<p>Does your EFC become less with the more college debt you have.</p>
<p>No.</p>
<p>EFC is based on income and assets (and number in family/college/parents ages). Debt does not enter into it. Even college debt.</p>
<p>I think PROFILE does take it into account though, because it eventually may affect your 1040 form & schools often want those to double check figures.</p>
<p>Emerald, how does your college debt affect your income on the taxes other than the miniscule tax credit? </p>
<p>Agreed with Swimcats...our total EFC has not changed even with two kids in college and increasing use of home equity and student loans. Believe me, we have plenty of college debt that has had no effect on our taxes or our EFC. And yes, the school uses the Profile.</p>
<p>I didn't mean to say that PROFILE adjusts your EFC depending on how much your loan payments are, but there is a place on tax forms for those making under $140,000 joint AGI, that reduces taxable income.
It may be small, but it is something.
Publication</a> 970 (2007), Tax Benefits for Education</p>
<p>The only thing I can think of on ones taxes is tuition credits and some small amount for repayment of interest on loans...which are actually in your favor. The amounts are VERY small...and would not have an appreciable impact on your EFC. Plus ther is a ceiling on these credits...and they don't increase with increased student debt. In fact, they are given for paying for college, not for student debt. College loans are consumer debt, just like any other kind of consumer debt and they don't really factor in to financial aid awards from what I can see. Perhaps someone else has a different experience.</p>
<p>On tax forms, loans taken out for tuition can be claimed as a tax deduction in the year the tuition is paid. For 2007, the deduction was $4,000.00. Depending on other information on the return, it can produce a decent result on a person's EFC. Using my taxes and FAFSA application, it resulted in an additional $1k in Pell Grant funds...which is pretty major for me.</p>
<p>Thanks for the information Nikki. Correct me if I'm wrong...but I think the lower your EFC was to begin with, the more likely that this deduction would make a difference in your EFC. Also, correct me if I'm wrong....but that deduction does not change in relation to the college debt you've amassed. I believe that is what the OP was asking.</p>
<p>Depending on how high the EFC was to begin with, it may not be a large enough difference to take someone from not receiving Pell to receiving Pell...but it can mean the difference between Sub and Unsub eligibility..unless the EFC is already a lot higher than the cost of attendance. Also, the tax deduction is capped at $4,000 no matter how much loan debt a student/parent has incurred. Now, for those with little ot of pocket expense...the amount can be MUCH lower than $4,000.</p>