My S is planning to take a gap year… for a variety of reasons but one of his goals is to earn enough money to sock a chunk away for college (5-8k) and a little more for travel. Our current EFC is 28k with his summer earning in the 1.5k range. If I am understanding it correctly, his earnings over the gap year will significantly boost our EFC as that money is counted more heavily towards the contribution. I really want him to use that time and contribute financially, but what will happen to our FA when the EFC increases and he is unable to earn that much once he enrolls in school? Am I getting this right? He applied exclusively to small LACs. This won’t matter I guess for the fall 2017 because they will now use 2015 income, but for 2018?
Student income is assessed at 50% above the student income protection allowance of (currently) $6,260. Student assets at 20%.
2017-2018 EFC will be based on 2016 financial information.
So, if he earns less than 6250 (or whatever the number is for 2016) it won’t have an impact on FA?
The assets will make a difference (probably somewhat negligible – you can do the math), but the income shouldn’t be counted if below that amount.
Thanks… that’s really helpful. I’d have him put the money he is setting aside into the 529 account that we own. So… no assets for him, just us. Plus… that way, it won’t get spent on gap year adventures.
The parent income has the biggest impact and parent assets over the parent asset protection allowance.
For 2016-17 FAFSA student income has an income protection allowance of $6,400 and also an allowance for federal, state, social security taxes.
The student doesn’t have asset protection allowance so putting his earnings in the 529 is a good idea since it counts as parent asset.
2015 income will be used for 2016-17 and 2017-18 FAFSA.
But some LACs might also use the CSS profile. The aid calculation will be different.
Have you tried running the net price calculators with different student incomes and assets to see the changes?
https://www.gpo.gov/fdsys/pkg/FR-2015-08-03/html/2015-18991.htm
Table of parent asset protection allowance for FAFSA
@mommdc Thanks for the table. I knew the amount changed with age of parent, but had only found vague estimates of the numbers. Since his amount won’t be a lot… it looks like it makes the most sense for us to put his college savings in his 529 from his wages. I don’t expect that once he travels and does his language school there will be much in the way of assets in his name.
Once again… thanks CC for answering quickly!
Thie 2017-2018 FAFSA will use the 2015 tax year information…as it will become available for filing in October 2016…well before the 2016 tax year information will be available.