since they must file a 1040 (and it will be verified once the school gets the copy of the DRT (or request a copy of the IRS transcript), you will not be eligible for an automatic 0 EFC.
Being eligible to file a 1040A is one of the other qualifiers for auto zero EFC, the free/reduced lunch (federal means tested benefit) is just one of them.
So is your family’s income primarily from rental income or how can you be sure it will remain under $25,000?
Yes, and other sources. It will remain under $25k, I’m sure of that.
@kelsmom , can you provide some feedback
His parents may have insurance through medicaid (or the student might). There are 26 states that use medicaid as the insurance under ACA for low income families. Assets aren’t usually considered, just income. If OP’s parents are older and have medicare, OP may have medicaid.
^ Even if the OP’s family qualifies for Medicaid now, that’s not something I’d count on these next few years.
<<<
@fartoosoon wrote:
Assets are high because of real estate.
<<<
When you say income is around $25k, are you counting the rental income, etc, from all of that real estate? This seems very odd because the property taxes alone on $500k of real estate would be quite high.
Is your parents gross income MUCH higher, but after deductions the AGI is MUCH lower?
But the question about qualifying for a program (Snap, free lunch, medicaid) is for the tax year or the next year. This year asked for 2015/16, next year will ask 2016/17, etc.
If the federal guidelines change for medicaid, they might change for FAFSA too. Another program, another qualifier.
mom2, the taxable income for qualifying for auto zero or simplified assets is taken from the tax returns. Many a millionaire farmer has no taxable income and thus would qualify for auto zero. We’re used to ‘thinking FAFSA’ and adding income back into the amount on the returns, but if you qualify for $0 or simplified assets, you don’t. The CSS might get you, but FAFSA won’t.
It is hard to project four years out.
A piece of real estate could be sold which would generate a capital gain, change the asset picture, etc. Rents can go up or down. Expenses go up or down.
And as the other posters have pointed out- the Medicaid formula could change.
The question is…what happens when this kiddo no longer can say anyone in the family is eligible for free/reduced lunch in two years.
For the 2017-2018 fafsa, it asks about 2015 and 2016.
Presumably the 2018-2019 form will ask about 2016 and 2017…so the student will still be able to answer.
But in 2019-2020, the form will ask for 2017 and 2018…when this student will no longer be able to answer YES to the free lunch piece to get that auto $0 EFC. The family can’t file a 1040A or 1040EZ. And no one is a dislocated worker.
So…what happens to these kids whose family assets would make their EFC unaffordable as low income, formerly auto $0 EFC kids?
Then they are treated just like other kids with $500k in assets.
Maybe the family should aplly for SNAP or some other means tested benefit.
OP graduated from high school in 2015. Unless he had siblings in high school in 2016 he’d have to answer no for the 2018-2019 FAFSA too, wouldn’t he?
I have learned something new with this thread. I had no clue that a family that has assets , like $500,000, could still qualify for things like free lunch. I just assumed it was geared to people at or near the poverty level. But, maybe I’m not understanding how it works.
One of the challenges for using free lunch as a qualifier is a lot of the income information is self reported (the exception in NYC is those who are automatically eligible for free lunch if your family receives public assistance through HRA, the information is automatically fed to the NYC department of education).
Op’s scenario presents a big problem with the auto 0 as I am sure that it was not designed for students to get taxpayer benefits while having a half million in assets.
But really…all the OP would be entitled to is the Pell Grant, and the Direct Loan. The OP would,get the Direct Loan anyway…so really the additional would be $5800 or so on Pell aid.
Remember…the school can ask for anything when awarding institutional aid. And unless this is university of Chicago, a school using only the fafsa does not guarantee to meet full need anyway…
Yes, that is what I was confused about. How someone with $500,000 in assets, can end up with a 0 EFC. Most people don’t have assets that high, yet many still have significant EFC’s.
$5800 in free money is not insignificant.
There are outliers for almost every public assistance program, people who qualify but weren’t expected to, and those who should be included but are excluded because of a technicality.
Most public assistance programs are income based only, not asset based. Most who qualify based on income (or no income) for food stamps and TANF also have no assets, but some do have houses and maybe even 401k plans because they are cash poor after a medical issue, job loss, divorce. Now because of the ACA, there are many on medicaid who do have assets because that’s how the program is designed - you can’t get a subsidy to buy a policy on the ACA if you are low income and qualify for medicaid even if you want to buy your own policy.
I actually think it is fair. If you lose you job but have a nice house (usually with a nice mortgage, a nice heating bill, a nice tax bill), your kids might need a free lunch. There isn’t time to liquidate your assets to buy a lunch ticket for next week. I’m actually a believer that all public school students should have a free lunch. They are children, feed them with the money the is used in running the program and figuring out who qualifies for free lunch and who doesn’t. Just feed everyone.
I get the house issue, that is typical with qualifying for Medicaid as an elder as well-they won’t expect you to give them the house to qualify. But you are expected to use up some of your financial assets before qualifying. I was just surprised with the $500,000 in (possibly liquid) assets, not related to the residence. And I certainly believe in helping people out that need it.
If everyone has free lunch how do you differentiate low income students for title I funding (which is currently tied to percentage of students receiving free/reduced lunch).