If you look at the FAFSA formula guide, table A6 on page 19, you’ll see the percentages of Adjusted Available Income that go toward EFC. AAI is the sum of AGI minus all the allowances for the income protection allowance, taxes paid, family size, FICA paid etc. plus 12% of assets above the asset protection allowance. So if an EFC is already calculated with all those allowances, the incremental or marginal increase in EFC from an additional amount of income would range from 22% to 47% depending on AAI.
@SaphireNY - The same thing happened to us. I have no idea which school made the change - it just says “college”. I called the one school my DD accepted and they said they don’t know why any changes would have come so late into May. They assured me that, although our EFC changed by $8K, it will not change the FA offer. They said they have already run their “checks” on our CSS profile, FAFSA and Tax returns. We were early with all of these submissions (Oct 28th for CSS, FAFSA on Jan 3rd, tax returns uploaded on 3/3).
When the FA offer came from the college DD is attending, I was wondering why it was lower than anticipated. But, seeing the new EFC, it’s right on. Need (met at 100%) + EFC = COA.
Our EFC went down by 4K after 2014 numbers were corrected, plus there were special circumstances in 2014 that didn’t occur in 2013 and won’t occur again in 2015 which increased our AGI by 15K.
No adjustment to FA based on that.
I would hope if people have a lot lower EFC, they would be kind to overlook an EFC increase if they overlook our EFC decrease.
Thank you everyone. Very helpful. I am not worried since our required contribution is higher than our Fafsa EFC and the HSA does have a line on the tax returns and on the CSS, so it has been previously disclosed and factored into the package. I just thought it bizarre that they would make this change now. However it makes sense in the context of wrapping up our financial information. Very helpful explanation of AGI and why this changes so much
I’m sorry if I was wrong about HSA contribution not showing up on tax return. We don’t have a HSA and our 401k contributions don’t show up on tax return, I thought it worked the same way.
There are TWO ways that your HSA can get funded; one shows up on your 1040 and the other doesn’t.
Most people with an HSA have the funds for their HSA withdrawn from their paycheck, but technically (from the IRS’ perspective) this is a salary reduction ==> Your W-2 shows a lower income than it would have shown if you didn’t have the HSA. Technically (from the IRS’ perspective, not FAFSA’s) your employer made the contribution, not you.
Some people with an HSA contribute separately to their HSA without having it go through the employer. Those people then take an HSA deduction as an Adjustment to Income (line 25 of the 1040).
I just want to clarify the Professional Judgment term that the FAFSA rep used. It is possible that the school used PJ, but I doubt it given the info you have posted. What they probably did was resolve conflicting information based on the information they had … which is not up to them (as PJ would be), but required by federal law. Other schools may not have had the same info, or they might not have reviewed the same info. But any school that sees it has to fix it. Of course, someone at the school might have made a mistake, too. You have to ask the school to make sure. You can find out which school did it. Call the FAFSA help line and ask them who made the update, then call that school - or not. But if you don’t, you will never know what happened.
This happened to my son’s FAFSA last year. A college updated it in April, but they updated the first one we completed in early January that only had estimated tax info, not the current version. This incorrect update then got sent to all the schools on the original list, including ones he already had notified he wasn’t attending. It created a lot of confusion and took a lot of phone calls and emails to straighten out. Really annoying.
Happened to us as well, in fact I started a post about it a couple of months ago. Never did figure out why, but my EFC didn’t change much so it was a non-factor. Curious which school found the miscalculation though. Like others, we have a small business and a HSA so either of those could have factored in I suppose.
There is a quirk of the DRT. IF you have a rollover, it will transfer that amount into the FAFSA. That increase will increase your EFC as well. I went in and removed it from the FAFSA, as even the FAFSA states if there is a rollover it needs to be subtracted. I had to explain this to every single school that my DS applied to and the one my DD is going to as well.
A guy I know had a rollover of around $800,000. The schools kept asking for very detailed information on his income and people in household etc. I explained to him what was probably happening and to call the schools and explain how the DRT was transferring this amount.
Don’t ever assume the people you are talking are always right. Do your own homework.
HSA and IRA contributions will all add back to the income on FAFSA. I made that mistake once and the DRT correted it. Also, if you did not submit 2014 tax info, your FAFSA is not verified. The school may request updated tax document over the summer before they release the aid and the amount may change depending on the verification.
