Why is my EFC so high?

I’m a first-generation senior applying to college and I’m totally lost, so forgive me if this question sounds really dumb. I recently filled out the FAFSA and it calculated my EFC as $60,000. I can’t imagine how this could possibly be a reasonable number - I have no income myself, a single mom (she makes about $90k), and another sibling. The only thing that I can think of that would complicate the cost is our assets - my mom has about $67k stored away in a 529 for me and $230k in a mutual fund/cash reserve. But from what I’ve read, only 5.64% of assets are expected to go to college costs (about $17,000). Where is the 60k figure coming from? Is college really this expensive, or have I filled the form out wrong?

Something is wrong. Did you use the IRS data retrieval tool to import your mom’s tax return information? Any chance she did a rollover of a tax deferred retirement account in 2020? Ask her…because if she did, and you didn’t correctly note this on the FAFSA form, that rollover was included as income.

Make sure you entered your mom’s info in the parent section…and not the student section.

Print out the form and make sure all data is entered correctly…if you used the DRT, you won’t be able to check those numbers…but you can check asset numbers.

4 Likes

I agree with all of Thumper’s points, and would first check to see if your mom did an IRA rollover in 2020.

Here is the FAFSA form, if you want to use that to help manually find the error. https://studentaid.gov/sites/default/files/2021-22-fafsa.pdf

4 Likes

Is the account with $230,000 a retirement account?

1 Like

Plugging the OP’s numbers into an EFC calculator yields an EFC that is much lower. I agree that the first thing to check into is a rollover.

1 Like

Thank you so much for the help!! I asked her - her rollover was about $169,000 and I don’t believe that we reported that anywhere in the FAFSA. Do you know where that should be reported? I used the DRT so it’s difficult to tell.

That explains it! That rollover was included as income! There is a question about rollovers and a teeny box to check. It’s easy to miss (I keep thinking this will change). Unfortunately you can’t change this, but each college can. So…you need to contact each college financial aid office and let them know about this. They will tell you what to do.

@kelsmom

4 Likes

That’s great news!

Also, double check if the $230k is in a retirement account (401k, 457, IRA, Roth IRA,etc) vs a “regular” savings or investment account. If it is in a retirement account, then it is not reported in the assets. If it is in a “regular” account, then it is. This may also help you lower your EFC if relevant.

4 Likes

It seems a number of people are getting caught by this rollover issue. So glad this is getting discussed in CC!

1 Like

Also, make sure that the 529 money is reported as a parent asset, not a student asset. That’s how 529s are treated, and it will save you about 15% of the value of the asset.

1 Like

Oh man :frowning_face: I just read up on the rollover issue. Thank you so much for pointing this out - you probably just saved me $100,000 of tuition. Having to contact each office is such an inefficient system - this is crazy! Should I contact each financial aid office after being admitted or email them as I apply?

I’m fairly sure that that information is reported correctly - she says it’s in her mutual fund and her retirement account is worth significantly more. I really appreciate the input!! This rollover is definitely what got me.

It’s not! It looks like retirment rollover is my issue.

1 Like

My opinion is that you should go ahead and contact the financial aid departments- if you’re looking for need based aid, or merit, both of those ”pots” are limited and tend to be first come, first served.

2 Likes

I’d contact them now…they will tell you what to do, and when. You will need copies of the rollover document your mom got when she did this. My guess is that schools will want that…or maybe a signed copy of her tax return because the rollover IS on there.

The schools will tell you what to do!

@kelsmom why does this have to be an issue…why didn’t the FAFSA coders have something about the rollover…or at least put that teeny question in larger font and bold face.

4 Likes

I asked about it a few years ago at the Federal Student Aid conference. I was told that it doesn’t affect a large enough population to justify a “fix.” They said it’s easier to just have the aid offices fix it. I pointed out that they don’t necessarily realize that they need to fix it, and it hurts them in terms of EFC. My gut tells me that not many Pell eligible parents are doing rollovers, so it doesn’t affect aid for the poorest … which is what federal aid is most concerned with.

4 Likes

posted in wrong place!

1 Like

This site can be especially convenient for estimating costs for particular colleges:

An estimate. MyIntuition would be less accurate than the net price calculators on each college website, in my opinion. Take the time to do those.

4 Likes

However, note that the schools included represent partner colleges. To the extent feasible, they have attempted to replicate their Net Price Calculators through the site.