If I take a gap year and work, does that money get subtracted from FA?

Paying for College
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<p>I'm a junior right now and for various reasons I definitely want to take a gap year after my senior year. Basically, I'm already very young for my grade, I want a year to explore and do my thing, I kind of need a little break from academia, etc. </p>

<p>I was thinking about taking a full time job or upping my hours at my current jobs to full time + another part time to save a bunch of money (like 15,000-18,000 - I included taxes and stuff in that calculation at my current pay rate, which should be going up next year anyway).</p>

<p>If I did that, would I be able to contribute it to my EFC (which is around 20k), or would my FA be lowered because of the added income? I'm talking about full need schools here, because obviously schools that don't meet need will just do whatever they want. I plan to defer a year from wherever I end up being accepted, which will hopefully be a full need school. However, if this extra income is just going to be taken out of my grants, then I would rather spend a gap year volunteering, writing, and perhaps even training to be an EMT.</p>

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<p>As I understand FA, any money the student has in savings will be assessed at about 20% to be contributed to school. 20% of your savings will be added to the EFC determined using your parents info., making the EFC larger. Schools that meet need are usually profile schools; they may expect you to contribute more of your own savings than the FAFSA formula.</p>

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<p>So if they only want 20% of my savings, then they would up the EFC around $3,600 if I made 18,000? That sounds very reasonable.</p>

<p>Edit: Oh, but some schools might want all the savings? Is this something I should just call individual schools about when I have acceptances next year, or does anyone know if there is a rule that most schools follow?</p>

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<p>That is only your part of the EFC. Your parents will be assessed as well. If you work and you save some $$, put it into a 529 before you fill out your FAFSA. This will lower the assessment to 5.6%.</p>

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<p>You would put 3600 towards your EFC if you had $18k in an account for your savings ALONE.</p>

<p>Roughly, over the protected income for students ($6k?), student income is 50% towards EFC. In other words 18000-6000 = 12000 x .5 = 6000. An income of $18k would add roughly $6k to your EFC.</p>

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<p>Woahhh conflicting advice here. </p>

<p>If I put my savings in a 529 would my EFC still go up $6,000?</p>

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<p>^ The savings are not the issue so much as the income. </p>

<p>Run your numbers through an EFC calculator. First with 0 income, then with 18k income. </p>

<p>Fwiw- I just did that and didn’t get the numbers I was expecting. I might be misinformed about something I stated above. I entered 18k in and the EFC was raised roughly 4k. Hmm…</p>

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<p>I ran it through Harvard’s financial calculator (I don’t expect to go there, I just figured I would use it as an example).</p>

<p>It gave me $21,600 without any assets and $22,600 with $20,000 in student assets. I didn’t see anything to put in a yearly income though.</p>

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<p>The above information is correct. In FAFSA, a dependent student has a certain amount of income protection. For 2012-2013 it is $6000. Additionally there will be allowances against income for any federal taxes paid, for FICA taxes, and for state taxes (depending on the state) (theses allowances may account for the difference romanp found). 50% of the balance after the allowances would be added to your EFC. Additionally any assets you still have on the date you file FAFSA would add another 20% to your EFC (dependent students have no asset protection).</p>

<p>if you want to look at the formula, it is here:
<a href=“http://ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf&lt;/a&gt;&lt;/p&gt;

<p>Putting money in a 529 account would help with the asset side as a 529 account is reported as a parent asset, so only up to 5.6% would go to the EFC. It wold not reduce the income assessed.</p>

<p>The above are for FAFSA, not for a school’s own formula (such as Harvard).</p>

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<p>Allowances! That’s what I forgot.</p>

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Harvard is NOT a good school to use as an example for FA. They have the best FA in the country.</p>

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<p>Don’t use H’s NPC…theirs is too generous.</p>

<p>When students earn and save a good bit of money they take a “double hit” with EFC… </p>

<p>To look at it simply…if you earn $16k and spend it all, there will still be an expectation that about $5k of that money should go for college.</p>

<p>If you earn $16k and save $10k, then you’ll be expected to put even MORE towards college…around $7k.</p>

<p>(I think I’ve got that right…others can correct me.)</p>

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<p>If you want to save money towards college, the best thing to do is to pay your parents the money for all of the expenses they have laid out for you and let them put it in a savings account earmarked for your college payment. As for income, after you earn the protected amount, yes,a proportion of that is expected to be used for your college, so working can increase your EFC. Run the numbers through PROFILE and FAFSA calculators to get some ideas as to what can be impacted for you. What you don’t want to do is to “fall off a cliff” in terms of eligibility for certain funds that have an income cut off point, and that can make a big difference. Otherwise, as a rule, you do better the more money you have to work with since you don’t know what you will get from a given school and if the school does not guarantee to meet need, you are taking risks assuming that they will give more to you, if you need more.</p>