<p>Hello all,</p>
<p>I would like to know what the main difference is between filing a FAFSA and having an income of 28K and a zero EFC (filing a 1040A!) and having an income of 31K and probably not a zero EFC <?> and filing a 1040A.</p>
<p>What is the difference?</p>
<p>You’ve pretty well answered your own question. As income goes up, you eventually reach a cross-over point where income is assessed against your EFC.</p>
<p>Can you be more any more specific in your question?</p>
<p>fyi, you could possibly put 2K into an IRA to lower your AGI below the magic 30K number</p>
<p>If you have an automatic 0 EFC then all other data is ignored in the formula. For instance if there is reportable untaxed income that will be ignored. If the there are parent and student assets those will be ignored. If there is student income that will be ignored.</p>
<p>If the income is too high (>$30k) but is below the maximum for simplified needs (<$50k) and a 1040A is filed then you qualify for the simplified needs test. In the simplified needs test assets are ignored by the formula, but other income (such as untaxed income, student income, pretax contributions to IRAs) will be counted in the EFC calculation. </p>
<p>How much difference it makes in the actual EFC will depend on each individuals financial circumstances. For instance we qualify for the automatic 0 EFC. My son is a dependent for FAFSA purposes. he was working full time and returned to school August last year. If his 2007 income were considered his EFC would be several thousand making him ineligible for Pell etc. So for him a very big difference. For my daughter her non WS income was low enough that it would have all been protected so would not have increased her EFC. So for her not much difference at all.</p>
<p>An income of only $31k without other income and assets can result in an EFC of a few hundred. This can make a big difference in certain circumstances. For instance at both my kid’s school the SEOG is awarded only to students with 0 EFCs. So a student with a 100 EFC does not get SEOG. A student with a 0 EFC does get it. At my daughter’s school the max SEOG is $2000 so that 100 difference in the EFC makes a big difference (more loan, less grant). At my son’s school the maximum SEOG is $200 so it does not make as big a difference.</p>
<p>Hi all,</p>
<p>Thanks for the quick responses. Here is more data –</p>
<p>I have some assets (house paid for; savings of $200K NOT in an IRA), no reportable untaxed income. I will still be filing my trusty 1040A.</p>
<p>I was offered some work that would literally put me over 30K by about 1K. (I am not sure why 30K is sticking in my mind here.)</p>
<p>sueinphilly, am I better off sticking with 28K and 0 EFC? Is there a current online calculator that is reasomably accurate?</p>
<p>anyone else?</p>
<p>My D does not have the SEOG right now; she has full Pell. She qualifies for Perkins. (Not sure she will need to take them but they are available.)</p>
<p>
Because <$30k is the amount required for the automatic 0 EFC? (for 2009-2010).</p>
<p>With $200k in assets if anything happens that makes you ineligible for the simplified needs test (such as anything that makes you ineligible for the 1040A) your EFC would go up enough to make your daughter ineligible for the Pell. The being ineligible for the automatic 0 EFC would probably increase your EFC by a few hundred or in the low one thousands. Finaid’s EFC calculator is no longer updated unfortunately. I believe the collegeboard one is quite accurate
[EFC</a> Calculator: How Much Money for College Will You Be Expected to Contribute?](<a href=“http://apps.collegeboard.com/fincalc/efc_welcome.jsp?noload=Y]EFC”>http://apps.collegeboard.com/fincalc/efc_welcome.jsp?noload=Y) </p>
<p>though I seem to recall it had no option for putting in the tax return info and I had to answer yes to one of the other relevant questions to make the auto 0 work (dislocated worker or means tested benefit).</p>
<p>As Sue said in an earlier post, you could put money in an IRA to bring you back below $30k (though we do not know what the 2010-2011 cut off will be. It’s supposed to be linked to something now.</p>
<p>So the FAFSA figure for Pell is the AGI on my 1040A?</p>
<p>And the AGI is AFTER any IRA contributions? Are those contributions added back to haunt me elsewhere? Can I file a 1040A if I am contributing to an IRA?</p>
<p>I played with the calculator and 29999 is a zero EFC and 30500 is EFC of 1500.</p>
<p>
I don’t quite understand what you mean by that. The AGI is the number FAFSA looks at when deciding whether you qualify for the automatic 0 EFC or the simplified needs test. if the AGI is < $30k (for 2009-2010) then, as long as additionally meet other criteria such as the 1040A or having means tested benefits then you get the automatic 0 EFC. The 0 EFC makes the student eligible for the maximum Pell of $5350. A higher EFC would mean a lower Pell until at an EFC of around 4619 there is no Pell eligibility.</p>
<p>In most cases IRA contributions *are *added back to income in the EFC formula. The exception is that for the automatic 0 EFC and the simplified needs tests, the AGI is the cut off point where eligibility for these special formulas is decided. If the AGI is <$30k (and other criteria are met) then the formula stops there and the automatic 0 is granted. If the AGI is below $50k (and other criteria are met) then assets will be ignored by the simplified needs test, but the IRA contribution will be added back to income and will be included in the EFC calculation. All other EFC calculations will add back the IRA contribution. (obviously I am talking about the type of IRA where contributions are pre tax dollars rather than the Roth IRA).</p>
<p>I meant, is the AGI the Adjusted Gross Income on my 1040A?</p>
<p>And, sorry to be dense, but let’s say that I do have an AGI of 30,500.</p>
<p>If I contributed 2K to an IRS, would my AGI be 28500, thus making me eligible for EFC of 0 or would the 2K be added back as income somewhere?</p>
<p>As you can see, this extra bit of income could wind up costing me a bit.</p>
<p>Ordinarily, if you contribute 2K to an IRA, it lowers your AGI by the same amount, but it also gets added back into the FAFSA formula as income, so no real net change in EFC (there might actually be a slight increase in EFC due to a change in the income tax paid).</p>
<p>But in the special circumstance where the AGI would be slightly higher than the automatic zero EFC threshold sans the IRA contribution, it works differently. The IRA contribution lowers the AGI below 30K, and if the other criteria are met (see scm’s post above), the EFC becomes zero automatically.</p>
<p>
</p>
<p>Yes, your AGI is on line 21 of 1040A.</p>
<p>There’s a fairly straightforward explanation of the EFC formula here, and schedules you can print and work through pretty quickly. Just use the ones marked A.</p>
<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf</a></p>
<p>Even if my EFC goes up to 1K or whatnot, I just want to be prepared financially!</p>