<p>My husband has been on unemployment for a year and our family income is pretty low (qualified for some Pell money this year) My daughter decided to live in NYC for the summer and work her butt off, pay her own rent and expenses. Now she tells me her income is up to 8k and she is still working at least 20 hours a week for the remainder of the school year. How is that going to effect our EFC and financial aid for next year? Will her income hurt us? Will they take into consideration her cost of living in the city? She has not had to file a tax return in the past because she never made enough to require it. BTW, she has saved up a few thousand for spending money when she does a semester abroad (Jan).</p>
<p>Congratulations to your daughter. It sounds like she is working very hard.</p>
<p>The good news is it sounds like she has a job to help support her college costs. That is not a bad thing.</p>
<p>Her income may or may not affect her financial aid…lots depends on the school. Does her college meet full financial need of all students?</p>
<p>No the college will not take into consideration the cost of her living in NYC.</p>
<p>Does your family qualify for the simplified needs test…you would need to have an income below $50,000 a year AND then any one of the following three items…dislocated worker, file 1040EZ or 1040A tax form, or qualify for a means tested benefit (e.g. free lunch for someone in the family or food stamps…or the like). If that is the case, your daughter’s income/assets are not used at all in the FAFSA calculation. For Profile schools (is hers one?) there is no simplified needs test.</p>
<p>omg, it looks like we are going to end up around 50,500!! This will really stink. Last year with my husband on disability, followed by unemployment we almost qualified for the earned income credit (which would be a first time ever) but we made a couple hundred over and lost a huge credit. I thought I was doing a good think by getting a few hours extra and now it will come to bite us in the butt. Any ideas?</p>
<p>The simplified needs test does not cause a students income to be ignored. It only causes assets to be ignored. It is the automatic 0 EFC formula that ignores students income. To qualify for the automatic 0 you would need an AGI below $32,000 plus at least one of the other qualifiers (eligible to file a 1040a or ez or receive means tested benefits etc). You are a long way off from meeting the requirements for the auto 0.</p>
<p>A student has a certain amount of income protection (around $5500 ish - can’t remember the exact figure - plus allowances for any taxes, FICA etc). 50% of income over that goes to the EFC. So it looks like her EFC will be impacted by her earnings. Any WS or taxable scholarships/grants included in her AGI will not affect her EFC, but if the earned income is over the allowance it will. 20% of a students assets go to the EFC if you are not eligible for the simplified needs test.</p>
<p>The simplified needs test is based on your AGI, not your gross income (plus qualifying for one of the other requirements - unemployment is one). Is it your AGI that is going to be $50,500? If your AGI is just a little over the qualifying amount, and you can file a 1040a or ez (or meet one of the other requirements), then you can reduce your AGI by contributing to an IRA or 401k. The contribution is added back to income for calculating the EFC, but the actual AGI is what is used to determine eligibility for simplified needs.</p>
<p>My daughter decided to live in NYC for the summer and work her butt off, pay her own rent and expenses. Now she tells me her income is up to 8k and she is still working at least 20 hours a week for the remainder of the school year.</p>
<p>Since there are still 3 months left, she could be working another 250+ hours…so maybe earning another few thousand…putting her income at $10k+</p>
<p>What is she using her current earnings for (I’m guessing that she’s no longer in NYC)? </p>
<p>I know it sounds punitive, but your D did decide to live in NYC, earn a good bit of money, and it may likely negatively affect her aid. It’s the
Financial World’s way of saying that summer earnings should have been saved for her education…not living unnecessarily in an expensive place in the summer. </p>
<p>This isn’t much different than if she had gone off to some exotic place for the summer, earned $8k to pay for it, and then the FA World feels that her luxury choice should impact her aid a portion of that earning should go to education…</p>
<p>Thanks for that clarification Swimcatsmom…I always seem to confuse the benefits of auto $0 with simplified needs.</p>
<p>How much would this $8000 in student income add to the student’s EFC?</p>
<p>Probably a couple thousand, but I am not sure about that. The best thing to do is plug your numbers into an EFC calculator.</p>
<p>*How much would this $8000 in student income add to the student’s EFC? *</p>
<p>the $8k amount was what was earned by the end of summer. The mom says the D is STILL working 20 hours per week…which would suggest that she’s going to earn at least another few thousand by Dec 31st. </p>
