Need Analysis. Participant Handout

Transcription

1 Need Analysis Participant Handout

2 The NASFAA Training was developed by the NASFAA Training and Professional Development Committee. Special thanks is given to the NASFAA Staff for their input on this very important topic, especially compliance review of the content. This Participant s Handout contains pages excerpted from The EFC Formula, , a U.S. Department of Education publication. You may access the publication in its entirety at the Information for Financial Aid Professionals (IFAP) website at by National Association of Student Financial Aid Administrators (NASFAA). All rights reserved. NASFAA has prepared this document for use only by personnel, licensees, and members. The information contained herein is protected by copyright. No part of this document may be reproduced, translated, or transmitted in any form or by any means, electronically or mechanically, without prior written permission from NASFAA. NASFAA SHALL NOT BE LIABLE FOR TECHNICAL OR EDITORIAL ERRORS OR OMISSIONS CONTAINED HEREIN; NOR FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE FURNISHING, PERFORMANCE, OR USE OF THIS MATERIAL. This publication contains material related to the federal student aid programs under Title IV of the Higher Education Act. While we believe that the information contained herein is accurate and factual, this publication has not been reviewed or approved by the U.S. Department of Education or the Department of the Interior. NASFAA reserves the right to revise this document and/or change product features or specifications without advance notice. August 2014

3 NASFAA Annual State and Regional Training Materials Need Analysis Table of Contents Legislative Changes to Federal Methodology and the Federal Pell Grant Program... 1 Overview of Federal Methodology Formulas Free Application for Federal Student Aid (FAFSA) Institutional Methodology Case Studies Case Studies Hand Calculation Scenarios Model A: Melanie Knox Model B: Courtney Fletcher Model C: Kurt Smith Blank worksheets and tables from EFC Formula, Hand Calculation Solutions Attachment B (Q&As) from GEN Slideshow Resources Evaluation Form NASFAA i Prepared by T&PD Committee

4 NASFAA Annual State and Regional Training Materials The training material topic for states and regions is Need Analysis. The materials were developed by the NASFAA Training and Professional Development Committee (T&PD Committee). A special thank you goes to the committee members: Joan Bailey, St. Petersburg College, SASFAA Stephen Brown, Fordham University, EASFAA Ben Burton, Ivy Tech Community College, MASFAA Valerie Curtin, Helena College University of Montana, RMASFAA Melet Leafgreen, Texas Christian University, SWASFAA Terri LeGrand, Wake Forest University, SASFAA Melissa Smurdon, Butler University, MASFAA Robert Walker, Creighton University, RMASFAA Iris Godes, Vice Chair, Quinsigamond Community College, EASFAA John View, Chair, SUNY, EASFAA Paula Luff, Commission Director, DePaul University, MASFAA Workshop Goals Participants will be able to: Determine how a Student and Parent contribution are calculated using Federal Methodology (FM) and explain what institutional methodology is and why some schools use it. Hand calculations of case studies will be performed in order to clearly illustrate the entire Need Analysis process and take into account the family dynamics behind the numbers; Understand the history and evolution of Need Analysis from a process developed and regulated by colleges and universities by using member served groups such as College Board and its financial aid group College Scholarship Services (CSS) and American College Testing (ACT) before being regulated by Congress; Identify the components that go into calculating the Expected Family Contribution (EFC) for a Dependent student and an Independent student; Define Federal Methodology, Institutional Methodology, the differences, the components of each and the source of where the components come from (e.g., Bureau of Labor Statistics, state tax codes, etc.); Ensure all participants have a hands on working knowledge of the Need Analysis process so the participant will be able to fully explain, in detail to a student/parent, how their need was calculated and, if necessary, be better equipped as an aid professional to handle professional judgment cases; Explain to certain families the new changes that have a direct impact on a family s need amount [e.g., Impact of Defense of Marriage Act (DOMA) Changes]; Explain that the Need Analysis process, while mechanical in its calculations, does take certain family dynamics into consideration; Resolve issues related to calculating an EFC and understand the reason why many schools also use Institutional Methodology to determine who may receive institutional funding; and Understand what the underlying principles are and the use of Need Analysis, and how Need Analysis is applied as a consistent standard to determine need-based aid across the various educational institutions in the United States. Prepared by T&PD Committee ii 2014 NASFAA

