Which year's income has biggest impact on EFC?

Paying for College
1

<p>We have a high school senior and will soon be applying for need based aid. My husband found out he will be getting a bonus (unusual) and we are wondering if there is a difference between taking the bonus in 2013 or 2014. So, to throw in numbers, let's say our income could be either 2013 = $100,000 and 2014= $120,000 or the reverse with the higher amount if 2013. In which case (if any) will our EFC for 2014-2015 be lower?</p>

2

<p>Year 2013 tax information is required for 2014-2015 FAFSA (EFC). You file 2014-2015 FAFSA if your kids will attending schools in 2014-2015 school year</p>

<p>Year 2014 tax information is required for 2015-2016 FAFSA (EFC).</p>

3

<p>I would think that having your “base year” as the lowest would be best…so take the bonus after Jan 1.</p>

4

<p>If you take the bonus in '14 but before you file fafsa, you will have to include any of the bonus that’s in savings/investments in your assets for the 2014-15 school year. Assets are assessed at 5.6% above the asset protection allowance. Fafsa is largely income driven.</p>

5

<p>The bonus will also appear as INCOME in the year you take it…and THAT is assessed higher than your assets!</p>

<p>Are you anticipating being able to use any of this to help pay for college?</p>

<p>Is your kiddo hoping to be accepted to a college that guarantees to meet full need? If not, this might not matter.</p>

<p>Also, if your income is already at a certain level, you might not qualify for need based aid anyway.</p>

<p>At SOME point, this is going to be reflected as income one or your kid. If you have the money the day you file the FAFSA/Profile, it will ALSO be an asset.</p>

6

<p>If the dad has some control as to when the bonus is issued, then have it issued right after FAFSA is filed in 2014. That way, the dollars won’t be in savings and the income won’t get reported til they file the 2015 FAFSA.</p>

<p>That will give them nearly a year to figure out what to do with the cash. If they plan on doing some home repairs or whatever, then it won’t be in savings next year. That said, married couples have about $50k in protected non-retirement assets, so if they’re under that amount, then they can have it in savings and it won’t get assessed at all. </p>

<p>Since the best awards are as incoming frosh, the family should try to have their lowest EFC for the next year. It may help get a need-considered merit award that once awarded, won’t be removed if the EFC goes up a bit the next year.</p>

7

<p>Thanks everyone. I think we’ll still be able to keep our assets under $50k so we won’t have a need to wait until FAFSA is filed. He is looking at schools that meet 100% need and for next year we will have 3 in school so it seems like 2013 is the year we should try to minimize income.</p>

8

<p>Table A5 in the link shows the parent asset protection allowance for 2014-15. In order for it to be $50k the oldest parent would have to be 64 or older. This allowance has decreased significantly in the last 2 years.</p>

<p><a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf&lt;/a&gt;&lt;/p&gt;