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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.

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slide1
Chuck Moore, CCFC, CAMC, CAFC

Louisville, Kentucky

502-721-8646 ▪ [email protected]

www.collegeliteracyacademy.com

www.gearuped.com

slide3
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.

slide4
Where Does Most College Financial Aid Come Form

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.

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The Financial Aid Process

FAFSA and CSS Profile

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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.
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Completing The FAFSA
  • Simple To Complete
  • Complicated To Understand
slide8
FAFSA Formula Similar To Tax Formula
  • Income Protection Allowance
  • Asset Protection Allowance
  • Employment Allowance
  • Deductions For Certain Taxes Paid
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Income Protection Allowance Example

Number In Household 4

Number In College 1

AGI: $85,000

Income Protection Allowance $26,290

Available Income $58,710

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Asset Protection Allowance Example

Oldest Parent 46

Allowance $37,100

Exposed Assets $50,000

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Asset Protection Allowance Example

Oldest 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)

slide14
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)

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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)

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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)

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Tax Allowance Example

Federal Taxes $ 5,250

Social Security Taxes $ 6,120

State Taxes 4% $ 3,200

Total Tax Allowance $14,570

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Total Allowance

Income Allowance $26,290

Asset Allowance $ 729

Employment Allowance $ 3,500

Tax Allowance $14,570

Total Allowances $45,089

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Adjusted Available Income Of Parents

Total Income $85,000

Total Allowances -$45,089

Adjusted Available Income $39,911

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Adjusted Available Income Of Parents

Available Income $39,911

Adjustment Factor - 30,901

Adjustment Factor Left $ 9,010

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Adjusted Available Income Of Parents

First $30,901 Assessed $8,358

Second $9,010 Assessed 47% +4,235

EFC Of Parents $12,593

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Student’s EFC

First $6,130 - $0 (50% thereafter minus taxes)

Assets 20% (No Asset Protection Allowance)

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Student’s EFC

Student’s Income $ 3,850

Student’s Assets $10,000

slide25
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

slide26
Total Family’s EFC

Parents’ EFC $12,593

Student’s EFC + 2,000

Family’s EFC $14,593

slide27
Student’s Financial Need

Total Cost Of Attending $18,000

EFC Of Family - 14,593

Financial Need $ 3,407

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Student’s Attends Private University

Total Cost Of Attending $38,000

EFC Of Family - 14,593

Financial Need $23,407

slide29
BIG PROBLEM

How Is This Family Going To Pay Their Expected Family Contribution Of

$14,593

This is14%of Gross Income or;

17%of Net Income After Taxes

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Chuck Moore, CCFC, CAMC, CAFC

Louisville, Kentucky

502-721-8646 ▪ [email protected]

www.collegeliteracyacademy.com

www.gearuped.com

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