5 2014 NASFAA 1 Prepared by T&PD Committee EFFECTIVE DATE Legislative Changes to Federal Methodology and the Federal Pell Grant Program, LEGISLATION HEA CITATION CHANGE COMMENT 7/1/06 HERA 479 Added receipt of a federal means-tested benefit during the base year as an alternative eligibility criterion for simplified needs test (SNT) and automatic zero expected family contribution (EFC) designation. For dependent students, only the dependent student s parent has to meet the tax filing criterion in order to qualify for SNT or automatic zero EFC. Increased the adjusted gross income threshold in the base year to $20,000 or less for the student to qualify for an automatic zero EFC. 7/1/06 HERA 480(f)(2) Excludes the net value of a family-owned and controlled small business (or any part of such a small business) with not more than 100 fulltime or full-time equivalent employees from the definition of assets used in the need analysis formulas. 7/1/06 HERA 480(d) Individuals who are currently serving on active duty in the U.S. Armed Forces for purposes other than training have been added to the list of individuals who are considered to be independent students. 7/1/07 HERA 475(g)(2)(D) and (h) Dependent students: Income Protection Allowance (IPA): Changed from $2,200 (which was the base year 1999 amount used in the EFC calculation) to $3,000. Contribution from Assets: The assessment rate is reduced from 35 percent to 20 percent. Receipt of federal means-tested benefit is an alternative to the tax-filing criterion; family income requirements still apply. Previously, the threshold was indexed to the maximum amount of adjusted gross income used to qualify for the Federal earned income credit. Because the base year amount is indexed annually for inflation, the IPA would have been $2,640 for absent this increase to $3,000. The new base year for the annual inflationary update is The $3,000 IPA will be indexed for inflation annually beginning with the award year.

6 Prepared by T&PD Committee NASFAA EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/07 HERA 476(b)(1)(A)(iv) Independent students without dependents other than a spouse: Income Protection Allowance: The statutory IPA for a single student, and for a married student whose spouse is also enrolled in postsecondary education, is changed from $5,000 to $6,050. 7/1/07 HERA 466(c)(4) and 478(b) For a married student whose spouse is not enrolled in postsecondary education, the IPA is changed from $8,000 to $9,700. Contribution from Assets: The assessment rate is reduced from 35 percent to 20 percent. Independent students with dependents other than a spouse: Income Protection Allowance: For the award year only, and only for independent students with dependents other than a spouse, the values for the income protection allowances will be increased by 5 percent. Contribution from Assets: The assessment rate is reduced from 12 percent to 7 percent. 7/1/07 HERA 480(f) and (j) Qualified education benefits (QEB) reported as asset of parent if the parent is the owner (never reported as asset of the student). 7/1/07 Revised Continuing Appropriations Resolution of 2007 Increased maximum Pell award by $260, to $4,310. Because the base year amount is indexed annually for inflation, the IPA would have been $6,010 for absent this increase to $6,050. The new base year for the annual inflationary update is The $6,050 IPA will be indexed for inflation annually beginning with the award year. Because the base year amount is indexed annually for inflation, the IPA would have been $9,620 for absent this increase to $9,700. The new base year for the annual inflationary update is The $9,700 IPA will be indexed for inflation annually beginning with the award year. The values for the income protection allowances are increased each year in consideration of general price inflation, and this practice will continue. The Secretary s estimate for inflation for the award year is 2.8 percent. QEBs include Coverdells, prepaid tuition plans offered by states, 529 college savings plans, and 529 prepaid tuition plans.

7 2014 NASFAA 3 Prepared by T&PD Committee EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/07 CCRAA 401(b)(3)(A) Eliminated tuition sensitivity provision that adjusted downward the scheduled award amount for Federal Pell Grant recipients at lowcost institutions, such as community colleges. 8/14/08 HEOA 401(c)(5) Limits the period of time a student may receive a Federal Pell Grant to 18 semesters or the equivalent as determined by regulation. The regulations are to provide fractional equivalents for terms in which a student is enrolled less than full time. As a result, a student is eligible to receive up to nine Federal Pell Grant Scheduled Awards. 7/1/09 CCRAA 401(a), (b) Extends the authority for Federal Pell Grant funding through fiscal year 2017, and appropriates mandatory funding for fiscal years 2008 through Requires the mandatory funds be used to increase the maximum Federal Pell Grant award, as established in the annual appropriations act, by the following amounts: $490 for the and award years; $690 for the and award years; and $1,090 for the award year. Effective retroactively This provision applies to students who receive a Federal Pell Grant for the first time on or after July 1, The annual amount that would be added to the maximum Pell Grant each award year from mandatory funds as described above may be increased or decreased. If the mandatory funds provided are insufficient to fund the specified increase, the amount would be reduced. If, however, the mandatory funds provided are more than are required, the amount would be increased.

8 Prepared by T&PD Committee NASFAA EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/09 CCRAA 479(b), (c) Increased time frame for receipt of a federal means-tested benefit from 12 to 24 months as an alternative eligibility criterion for SNT and automatic zero EFC designation. 7/1/09 CCRAA 475(g)(2)(D) 476(b)(1)(A)(iv) 477(b)(4) 478(b) Added dislocated worker status of one of the parents of a dependent student or an independent student or his or her spouse as an alternative eligibility criterion for SNT and automatic zero EFC designation. Increased the adjusted gross income threshold in the base year to $30,000 or less for the student to qualify for an automatic zero EFC. Also requires the Secretary to update this amount annually based on increases in the Consumer Price Index (CPI). Specifies scheduled increases in the IPA for dependent students, independent students without dependents other than a spouse and independent students with dependents other than a spouse. After the award year, the dollar amounts of the student IPAs will increase by a percentage equal to the CPI. Receipt of federal means-tested benefit is an alternative to the tax-filing criterion; family income requirements still apply. Definition of dislocated worker is found in Workforce Investment Act. The CCRAA did not make any changes to the IPA for parents of dependent students, but provides that the table of IPAs for parents of dependent students must be updated based on the percentage increase in the CPI for award years after

