<p>Ok, so I am a junior in high school and have been increasingly making profits from a small company I run. It made 5,000 in 2007 and about 12,000 in 2008. Now, that its 2009 and the money I make this year will affect my EFC, I was wondering what I should do. As of right now, I have not made a cent through my business and have just been working as an employee of a gift shop making about 4,000 for the whole fiscal year. I have less than $200 in my bank account. Should I try to make as much money as possible to save for college, and have it negatively affect my financial aid, or just work at the gift shop and make enough to scrap by as a high school student?</p>
<p>First, congratulations!
The way to determine this is to run your (and your parents’) numbers through the FAFSA Forcaster. That way you can try out and see all the ramificaitons of how this works with your money and your parents’ money. Also, Finaid (org? com?) has an excellent worksheet/model that will also explain how the percentage of your work will affect your scores, and you can try running it with different models to find out. You’re smart to think about this right now. You’ll need your parents’ tax returns and your own to fill out the forms. Good luck!</p>
<p>Thank you so much Endicott. That suggestion makes so much sense!! I will do that right now and see what comes up!</p>
<p>Other ideas/suggestions will be appreciated.</p>
<p>I’m curious: you made $12,000 in 2008 and have only $200 in your bank account. Where did the $12,000 go?</p>
<p>Wow, what did you sell? Looks like you found a niche somewhere. I’m guessing the money went to the company or under his mattress.</p>
<p>You should definitely follow Endicott’s advice. It’s a good start. If you do have money under a mattress, think about investing in some long-term government bonds or back into the business.</p>
<p>It’s tough though; you have a nice thing going, but if I were you, I wouldn’t want it to ruin my chances of getting more aid for school.</p>
<p>What’s your major?</p>
<p>I will major in nursing, I am in high school at this time. The money had to go to a car, a mattress for Christmas for my mother, a washer and dryer, and other things.</p>
<p>Your last response made me wonder … is your family low income? If your mom meets the criteria for automatic 0 efc, it won’t matter how much YOU make or save for federal aid purposes (Profile schools may take it into consideration when awarding institutional funds). If mom’s agi is less than $30,000 AND 1) she is eligible to file a 1040A or 1040EZ (even if she filed a 1040-as long as she “could have” filed a 1040A/EZ) OR 2) she is a dislocated worker/displaced homemaker OR 3) someone is your household received federal means tested benefits within the past 2 years (free/reduced lunch, WIC, TANF, SSI) your efc is automatically 0 … it doesn’t look at the student’s income/assets.</p>
<p>Ok, so my mom said she makes less than $30k and that she may have filed a 1040A/EZ. She gets Social Security for me, I think because my father is deceased…What does that mean for EFC?</p>
<p>Edit: She made $33k and filed a 1040.</p>
<p>It sounds as if you will probably have a low EFC, which is very good news for financial aid! Next year, after you submit and get your FAFSA score, some schools have their own financial forms, and/or the CSS/Profile forms (this is mostly private schools). There is room on the CSS Profile to write a letter explaining any extenuating circumstances. I would also suggest writing a letter to each school’s financial aid office explaining any kind of extraordinary reasons why your financial aid picture is even more dire than it appears. The fact that you have a deceased parent is certainly one of those circumstances, and also the fact that you need to spend the money you do make on basic necessities like replacing broken appliances. Good luck to you! You sound very enterprising!</p>
<p>If she does have an AGI of less than 30K and can file a 1040A or 1040 EZ, it sounds like you will have an automatic 0 EFC. That is based on this year’s formula (2009-10). I have to caution that this is based on the little info you have provided … I cannot tell you for sure just based on this. But if you do qualify for auto 0 efc, your income won’t affect your efc for fafsa. You would be eligible for a Pell grant. Remember that Profile schools can use your income/asset info if they wish, even with an auto 0 efc - for anything but federal aid.</p>
<p>Oh darn! She made $33,000 and filed a 1040!!! Does that basically “screw” me over? (She just checked)</p>
<p>Did you get free or reduced lunch? You can qualify for the Simplified Needs test with an AGI of less than 50,000 (plus, if your mom filed the 1040 but COULD HAVE filed a 1040A or 1040EZ, it still counts). Simplified Needs ignores assets of student & parent.</p>