<p>The student might be in a bit of a pickle. She needs to save the money that she’s earning NOW to help pay for her FA shortfall next year. However, any money she saves will hurt her MORE when she files for aid after Jan 1st. Don’t know if she can pre-pay any of her 2012-13 school year costs so that she doesn’t have any savings on FAFSA file day.</p>
<p>To answer a few of the questions above . She is still living in NYC (she goes to school there). Our AGI is going to be about 50k and and we do have to do itemized deductions, so cannot file a 1040ez (home mortgage deductions, etc). We also have another child attending college. I am not concerned about how much of hers is actually sitting in the bank when I fill out the FAFSA, as it will be put towards something else by then, like tuition for next semester. So my last question would be, if my husband is on unemployment (dislocated worker), and our AGI falls a bit under the 50k mark, it won’t make a difference on the formula used by FAFSA?</p>
<p>Swimcatsmom clarified MY mistaken post. If you qualify for simplified needs test (<$50K income and one of the other qualifying criteria), your ASSETS are not used but your student’s income IS used. There is a formula for that…above a certain amount of income, your child’s income is tapped at…perhaps someone else can provide this.</p>
<p>Does your child currently qualify for a Pell Grant? Or some other type of federally funded need based aid? If so, this MIGHT be affected.</p>
<p>Did you try an online EFC calculator using this new income?</p>
<p>Ok, so I did the FAFSA calculator and it shows an automatic deduction (allowance)off her income of 5350.00, taxes, etc and then they figure on 50% of what is left to go towards the EFC. It looks like she would have to figure on about 2500.00 to put towards her education. But, it will bring our EFC up high enough to probably disqualify us from a decent amount of Pell money. So her working all those hours has really hurt the bottom line. What a lesson to learn. If you decided to live home for the summer, work for min wage part time (if you even found a job) you would have gotten a lot more free money for school. Since you decided to go out on your own and work 55 hours a week during the summer, while your friends were sitting on the beach, you now you have to pay more for school.</p>
<p>Almostbroke…did your student get some valuable job experience this summer? That needs to be counted for something here. Will she have to pay $2500 more in total…including the loss of part of the Pell grant? </p>
<p>I know she is losing some financial aid money for the upcoming year…but really she has a job…and is earning some money which should be able to offset that loss in aid and also provide her with some ongoing income and valuable job experience.</p>
<p>I’m not quite sure how you are getting a figure of $2500. The 5350 figure on the calculator is pretty out of date. The income protection allowance for 2012-2013 is increasing to around $6000. FICA and any federal taxes will also be allowances against income. But yes, 50% of the remaining earnings will impact the EFC. So at the current $8000 earnings, the impact will be considerably less than $2500 - actually about 644. (8000 - 6000 - FICA 452 [8000x 5.65%] - federal taxes 260 = 1288. 1288/2 = 644 impact on EFC). So she has earned $8,000 an her EFC will increase by 6-700, she is in a much better position than friends who did not earn $8000. Plus the work experience will look much better when she comes to applying for jobs in the future. Employers like to see that.</p>
<p>Any earnings above the 8000 will continue to impact her EFC at around a 42% rate (after allowances for FICA and fed tax) - she would have to earn an additional $4400 ish over the 8,000 to get the EFC impact up to 2500.</p>
<p>swimcatsmom, Yes, she will earn at least that in addition to what she has earned. I was figuring on the estimate of what she will be earning by year end, about 12500. She told me today she actually is up to close to 9k. She is working last week and this week 34 hours (and carrying 18 credits) and will cut down to 20 weekly starting next week. she will easily get up to the figure that I based it on. I have stressed over and over that school is a top priority during the school year so she has reluctantly promised to go to 20 hours.</p>
<p>Wow, good for her! She sounds like a very hard worker and a go getter. I know this potential impact on the FA is painful, but her work ethic will stand her in good stead in the future.</p>
<p>I admire your daughter’s work ethic and determination. I am back in school myself trying to finish up an accounting degree. I don’t know how people manage to get good grades and work lots of hours as well. I commute 2 hours a day to my classes bit am not currently working. I have been trying to get a part time job, but don’t think I could manage 34 hours a week and maintain my good GPA. 20 hours seems reasonable (though I think I would be exhausted between the commute, the drive, and the studying - of course I am old). Good luck to her. She sounds like she deserves it.</p>