9 2014 NASFAA 5 Prepared by T&PD Committee EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/09 CCRAA 480(a)(b),(d)-(f) Changes to definitions of terms used in Federal Methodology (FM): Total income: doesn t include distributions from qualified education benefits that aren t taxable; Untaxed income: doesn t include welfare, earned income credit, credit for federal tax on special fuels, foreign income exclusion, untaxed Social Security benefits, and additional child tax credits; Excludable income: includes combat pay; Independent student: includes students who were orphans, in foster care, or ward of the court at any time when age 13 or older, students who are/were emancipated minors or in legal guardianship, unaccompanied youths who are homeless or at risk of homelessness and are self-supporting; and Assets: Qualified education benefits are reported as an asset of the parent of a dependent student regardless of whether the owner of the account is the student or parent. If the student is independent, the student s or student s spouse s qualified education benefit is reported as an asset. 7/1/09 HEOA 401(b)(2)(A) Increases the authorized maximums for an academic year under the Federal Pell Grant Program as follows: $6,000 for the award year; $6,400 for the award year; $6,800 for the award year; $7,200 for the award year; $7,600 for the award year; and $8,000 for the award year.

10 Prepared by T&PD Committee NASFAA EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/09 HEOA 401(b)(4) Eliminated the $400 minimum award and instead sets a new minimum award at 10 percent of the maximum award appropriated each year. Students who are eligible for an award equal to or greater than five percent but less than 10 percent of the maximum award will receive an award amount of 10 percent of the maximum award appropriated each year. 7/1/09 HEOA 401(b)(5)(A) Year-round Federal Pell Grant. 7/1/09 HEOA 401(b)(7) Student who is subject to an involuntary civil commitment after completing a period of incarceration for a forcible or nonforcible sexual offense is ineligible to receive a Federal Pell Grant. 7/1/09 HEOA 401(b)(8)(D) and (F) Clarifies the treatment of the funds that are authorized and appropriated under section 401(a)(8) of the amended HEA for through the award years (mandatory funds) and that are added to the maximum award set in the annual appropriations act that appropriates the discretionary funds for the program. The HEOA provides that nothing regarding the additional mandatory funds alters the requirements and operations of the Federal Pell Grant Program except for the provisions setting the additional amounts from mandatory funds for individual awards or authorizes the imposition of additional requirements or operations for the determination and allocation of Federal Pell Grants except for the provisions setting the additional amounts from mandatory funds for individual awards. Further, the HEOA clarifies that additional mandatory funds appropriated for a fiscal year become available as of October 1 of that fiscal year and remain available through September 30 of the following fiscal year.

11 2014 NASFAA 7 Prepared by T&PD Committee EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/09 HEOA 401(f)(4) Provides maximum Federal Pell Grant eligibility for a student whose parent or guardian was a member of the Armed Forces and died as a result of performing military service in Iraq or Afghanistan after 9/11/2001, provided the child was under 24 years old or was enrolled in college at the time of the parent or guardian s death. These students will be considered to be eligible for the maximum Federal Pell Grant award for the period during which the student is otherwise eligible to receive a Federal Pell Grant. 7/1/09 ARRA 401(b)(9)(A) Increased maximum Pell award by $500. 7/1/10 HEOA 480(e) Added income earned from work under a cooperative education program to the definition of excludable income. 7/1/10 HCERA 401(b) Federal Pell Grant maximums in future years changed to reflect an appropriated base with a mandatory add-on. From through , increases to the mandatory add-on based on estimated changes to the CPI. 7/1/10 HCERA 401(b)(4) Revises the minimum Federal Pell Grant from 10 percent of appropriated maximum to 10 percent of total maximum (appropriation + mandatory add-on). 7/1/10 HCERA 401(b)(6) Continues to allow the Federal Pell Grant to be exceeded for study abroad but caps the grant at the total maximum (appropriation + mandatory add-on) rather than the appropriated maximum. 7/1/12 Budget Control Act of (b)(7)(A)(iv) Provides an additional $10 billion in mandatory funds for Pell in FY 2012 and $7 billion for FY Students who are eligible for any amount of Pell receive the maximum award. Students who are not eligible for Pell receive the equivalent amount of the maximum award as an Iraq and Afghanistan Service Grant. A portion of the $10 billion was savings from the elimination of the Stafford Loan subsidy for graduate students.

