Students submit the Free Application for Federal Student Aid (FAFSA) to apply for college financial aid from the federal government, state government and most colleges and universities. For many colleges and universities, the FAFSA is the only form students need to file. However, some colleges require a supplemental form called the CSS Profile in addition to the FAFSA.
The FAFSA is used to apply for financial aid from more than 6,400 colleges and universities, in addition to the federal and state governments. About 200 mostly private colleges use the CSS Profile for awarding their own financial aid funds. The colleges that require the CSS Profile must still use the FAFSA for awarding government financial aid.
The CSS Profile asks more than twice as many questions as the FAFSA. Although the FAFSA and the CSS Profile both use skip logic to eliminate unnecessary questions, the FAFSA starts off with 108 questions and the CSS Profile with 241 questions. The questions on the CSS Profile depend in part on the specific colleges to which the student is applying, so it is possible for the CSS Profile to involve more than 241 questions.
There are many other ways in which the FAFSA and the CSS Profile differ, aside from the number of questions. The CSS Profile tries to provide a more detailed analysis of the family’s financial strength. The CSS Profile form prevents wealthy students from looking poor, by blocking potential loopholes that families can use to manipulate their finances. This causes most students to qualify for less financial aid using the CSS Profile than the FAFSA.
Differences in Treatment of Assets
The FAFSA excludes certain assets that the CSS Profile includes:
- Home Equity. The FAFSA ignores the net home equity of the family’s principal place of residence. The CSS Profile does not. (The FAFSA still counts the net worth of investment real estate, second homes and vacation homes, just not the family home.) About a fifth of colleges that use the CSS Profile do not consider net home equity, a fifth count the full amount of net home equity and more than half cap net home equity at 1-4 times income. Of the colleges that cap net home equity, more than two-fifths cap it at twice income and a quarter at 1.2 times income.
- Small Businesses. The FAFSA ignores the net worth of small businesses owned and controlled by the family. The CSS Profile does not. Small businesses have the equivalent of 100 or fewer full-time employees. The family, which can include family members who are not listed on the FAFSA, must own at least 51% of the business for it to be excluded.
- Student Assets. The FAFSA assesses 20% of a student’s assets, while the CSS Profile assesses 25% of student assets. Any 529 plans owned by a dependent student are treated as though they are owned by the student’s parent on the FAFSA.
- 529 Plans. The FAFSA counts only 529 plans that are owned by the student or a dependent student’s parent. The FAFSA does not count 529 plans that are owned by grandparents, aunts, uncles and other third parties. The CSS Profile counts all 529 plans that list the student as a beneficiary, regardless of the account owner.
- Sibling Assets. The FAFSA ignores sibling assets, except to the extent that they are saved in a parent-owned 529 plan. The CSS Profile counts sibling assets for siblings who are under age 19 and not yet in college.
- Parent Assets. The FAFSA assesses parent assets on a bracketed scale, with a top bracket of 5.64%, after subtracting a small asset protection allowance. The CSS Profile also uses a bracketed scale, with a top bracket of 5%. The CSS Profile first subtracts an allowance for cumulative education savings and an allowance for an emergency reserve.
- Simplified Needs Test. The FAFSA uses a simplified needs test which disregards all assets if the parents’ adjusted gross income (AGI) is less than $50,000 and they satisfy certain other criteria. These criteria include the type of federal income tax return the parents were eligible to file (e.g., 1040A or 1040EZ prior to 2018 or 1040 without schedule 1 in 2018 or subsequent years), whether either parent is a dislocated worker or whether anyone in the household received certain means-tested federal benefits within the last two years (e.g., Medicaid, SSI, SNAP, Free and Reduced Price School Lunch, TANF or WIC). The type of tax return test prevents families from using paper losses to artificially reduce AGI on the FAFSA. The CSS Profile does not use a simplified needs test, but does exclude paper losses from the consideration of income.
- Emergency Fund. The CSS Profile subtracts an allowance for an emergency reserve from parent assets. The FAFSA does not. The CSS Profile’s emergency reserve is slightly more than 100% of the poverty line for families with dependents, much lower otherwise.
Differences in Treatment of Income
There are several differences in the treatment of income on the FAFSA and the CSS Profile.
- Auto-Zero EFC. Auto-Zero EFC uses similar criteria to the Simplified Needs Test, but with an income threshold of $26,000 (2020-2021) or $27,000 (2021-2022), to set the expected family contribution (EFC) automatically to zero. The CSS Profile does not have Auto-Zero EFC.
- Minimum Student Contribution. The minimum student contribution, also known as the summer work expectation, assumes that all students can contribute about $3,000 to $6,000 based on earnings from part-time employment during the academic year and full-time employment in the summer. This effectively sets a non-zero minimum EFC and is especially problematic for low-income students. The CSS Profile has a minimum student contribution, while the FAFSA does not.
- Paper Losses. The CSS Profile ignores so-called “paper losses” such as depreciation, net operating loss (NOL) carry-forward, business/farm losses and capital losses. These losses can artificially reduce income reported on federal income tax returns. Financial aid formulas are focused more on cash flow than net income.
- Cost of Living. Although the FAFSA has allowances for state and local taxes, the CSS Profile goes further, considering regional differences in the cost of living.
- Allowances against Income. The FAFSA and the CSS Profile both have allowances against income such as a basic living expense allowance (income protection allowance), income taxes and an employment expense allowance. The CSS Profile also has an allowance for K-12 tuition (capped at about $10,000), medical/dental expense allowance (approximately 4% of income) and an annual college savings allowance (capped at about $3,000 per child).
- Special Circumstances. The CSS Profile includes a free-form question about special circumstances that affect the family’s ability to pay for college, while the FAFSA does not.
There are several significant differences between the FAFSA and the CSS Profile concerning demographic variables.
- Divorced and Separated Parents. When a student’s parents are divorced or separated, the FAFSA ignores the income and assets of the non-custodial parent, requiring information about just the custodial parent. If the custodial parent has remarried, the income and assets of the stepparent are counted, regardless of any prenuptial agreements. However, if the student’s biological/adoptive parents live together, they are treated as though they were married even if they are unmarried or never were married. (Note that stepchildren may be counted in household size and number of children in college, even if they don’t live in the household, if the custodial parent and stepparent provide more than half of their support.) The CSS Profile considers income and assets of both sets of parents, including custodial and non-custodial parents, as well as stepparents, regardless of the living arrangements.
- Number of Children in College. The FAFSA divides the parent contribution portion of the EFC by the number of children in college, effectively reducing the parent contribution by 50% (2 children), 67% (3 children) and 75% (4 children). The CSS Profile uses a smaller reduction in the parent contribution, reducing the parent contribution by 40% (2 children), 55% (3 children) and 65% (4 or more children).