<p>First…I hope one of the others will post…but with an income under $20,000 a year, your family will likely qualify for the simplified needs test IF they can file are not required to file a regular 1040 tax form. If they are able to do the 1040A or 1040EZ (I think both are applicable) the would not be required to report their assets. </p>
<p>Other experts…would this student with this family income also be eligible for the auto $0 EFC?</p>
<p>Your parents would not be eligible for the above IF they are required to file a regular 1040 tax form.</p>
<p>If you are not eligible for the above…keep reading. Is your parents’ $150,000 in a RETIREMENT account or a regular savings account? If it’s in a designated retirement account (401K, 403B, TSA, IRA, or the like) the amount IN that retirement account will not be used for college purposes. The contribution they make in the year used for the finaid forms will be added back in as income for that year. So…for example…if you are starting college in Sept 2010, you will complete a 2010-2011 FAFSA. The tax year for that document will be 2009. Any contributions made to a designated retirement account during 2009 will be added back in as income but the balance IN that designated retirement account will not be counted as an asset. There are some schools that use the Profile which DO ask for retirment account balances but no one is really sure how those are used. Speculation is that these balances are checked to see if families are making unusually high contributions to retirement accounts when they could be using some of those contributions to fund college.</p>
<p>Now…if you parents have this money in a regular savings account or certificate of deposit, that is a different story. Those accounts are considered ASSETs no matter what the family has them designated for. There is some asset protection for the parents…but in above that the colleges assume that assets can be assessed at 5.6% (I think that is the number) annually.</p>