We swapped out some of the school spots on the FAFSA (more than 10 schools on the list), and I’m looking at the “successfully submitted” e-mail from Federal Student Aid again.
Anyone know what that Estimated Expected Family Contribution (EFC) number in the e-mail indicates? I hope it’s a code of some sort because, if it’s a dollar amount, it’s three times our total income in 2018. I transferred the tax return information to FAFSA, so I can’t see some of the numbers that were submitted.
I downloaded the EFC Formula 2020-2021 worksheets and tried figuring it out by hand…the amount is still absurd(!), but at least it’s only 1/4 of the EFC figure in the e-mail.
This is my first FAFSA, so I’m concerned I did something terribly wrong.
Did you ask your parents if they did a retirement rollover in 2018? Did you? Please ask them. If you used the IRS Data Retrieval Tool when you did your FAFSA and there IS a rollover that was done in 2018, that very well could explain this.
I am the parent, actually, and we did withdraw funds from our retirement account, which was recorded as a rollover. It wasn’t a huge amount, so I’m still surprised at that ridiculous EFC. My hand calculation puts us well over the eligible amount for federal aid anyway (not that I was expecting anything) – we only submitted because some of the schools required it for scholarships, etc.
Next year I’ll know not to use the data retrieval tool; I’m pretty convinced that didn’t help.
The data retrieval tool is fine IF you check the little box about that rollover. That rollover amount was likely included as income added to your income from 2018.
You need to call each college and get this corrected. They will tell you what you need…documentation of the rollover and amount.
Without knowing you income…or the EFC number…it’s very hard to say how “off” this is. But typically, the EFC is about 1/4 to 1/3 of your gross income. In your case you would need to add that rollover amount to your gross income to see if the number aligns.
You say the rollover amount isn’t much…but it might be.
To get a Pell Grant, your EFC would have needed to be less than $6000.
ETA…if you don’t use the DRT, your college will require a tax transcript to verify that the data you entered on the FAFSA is the same as your tax return. This issue is not the fault of the data retrieval tool. You made a mistake by not noting the rollover.
Yes. Whoever is in charge of the FAFSA should do two things immediately: (1) get rid of the phrase Expected Family Contribution and instead call the number the FAFSA formula spits out something that more accurately reflects what it actually is and what it us used for; and (2) make it clear exactly what the actual formula answer is (if it’s a dollar amount, make it look like a dollar amount – $12,574, not 0012574).
A distribution in retirement from a taxable retirement account (such as a traditional IRA, 401(k), 403(b), etc.) would be reported on FAFSA as part of AGI (FAFSA question 84 for parents). A distribution in retirement from a non-taxable retirement account (such as a Roth IRA) would be reported on FAFSA as untaxed income (FAFSA question 92e for parents).
I’m not familiar enough with the FAFSA formula, off the top of my head, to provide a reliable answer to this question.
Really, it’s very hard to tell you if your EFC is super crazy…or not. It might very well be accurate given your income, assets, and extra whatever from your retirement account.
If you EFC is multiples of your income did you do something odd like inputting your assets including cents? For example if you have $10,874.67 in your checking account did you put in 1087467 instead of 10874?
Print out the FAFSA and make sure the asset information you entered was correct…and in the right spot.
Make sure you put Parent assets ONLY in the parent section and not in the student section.
Hopefully you didn’t include balances in your tax deferred qualified retirement accounts as assets!
Check to make sure there are no additional zeros, or misplaced decimal points.
Check your tax return...make sure that was accurate!
And really...if you did a rollover, get that straightened out by contacting the colleges and sending the pertinent documentation.
Your EFC should not be three times your total income. That’s not right unless you entered huge asset amounts…and particularly student assets which are assessed at 20% of their value.
But if your income was say…$50,000 a year…and you did a rollover of $100,000, that would make your income look like $150,000…3 times your actual income. But even with that…your EFC would not be 3 times your annual income. It just wouldn’t be.
There is a mistake someplace on your form. So…print out and check your entries…and try to figure out how that rollover impacted this.
I figured out what caused the problem but not specifically how the error happened because the relevant fields on the FAFSA say “Transferred from the IRS” instead of the $ amounts. Althought we withdrew a portion of our retirement account (accurately added to our income total and taxable), the rest of the 401K was rolled over into an IRA, which I didn’t realize (thanks for the heads up, DH ?). Somehow that total was also (incorrectly) added to our income. I “chatted” with a FAFSA help person yesterday and was advised that the only solution is to talk with the school my D ends up attending because the fields that were transferred cannot be edited, even if I could see them.
We aren’t eligible for federal aid anyway, but my D is concerned the crazy EFC (trust me, it IS crazy!) will affect potential scholarships from the private colleges on her list. Fortunately, we submitted the CSS for those, so hopefully it will be evident that something is amiss with the EFC.