Do you receive less financial aid if you have 2 working parents as opposed to 1 working parent even if combined income of 2 working parents is same as income of the 1 working parent?(ex: 2 working parents combined income=$50,000 vs. 2 working parent income=$50,000)?
no
It depends.
For the FAFSA EFC it cerrtainly does matter if the same amount of income is earned by one married parent in a couple (example $50k) or both together (also $50k).
I invite you to try the FAFSA EFC calculator on the bigfuture.collegeboard.org website. On the ‘finances’ tab put in 50000 for AGI, and 50000 for Parent 1 and 0 for Parent 2 on the Earnings from Work line.
After noting the EFC result, click back to the Finances page and change Earnings from Work for Parent 1 to 25000 and Parent 2 to 25000.
Is the EFC different this time?
^ That is interesting.
Wow, I just ran this calculator, and indeed the EFCs were different!
How does it differ?
I haven’t run the calculator and don’t know how much difference people are seeing but line 13 of the fafsa formula at the guide below could explain most of it. Look at the regular dependent student worksheet.
http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
That is interesting. It seems they give an allowance up to $4000 (if the lower income parent makes $11428 or more, otherwise, 35% of the lower income) perhaps as a cost to go to work (gas, transportation, and other expenses). So having both parents working may lower the total income in the calculation up to $4000. So it is just the opposite as what the OP asked.
Yes ran the EFC calculator on same total AGI for 2 parents working and 1 parent working and they did give about 35% to $4000 allowance on both parents working!
Obviously if 2 people are working they may pay more FICA taxes than one person with the same combined salary. For example 2x75K earners will pay more than one 150K earner because SS taxable amount has a limit (18,500 this year). All taxes paid are subtracted from earnings for EFC calculations. Profile schools may take into account expenses related to employment and for fixed employment state taxes like unemployment, disability, etc. that would double for 2 earners.
So to answer @vgulian 's question, use the FAFSA EFC calculator. You will find that the EFC is less (i.e. potentially more aid) if both parents work as compared to 1 parent in a married coupke working and earning the same.
Made a typo - SS taxable amount has a limit (118,500 this year).
This allowance for a second working spouse is referred to as the “Employment Expense Allowance.” As the Federal Register describes it:
“The allowance is based on the marginal differences in costs for a two-worker family compared to a one-worker family. The items covered by these additional expenses are: Food away from home, apparel, transportation, and household furnishings and operations … The employment expense allowance … is the lesser of $4,000 or 35 percent of earned income.”
I wonder why @vgulian asks this question. Maybe the parents have a Schedule C which could be marked ‘Joint’.