EFC Calculations and Eligibility. For our purposes, however, estimating this is enough to get us in the range of a reasonable EFC. Strategy: Parents should max out 401k, 403b, and IRA contributions for a couple years before filling out the FAFSA and the whole time you're in college. Continue this thread View Entire Discussion (11 Comments) More posts from the ApplyingToCollege community. But no matter where you are in the FAFSA filing process, I’ll give you a few ideas to lower your EFC and to increase your needs-based aid for college. So say your parents have $100k in assets. Having an estimate of your EFC doesn’t mean you’ve finished all your financial aid paperwork, like the FAFSA or CSS Profile. As you can tell, given the same COA, a lower EFC generally means more financial aid. Step 2 – Lower EFC Strategies. $400K net worth, but roughly $36K EFC. A bunch of things are netted out (taxes, personal allowances, etc). There is a specific formula used to determine your eligibility. This subreddit is for anyone looking for advice about undergraduate college admissions, including college essays, scholarships, SAT/ACT test prep, and anything related to college applications. If you are eligible, the EFC will determine exactly how much financial aid you can get. Determine if you’re a need-based aid candidate at any of the schools you are serious about. The lower your income, the less your EFC will be. A higher allowance results in a lower EFC, because it is deducted from your income in the formula. “Assets belonging to the student are assessed at a 20% rate. What Now? The rental income will count as income too. Share #3. The results are only an approximation of the Federal EFC figure that is calculated when you file the FAFSA. The EFC is how much money you’re supposed to be able to pay toward college expenses. A low EFC is good news. The larger your household size is, the lower your EFC will be (in most cases). Note that some or all of these concepts may not be appropriate for everybody, so please consult a qualified college financial planning expert before proceeding. For example, you could have the same net worth with both: A $400K house with no mortgage. Honestly FAFSA is pretty complicated, so it's hard to say what your EFC and actual aid offers will look like until you fill it out and apply. Dorothy Speaks About Coach-for-College Service “G iven my status at the time, I felt completely lost and was afraid to make the wrong move given the risks. Press J to jump to the feed. A $400K house with a $300K mortgage. If you’re applying for financial aid with the FAFSA, there are two basic numbers that go into the equation. You can also shelter your wealth and income from FAFSA by maxing out retirement account contributions. However presumably if your family income or assets were actually that high you'd probably not be doing a FAFSA anyway. Wait does this mean that since I wanted $9k ish and my mom earned 5k that I'd be expected to pay $1500 when I obviously used that money for the family????? I don't work at all. Your parents saved $2,400 per year by shifting their assets around with no changes to their net worth. Married students will often have a lower EFC than those who are unmarried, even though incomes and deductions are the same. How to do that? If it was that easy, every student would do it and everyone would have a very low EFC. EFC is calculated by taking the Cost of Attendance (COA) and subtracting the EFC. However, it’s all relative, since these numbers are in relation to each other. Home equity in a primary residence is not included in assets. Dear OScar, I cannot calibrate ESC: they enter calibration mode (musical tone) but when I lower to minimum the slider they do not exit calibration mode: they just beep 1, then 2, then 3 times and repeat…leaving ESC not calibrated. You will be eligible for need based scholarships as well. If you got a number that seems implausible for your situation, you first want to look over the FAFSA and make sure there isn't an error. The rental property will count toward your parent's assets. EFC is Expected Family Contribution and, while the income protection allowance decreases by $3,160 for each additional student, the EFC is effectively divided by the number of college students in the household. Posted by 4 days ago. The EFC is determined by a formula designed by Congress, and is an estimate of how much you and your family are able to contribute toward your education expenses, based on information from the FAFSA. Note that this is an annual amount, which is kind of crazy. On the idea of making changes to your assets in an attempt to lower your EFC, McKenna said you should be very leery of anyone trying to “sell” you an investment or insurance product that purports to lower your EFC. If your EFC is higher than the COA, you just get no aid. LasMa 10768 replies 138 threads Senior Member. Keep