I am so confused and upset. Did I do something wrong? Our annual income is around $50k and our EFC is $55k. My parents are both retired. I have no idea how the EFC is so high and higher than our income.
I don’t think we have incredibly high assets either. What kind of assets would make the EFC that high? Is this a mistake? Thank you for any help.
We had a similar situation. People who are retired still have bills to pay, but have very little income (often just social security). In order to pay our bills, we often have money in the bank, or in other investments.
Do you know the complete list of what your parents investments are? My understanding is that anything that is in an official retirement account (such as an IRA, 401k, or 403b) is not included in computing need based financial aid. However, retired people often have money in other accounts. Retired people might think “I am retired, I have bills to pay, the money that I have sitting in the bank is a retirement fund”. Universities see money sitting in the bank and think “college money”. As far as I know whatever your parents took out of a retirement fund last year is considered income.
Is there any chance that you put IRA assets into the net price calculator as current assets? Did you use income from a previous year when a parent was working? Do your parents own a summer cottage, or any rental properties?
I am not sure that there is any “fair” here. This is just a situation which is not very good for the student.
In our experience there are a LOT of universities and colleges that are just not affordable if your parents are retired (or own a farm, small business, or rental property). We were able to find some other options which were both very good matches for our two daughters and were also affordable.
You might need to focus on in-state public universities, or on universities that give good merit based scholarships.
Did your retired parents do a rollover of a tax deferred retirement account in 2020? Ask them. If they did and this wasn’t correctly noted on the FAFSA form, this rollover will be treated as additional income. This could be a LOT for retirees!