12 Prepared by T&PD Committee NASFAA EFFECTIVE DATE LEGISLATION HEA CITATION CHANGE COMMENT 7/1/12 Consolidated Appropriations Act of /1/12 Consolidated Appropriations Act of /1/12 Consolidated Appropriations Act of /1/12 Consolidated Appropriations Act of (c) 401(b)(7)(A)(iv) 401(b)(4) 401(c)(5) Reduces the income threshold for an automatic zero EFC from $30,000 to $23,000. Includes funds to establish the maximum Federal Pell Grant award for the Award Year at $4,860. Establishes the minimum Federal Pell Grant award for a student at 10 percent of the maximum award amount for the award year and eliminates the provision that permitted a student who would be eligible to receive a Federal Pell Grant of between 5 and 10 percent of the award year s maximum award to receive an award of 10 percent of the maximum award. Reduces the duration of a student s eligibility to receive a Federal Pell Grant from 18 semesters (or its equivalent) to 12 semesters (or its equivalent). However, HEA section 401 (b)(7) provides for an automatic mandatory increase to the appropriated Federal Pell Grant maximum award for of $690, resulting in a maximum award of $5,550. Students will not receive a Federal Pell Grant if they are not eligible for at least 10 percent of the maximum award for the academic year. This change in the calculation of the minimum award amount results in 4995 being the maximum EFC enabling a student to be eligible to receive a Federal Pell Grant. Applies to all Federal Pell Grant eligible students effective with the award year (i.e., no grandfathering ). The calculation of the duration of a student s eligibility will include all years of the student s receipt of Federal Pell Grant funding. This change in the duration of students Federal Pell Grant eligibility is not limited only to students who received their first Federal Pell Grant on or after the award year, as the HEA previously provided when the duration of eligibility was 18 semesters.

13 2014 NASFAA 9 Prepared by T&PD Committee Overview of Federal Methodology Formulas DEPENDENT INDEPENDENT WITHOUT DEPENDENTS OTHER THAN A SPOUSE INDEPENDENT WITH DEPENDENTS OTHER THAN A SPOUSE Model A Automatic Zero EFC Model B Automatic Zero EFC Model C Automatic Zero EFC Expected Family Contribution (EFC) automatically set to zero if student s parents meet certain income and federal tax filing criteria. Automatic Zero EFC is not applicable. EFC automatically set to zero if student (and spouse, if married) meets certain income and federal tax filing criteria. Model A Simplified Formula Model B Simplified Formula Model C Simplified Formula EFC calculation excludes student s and parents assets. EFC calculation excludes student s and, if married, spouse s assets. EFC calculation excludes student s and, if married, spouse s assets. Model A Regular Formula Model B Regular Formula Model C Regular Formula EFC calculated using student s and parents income and asset information. Expected Family Contribution (EFC) Parents contribution + Student s contribution from available income + Student s contribution from assets Student s Contribution from Available Income (Total income Total allowances) x.50 Total Income (Student) Taxable income + Untaxed income and benefits Total additional financial information (excluded income) EFC calculated using student s and, if married, spouse s income and asset information. Expected Family Contribution (EFC) (Contribution from available income + Contribution from assets) Number in college Contribution from Available Income (Total income Total allowances) x.50 Total Income Taxable income + Untaxed income and benefits Total additional financial information (excluded income) EFC calculated using student s and, if married, spouse s income and asset information. Expected Family Contribution (EFC) (Total contribution from adjusted available income) Number in college Total Contribution from Adjusted Available Income Application of Table C6 to (Available income + Contribution from assets) Adjusted Available Income (Total income Total allowances) + Contribution from Assets Total Income Taxable income + Untaxed income and benefits Total additional financial information (excluded income)

14 Prepared by T&PD Committee NASFAA DEPENDENT INDEPENDENT WITHOUT DEPENDENTS OTHER THAN A SPOUSE INDEPENDENT WITH DEPENDENTS OTHER THAN A SPOUSE Model A Regular Formula Model B Regular Formula Model C Regular Formula Total Allowances (Student) U.S. income tax paid + State and other tax allowance + Social Security tax allowance + Income protection allowance + Allowance for parents negative adjusted available income Student s Contribution from Assets Net worth x.20 Net Worth (Student) Cash, savings, and checking + Net worth of investments + Net worth of business and/or farm Parents Contribution Total parents contribution from adjusted available income Number in college Available Income (Parents) Total income Total allowances Adjusted Available Income (Parents) Available income + Contribution from assets Total Contribution from Adjusted Available Income (Parents) Application of Table A6 to (Available income + Contribution from assets) Total Allowances U.S. income tax paid + State and other tax allowance + Student s Social Security tax + Spouse s Social Security tax + Income protection allowance + Employment expense allowance Contribution from Assets Discretionary net worth x.20 Discretionary Net Worth Cash, savings, and checking + Net worth of investments + Adjusted net worth of business and/or farm Asset protection allowance Parents Contribution Not applicable Total Allowances U.S. income tax paid + State and other tax allowance + Student s Social Security tax + Spouse s Social Security tax + Income protection allowance + Employment expense allowance Contribution from Assets Discretionary net worth x.07 Discretionary Net Worth Cash, savings, and checking + Net worth of investments + Adjusted net worth of business and/or farm Asset protection allowance Parents Contribution Not applicable

15 2014 NASFAA 11 Prepared by T&PD Committee DEPENDENT INDEPENDENT WITHOUT DEPENDENTS OTHER THAN A SPOUSE INDEPENDENT WITH DEPENDENTS OTHER THAN A SPOUSE Model A Regular Formula Model B Regular Formula Model C Regular Formula Total Income (Parents) Taxable income + Untaxed income and benefits Total additional financial information (excluded income) Total Allowances (Parents) U.S. income tax paid + State and other tax allowance + Parent 1 s Social Security tax allowance + Parent 2 s Social Security tax allowance + Income protection allowance + Employment expense allowance Contribution From Assets (Parents) Discretionary net worth x.12 Discretionary Net Worth (Parents) Cash, savings, and checking + Net worth of investments + Adjusted net worth of business and/or farm Education savings and asset protection allowance

