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Chuck Moore, CCFC, CAMC, CAFC Louisville, Kentucky 502-721-8646 ▪ [email protected] www.collegeliteracyacademy.com www.gearuped.com
Chuck Moore, CCFC, CAMC, CAFC
Louisville, Kentucky
502-721-8646 ▪ [email protected]
www.collegeliteracyacademy.com
www.gearuped.com
How The EFC Is Calculated
What Is College Financial Aid
Student financial aid refers to funding intended to help students pay educational expenses including tuition and fees, room and board, and books/supplies, and miscellanious costs, for education at a college, university, or private school.
Financial aid may be classified into two types, merit-based or need-based.
Most student aid is provided by the federal government. Students received more than $109 billion in federal aid during the school year of
2011–2012. Most federal student aid is awarded as grants and low-interest loans.
Where Does Most College Financial Aid Come Form
The Financial Aid Process
FAFSA and CSS Profile
• The FAFSA cannot be filed until after January 1 of the student’s senior year of high school. Furthermore, it must be filed each year the student is seeking financial assistance while in college.
• The Federal Methodology Formula that calculates the family’s EFC is based mainly on the parents’ and student’s income and assets minus certain deductions and allowances.
Completing The FAFSA
• Simple To Complete
• Complicated To Understand
FAFSA Formula Similar To Tax Formula
• Income Protection Allowance
• Asset Protection Allowance
• Employment Allowance
• Deductions For Certain Taxes Paid
Income Protection Allowance
Family size
Number in college
1 2 3 4 5
2 $17,100 $14,170
3 21,290 18,380 15,450
4 26,290 23,370 20,460 17,530
5 31,020 28,100 25,190 22,260 19,350
6 36,290 33,360 30,450 27,530 24,620
Parents of Dependent Students
Income Protection Allowance Example
Number In Household 4
Number In College 1
AGI: $85,000
Income Protection Allowance $26,290
Available Income $58,710
Asset Protection Allowance
Asset Protection Allowance Example
Oldest Parent 46
Allowance $37,100
Exposed Assets $50,000
Asset Protection Allowance ExampleOldest Parent 46
Exposed Assets $50,000
Allowance (minus) $37,100
$12,900
$12,900 X 5.65%
Adjusted Available Assets $729($729 Is Added Into Your Adjusted Available Income)
Employment Allowance Example
Number Of Parents Working 2
Lowest Earner Amount $26,000
Employment Allowance % 35%
Maximum Allowance $3,500(Single Wage Earners Do Not Get An Employment Allowance)
Employment Allowance Example
Number Of Parents Working 2
Lowest Earner Amount $26,000
Employment Allowance % X 35%
$9,100
Maximum Allowance $3,500(Single Wage Earners Do Not Get An Employment Allowance)
Employment Allowance Example
Number Of Parents Working 2
Lowest Earner Amount $7,000
Employment Allowance % X 35%
$2,450
Maximum Allowance $2,450(Single Wage Earners Do Not Get An Employment Allowance)
Tax Allowance Example
Federal Taxes $ 5,250
Social Security Taxes $ 6,120
State Taxes 4% $ 3,200
Total Tax Allowance $14,570
Total Allowance
Income Allowance $26,290
Asset Allowance $ 729
Employment Allowance $ 3,500
Tax Allowance $14,570
Total Allowances $45,089
Adjusted Available Income Of Parents
Total Income $85,000
Total Allowances -$45,089
Adjusted Available Income $39,911
Adjusted Available Income Of Parents
If AAI is— Then the contribution is—
Less than −$3,409 −$750
($3,409) to $15,300 22% of AAI
$15,301 to $19,200$3,366 + 25% of AAI over $15,300
$19,201 to $23,100$4,341 + 29% of AAI over $19,200
$23,101 to $27,000$5,472 + 34% of AAI over $23,100
$27,001 to $30,900$6,798 + 40% of AAI over $27,000
$30,901 or more$8,358 + 47% of AAI over $30,900
Adjusted Available Income Of Parents
Available Income $39,911
Adjustment Factor - 30,901
Adjustment Factor Left $ 9,010
Adjusted Available Income Of Parents
First $30,901 Assessed $8,358
Second $9,010 Assessed 47% +4,235
EFC Of Parents $12,593
Student’s EFC
First $6,130 - $0 (50% thereafter minus taxes)
Assets 20% (No Asset Protection Allowance)
Student’s EFC
Student’s Income $ 3,850
Student’s Assets $10,000
Student’s EFC
Student’s Assessment From Income $3,850 - $6,130 = $0
Student’s Assets $10,000 X 20% = $2,000
Students EFC = $2,000
Total Family’s EFC
Parents’ EFC $12,593
Student’s EFC + 2,000
Family’s EFC $14,593
Student’s Financial Need
Total Cost Of Attending $18,000
EFC Of Family - 14,593
Financial Need $ 3,407
Student’s Attends Private University
Total Cost Of Attending $38,000
EFC Of Family - 14,593
Financial Need $23,407
BIG PROBLEM
How Is This Family Going To Pay Their Expected Family Contribution Of
$14,593
This is 14% of Gross Income or;
17% of Net Income After Taxes
Chuck Moore, CCFC, CAMC, CAFC
Louisville, Kentucky
502-721-8646 ▪ [email protected]
www.collegeliteracyacademy.com
www.gearuped.com
