EFC too high? Like WAY too high?

Paying for College
1

<p>Hi! I'm a community college student researching schools to transfer to for the fall of 2014. I was looking at my FAFSA from last year (I submitted it to a 4-year school but dropped my enrollment due to barely any finaid).</p>

<p>According to the Student Aid Report, our EFC is $74,000......how is that even logical? Here are my family's stats for 2012:</p>

<ul>
<li>My Dad co-owns a small business with about 10 employees.</li>
<li>His adjusted gross income is about $120,000-- but not what we take in. At ALL.</li>
<li>He pays income tax of about $10,000.</li>
<li>His Income Earned From Work is about $60,000-- THIS is what we take in.</li>
<li>My mother is unemployed.</li>
<li>We are a family of 4, with me being the first kid out of two to attend college.</li>
</ul>

<p>Can someone shine some light on this please? As an 18-year old fresh out of high school, the FAFSA is extremely confusing. I don't see how $74,000 is a reasonable EFC.</p>

<p>Any help is appreciated! Thanks!</p>

2

<p>The EFC is based on Adjusted Gross Income, not on income after taxes.</p>

<p>With an AGI of $120k, your EFC is likely to high for federal grant aid. But 74,000 certainly sounds very high unless your parents have very high assets (or you yourself have income and assets). I would expect it to be more in the 25,000+ range.</p>

3

<p>Recheck those numbers…something isn’t right. Did you put income under both parent and student? Do you have significant assets you didn’t list here. A $120,000 gross income would not net a $79,000 EFC in most cases.</p>

4

<p>Do your parents have assets?</p>

<p>Did you accidentally put your dad’s income into the student’s section.</p>

5

<p>Here is the formula for next year’s FAFSA: <a href=“http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf&lt;/a&gt;&lt;/p&gt;

<p>Print it out, and work through it on paper with your parents to see what factors are contributing to that high EFC.</p>

6

<p>Thanks for the replies everyone! Could someone explain what the assets could entail though?</p>

7

<p>One of the assets ask for the value of a business. Since there are less than 50 employees this is zero. Make sure this was not filled in.</p>

8

<p>Well, what did you put as assets? </p>

<p>Some assets are protected and do not have to be reported on FAFSA - like the primary home and retirement accounts such as IRAs and 401ks. Other assets must be reported such as bank accounts, savings, stocks and bonds, etc.</p>

<p>You EFC is probably going to be pretty high even without assets though.</p>

9

<p>If the income from work is $60,000 and the AGI is $120,000 then there must be income of $60,000 not from work. If that income is from investments, then I can see where the high EFC come from. </p>

<p>OP: If you say your family takes in $60,000, where does the other $60,000 included in the AGI come from?</p>

10

<p>Probably from the business?</p>

<p>

</p>

<p>OP, how much of the business does your family own? If it is more than 50%, then the business assets do not have to be reported if there are fewer than 100 full time employees. If it is 50% or less, then the value of your Dad’s share does have to be reported.</p>

11

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<p>I am not 100% sure at the moment (my dad is still sleeping, haha). I will ask him for specifics when he wakes up, but I know he always says his money is “tied up” in business investments. I know he owns a couple pieces of small property, but that is also through the business, and not the family ourselves.</p>

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</p>

<p>He owns the small business with my uncle. It has always been a 50/50 partnership. So this means we do not have to report his assets? (I’m assuming owning other properties could be considered an asset)</p>

12

<p>Other properties outside of your primary residence are assets and must be reported</p>

13

<p>Even if those properties are owned by the business 50/50 with my uncle?</p>

14

<p>^Yes, your 50% is still your 50%. And if the business is 50/50 it’s assets might have to be reported as well. It starts to complicate things.</p>

15

<p>Actually, the business is exempt as it is owned >50% by family and meets the other rules. FAFSA rules say that family includes direct relatives such as parents, siblings, cousins and also relatives by marriage. So those assets should not be reported. </p>

<p>This is a good place for detailed explanations of FAFSA questions:
<a href=“http://studentaid.ed.gov/sites/default/files/2013-14-completing-fafsa.pdf[/url]”>http://studentaid.ed.gov/sites/default/files/2013-14-completing-fafsa.pdf&lt;/a&gt;&lt;/p&gt;

<p>Explanations about parent assets start at page 54</p>