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17 FAFSASM FREE APPLICATION for FEDERAL STUDENT AID Use this form to apply free for federal and state student grants, work-study and loans. Or apply free online at Applying by the Deadlines For federal aid, submit your application as early as possible, but no earlier than January 1, We must receive your application no later than June 30, Your college must have your correct, complete information by your last day of enrollment in the school year. For state or college aid, the deadline may be as early as January See the table to the right for state deadlines. You may also need to complete additional forms. Check with your high school guidance counselor or a financial aid administrator at your college about state and college sources of student aid and deadlines. If you are filing close to one of these deadlines, we recommend you file online at This is the fastest and easiest way to apply for aid. Using Your Tax Return We recommend that you complete and submit your FAFSA as soon as possible on or after January 1, If you (or your parents) need to file a 2013 income tax return with the Internal Revenue Service (IRS), and have not done so yet, you can submit your FAFSA now using estimated tax information, and then you must correct that information after you file your return. The easiest way to complete or correct your FAFSA with accurate tax information is by using the IRS Data Retrieval Tool through In a few simple steps, most students and parents who filed a 2013 tax return can view and transfer their tax return information directly into their FAFSA. Note: Both parents or both the student and spouse may need to report income information on the FAFSA if they did not file a joint tax return for For assistance with answering the income information questions in this situation, call FED-AID. SM Filling Out the FAFSA If you or your family experienced significant changes to your financial situation (such as loss of employment), complete this form to the extent you can and submit it as instructed. Consult with the financial aid office at the college(s) you applied to or plan to attend. For help in filling out the FAFSA, go to or call FED-AID ( ). TTY users (for the hearing impaired) may call Fill the answer fields directly on your screen or print the form and complete it by hand. Your answers will be read electronically; therefore if you complete the form by hand: use black ink and fill in circles completely: print clearly in CAPITAL letters and skip a box between words: report dollar amounts (such as $12,356.41) like this: Correct Incorrect x 1 5 E L M S T $ no cents, Blue is for student information and purple is for parent information. SM Mailing Your FAFSA After you complete this application, make a copy of pages 3 through 8 for your records. Then mail the original of pages 3 through 8 to: Federal Student Aid Programs, P.O. Box 4692, Mt. Vernon, IL After your application is processed, you will receive a summary of your information in your Student Aid Report (SAR). If you provide an address, your SAR will be sent by within three to five days. If you do not provide an address, your SAR will be mailed to you within three weeks. If you would like to check the status of your FAFSA, go to or call FED-AID. Let s Get Started! Now go to page 3 of the application form and begin filling it out. Refer to the notes as instructed. Federal Student Aid logo and FAFSA are registered trademarks or service marks of Federal Student Aid, U.S. Department of Education. July 1, 2014 June 30, 2015 APPLICATION DEADLINES Federal Aid Deadline - June 30, 2015 State Aid Deadlines - See below. Check with your financial aid administrator for these states and territories: AL, AS *, AZ, CO, FM *, GA, GU *, HI *, MH *, MP *, NE, NM, NV *, PR, PW *, SD *, TX, UT, VA *, VI *, WI and WY *. Pay attention to the symbols that may be listed after your state deadline. AK AK Education Grant and AK Performance Scholarship - June 30, 2014 AR Academic Challenge - June 1, 2014 (date received) Workforce Grant - Contact the financial aid office. Higher Education Opportunity Grant - June 1, 2014 (date received) CA Initial awards - March 2, * Additional community college awards - September 2, 2014 (date postmarked) + * CT February 15, 2014 (date received) # * DC April 1, 2014 (date received) * For priority consideration, submit application by April 30, For DCTAG, complete the DC OneApp and submit additional supporting documents on or before April 30, DE April 15, 2014 (date received) FL May 15, 2014 (date processed) IA July 1, 2014 (date received); earlier priority deadlines may exist for certain programs. * ID Opportunity Grant - March 1, 2014 (date received) # * IL As soon as possible after January 1, Awards made until funds are depleted. IN March 10, 2014 (date received) KS April 1, 2014 (date received) # * KY As soon as possible after January 1, Awards made until funds are depleted. LA June 30, 2015 (July 1, 2014 recommended) MA May 1, 2014 (date received) # MD March 1, 2014 (date received) ME May 1, 2014 (date received) MI March 1, 2014 (date received) MN 30 days after term starts (date received) MO April 1, 2014 (date received) MS MTAG and MESG Grants - September 15, 2014 (date received) HELP Scholarship - March 31, 2014 (date received) MT March 1, 2014 (date received) # NC As soon as possible after January 1, Awards made until funds are depleted. ND April 15, 2014 (date received) # Early priority deadlines may exist for institutional programs. NH NH is not offering a state grant this year. NJ Tuition Aid Grant recipients - June 1, 2014 (date received) All other applicants - October 1, 2014, fall & spring terms (date received) - March 1, 2015, spring term only (date received) NY June 30, 2015 (date received) * OH October 1, 2014 (date received) OK March 1, 2014 (date received) # OR OSAC Private Scholarships - March 1, 2014 Oregon Opportunity Grant - February 1, 2014 PA All first-time applicants at a community college; a business/ trade/technical school; a hospital school of nursing; or enrolled in a non-transferable two-year program - August 1, 2014 (date received) All other applicants - May 1, 2014 (date received) RI March 1, 2014 (date received) # SC Tuition Grants - June 30, 2014 (date received) SC Commission on Higher Education Need-based Grants - As soon as possible after January 1, Awards made until funds are depleted. TN VT WA WV State Grant - Prior-year recipients receive award if eligible and apply by March 1, All other awards made to neediest applicants who apply by March 1, 2014, until funds are depleted. State Lottery - fall term, September 1, 2014 (date received); spring & summer terms, February 1, 2015 (date received) As soon as possible after January 1, Awards made until funds are depleted. * As soon as possible after January 1, Awards made until funds are depleted. PROMISE Scholarship - March 1, New applicants must also submit additional application at Contact your financial aid administrator or your state agency. WV Higher Education Grant Program - April 15, 2014 # For priority consideration, submit application by date specified. + Applicants encouraged to obtain proof of mailing. * Additional form may be required. STATE AID DEADLINES NASFAA NASFAA Training Prepared by T&PD Committee

