<p>Currently, our house hold income is about 60K, which make my EFC around 15K. Let's say Rice gives me a 30K grant. </p>
<p>What happens if a our household income increases during my freshman year to about 90K. Will the college not offer me the same financial aid package during sophmore year? </p>
<p>Or does the financial aid package offered at admission stay the same all 4 years, regardless of income increases?</p>
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What happens if a our household income increases during my freshman year to about 90K. Will the college not offer me the same financial aid package during sophmore year?
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<p>Since you have to reapply for finanicial aid every year, if your current package is based on need based FA (not merit money) then your parent's income increasing by 50% will definitely reduce the grant/financial aid that you will recieve from rice your sophomore year.</p>
<p>Here's the LONG answer to your question: </p>
<p>The short answer is that your financial need is recalculated every year. That's not a perfect system, but the idea is to keep any student from having to go broke to go to college while aiming most aid at the most needy students.</p>
<p>You mistitled your original post. Should have been, "If parent's income rises, I won't need as much FA, isn't that great?"</p>
<p>...that's assuming that the parents are contributing financially toward the child's education (which may or may not be the case).</p>
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that's assuming that the parents are contributing financially toward the child's education (which may or may not be the case).
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<p>If the child is a dependent student (under 24, not married, not a veteran, no first bachelors, or kids of their own) a 50% increase in the parents income will definitely affect the amount of need baed financial aid the student will be given. Whether the parents want to pay the increased EFC is another issue and the college does not care what the parents want to do, financial aid is based on what they can afford to do.</p>
<p>"If the child is a dependent student (under 24, not married, not a veteran, no first bachelors, or kids of their own) a 50% increase in the parents income will definitely affect the amount of need baed financial aid the student will be given."</p>
<p>sybbie-- in the OP"s case, you're correct, but that's not always the case.</p>
<p>Remember that the EFC has contributions from Parental income, student income, parental assets, and student assets. If the parents are very low income, there may be no contribution to the EFC from parental income, even after a 50% increase, if the AGI remains below the income protection allowance.</p>
<p>In OP's case, a household income increase from 60K to 90K will certainly result in an increased EFC (and decreased aid), as you said.</p>
<p>I turned down a promotion at work that would have increased my salary by about 10K. I figured after taxes, contribution to retirement, yada yada yada, the impact to my EFC would have been not worth it. I took on the extra work for comp time (time off). I don't think Uncle sam or FAFSA has found away to tax my Time yet!</p>
<p>I told my boss that after I do the last FAFSA (3 years from now), I'll be ready for that promotion :-)</p>
<p>How much of a difference depends on what your original income was and how much it rose and on the financial aid policies.</p>
<p>Before my daughter accepted a college offer, I called several financial aid offices. At the school where she's going, they said that I could count on an increase in family contribution for increased income, at a rate of about 15%. Thus each 10K increase in income would add $1500 to the family's cost.</p>
<p>my net pay is about 50% of my gross (I currently contribute 18% pretax dollars to my retirement - which is reported on the fafsa). So a 10K raise would be take home of 5K, and then the college would want their share, lets say 1500 so I'm down to 3500. And this job would have meant more work (I know imagine that!). I figured it wasn't worth and extra $67 a week for the aggravation.</p>
<p>Time off & less stress = priceless</p>
<p>I hear you, sueinphilly! I'm not questioning your choice, just trying to supply information to the OP.</p>
<p>I have been doing some "what if" calculations on the FAFSA calculator, since I am looking for fulltime work. I have found that there is a certain point at which our EFC goes up A LOT --- it would be different for another family, due to the components that make up the EFC, but I was surprised at how much it jumps after a certain threshold. I would suggest plugging numbers into a calculator & seeing what happens. If you are just getting loans, it won't be much of an issue. If you are getting a big grant package, however, you might find that you lose more in grants than you end up gaining in salary!</p>
