![]() This will be changing on the 2023-24 FAFSA, when the parent contribution will no longer be divided by the number of children in college. So, when a child graduates from college or drops out, it can cause a big decrease in financial aid for the remaining children. When the number of children in college decreases, it can cause the EFC to increase. Thus, when the number of children in college increases, it can cause the EFC to decrease. The parent contribution portion of the EFC is divided by the number of children enrolled in college at the same time. Changes in the Number of Children in College Also, if the student saves income from a summer job, it can increase their assets. Changes in student assets generally have a bigger impact than changes in parent assets.Ĭommon reasons for a change in assets include stock market appreciation, gifts and inheritances. If the student or parent assets increase, it can lead to an increase in the EFC. (A Roth IRA conversion, on the other hand, is correctly reported as income, but the family can appeal to the college to get it excluded.) Changes in Assets If you suspect that this may have occurred, contact the college’s financial aid office. ![]() A distribution is counted in income on the FAFSA, but rollovers are supposed to be excluded from income. The IRS Data Retrieval Tool may occasionally treat a rollover from one retirement plan to another as through it is a distribution. Retirement plan rollovers may sometimes be incorrectly reported as income on the FAFSA. If the parent income increases beyond this threshold, it can lead to a big decrease in grants and other financial aid. For example, some colleges have “no loans” financial aid policies or caps on the parent contribution for families with income below a specific threshold. Some colleges have income thresholds that affect the generosity of their own financial aid policies. (The $50,000 threshold will be increased to $60,000 starting with the 2023-24 FAFSA.) ![]() The simplified needs test causes assets to be ignored when parent income is less than $50,000. Auto-zero EFC sets the student’s EFC automatically to zero if parent income is less than or equal to $27,000. There are threshold effects in the federal financial aid formula that can cause a big change in the EFC if income increases above certain thresholds. ![]()
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