18 Notes for question 8 (page 3) Enter your Social Security Number (SSN). If you are a resident of the Freely Associated States (i.e., the Republic of Palau, the Republic of the Marshall Islands, or the Federated States of Micronesia) and were issued an identification number beginning with 666 when submitting a FAFSA previously, enter that number here. If you are a first-time applicant from the Freely Associated States, enter 666 in the first three boxes of the SSN field and leave the remaining six positions blank and we will create an identification number to be used for federal student aid purposes. Notes for questions 14 and 15 (page 3) If you are an eligible noncitizen, write in your eight- or nine-digit Alien Registration Number. Generally, you are an eligible noncitizen if you are (1) a permanent U.S. resident with a Permanent Resident Card (I-551); (2) a conditional permanent resident with a Conditional Green Card (I-551C); (3) the holder of an Arrival-Departure Record (I-94) from the Department of Homeland Security showing any one of the following designations: Refugee, Asylum Granted, Parolee (I-94 confirms that you were paroled for a minimum of one year and status has not expired), T-Visa holder (T-1, T-2, T-3, etc.) or Cuban-Haitian Entrant; or (4) the holder of a valid certification or eligibility letter from the Department of Health and Human Services showing a designation of Victim of human trafficking. If you are in the U.S. on an F1 or F2 student visa, a J1 or J2 exchange visitor visa, or a G series visa (pertaining to international organizations), select No, I am not a citizen or eligible noncitizen. You will not be eligible for federal student aid. If you have a Social Security Number but are not a citizen or an eligible noncitizen, you should still complete the FAFSA because you may be eligible for state or college aid. Notes for questions 16 and 17 (page 3) Report your marital status as of the date you sign your FAFSA. If your marital status changes after you sign your FAFSA, check with the financial aid office at the college. Consistent with the Supreme Court decision holding Section 3 of the Defense of Marriage Act (DOMA) unconstitutional, same-sex couples must report their marital status as married if they were legally married in a state or other jurisdiction (foreign country) that permits same-sex marriage, without regard to where the couple resides. Notes for question 22 (page 3) The Selective Service System, and the registration requirement for young men, preserves America s ability to provide manpower in an emergency to the U.S. Armed Forces (Army, Navy, Air Force, Marines or Coast Guard). Almost all men ages 18 through 25 must register. For more information about Selective Service, visit Notes for questions 33 (page 4) and 81 (page 6) If you filed or will file a foreign tax return, a tax return with Puerto Rico, another U.S. territory (e.g., Guam, American Samoa, the U.S. Virgin Islands, Swain s Island or the Northern Marianas Islands) or one of the Freely Associated States, use the information from that return to fill out this form. If you filed a foreign return, convert all monetary units to U.S. dollars, using the exchange rate that is in effect today. To view the daily exchange rate, go to Notes for questions 35 (page 4) and 83 (page 6) In general, a person is eligible to file a 1040A or 1040EZ if he or she makes less than $100,000, does not itemize deductions, does not receive income from his or her own business or farm and does not receive alimony. A person is not eligible to file a 1040A or 1040EZ if he or she makes $100,000 or more, itemizes deductions, receives income from his or her own business or farm, is self-employed, receives alimony or is required to file Schedule D for capital gains. If you filed a 1040 only to claim the American Opportunity Tax Credit or Lifetime Learning Tax Credit, and you would have otherwise been eligible to file a 1040A or 1040EZ, answer Yes to this question. If you filed a 1040 and were not required to file a tax return, answer Yes to this question. Notes for questions 42 and 43 (page 4), 45j (page 5), and 91 and 92 (page 7) Net worth means current value minus debt. If net worth is negative, enter 0. Investments include real estate (do not include the home in which you live), rental property (includes a unit within a family home that has its own entrance, kitchen, and bath rented to someone other than a family member), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc. Investments also include qualified educational benefits or education savings accounts (e.g., Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans). For a student who does not report parental information, the accounts owned by the student (and/or the student s spouse) are reported as student investments in question 42. For a student who must report parental information, the accounts are reported as parental investments in question 91, including all accounts owned by the student and all accounts owned by the parents for any member of the household. Money received, or paid on your behalf, also includes distributions to you (the student beneficiary) from a 529 plan that is owned by someone other than you or your parents (such as your grandparents, aunts, and uncles). You must include these distribution amounts in question 45j. Investments do not include the home you live in, the value of life insurance, retirement plans (401[k] plans, pension funds, annuities, noneducation IRAs, Keogh plans, etc.) or cash, savings and checking accounts already reported in questions 41 and 90. Investments also do not include UGMA and UTMA accounts for which you are the custodian, but not the owner. Investment value means the current balance or market value of these investments as of today. Investment debt means only those debts that are related to the investments. Business and/or investment farm value includes the market value of land, buildings, machinery, equipment, inventory, etc. Business and/or investment farm debt means only those debts for which the business or investment farm was used as collateral. Business value does not include the value of a small business if your family owns and controls more than 50 percent of the business and the business has 100 or fewer full-time or full-time equivalent employees. For small business value, your family includes (1) persons directly related to you, such as a parent, sister or cousin, or (2) persons who are or were related to you by marriage, such as a spouse, stepparent or sister-in-law. Investment farm value does not include the value of a family farm that you (your spouse and/or your parents) live on and operate. Notes for question 49 (page 5) Answer Yes if you are currently serving in the U.S. Armed Forces or are a National Guard or Reserves enlistee who is on active duty for other than state or training purposes. Answer No if you are a National Guard or Reserves enlistee who is on active duty for state or training purposes. Notes for question 50 (page 5) Answer Yes (you are a veteran) if you (1) have engaged in active duty (including basic training) in the U.S. Armed Forces, or are a National Guard or Reserves enlistee who was called to active duty for other than state or training purposes, or were a cadet or midshipman at one of the service academies, and (2) were released under a condition other than dishonorable. Also answer Yes if you are not a veteran now but will be one by June 30, Answer No (you are not a veteran) if you (1) have never engaged in active duty (including basic training) in the U.S. Armed Forces, (2) are currently an ROTC student or a cadet or midshipman at a service academy, (3) are a National Guard or Reserves enlistee activated only for state or training purposes, or (4) were engaged in active duty in the U.S. Armed Forces but released under dishonorable conditions. Notes for questions 38 (page 4) and 87 (page 7) Notes for those who filed a 1040EZ On the 1040EZ, if a person didn t check either box on line 5, enter 01 if he or she is single or has never been married, or 02 if he or she is married. If a person Also answer No if you are currently serving in the U.S. Armed Forces checked either the you or spouse box on line 5, use 1040EZ worksheet line and will continue to serve through June 30, F to determine the number of exemptions ($3,800 equals one exemption). Page 2 Notes continued on page 9. NASFAA Training Prepared by T&PD Committee 14