<p>I do not get free or reduced lunch. She always says that she makes too much and throws the form away…stupid I know.</p>
<p>She probably does make too much for the free lunch program according to what you have said, unless you have a whole lot of siblings you haven’t mentioned. (The system starts to kick for free lunches at the $30K level when household size gets to around 6).</p>
<p>You need to keep in mind that your EFC is not a guarantee of aid – it is just the minimum that you will be required to pay before qualifying for aid. If you have a 0 EFC you will definitely qualify for a Pell grant – which is federally guaranteed money – but a Pell grant covers only a fraction of college costs. In other words, if the cost of attendance at the school you want to attend is $18,000, and you get a $5,000 Pell grant - and all the rest is in loans — you really would not be better off than if you had worked and saved $3000, and your EFC was $2000 - and you only got $3000 in Pell money + loans. (You see by the example I gave you are $1000 ahead, even though you get less “free” money from the government). So I guess part of the equation is how hard you have to work with your business- you will still probably be better off to earn more money, every dollar you make has a potential “cost” in reduced financial aid.</p>
<p>I only gave very rough numbers however – Kelsmom is the expert. Its just been my experience over the years that you almost always come out ahead to have more money (assuming that you wouldn’t otherwise qualify for the automatic 0 EFC). But you should really talk to someone who knows the system well to get the best advice.</p>
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<p>Social Security benefits that are not taxed are also not reported for FAFSA.</p>
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<p>Assuming that you are not eligible for the Automatic 0 EFC, this level of student income ($16K) could put your EFC over the limit for federal need based grants. Dependent students have an income protection allowance of $4500 next year (plus allowances for taxes paid). Beyond that, 50% of your income will be added to your EFC. As a student, you have no asset protection allowance and 20% of your savings as of the day you file FAFSA next year will be added to your EFC. The cutoff EFC for Pell (and ACG) eligibility is $4617, I think, this year. </p>
<p>The best thing to do would be to take out your tax form, and mom’s, and work through a paper FAFSA form to get an idea of how things work. There are online calculators, but they’re not always reliable and they don’t really give you a sense of what’s affecting your EFC and how. You should also get familiar with your state’s higher ed grant programs.</p>
<p>Here are a couple of links that will help you understand FAFSA and federal grants/loans:</p>
<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf</a> - there are tables and printable FAFSA worksheets here, just use the sections marked A. Note that the student income protection allowance (currently $3750) is supposed to go up to $4500 next year.</p>
<p>[Student</a> Aid on the Web](<a href=“http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp]Student”>http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp) - FAFSA forecaster here, not sure how accurate it is right now, but it’s a start</p>
<p>[FinAid</a> | Financial Aid Applications](<a href=“Your Guide for College Financial Aid - Finaid”>FAFSA - Finaid) - lots of other useful info on grants/loans at this site too</p>
<p>Also, reemember that the question about the tax return was could you file a 1040EZ or 1040A…while her tax return might be a 1040, she needs to find out whether she was eligible to use the 1040A or 1040EZ return. Also, make sure you are looking at the AGI not the earned income. You said she made $33,000…If she had any reductions to her earned income her AGI may be low enough to keep you within the under $30k heading.</p>
<p>I would also recommend she complete the application for the free/reduced lunch program…the worst that will happen is they will say no. However, depending on the number of siblings in the home, you might qualify for reduced lunch which will benefit your situation for financial aid purposes. I make just a tad bit less than you listed for your mom and we were just barely over the threshold for free lunch and were awarded reduced lunch (but there are 4 in our household.) Again, it might be a no, but it doesn’t hurt to try. I have included a link to the income guidelines for the federal lunch program <a href=“http://www.fns.usda.gov/cnd/Governance/notices/iegs/IEGs09-10.pdf[/url]”>http://www.fns.usda.gov/cnd/Governance/notices/iegs/IEGs09-10.pdf</a></p>