<p>I don't understand how that can be possible. How can your EFC rise more than the extra income you're bringing in? It's like the people who don't want to make more money because it puts them in the next higher tax bracket. It will never cost you more in tax than the extra money you're making.</p>
<p>I agree with Kelsmom about doing the different "what if" scenarios as you would be suprised how easily you can slip from one category to another. </p>
<p>For example if a family (1 parent age 45 and 1 child) makes under 50k and passed the simplified needs test they will have a FAFSA EFC of "0". (2 parents same income would still be "0")</p>
<p>According to the college board the same family that does not meet the simplified need test fill have a fafsa EFC of 5218 (2 parents the EFC would be 5054). Student would be eligible for low income initiatives (no loans) at many of the elite schools.</p>
<p>The same family who makes 60k (lets say for all intents and puposes has now taken a part time job for $10,000) now has an EFC of 8720 (2 parents 8836)</p>
<p>By the time you pay the tax on the 10,000 (lets say 30%) and the incremental cost associated with taking this job (extra gas, car fare, value on the time that you could be doing other things and missing your child's events because you are working the part time job) is it really worth the ~3500 gain after paying the increased EFC?</p>
<p>If the part time job was 25k ($480/wk) the EFC rises up to $14,493. Using the same 30% tax bracket, 7500 going to taxes, netting 17500 to pay the 9215 increased EFC, maybe even more depending on home equity & other assets and no longer eligible for low income initiatives, you may really have to question the worth. </p>
<p>In OP's situation, the EFC goes up to ~21,050 (on the FAFSA)</p>
<p>YMMV.</p>
<p>Yeah-- there are thresholds-- below which a change in parental income won't make any difference, and above which it will make a significant difference.</p>
<p>The big one is the simplified needs test income threshold. Another is the automatic 0 EFC income threshold. A third is the income protection allowance.</p>
<p>Smilarly, for student income, an increase in income may not impact the EFC at all (if the income increases from, for example, 1K to 3K, it won't impact EFC). But an increase from 3K to 5K wll result in a significant increase in EFC, because the student has exceeded his income protection allowance.</p>
<p>That's why it's a good idea to understand how the formula works. "Paying for College Without Going Broke" by Princeton Review is a good investment for the parents of any college bound student. It explains both methodologies, and outlines strategies in detail for maximizing potential need-based aid, legally.</p>
<p>simplified needs test income threshold.
Another is the automatic 0 EFC income threshold</p>
<p>These are different
we have met simplifed need & our EFC has been about $10,000+
Other years- our income has been similar- but the only reason we didn't qualify for simplified need was because we itemized taxes.
It is usually (for us) a case of 6 of 1- half dozen of the other ;)</p>
<p>I will agree that an extra $10,000 of income will affect EFC more in some cases than others. And I will agree that the difference has to be considered. But I'm going to guess that if someone's EFC is affected drastically by the $10,000 increase, then they are at the lower end of the income spectrum. And thus, the increase of ONLY $3,500 out of the original $10,000 would also impact their life more than to the higher end earners. Especially if that difference were in loans. If my family were struggling to make ends meet, I would more likely be willing to work extra for that money than if it didn't mean much to us. Or am I missing something?</p>
<p>The extra $67 a week would not impact my life directly. The extra aggravation at work (the comptroller's dept for the Defense Logistics Agency - which is part of the Dept of Defense) would cost me more than $67 in stress.</p>
<p>Going from a GS-11 to GS-12 in my line of work puts you in a line of responsibility and accountability I am not willing to take on in this job at this time.</p>
<p>It is ironic. This may not go well, but I have to say it.</p>
<p>When blacks find ways to maximize welfare dollars, they are labeled as welfare queens or baby making machines. When able bodied person can marginally increase their income by working but prefers welfare, they are called lazy.</p>
<p>But when white people let go a promotion, don't work during the summer or like that lady who pay $80 k in mortgages per year, it is called fin aid strategies.</p>
<p>The financial aid was only part of my decision to forgo the promotion. I honestly didn't want the extra aggravation, stress and responsibility that I knew it would bring. I have no regrets. I like to know that I can give 100% to my job and I didn't want to do that in the new position. Not all promotions are good opportunities, especially in the Dept of Defense!</p>