19 FAFSASM FREE APPLICATION for FEDERAL STUDENT AID July 1, 2014 June 30, 2015 Step One (Student): For questions 1-31, leave blank any questions that do not apply to you (the student). OMB # Your full name (exactly as it appears on your Social Security card) If your name has a suffix, such as Jr. or III, include a space between your last name and suffix. 1. Last name Your mailing address 4. Number and street (include apt. number) 2. First name 3. Middle initial 5. City (and country if not U.S.) 6. State 7. ZIP code 8. Your Social Security Number See Notes page Your date MONTH DAY YEAR 10. Your permanent telephone number of birth ( ) Your driver s license number and driver s license state (if you have one) 11. Driver s license number 12. Driver s license state 13. Your address. If you provide your address, we will communicate with you electronically. For example, when your FAFSA has been processed, you will be notified by . Your address will also be shared with your state and the colleges listed on your FAFSA to allow them to communicate with you. If you do not have an address, leave this field 14. Are you a U.S. citizen? Mark only one. See Notes page 2. Yes, I am a U.S. citizen (U.S. national). Skip to question No, but I am an eligible noncitizen. Fill in question No, I am not a citizen or eligible noncitizen. Skip to question Alien Registration Number A 16. What is your marital status as of today? See Notes page 2. I am single I am married/remarried 1 2 I am separated I am divorced or widowed Month and year you were married, remarried, separated, divorced or widowed. See Notes page 2. MONTH YEAR 18. What is your state of legal residence? STATE 19. Did you become a legal resident of this state before January 1, 2009? Yes 1 No If the answer to question 19 is No, give month and year you became a legal resident. MONTH YEAR 21. Are you male or female? Male Female If female, skip to question 23. Most male students must register with Selective Service to receive federal aid. If you are male, age and not registered, fill in the circle and we will register you. See Notes page 2. Register me Have you been convicted for the possession or sale of illegal drugs for an offense that occurred while you were receiving federal student aid (such as grants, loans or work-study)? Answer No if you have never received federal student aid or if you have never had a drug conviction for an offense that occurred while receiving federal student aid. If you have a drug conviction for an offense that occurred while you were receiving federal student aid, answer Yes, but complete and submit this application, and we will mail you a worksheet to help you determine if your conviction affects your eligibility for aid. If you are unsure how to answer this question, call for help. No 1 Yes 3 Some states and colleges offer aid based on the level of schooling your parents completed. 24. Highest school completed by Parent Highest school completed by Parent 2 Middle school/jr. high Middle school/jr. high High school High school College or beyond College or beyond Other/unknown Other/unknown When you begin college in the school year, what will be your high school completion status? High school diploma. Answer question Homeschooled. Skip to question General Educational Development (GED) certificate or state equivalent test. Skip to question 28. For Help Page 3 Step One CONTINUED on page 4 NASFAA None of the above. Skip to question

