<p>Sorry! I clicked on submit twice. My connection is very slow.</p>
<p>Our son is a senior in high school who is starting to get offers that are not generous because our FAFSA EFC is $48k. When we run the same numbers through FAFSA4caster we get an EFC of $28k. Other estimators on the web give $27-30k. What gives?</p>
<p>We are a family of four with an AGI of $111k. My son has $27k set aside for college and we have set aside an additional $46k for both children–son in 12th and daughter in 10th. Doesn’t an EFC of $48k sound outrageously high? </p>
<p>When I contact FAFSA by phone or by chat it is like communicating with a robot. What recourse do we have?</p>
<p>Never have used the 4caster, but if you have filled the FAFSA out accurately , there really isn’t any appealing. </p>
<p>Are the college funds in the students name? That will take a bigger hit than if it is in parents name.</p>
<p>Your son has $27,000 available for college & you have $46,000 for your sons education or is that for both kids? </p>
<p>Has your family identified what you can spend from savings income & loans & has your son applied to schools you can afford?</p>
<p>If attending schools that meet 100% of need, I would expect that after your sons college acct is used for freshman year, your EFC for subsequent years will be lower and you should receive more aid.
However if they don’t meet 100% need they may not adjust the offer, so it would be important to have that clarified.</p>
<p>If you google EFC Formula 2013, you will get the link to the formula itself. Print it out and work through those numbers by hand. You may have entered something incorrectly.</p>
<p>Try that first.</p>
<p>If your son has 27000 put aside in his name, it contributes to the formula more generously not in his favor. Sorry to say. Your EFC by 4caster sounds right for your AGI with no frills such as savings and college funds.</p>
<p>^disagree. It does sound high… $111k AGI is around $28k to your EFC and son’s $27k would add around $7k. That leaves $13k which would mean that you would have $225k in assets. Our EFC was $46k with slightly higher AGI and over $300k in assets.</p>
<p>Here’s the link that I couldn’t post last night: <a href=“http://ifap.ed.gov/efcformulaguide/attachments/010512EFCFormulaGuide1213.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/010512EFCFormulaGuide1213.pdf</a></p>
<p>Do work through this, and see where you could have gone wrong with either the 4caster or the FAFSA itself. If you identify the problem, correct your FAFSA and contact the colleges/universities about the error. They will probably request documentation at this point, but you will have it in hand.</p>
<p>Good luck!</p>
<p>It doesn’t matter what went wrong with 4caster, but it there is an error in the FAFSA, that should be corrected and you can use the 4caster comparison to see where the difference is.</p>
<p>I don’t think it will make a whole lot of difference in awards, however. You are not PELL eligible either way, so that grant and any monies that want PELL eligibility are out of the picture. Most every school that uses FAFSA only for financial aid does not meet full need. The only place where it might make a difference is in some loan subsidy.</p>
<p>I suggest your son use his money to pay for school this year and to reimburse you for expenses so that you have the money in your savings instead of his. You took a hit in that it is sitting in a student account. FAFSA takes a little more than 5% parents assets into account and 20% of the students’. Unfair, and stupid, but that’s the way it’s wired.</p>
<p>It sounds like the “hit” is because the college funds are in the child’s name. The parents should have put all savings in THEIR name.</p>
<p>Or…the problem is that the PARENTS have too much in savings/assets…which may be the case. It sounds like this family has a large amount of savings based on the fact that they have about $50k set aside for college. Usually people with college savings also have their own savings.</p>
<p>When there are substantial savings, then just talking about AGI isn’t the issue.</p>
<p>It is my experience that usually when people talk about EFC being x% of adjusted gross income they are talking about families that have assets only in 401Ks or IRAs or other vehicles sheltered by the FAFSA. Somewhat like the flush colleges that “say” kids will only pay 10% of their parents include…there is a very big BUT after the ellipse. Those families whose EFCs are straightforward might have a home which isn’t considered but no rental properties, no land, no money market accounts, no college funds etc. The best advice is given is to back through the formulas guide line by line and check the accuracy of the original FAFSA. Did you use the IRS retrieval tool? But $48,000 for a six figure adjusted gross income and college funds does not sound inconceivable. We have a very low adjusted gross income which is somewhat meaningless because of investments that are relative to our EFC which is highish, not 99,999 but high enough to make us financially aware of what colleges have cost us so far.</p>
<p>Probably too late for this student this year, but large student savings/assets should be put in a 529 type account. Then it is assessed at parental rate for FAFSA, even though it is in child’s name. Of course, then it needs to be used for education, doesn’t qualify for tax credits, and is harder to buy a sports car with.</p>
<p>When my oldest son was an incoming freshman our EFC was $69k because we had begun saving for college in each kid’s name and switched to parent savings at some point. But he did have substantial $$ in his own name and we also likely had an AGI > $100k. Over the years we spent “his” money down and also reduced our younger son’s accounts. Eventually, on comparable AGIs, we worked the EFC down to about $35k by eliminating both their college savings accounts and reducing our assets (as we paid for college). I think that the OP’s EFC is very possibly correct, if the family has assets outside of retirement accounts (which we did).</p>
<p>I am very grateful to everybody for helping us to figure this out. To address some of your responses:</p>
