Is my EFC too high?

Hi.
So my mom just filled out the FAFSA and she says our estimated EFC is 63000. My parents make a combined 105,000 with 40k in college savings and no other investments/assets. Every single college net price calculator we have sat down and done with updated and accurate information put us at about 25-30k aid which was perfect for us. We also did one of those expected EFC calculators on fafsa’s website earlier this year and it came out to about the same, like 26k. Is this a normal amount given our finances? I’m freaking out a bit.

Print out your FAFSA and check each entry for accuracy.

  1. Make sure parent income isn’t also listed in the student section.
  2. Did your parents do an IRA or TSA rollover in 2018? If they did, and didn’t complete the FAFSA correctly, this would be included as income.
  3. Make sure that there are no misplaced decimal points. $100.00 can look like $10,000 if the decimal point is incorrectly placed.

@thumper1 My mom says that we can’t print it out or view the application because it’s now processing. I logged in to both accounts and I can’t find the actual application she filled out, just the status that it is processing? Do you know if I can access her input right now?

She says she didn’t make any mistakes, which is why I’m really worried, but fingers crossed she did.

You can’t access it while it is processing. That usually takes about 2-3 days.

Did she do a rollover of retirement accounts in 2018.

Everyone thinks they haven’t made a mistake. It’s very easy to do a typo, especially a misplaced decimal or added zero.

Wait until this processes and then print out and check.

The only thing is…if you used the IRS Data Retrieval tool to import tax return info, you won’t be able to read those numbers.

If your parent did a rollover, it will be on her tax return. Check that.

Another thought…did your mom include balances in her tax deferred retirement accounts as assets?

EFC does seem really high for that income and assets. DS’s FAFSA processed very quickly last week. It was ready to be viewed in 24 hours, so maybe you won’t have to wait several days like it says on the site. I’d check everything suggested above.

@thumper1

Thanks for the helpful info!
Just asked, and my mom did do a rollover, and she included it on the FAFSA. The rollover was around 4300 dollars according to her tax returns. She also says that she didn’t include the balance in retirement accounts as assets. I’m going to be honest, I have no idea what a rollover is and what that means, but did we make a mistake here?

Unless there is something unusual about your family’s tax situation or unique numbers around home business or farm or something, that number (EFC) is too high. Our assets are very similar and our combined income from both parents is closer to 150k and our EFC was 41,000.

Take a look at the relevant tax return—get the paper version since you will not see that part on the FAFSA and as @thumper1 says, check for rollovers or withdrawals of Qualified plan money. Also look at how much was contributed to qualified plans that year. Any qualified plan contributions would be added back to income. Also added to income are return of overpayment of state taxes from prior year. These are items often forgotten

Given that the EFC % is in a sliding scale from 22-47%, it’s difficult to see you getting a $60k+ EFC. Your net FAFSA income would have to be greater than $134k to get this and Im taking it at the marginal rate which is not the way it works and not including any allowances, taxes.

Were the college savings included as your assets or your parents’?

That could be the problem. If the $40k was listed as YOUR asset and not your parent’s, it gets hit at the student’s 20% rate rather than the parent’s 5.6%. If the money is in a 529 account, it counts as a parent’s asset. If it is sitting in your (student’s) bank account, it really raises the EFC.

20% would increase EFC by a little more than $6k which only accounts for some of the difference. Something else is off

I still think 63 is too high, even if it was listed as student funds and/or the rollover was wrongly input. 40k at 20% is only 8k.

Here’s a wild guess:

OP, if you correctly roll funds from one qualified investment to another, directly, it’s tax free and not counted for the FAFSA. But it seems the Fafsa doesn’t properly import the full rollover details from the tax forms. There’s supposed to be another Fafsa question, asking the amount of untaxed funds from a rollover, so it can be excluded.

https://www.edvisors.com/blog/irs-data-retrieval-tool-returns-for-the-2018-2019-fafsa/
“IRA and pension distributions will be automatically transferred and autofilled on the FAFSA form, and incorrectly counted as income. This could affect the amount of aid the student can qualify for. Because of the new security measures implemented, the parent will not be able to see the amounts that are autofilled in the fields showing untaxed IRA or pension distribution. But you will be asked if the amount includes a rollover. If the amount includes an IRA rollover, answer yes.”

“…the online FAFSA form will generate a new field for you to report the amount of any untaxed IRA distribution or pension that was rolled over. The parent will need to manually enter this number. The FAFSA will then subtract the user-reported rollover…”

You want to be sure this subsequent question was answered.

But, if only 4300 moved, that doesn’t seem to explain the high EFC.

??

The $4300 rollover would increase the income by that amount. The parent would have needed to enter the amount AND check a teeny box on the FAFSA to indicate this rollover.

Is it possible that she put $43,000 instead of 4,300?

Thank you all so much for the responses! We’ve spent the last day looking over the processed form.

Like most of you said, the issue is the Rollover. My dad switched jobs so around 85k rolled over to his new job. We used the IRS Retrieval tool. How do we fix this now so the roll over doesn’t count as income?

Look at @lookingforward ’s post #11 above. Then look it up on the internet and read the procedure V-E-R-Y carefully. You need to correct the FAFSA.

I think you need to correct the income issue with each school, and don’t think you can correct the FAFSA once it is processed.

It’s likely you need to get tax transcripts from the IRS, so you might want to be pro-active and order that now.

You need to contact each college. You aren’t the first (and won’t be the last) who has this issue. The colleges are the ones who can make the changes. You will need to provide documentation to each school of the rollover info.

It will get done…but start now.

@cptofthehouse unless something has changed this year, this student can not make this correction. Her colleges need to make the correction to her FAFSA.

We were able to make a Fafsa correction online, I thought. Not CSS. (That had to be a manual correction on a copy.) But it’s been a while.

But the point is, as twoinanddone and thumper say, to contact the colleges and ASK them how they want you to correct.

I highly suspect you’ll be one of many who has this error.

Though there are things you can correct on FAFSA, I do not know if this is one of them. If it is not, you do have to contact each college as @thumper1 says above.

One would think the FAFSA would allow this correction to be made, given it is an easy mistake to make. I seem to remember discussion on this some time ago. No idea if this year’s form can be corrected by filer—check it out because if it is correctable by you, it would be a heck of a lot easier than sending the info to each college, especially if you are applying to a lot of schools. But you do as you have to do. It’s a huge difference in EFC.

@lookingforward there are plenty of FAFSA corrections you can make yourself online. Unless something has changed, this rollover thing cannot be corrected online. It has to be done by the college.

I do agree…this mistake is so easy to make. It’s a little checkbox…and if you miss it…your rollover is included as income. Seems like an easy thing for FAFSA coders to fix.

I found this…

I would suggest you contact the college(s) and ask them how to correct this rollover issue. If it can be done by you online…they will likely tell you to do it. But since it was imported from the DRT, that might not be the case…but do ask!!