in mind that student aid is generally not considered income, although you’ll still need to report it when filing taxes. New comments cannot be posted and votes cannot be cast, More posts from the ApplyingToCollege community. Your EFC will not be affected by money you have saved in 401K or IRA retirement accounts. It's possible to have a $70k salary and be below the top bracket here if you have a lot of deductions. Since your EFC is greater than your COA, your calculated financial need is $0, and you would not receive any financial aid. Here is the formula: Cost of College – the EFC = Financial Need. The EFC is used to determine your eligibility for federal student aid. My EFC is nearly $5,500 and I barely make 24k a year. However presumably if your family income or assets were actually that high you'd probably not be doing a FAFSA anyway. You can use the FAFSA 4caster to estimate your EFC; just remember to add back any retirement plan contributions to your income or you’ll be way off. My mom made the opposite mistake and was delighted when my first choice school's net price calculator spit out like 5k per year. So if your parents have a $500k investment account and $100k of equity in their $600k home that would be $60k added to your EFC. If your parents' earned gross income is below $25k you get an automatic EFC of $0. Combining all three of these approaches could have a significant effect on your final EFC. david iaschi 21st October 2019 at 4:18 pm. If my source of income from parents is lower, would my EFC be also lower as well? It starts with adjusted gross income from their tax return. Retirement savings aren't included in assets either. Number of dependents isn't going to do much with that other than increase the asset protection allowance. They didn't and won't let me see how much they make. What if I don’t go off of my parents income and go off of my own. However, you could also have a much lower EFC at a PROFILE school because of the other information they consider. Strategy: Parents should move as much of their assets into their primary residence as possible. My mom and stepfather refused to show me their numbers. Step 5 – Identify Generous Schools. Low-income families can have an EFC as low as $0. Most colleges cannot meet 100% of need. My fafsa says my EFC is 000000, what does that mean? If your parents sold the investments and paid off their house, they would reduce that portion of the EFC to $0 without influencing their true net worth at all. This is one of the few things in the process that's okay/preferred to be done by a parent. What your parents can pay is the only thing the EFC is supposed to measure. In any case, you’ll also probably have to ask for the EFC since schools that use the PROFILE don’t have an equivalent of the SAR. Subsidized is good because it means that the government pays the interest while the child is in school. For example, an EFC number of 500 means that your family is expected to pay at least $500 to cover tuition and fees, and you may be eligible to receive aid to cover tuition up to that amount. Have children. It will also not be affected by your outstanding debt, from your mortgage to car loans to credit cards. All else equal, families from high-tax states like California, Maryland, New Jersey, and New York will have lower EFCs; families from low-tax states like Alaska, Nevada, Tennessee, and Washington will have higher EFCs. Online "net price calculators" can help you estimate your EFC, but it's just that -- an estimate ... could potentially lower the amount of other financial aid you receive. The Free Application for Federal Student Aid (FAFSA) considers someone a part of a household if they live at home and if the parent or parents provide more than 50 percent of the dependent's support. For some people it would even be worth refinancing their home after you graduate or getting a HELOC to have access to those funds again. I'm assuming middle upper class. I thought I would get EFC of 0 because I don't work! So, the college you attend will use that EFC figure to determine how much aid you get. Step 4 – Determine College Affordability. 5. (Your family can afford to pay more than the college costs.) If you're looking for an increase in financial aid, the solution is to lower your EFC by following several strategies as you fill out and submit your FAFSA form. I wanted guidance and wasn’t completely sure who to turn to. I got an EFC number of 525330.... Is that even possible? What is reported on federal tax forms as AGI with some adjustments is the primary number for EFC. Step 3 – Evaluate Aid Eligibility By School. By using our Services or clicking I agree, you agree to our use of cookies. A decrease in income may decrease your EFC and increase your financial aid package if you are interested in requesting more student loan money.
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