<p>My parents income is about 30k... (we live abroad) When I finished FAFSA, my EFC was 13k</p>
<p>This seems insanely high. My fathger does have some investments, but is he expected to sell them? because 13k is very high - in fact too high for a 30k income</p>
<p>They do consider a portion of investments & other assets. Your parents & you can write a letter to the schools you're applying to & explain your family situation. It is up to the school to decide what they choose to do about it. Schools are required to follow many guidelines in awarding any federal money. In any case, it's up to the school how to structure any award they give to the students--how much is loans & how much is grants. The philosophy is that it is the family's responsibiity to fund education primarily. How your parents choose to fund their EFC is up to them--some take out loans, some sell investments, etc. Everyone has to figure out how to get money for education & education IS expensive.</p>
<p>I think almost everyone thinks their EFC is insanely high. From my experience, the EFC is usually somewhere between 1/4 and 1/3 of your adjusted gross income. If you have any assets other than income, it tends to be on the higher side of that. So...while shocking (like almost everyone else), that $13,000 EFC on an income of $30K seems about right.</p>
<p>I wish people would study before hand. There are so many things that can be done to prevent a situation like this.</p>
<p>What can we do to make the EFC lower?</p>
<p>ye...
Its kinda crazy.. thts 1/2 the income..</p>
<p>So, how do we lower it?</p>
<p>scottaa wrote an excellent book that takes some of the mystery out of the EFC calculations -- </p>
<p><a href="http://www.realcollegesavings.com/%5B/url%5D">http://www.realcollegesavings.com/</a></p>
<p>it might help you figure out how to lower that EFC</p>
<p>You state that you live over seas. Is the 30,000 your income after foreign exemptions? If you take foreign expemtions fot tax purposes, the money is calculated back in for FA purposes.</p>
<p>If you have investment income, those monies are also counted in the FAFSA</p>
<p>Income 30K for family of 4 should be around 2-3k. Now if your family has
lots of assets it will increase your EFC.
I am not sure how it works for overseas, but there is Simplified Need test for those whose income below 50k and they do not itemize/ use the form 1040A/EZ. In such cases all assets are discounted.</p>
<p>Rephrasing the question: Is your family's income $30,000 after foreign tax credits? The money written off in foreign tax credits is added back in when calculating the EFC</p>
<p>Yeah-- no good reason to have an EFC as high as 13K with a family income of 30K. See my reply in other thread-- it might be too late now, but with a little research and planning, you should be able to get this much lower, maybe to 0.</p>
<p>Is FAFSA a "graduated" system, like taxes? Is a higher income family expected to pay 30% of their gross income while a lower income family is expected to pay only 6%-10% of their income?</p>
<p>lkf:</p>
<p>It's a complicated formula. High income families will be expected to pay their full way, while very poor families will end up with an Expected Family Contribution of "0", which means they are eligible for the best needs-based aid packages (which will likely include grants, loans, and work-study even in the best cases).</p>
<p>The formula takes into consideration:</p>
<ol>
<li>Parental assets</li>
<li>Parental income</li>
<li>Student assets</li>
<li>Student income</li>
</ol>
<p>as well as the age of the older parent, number of dependents in the family, number currently attending college, and a few other factors.</p>
<p>There is an asset protection allowance for parents, as well as an income protection allowance (assets and income below a certain amount aren't considered). No asset protection allowance for the student (this is where many families hurt themselves).</p>
<p>BEFORE you apply and fill out the FAFSA-- get one of the good books on the subject and learn how it works. Then in the year prior to applying, do some planning to arrange your financial matters so as to best increase your aid package (legally and ethically).</p>
<p>I know, completely unfair. I had to borrow the whole family contribution through private lenders. I am just a sophomore and I already owe a bank.
30K-13K = 17K-12K(cheapest mortgage) = 5K/12 months = $416 / 3 = $138.6 per person per month left for food and expenses.
God forbid you get cable or a cell phone. Car loan payments and insurance are apparently out of the question.
My family has 0 assets and similar income and my EFC is 8k, which is still hard to match.
Cheers.</p>
<p>sblake7,
Thanks for the info. We should have researched earlier, but we had faith that the system would be fair. Dumb, huh? I can understand the extremes of zero payment and full payment, but for those families who are somewhere in the middle, are families with higher incomes/assets/retirement funds assessed at a higher <em>RATE</em> than families with lower incomes and/or no savings/assets/etc ? If all else was equal, would a 100K family income be assessed at a higher rate than a 50K family income? Will a family with a healthy 401K be assessed at a higher rate than a family with the same income but no retirement planning?
(sorry if my question is unclear!)</p>
<p>lkf-</p>
<p>Short answer: Yes, usually.</p>
<p>Longer answer: the formulas are complicated, and take into account many factors. Assets, for example are treated independent of income, for the most part. And retirement funds are exempt-- so you can have 500K in your 401K and still get aid. And a certain amount of income and assets is exempt for all parents, regardless of income.</p>
<p>You could have a 100K income family with a million dollar house, three luxury cars, no credit card debt, and 500K in retirement savings, that will still get some need-based aid. The key there would be to have few "liquid" assets in cash, savings, stocks and the like. And nothing in the student's name. And having an older parent (over 50, for example), and several kids (which increases exemptions in the forumla).</p>
<p>On the other hand, you can take a family that makes only 50K, rents an apartment, owns no car, and has nothing in retirement, and is up to the wazoo in credit card debt, that will have a high EFC and get very little or no aid. The reason here could be if the student had a lot of savings in his name (unlikely, but it happens sometimes), and if the student earned over 2,600 in the baseline year. And a younger set of parents, with a single child, so there is less exempted from the formula.</p>
<p>So it's not just a matter of income-- assets and the form they are in, and their ownership plays a major role.</p>
<p>With a bit of research, and a bit of time, most families can develop strategies to legally and ethically increase the aid they're eligible for. Since the FAFSA and Profile are 'snapshots'-- a picture of a portion of the family financial situation on the day they FAFSA or Profile is filed.</p>
<p>Oops replied to wrong thread here!!</p>
<p>I was at a workshop last year where they had us all calculate the EFC by hand. I think they made us do it to greater appreciate computers.</p>
<p>The EFC is determined by a flat percentage of income; but with all the allowances that are thrown into the equation, it has the effect of an exponentially growing contribution as your income increases.</p>
<p>In other words, the EFC appears to be determined by a sliding scale. In actuality, it is determined by a far more confusing equation.</p>
<p>30K-13K = 17K-12K(cheapest mortgage) = 5K/12 months = $416 / 3 = $138.6 per person per month left for food and expenses.
God forbid you get cable or a cell phone. Car loan payments and insurance are apparently out of the question.</p>
<p>uhh... I said we live abroad in India. The equation is wayy different. Its just that Its still way too much for a 30k income</p>
<p>Altho, will the cols just use this EFC or look at the FAFSA, CSS and Tax returns to make a proper decision?</p>
<p>With an income of $30,000 and an EFC of $13,000, your parents must have significant assets. Colleges expect that your parents will use their assets or take out loans to pay for college (not necessary use their income).</p>
<ol>
<li> Do you have income/assets? This will also affect EFC</li>
<li> Double check that you filled out the FAFSA correctly. It is very easy to make mistakes</li>
</ol>