<p>(1) $27k is in my son’s name and another $27k is in my daughter’s name. The $46k mentioned above is to be split between them. This means that we have $100k set aside for college. </p>
<p>(2) Our other assets, home, IRAS, and 403b’s were not supposed to enter into the FAFSA formula, yes?</p>
<p>(3) I should have mentioned that for 2011 only, we put an additional $32k before taxes into our 403b’s as well as $12k after taxes into our Roth IRAs because we thought it might be the last chance to do such a thing. IOW, our savings would have been perhaps $32k higher–$132k instead of $100k. I wonder how much this skewed the formula.</p>
<p>(4) Thanks for the 2013 EFC formula. I will run the numbers through it.</p>
<p>(5) I sure hope that the EFC drops next year and beyond because we cannot afford $48k/year/child. </p>
<p>Once again, thanks for the responses. It was heartwarming to see so many of them in so short a time. My salary before taxes is $49k and to learn that we are expected to pay $48k after taxes left me stunned, confused, and upset. If I lived in a state with an excellent public university I would probably just send him there.</p>
<p>Thanks.</p>
<p>John</p>
<p>Lynch, you have done a terrific job in saving for your kids’ college educations. Much better than I have and better than most people have. Private college costs are just crazy. </p>
<p>Having your son spend down his nest egg will help reduce your EFC. I am not sure what a 403b is, but for FAFSA purposed, your home and your 401K and other such accounts are not included in assets. However, the income is added back to your AGI when coming up with your income figure. Shifting assets from your son would result in a $7K reduction in EFC right ther. ALso, hopefully, you reported balances in your accounts after you paid your bills so there is not a lot of money sitting in them.<br>
Did your son apply to schools that use FAFSA only for financial aid? </p>
<p>The way it works is that you are expected to use past, present and future earnings for college as is your son. With both of you saving as you did, you are going to be in better shape than most people.</p>
<p>You report what you contributed to the 403B during the analyzed year so it sounds like the $32,000 is counted for the FAFSA you filled out as well as the Roth contribution (and for others a 401K contribution). You would have had to do that the previous year (2010) for it not to count…since the FAFSA you just filled out looked at 2011. The money that is in the accounts are not “counted” only contributions.</p>
<p>You say you have income of $49K but your AGI is $111K. Is that from a second salary or huge investments? The latter will affect your EFC and are part of the FAFSA formula. </p>
<p>Otherwise an EFC of $48K does seem high with that AGI, your son’s $27K and your $46K as your only includable assets. Your daughter’s $27K is not an issue if it’s in her name. </p>
<p>Cptofthehouse makes a good point. “ALso, hopefully, you reported balances in your accounts after you paid your bills so there is not a lot of money sitting in them.” I made that mistake this year thinking it wouldn’t affect the EFC too much. Wrong!</p>
<p>As momof3 said, the money contributed to IRAs in 2011 will be added back to the AGI in the EFC formula. Money in retirement accounts is not a reportable asset, but contributions in the tax year are counted as income. So that bumps your income used in FAFSA up to $143K. And of course the allowances against income will be reduced a little because you will have paid less taxes due to the contribution (for instance if your marginal tax rate is 28% your taxes would be $8960 less than if you had not made the 401k contribution - that savings in tax would actually increase your EFC because taxes are allowances against income).</p>
<p>20% of the $27000 in your sons name will go toward the EFC. If it was in your name or in a 529 account in your son’s name, then then the parent asset rate of up to 5.6% would be used instead.</p>
<p>Once you have more than one child in school at the same time, the parent part of the EFC will be divided between them equally, but any part generated by their own income/assets will stay with the student. If your son’s college savings are in his name and not in a 529 account, spend them down first and/or put them in a 529 account so they are treated as parent assets next time.</p>
<p>FWIW, the EFC does not mean that is all you will pay. Very few schools promise to meet need without loans anyway. Those that do use profile to determine the institutional grants, not FAFSA.</p>
<p>^^^continuing my unfinished thought - so even with the lower but still quite high EFC, you might have found your aid was less than you hoped unless you have schools that meet full need without loans. (to get federal grant aid, you EFC would have to be below around 5200ish, so that was never a possibility)</p>
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<p>It’s not, I repeat, not just AGI. A saavy person can lower their AGI significantly through how they invest their money. It is AGI plus this plus that that constitutes the EFC. Now that my H is retired we have a moderate AGI of which the vast majority is my salary and what gets thrown off in dividends and interest…even capital gains can be treated in a way that you don’t take a big hit every year. We had no income except for unemployment for a year and a half and still threw off a signifcant EFC and because of how things are structured could not have filled out the EZ tax forms. Unfortunately or fortunatly no income caused our assets to decrease but really didn’t affect the EFC all that much sad to report. People cannot look at an AGI and simply predict an EFC.</p>
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But once the 401k contributions are added back to income, that $143k income plus the assets plus the lower taxes because of the 401k contributions probably explain the EFC pretty well. Though I would have thought the forecaster should have taken that into account (assuming the contributions were reported on the forecaster).</p>
<p>The Roth contributions would make no difference as they do not affect the AGI or the taxes. (they of course should not be reported on FAFSA in the tax free income section where the 401k contributions were reported)</p>