<p>My DD is currently a freshman. I'm a single parent and our EFC last year was approximately $6600. This year, after filing my taxes and completing the DRT, my EFC now shows as $28990. </p>
<p>I compared the two SARs and the biggest difference is that my AGI last year was around $42,000 as compared to $51,000 this year. The increase in my AGI was all due to capital gains from moving long term investments (given to me when I was a child) to another financial investment company. My employment income did not increase at all. I'm assuming that this year's AGI no longer qualified me for the simple needs test, which resulted in the EFC jump.</p>
<p>Looking back, I should have left the investments alone until my daughter was out of college to avoid the capital gains, but I really didn't think they would make that much difference. Live and learn, I guess.</p>
<p>I expect my AGI to go down next year without the capital gains. I'm worried about my DD's financial aid package for this coming year, given the large jump in EFC. I can probably swing it for one year if her aid is reduced, but I'm wondering if my AGI goes back down to below $50,000 for her junior and senior years, will any reduced aid for the sophomore year be increased to reflect a lower EFC for the remaining years?</p>
<p>You must have large assets for the simplified needs test to have made that much difference, though as a single parent your asset allowance is very low. For federal aid determined by FAFSA the EFC should go back down as long as you meet one of the other requirements for simplified needs.</p>
<p>Is this a FAFSA only school? If you filled out profile or another form for this year, schools would have counted your assets for their own aid regardless of FAFSA triggering the simplified needs.</p>
<p>In a perfect world, you wiil be hit this one year, and then your aid will be increased to reflect the lower EFC for future years. Are you in a school that guarantees to meet full need? Is this the FAFSA EFC we are talking about or what the college has said you have to pay? Does the school use PROFILE? </p>
<p>IF the school does not guarantee to meet full need, then it is entirely possible that you don’t get more. You need to talk to the financial aid officer at the school to find out what their policies are for aid. Some schools just give renewal packages base on the previous year, with only adjustments downward. Federal law forces them to look at that EFC, so they do. They cannot give federal aid unless the EFC is met, other than PELL. </p>
<p>I have friend who ran into a similar situation with two kids one year. He got forced into early retirement but got a lump sum severance that he immediately parlayed into a business for himself. The schools refused to give him any break on that as a one time thng, so his kids took a gap year. Both went to schools that that did meet full need, and so when they returned they got financial aid that was commensurate to what they ahd before. It was quite a difference. </p>
<p>Yes, this is a FAFSA only school. I don’t really think my assets are that large, but I guess everything is relative. I’ve had my investment account since I was a child and have basically ignored it, considering it to help fund my retirement. My asset total includes amounts from my DD’s 529 and is around $110,000 (of which the 529 comprises about 25%).</p>
<p>Even though my EFC last year was $6600 and DD currently has a pretty good financial aid package (grants, scholarships and subsidized Stafford loan), I am currently paying about $25,000 per year out of pocket. I can swing one year of reduced aid, but will seriously have to think about the following years if the reduced aid continues past that.</p>
<p>Approximately $100k assets after your small asset allowance should only have bumped your efc about $5600. The increase in your AGI would add about another $4400. Something else is going on to get it to $29k. What are your D’s assets and income? Check over your SAR again with a fine tooth comb looking for a mistake, an extra 0 somewhere or something else. Did you report the 529 money as a student asset instead of a parent asset? That could do some of it.</p>
<p>Annoyingdad, she took realized gains when she moved her assets. Those go in the income catergory which is a killer in terms of affecting EFC. It was a mistake; she says she didn’t realize the effect it would have had. Each additional dollar and income really gets hit, and when it goes over a certain point it causes a sudden rise. FOr here she went from simplified means EFC to formula which is a hit anyways, and the realized gains over the years had to be reported. </p>
<p>I agree that this should not have caused such a big jump. Did you have any non-taxable pension distributions or IRA rollovers that did not count in your AGI? If so, and if you used the IRS Data Retrieval Tool, that is the culprit. In such cases, you have to provide the aid office with your 1099-R so they can see the untaxed distributions and edit your info (you cannot change anything imported by the DRT on your FAFSA).</p>
<p>Cpt, her AGI went up about $9k from the gains the OP said. That would be hit at 47%, thus the $4400 efc increase I mentioned. $6600 + $4400 +$5600 from the assets would make the efc about $16.6k, not $29k.</p>
<p>I don’t think this is the case, but I’ve got a question in to my financial advisor and CPA about it anyway. </p>
<p>My DD’s income was about $4,200. She has assets in a UTMA of about $40,000, which is about $10,000 higher than what it was last year. (Sorry, forgot about that account, saw it when I looked at her information on the SAR again.) I know those assets are assessed at a higher percentage than parental assets. I included her 529 monies as parental assets.</p>
<p>How does a gap year work? Is she able to take a year off from school and then return without going through the whole application process again? </p>
<p>And I’m not clear on how a gap year would work with the EFC problem - if the school won’t treat the 2014-2015 EFC as a one time thing, then does taking a gap year “reset” the financial aid picture so that her aid might go back to somewhere around its previous amount (considering if my AGI reverts back to under $50,000)?</p>
<p>I’ll have to see what her financial aid package is for next year and see what the school has to say about my situation.</p>
<p>Really kicking myself - I had no idea that taking the gains on moving investment accounts would have such repercussions.</p>
<p>Look on the school’s website for the leave of absence policy. It would only affect the 2014-15 aid change directly. It depends on the school how aid when she returned would be handled. You’d have to inquire about that.</p>