<p>The current FAFSA calculations seem to be different from last year. The new application requires filling in the American Opportunity credit amount as well as deferred retirement amount. I'm wondering if the above 2 items are affecting the final EFC calculation in an adverse way.</p>
<p>I compared the FAFSA EFC figure to the College Board EFC calculator figure and the FAFSA EFC number was significantly higher, ~+18%. I'm thinking the new FAFSA is calculating a higher EFC than last year's formula.</p>
<p>Has anyone had a similar experience and know what FAFSA is up to?</p>
<p>Contributions to retirement accounts were added in last year, although the AOTC would not have been a factor since it didn’t apply prior to the 2010 tax season. The asset protection and state tax allowance tables changed for this year, so that may account for the difference.</p>
<p>There is no change. Last year the AOC was supposed to be reported - in the place where they asked for the hope credit info. The AOC basically replaced the Hope in the 2009 tax year( except for people in certain midwest disaster areas who had an enhanced hope credit that was better than the AOC). They were just late updating the the terminology to catch up with the tax changes. The deferred retirement contributions have been reported for years (certainly the last 4-5 that I have been doing FAFSAs.)</p>
<p>The current year’s deferred retirement contributions are **added **back to income. They are considered available income for college. So they increase the EFC (as they have for years).</p>
<p>The education credits are reported so that you are not penalized for having taken them. They are deducted from income. (The refundable part of the AOC is not reported anywhere.)</p>
<p>mycollegekid - the American Opportunity tax credit is one of several education related tax benefits. Basically it is a tax credit, available if you paid qualified education expenses and meet other criteria (income limits etc). The credit is on the fist $4000 of qualified expenses - 100% of the first $2000 and 25% of the next $2000 (so up to $2500 actual credit). Up to $1000 of it may be a refundable credit. The relevant IRS publication for this and other education tax benefits is irs970.</p>