Undergraduate Financial Aid

Factors Considered in Brown's Needs Analysis Formula

Learn more about how Brown calculates a family's financial contribution to the student’s education.

A Brown education represents a major investment to students and their families. Cost is one of several factors that a student will have to weigh when choosing a college. At Brown, we believe that, to the extent possible, the primary responsibility for paying for college lies with a student and their family. Families typically pay for college using a combination of three sources: savings, current income and future income (including loans).

The overwhelming consensus among our students is that the growth, exposure and stimulation they gain from the range of opportunities available at Brown are well worth the commitment of time, energy and finances. Given the significance of the investment, students must understand how we arrive at the contribution expected from students and their families.

Brown University utilizes an Institutional Methodology (IM) when calculating the Expected Family Contribution (EFC). 

Major Factors Comprising the EFC

Brown assumes that an applicant’s natural parents have the primary responsibility of supporting their children throughout their undergraduate years.

Applicants whose parents are divorced, separated or were never married are required to provide financial data for both parents. If this is not possible, the student may submit a waiver petition for the non-custodial parent. Such waivers will be considered on a case-by-case basis.

If parents discontinue or deny support of the student for reasons other than ability to pay, Brown will not bear the parents' responsibility for supporting the student. Similarly, it is not possible for Brown to aid students who declare themselves independent when the income and assets of the student’s family indicate they are able to contribute.

To determine federal aid, the parent income amount is the Adjusted Gross Income (which appears on the federal tax return) plus any nontaxable income. For institutional aid, we also consider a family's total annual income received which includes items in the Additional IM Factors column.

Parent Income Federal Methodology Factors Additional Institutional Methodology Factors
Taxable Income
  • Wages
  • Interest
  • Dividends
  • Business income
  • Farm income
  • Pension and annuity distributions
  • Rental income
  • Royalties
  • Trust income
Add the following back to income:
  • Business and/or rental property losses
  • Capital losses
  • Depreciation on real and/or rental property

(The purpose of adding back these losses is to assess true cash flow in the household.)

Untaxed Income
  • Untaxed interest
  • Untaxed dividends  
  • Veteran benefits
  • Welfare benefits
  • Child support received
  • Annual contributions to tax deferred savings/retirement plans, such as a 401(k)
  • IRA deductions and payments to SEP, SIMPLE and Keogh plans
  • Housing/living allowances
  • Untaxed portions of pension/annuity distributions
  • Workers' compensation
  • Business distributions or payments not captured in personal income
  • Social Security benefits

With total parent income established, allowances for certain non-discretionary expenses for FM and several additional, considered allowances for IM are deducted. The needs analysis formula determines the percentage of any remaining income to be used for educational expenses.

    Federal Methodology Allowances Additional Institutional Methodology Allowances
Allowances
  • Federal income tax
  • State and local taxes
  • Social Security or its equivalent
  • Employment allowance for single-parent households or when both parents work
  • Living allowance* based on the number of household members and the number of dependents in college

*The living allowance is a provision for the basic living expenses of a family such as food, housing, transportation, clothing and personal care, and some medical expenses.

  • Medical/dental expenses over the standard FM allowance
  • All, or a portion of, a sibling's private school education costs
  • Currently in repayment on loans in parents' name for parents' education and/or education of siblings
  • Elder care expenses

Parent assets are considered in order to fully measure a family's ability to contribute toward educational expenses. The value of retirement plans (pension funds, annuities, non-education IRAs, Keogh plans) or the value of life insurance plans are not assets included in FM or IM. In fact, in regard to retirement, an allowance offsets the included assets in order to reserve a portion of those assets for parent retirement and/or family emergency. A percentage of the remaining net worth is added to the calculated parent contribution from income. In general, this asset contribution for parents falls between 2% and 5% of net worth.

    Federal Methodology Assets Additional Institutional Methodology Assets   
Assets
  • Cash (savings and checking)
  • Real estate (not including the home in which you live)
  • Trust funds
  • Money market funds
  • Mutual funds
  • Certificates of deposit
  • Stocks
  • Stock options
  • Bonds
  • Other securities
  • Education IRAs
  • College Savings Plans
  • Prepaid Tuition Plans
  • Installment and land sale contracts
  • Commodities
  • Business/farm net worth
  • Business transactions that increase net worth
  • Home equity

In general, this is the number of family members living in the same household, including the student’s parents, siblings attending college, or siblings living at home their first year after college. Grandparents who are living and are declared dependent may be included, but their income and assets may also be considered. "Adult children" who have finished their education, and are capable of working, are not included. Relatives living outside the home, even when supported by the family, are not included.

The calculations described above will produce a total expected parent contribution from income and assets. This total represents what families can contribute on an annual basis toward educational expenses. When families have more than one child in college at the same time, parents are not expected to double or triple their contribution. Instead, the contribution is adjusted to reflect the number enrolled in college. The contribution for each child may not be divided evenly, especially when a sibling attends an institution where the family’s out-of-pocket expenses are significantly less than what the family pays to Brown. Siblings enrolled in graduate, medical or law schools are not included in the number in college for the determination of eligibility for University Scholarship.

When we determine a family’s expected contribution, a contribution from a non-custodial parent may be included. Our policy for determining the financial need of a student whose parents are single, never married, separated or divorced is based on the principle that we use to determine eligibility for all of our students. To the extent they are financially able, the primary responsibility for financing a student's education lies with the student and the family.

Brown requires the submission of non-custodial income information detailing the non-custodial parent's ability, not willingness, to contribute. Should parents discontinue their financial support for reasons other than ability to pay, Brown will not assume the parental responsibility for financial support of the student. For details on the collection of non-custodial parent information, refer to the Non-custodial webpage.

Students are expected to contribute towards educational expenses from summer and academic-year earnings, and from their assets. The factors considered for student income and assets are the same as those indicated above for parent income and assets. All assets held in a student’s name, such as savings, investments, trusts and real estate, must be reported. Unlike parent assets, students must report retirement investments on the CSS PROFILE for purposes of Institutional Methodology. The expected contribution from a student's assets is 20% annually.

Determining a family's contribution to educational expenses is a complicated process.Contact our office for clarification and additional information.