<p>Everything I read states that student assets are assessed at 20pct while parent assets are assessed at 5.6pct when EFC is determined on the FAFSA. I've been operating under the assumption that the 5.6 number is for both parents COMBINED. However, when I look closely at the EFC formula guide, IFAP</a> - EFC Formula Guide, in its parental asset contribution calculation, It multiplies parental assets by .12 , which makes me think that the real parental rate is not 5.6, but 11.2 percent. Is this correct? If not what am I missing here?</p>
<p>The asset conversion rate is 12%. You’re missing the factor applied to adjusted available income, which is this:</p>
<p>Contribution from AAI ( $7,926 + 47% of AAI over $29,300).</p>
<p>47% of 12% is 5.64%.</p>
<p>AAI = (AGI - taxes - other allowances) + (assets - asset protection allowance) * 12%</p>
<p>Read through the whole formula. Parent assets are multiplied by .12 and added to available income giving (I think ) adjusted available income (AAI). Then the amount of AAI is used along with another table to determine the to determine the EFC. The % of AAI used for the EFC ranges from 22% up to a maximum of 47%. SO the maximum amount of the 12% of assets that can got to the EFC is 47%. 47% of 12 % is 5.64%</p>
<p>So up to 5.64% of parent assets can go to the EFC.</p>
<p>Got it! Thank you!</p>