Does a students income matter if you qualify for an automatic zero EFC by your parents income? if not, can a student earn as much possible and still have an automatic zero EFC? What is the most you can earn without having to file taxes for 2017-2018. Could changes be coming for the 2018-2019 FAFSA regarding student income with an automatic zero ETC? Would assets ever be requested with the additional income of the student? Long post but would really appreciate a response.
No.
If 2015 parent income was $25,000 or lower for the 2017/18 FAFSA, then that qualifies for auto zero EFC IF another condition is met.
- parent is eligible to file 1040A/1040EZ or
- someone in the household qualifies for federal means tested benefit (SNAP, free/reduced lunch, etc) or
- parent is dislocated worker
then assets and student income is disregarded.
This only applies to FAFSA though, if the schools require CSS profile, then there us no auto zero EFC.
The FAFSA EFC formula changes a bit every year. Income protection amounts can go up some, but nobody knows what the new formula will be like exactly.
For the 2017/18 FAFSA a dependent student got an income protection amount of $6,420. Also a deduction from income for federal, state, soc sec taxes paid.
Normally a dependent tax filer needs to file a return if they made more than $6,300 in earned income. There are different thresholds for self employment or unearned income. Also if the employer withheld any federal or state tax, you might want to file to get a refund of the tax paid.
And filing FAFSA is usually easier if a return was filed, rather that having to desl with non filer verification.
Student assets usually have a bigger impact on FAFSA EFC than income.
Another consideration, some state aid programs might require asset and student income information even if FAFSA would skip it due to parent income.
@mommdc When did you mean by income protection? Does it mean that if the kid earns less than $6420, the amount will not be used for EFC calculation? - thankx
Yes, a dependent student gets a $6,420 deduction from income on the 2017/18 FAFSA, and also deduction for federal, state, soc sec tax paid, before the income affects EFC. Also income from federal work study is not counted towards income subject to EFC calculation.
Great post! Should the student earn 2000 over the summer, and put that in their savings account, its then considered a student asset, correct? Would it make sense to save that money in a savings account in the parents name, so it is listed as a parent asset?
No, if the money is the student’s money, it needs to be reported as a student asset. $2,000 of student asset is assessed at 20%, so adds $400 to EFC.
If the EFC is low enough to be Pell eligible (<$5000) then that might make a difference, but if it is higher, it won’t make much difference.
The FAFSA gets filed beginning in October, if the student works in summer they can spend some of that money towards college costs for first semester before FAFSA is filed.
But coming back to the question OP posed, if the family qualifies for the auto zero EFC, or simplified needs test, then student assets and parent assets won’t matter, they are not considered then.
For auto zero EFC, student income is also not considered.
But remember…there is NO auto $0 EFC for Profile schools. There is NO simplified needs test for Profile Schools.
^yes, and profile schools might consider home equity as well.
The student’s money stashed in a parent’s savings account is still the student’s money… and it would need to be reported on financial aid forms as a student asset, regardless of where it is. Doing otherwise would be fraud.