Financial Aid and Income

[25or6to4]

<p>Is it true that the income is weighted most heavily in the calculation of expected family contribution (as opposed to assets, home equity, etc.)?</p>

[swimcatsmom]

<p>For FAFSA yes. First there are assets that do not have to be reported at all - for most people the primary home and retirement accounts. (there are some additional ones like small businesses). Then for the remaining assets there is a certain amount of asset protection based on the number of parents and the age of the older parent. For instance a 2 parent family with the older parent being 50 would have asset protection of @ $55,000 (fo 2009-2010). Assets over this would affect the EFC by @ 5.6% of their value.</p>

<p>Income has some protection but as income goes up (not to that high a level) the maximum amount of income (after deductions for taxes etc) that can go to the EFC is 47%.</p>

<p>For student assets and income the assets (no asset protection) affect the EFC by 20%. Student income over the protected income allowance (a little under $4000) affects the EFC by 50%.</p>

<p>This is all for FAFSA. Schools using profile will have their own different rules.</p>

[25or6to4]

<p>thank you very much. that was really helpful.</p>

[Rosieoney]

<p>Hi Swimcatmom: You seem to know a lot about this. In my family my dad is 70 years old and retired and my mom is 56 and working full time. We can’t see that the age of my father or the fact that he is retired changes the FAFSA at all. We’ve tried it and changed the age and it doesn’t change the final outcome. Should his age be a factor? THANKS.</p>

[swimcatsmom]

<p>The only affect his age has is that the asset protection allowance is higher the older the parent gets. The maximum asset protection (for 2009-2010) is $84,000 (for 2 parents where the older parent is 65 or older). If the reportable assets are less then age and being retired really makes no difference to the EFC.</p>

<p>If he is receiving his federal pension and it is untaxed (meaning other income is below a certain threshold) then that SS income does not currently have to be reported on FAFSA (it did on previous years). Not having to report it can lower the EFC. However if the federal pension is taxable, and therefore included in the AGI, it does have to be reported on the FAFSA.</p>

[Pea]

<p>

For student assets and income the assets (no asset protection) affect the EFC by 20%

</p>

<p>swimcatsmom – If I have a college fund for my daughter in her name you are saying that it only impacted our EFC by 20%?</p>

[swimcatsmom]

<p>

swimcatsmom – If I have a college fund for my daughter in her name you are saying that it only impacted our EFC by 20%?

. If it is a regular savings account in her name it would only affect the (FAFSA) EFC by 20%. However if it is a 529 account it would be reported as a parent asset so would only affect the EFC by up to a max of 5.6%.</p>

[Pea]

<p>Maybe I get it now … That would be 20% per year. So each year they would expect a 20% contribution from her college fund. Is that correct?</p>

[swimcatsmom]

<p>

What happens when a parent is retired or deceased and the child is receiving Social Security until age 18? Does the FAFSA count the 17 year old’s income toward the student contribution?</p>

<p>I am asking because a relative’s child will be in this situation in a few years.

</p>

<p>If both parents are deceased then the student would be independent for FAFSA purposes so would have a slightly higher income protection allowance (@$7000) than a dependent student. Up till this year I think the SS income would have had to be reported on FAFSA (my daughter had SS income because her dad was receiving his SS pension and we had to report it on FAFSA). There were some changes to FAFSA this year where SS income no longer has to be reported and I think that applies to this type of SS income. </p>

<p>from <a href=“http://www.fafsa.ed.gov/fotw0910/help/fotw23c.htm[/url]”>http://www.fafsa.ed.gov/fotw0910/help/fotw23c.htm&lt;/a&gt;

Enter the total amount of any other untaxed income or benefits that you received in 2008, such as workers compensation, Black Lung Benefits, untaxed portions of Railroad Retirement Benefits, disability, etc.</p>

<p>Don’t include student aid, earned income credit, child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Investment Act educational benefits, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels.

</p>

<p>If it is still reportable (which I don’t think it currently is as long as it is not taxable) the child should be able to ask for a special circumstances adjustment. SS income stops at 18 - we were able to ask for a special circumstances adjustment and the school removed the income from the FAFSA which lowered my daughter’s EFC.</p>

[swimcatsmom]

<p>

Maybe I get it now … That would be 20% per year. So each year they would expect a 20% contribution from her college fund. Is that correct?

Yes. The EFC is the EFC for the year - not the whole time in school.</p>

[hmom5]

<p>It should be noted that most private schools use Profile or their own methodology and count assets FAFSA does not such as equity in primary home. Private colleges tend to go deep and often want to know about family cars–which is why they joke that EFC stands for Every F@@@@@@ Cent.</p>

[25or6to4]

<p>hmom5-
do private colleges generally use income as the most important statistic when determining EFC?</p>

[dntw8up]

<p>^^^No. If you are low income and have a lot of assets you may not get any financial aid.</p>

[hmom5]

<p>There is no ‘most important’ factor. Everything you have will be considered.</p>