<p>So if I made 9000, would it require 20% of that from my savings and an additional 50% off of the money that isn't protected from the Student Income Protection?</p>
<p>Are you saving every penny? Yes, that’s how fafsa would calculate the student contribution to efc.</p>
<p>Can you explain to me, please? I don’t know much about this issue. Income? or money in the savings account??</p>
<p>The OP is a student, presumably a dependent student for financial aid. Fafsa will count about 50% of student income earned during the year above $6260(the 2014-15 student income allowance) toward the student portion of EFC. It will also count 20% of student savings toward the student portion of EFC. The student portion of EFC gets added to the parent portion of EFC to get the family EFC. The calculation of the parent portion is much more complicated. Even with the student calculation there are allowances for federal and state taxes paid and social security taxes paid in addition to the $6260 allowance. Here is the 2014-2015 Fafsa formula guide, it’s daunting to some but it will tell you everything you need to know about how fafsa EFC is calculated.</p>
<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf”>http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf</a></p>
<p>As Annoyingdad has posted, 50% of what a student earns in a year, above $6260 will go towards the FAFSA student contribution. Federal work study income is not included in the formula. Also, any assets a student has on the day s/he completes the FAFSA (note: not the last day of the calendar year, but the day FAFSA is completed which will a day of YOUR choice after first of the year when the new FAFSA form is released) is assessed at 20% directly onto the Student EFC. </p>
<p>It is therefore a good idea to spend YOUR earnings first before having to file the FAFSA. Assets that are attributable to financial aid (Work study proceeds, loan proceeds, money from grants) are not included in that asset balance. So if you can keep a paper trail so that you show that you are not spending those particular assets, but the money you have earned independently, it can make a difference. It’s also permissable to remiburse parents for expenses paid, since their assets are assessed at 5.6% after a parent allowance towards parental EFC, and so if it’s sitting in a parent account the impact is less on the EFC. </p>
<p>If you earn $9K in a non federal work study job and just put the money into an account in your name, (or have it in a drawer or anywhere else in your possession) and it’s all sitting there the day you complete FAFSA, your student EFC attributable to this would be: Due to the earnings: $9K-6260 ($2740); divided in half ($1370); plus Due to the Asset formula $9k x 20% = $1800, a grand total of $3170. </p>
<p>Nothing you can do about the earnings part of that EFC, but if you are smart about not having the money sitting as an asset the day you fill out the FAFSA, you can avoid that hit, and just have an EFC of $1370. </p>
<p>That is just the student part of the EFC. it is added to the parental EFC to get the complete number. </p>
<p>If I were to put the money in my parent’s account, would I be able to avoid the asset part of the EFC contribution?
And thanks again guys!</p>
<p>It becomes their asset, and the expectation is 5.6% rather than 20%</p>
<p>And If I were to just make exactly 6260, I wouldn’t have to shuffle around the money,correct?</p>
<p>No, you’d still have to report your assets (savings accounts) on the FAFSA and you’d still have to contribute 20%. The $6250 is a TAX number, as the first $6250 you make in 2014 is within the exemption. You might want to file taxes anyway if you had any amount withheld from an employer.</p>
<p>No, $6260 isn’t a tax number, it’s the dependent student income protection allowance in the fafsa formula. The tax number(standard deduction amount) for filing taxes for 2014 is $6200. Any state and federal taxes actually owed plus social security taxes taken out are also added to the $6260 before the 50% assessment kicks in.</p>
<p>And as cpt said, income based employment such as federal work study is subtracted out in the fafsa formula. And if you keep track of the assets from income based employment, you can subtract that from savings.</p>
<p>My personal feeling is that putting the savings in your parents account with the expectation that it is still your money and that you will get it back or be able to spend it yourself at some point is fraud. It’s still your money whether it’s in your parents name or under your mattress or in your savings account.</p>
<p>@myneighborwinny Do you have a 529 plan? Money in a 529 plan is considered a parental asset.</p>
<p>Money in the saving only counts if it is there on the FAFSA submission day. You earn the money over the summer but you probably won’t have much left after paying the bill for this year before you file for the FAFSA next year.</p>
<p>What is a 529 plan? @Madison85 Is it something I should look into?</p>
<p>Would it be ok to establish a savings account for yearly college expenses in the parent’s name (not 529) and then have the parents and student contribute to it? The student will contribute some of his work earnings and parents will pay for supplies, travel costs, books out of it?</p>
<p>A 529 plan is an educational savings account - money in this type of account needs to be spent on educational expenses. The account balance is considered to be the parents’ asset (assessed at 5.6% after other considerations), not the student’s asset (assessed at 20%) so it can result in a lower EFC.</p>
<p>Might you qualify for a PELL Grant? What is your estimated EFC?</p>
<p>Click ‘start’ you don’t have to ‘sign in’:</p>
<p><a href=“Expected Family Contribution (EFC) – BigFuture | College Board”>https://bigfuture.collegeboard.org/pay-for-college/paying-your-share/expected-family-contribution-calculator</a></p>
<p><a href=“http://www.irs.gov/uac/529-Plans:-Questions-and-Answers”>http://www.irs.gov/uac/529-Plans:-Questions-and-Answers</a></p>
<p><a href=“529 plan - Wikipedia”>http://en.wikipedia.org/wiki/529_plan</a></p>
<p>“If I were to put the money in my parent’s account, would I be able to avoid the asset part of the EFC contribution”? </p>
<p>Yes. But, intent can play a role in this–you are not supposed to be doing this to “avoid the asset hit”. You reimburse your parents for expenses and if they choose to put the money in a joint account with you with the parent name and ssn listed first, it’s permissable and legit. This is not a “wink, wink”, “nudge, nudge” arrangement but truly bonafide.</p>