How Much Financial Aid Can I Receive for my Education?
The amount of financial aid you are eligible to receive depends on your Expected Family Contribution (EFC). The Free Application for Federal Student Aid (FAFSA) uses the Federal Need Analysis Methodology to determine your status (private institutions often use Institutional Methodology). You can get a basic estimate of your EFC and through the FAFSA website and numerous other online calculators. Calculation forms will include the following:
STUDENT STATUS – You will find guidelines to determine whether you qualify as a “dependent” or “independent” student. The criteria are strict, and important in the application process. This section also takes into account full or part time enrollment status.
FAMILY INFORMATION – The number of family members, including the student, who will get more than half of their financial support from the household income during the specified award year. Support includes money, loans, gifts, housing, food, clothes, cars, medical and dental care, college payments, etc.
Independent Students – Include the student’s spouse and children (along with live-in dependents) if they will get more than half of their support from the student during the award year.
Dependent Students – Include the student and their parents, along with other children if they get more than half their support from the student’s parents during the award year.
PARENT INFORMATION – If parents are divorced, list the custodial parent as “one” unless he or she has remarried, in which case you list “two.” You will then have to fill out tax information in the following three worksheets:
Worksheet A : Untaxed Benefits- These sections were not included in taxable income. but do count during the need analysis process id and will be added to taxable income:
- Earned Income Credit (EIC)
- Additional child tax credit
- Welfare Benefits, including Temporary Assistance for Needy Families (TANF) with the exception of food stamps or subsidized housing.
- Untaxed Social Security benefits.
Worksheet B. Tax Deferred and Untaxed Income- These sections were not included in taxable income, but are also taken into account during the need analysis process. And will be
added to taxable income: Read more
- Contributions to tax-deferred pension and savings plans.
- IRA deductions and payments to SEP, SIMPLE and Keogh plans.
- Child support received for all children. Do not include foster care or adoption payments.
- Tax-exempt interest income.
- Untaxed portions of IRA distributions and pensions, excluding rollovers.
- Housing, food and living allowances paid to members of the military, clergy, and others.
- Veterans’ noneducation benefits such as Disability, Death Pension, Dependency & Indemnity Compensation (DIC), and VA
- Educational Work-Study allowances.
- Any other untaxed income or benefits not reported elsewhere on Worksheets A or B, such as worker’s compensation, disability, etc.
Worksheet C – Student Aid Included in Adjusted Gross Income (AGI)- This covers certain types of taxable student aid that were included in AGI but NOT counted in the need analysis process. These sums are subtracted from taxable income and thus increase aid eligibility:
- Education credits (Hope and Lifetime Learning Tax Credits).
- Child Support paid because of divorce or separation (this does not include support for children in the student’s parents’ household, as reported in the “Number in Household” question).
- Taxable earnings from Federal Work-Study and other need-based work programs. Include the need-based employment portions of fellowships and assistantships.
- Other student grant and scholarship aid reported in adjusted gross income (AGI). This includes awards, living allowances, and interest accrual payments as well as student grants.
Students will then be asked to fill out the same worksheets for themselves, along with the listing and other scholarships, benefits and resources toward the payment of tuition. Finally, the estimated school cost is calculated, adding:
- Room and Board
- Books and Supplies
- Health Insurance
- Incidental expenses
Filling out these forms and making the appropriate calculations will give you the best possible idea of the amount of aid you may receive toward tuition in the coming award year.
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Category: Personal Finance