both parents are deceased.

If you meet one of these conditions, your eligibility for Reed Grant is based on your (and your spouse's, if you are married) income and assets. Your expected contribution from income and assets is dependent upon your age, marital status, and/or the number of your dependents. The financial aid office can tell you about the need analysis formula that would be applicable to your situation.

Reed College expects you and your parents to assume the primary responsibility for your educational expenses; therefore, if you do not meet one of the two conditions listed above, you must complete the parental income and asset portions of the College Scholarship Service (CSS) Profile to be considered for institutional financial aid (Reed Grant). This policy was adopted March 29, 2006. If you attended Reed College prior to July 1, 2006, your dependency status for determination of institutional aid eligibility may be based on the federal definition of an independent student. Contact the financial aid office for a detailed description of the continuing Reed students unaffected by this policy change.

Federal Financial Aid:

For the 2013-14 academic year, you will be considered to be an independent student, for the purpose of determining eligibility for Federal Pell Grant, Federal SEOG Grant, Federal Perkins Loan, Direct Loan, and Federal Work-Study, if you meet one of the following conditions:

  • Born before January 1, 1990;
  • Veteran of the U.S. Armed Forces;
  • Ward of the court or both parents are deceased;
  • Married;
  • Graduate or professional student; or
  • Have legal dependents, according to federal definition;
  • Currently serving on active duty in the US Armed Forces;
  • Are (or were) an emancipated minor as determined by a court;
  • Are (or were) in a legal guardianship as determined by a court; or
  • An unaccompanied, homeless youth.

If you meet one of these conditions, your eligibility for federal financial aid is based on your (and your spouse's, if you are married) income and assets. Your expected contribution from income and assets is dependent upon your age, marital status, and/or the number of your dependents. The financial aid office can tell you about the need analysis formula that would be applicable to your situation.

If you have questions regarding your dependency status for financial aid eligibility at Reed, please contact the financial aid office.

Non-custodial parent contribution

If your parents are separated or divorced, only your custodial parent's (and stepparent's, if applicable) financial information should be included on the FAFSA and CSS Profile. The college believes that the financing of an undergraduate education is first of all a parental responsibility and that the college's resources should be used to assist students whose families cannot meet all of the educational costs; therefore, if your parents are separated or divorced, your non-custodial parent is required to complete the Non-Custodial Profile (NCP) for the first year you apply for financial aid at Reed. The contribution from your non-custodial parent will be considered when calculating your demonstrated financial need.

Siblings in college

Once the total amount your parents are expected to contribute toward educational expenses is calculated, the contribution is pro-rated, depending upon how many dependents in your parents' household are enrolled in college. There are two exceptions where Reed does not pro-rate the parental contribution. The college does not adjust the total parental contribution to recognize siblings who are enrolled in a graduate or professional program, or siblings who are enrolled in college in order to complete their high school diploma or who are enrolled simultaneously in high school and college. 

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