Pell Grant Eligibility

Paying for College
1

My dad contributes to his 401K so when he is 65-75 he can use it to retire and so FAFSA asked me about this untaxed income (I think it is untaxable, I don’t know) and so I typed in 4K. Apparently, my EFC skyrocketed to 6869. My mom makes $13,939 and my dad makes $21,451 so the total is $35,390 of a house of 3 people (married joint tax) but they gamble so the adjusted gross income is $55,505 but FAFSA does not ask for Schedule A in which they lost all the gambling winnings. There is also no other contribution.

When I had my FAFSA estimated for adjusted gross income of 44k and no other things, my EFC was 2455. My Pell Grant Estimate was $3280.

Then, when I received the 2014 tax, I fixed in my mom’s income to $24,294 (my dad’s stayed the same) and the adjusted gross income to $55,505. My EFC was 5302 (No Pell Grant Estimate). My counselor said I put the wrong number (I forgot to subtract expenses) so I fixed my mom and added the untaxed income (my dad’s 401K) and then EFC changed it 6869

Would I still be eligible for Pell Grant? I asked FAFSA and they said college determines the eligibility so the college that I would go to will figure it out but then why do they have the Pell Grant Estimate there if college determines that?

2

No, that EFC is too high for any Pell grant. Schools don’t determine Pell grant eligibility, your EFC does. And taxpayers through federal aid aren’t going to make up for gambling losses.

You need to explain this, what expenses are you talking about?

3

She just has expenses because she has 1099 to buy this and that

4

With an AGI of $55,000, I don’t think your EFC would be in Pell Grant range.

5

It’s too bad about the gambling winnings…basically your parents gambled away your Pell grant.

6

Yes, unfortunately gambling winnings show up under AGI, but the losses are deducted when you itemize and are reflected in your taxable income, but not the ‘gross income’ used for FAFSA. So even though they didn’t actually have any winnings, you get penalized for it. I don’t see any way around this. It affects our EFC also. And yes, any contributions your father made to his 401k need to be added back in as ‘untaxable income’ - unless it is a Roth 401K where they would already still be included in the income on the W2.