Do I earn too much for the FAFSA?


Q. Is it true that if you’re a student and make $10,000 or more in working income, you won’t be able to use the FAFSA anymore?
— Student

A. Absolutely not!

The amount of money a student earns has no impact on their ability to file the FAFSA (Free Application for Federal Student Aid) form, said David Slater, co-founder of College Benefits Research Group (CBRG) in Roseland.

He said the aid that comes from the federal government through the colleges that use the information from the form can be impacted, but there is no threshold of $10,000 to be concerned about.

Slater said the FAFSA algorithm uses a sliding scale, which approaches 25 percent of income. And the lower the income, the less you are deemed able to pay.

Here’s how it works.

The form is completed by undergraduate students and their custodial parent(s) each year. This generates a SAR – Student Aid Report – which calculates the family’s EFC – Expected Family Contribution.

“The calculation of the EFC takes into consideration both parent and student incomes,” Slater said. “It also counts all of the parent and student assets except the value of the home that you live in, the value of life insurance and retirement plans.”

Colleges utilize this EFC to calculate “need” when distributing federal loans and grants, Slater said.

He said there is no income limit on the FAFSA for the student to qualify for direct Stafford loans.

“While schools might not offer them the interest-free, subsidized portions because their family EFC is too high, all qualified students are guaranteed the option of securing $5,500 year one, $6,500 year two, $7,500 year three and $7,500 year four for a total of $27,000,” he said.

While having a lower EFC can be advantageous, Slater said the greatest impact on financial awards is the way that the student positions at the schools that they are applying nto.

“Think of it in terms of what the schools want and you will maximize your returns,” he said.

Everyone should complete the FAFSA, no matter their income levels. You can learn more here.

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