20 27. What is the name of the high school where you received or will receive your high school diploma? Enter the complete high school name, and the city and state where the high school is located. Step One CONTINUED from page Will you have your first bachelor s degree before July 1, 2014? High School Name High School City STATE Yes 1 No When you begin the school year, what will be your grade level? 30. When you begin the school year, what degree or certificate will you be working on? Never attended college and 1st year undergraduate... Attended college before and 1st year undergraduate... 2nd year undergraduate/sophomore rd year undergraduate/junior... 4th year undergraduate/senior th year/other undergraduate st year graduate/professional... Continuing graduate/professional or beyond st bachelor s degree... 2nd bachelor s degree... 2 Associate degree (occupational or technical program)... Associate degree (general education or transfer program) Certificate or diploma (occupational, technical or education program of less than two years) Certificate or diploma (occupational, technical or education program of two or more years)... Teaching credential (nondegree program) Graduate or professional degree... Other/undecided Are you interested in being considered for work-study? Step Two (Student): 32. For 2013, have you (the student) completed your IRS income tax return or another tax return listed in question 33? I have already completed my return... I will file but have not yet completed my return... I m not going to file. Skip to question 39. Answer questions about yourself (the student). If you were never married or are separated, divorced or widowed, answer only about yourself. If you are married or remarried as of today, include information about your spouse (husband or wife) What income tax return did you file or will you file for 2013? IRS IRS 1040A or 1040EZ... A foreign tax return. See Notes page A tax return with Puerto Rico, another U.S. territory, or Freely Associated State. See Notes page Yes 1 No 2 Don t know For 2013, what is or will be your tax filing status according to your tax return? Single... Head of household Married filed joint return... Married filed separate return... Qualifying widow(er) Don t know If you have filed or will file a 1040, were you eligible to file a 1040A or 1040EZ? See Notes page 2. Yes 1 No Don t know 2 3 For questions 36 45, if the answer is zero or the question does not apply to you, enter 0. Report whole dollar amounts with no cents. 36. What was your (and spouse s) adjusted gross income for 2013? Adjusted gross income is on IRS Form 1040 line 37; 1040A line 21; or 1040EZ line Enter your (and spouse s) income tax for Income tax amount is on IRS Form 1040 line 55; 1040A line 35; or 1040EZ line 10. $ $,,,, 38. Enter your (and spouse s) exemptions for Exemptions are on IRS Form 1040 line 6d or Form 1040A line 6d. For Form 1040EZ, see Notes page 2. Questions 39 and 40 ask about earnings (wages, salaries, tips, etc.) in Answer the questions whether or not a tax return was filed. This information may be on the W-2 forms, or on IRS Form 1040 lines Box 14 (Code A) of IRS Schedule K-1 (Form 1065); on 1040A line 7; or on 1040EZ line 1. If any individual earning item is negative, do not include that item in your calculation. 39. How much did you earn from working in 2013? 40. How much did your spouse earn from working in 2013? $ $,,,, 41. As of today, what is your (and spouse s) total current balance of cash, savings and checking accounts? Don t include student financial aid. 42. As of today, what is the net worth of your (and spouse s) investments, including real estate? Don t include the home you live in. Net worth means current value minus debt. See Notes page As of today, what is the net worth of your (and spouse s) current businesses and/or investment farms? Don t include a family farm or family business with 100 or fewer full-time or full-time equivalent employees. See Notes page 2. For Help Page 4 $ $ $,,,,,, Step Two CONTINUED on page 5

21 Step Two CONTINUED from page Student s 2013 Additional Financial Information (Enter the combined amounts for you and your spouse.) a. Education credits (American Opportunity Tax Credit and Lifetime Learning Tax Credit) from IRS Form 1040 line 49 or 1040A line 31. b. Child support paid because of divorce or separation or as a result of a legal requirement. Don t include support for children in your household, as reported in question 95. c. Taxable earnings from need-based employment programs, such as Federal Work-Study and need-based employment portions of fellowships and assistantships. d. Taxable student grant and scholarship aid reported to the IRS in your adjusted gross income. Includes AmeriCorps benefits (awards, living allowances and interest accrual payments), as well as grant and scholarship portions of fellowships and assistantships. e. Combat pay or special combat pay. Only enter the amount that was taxable and included in your adjusted gross income. Don t include untaxed combat pay. f. Earnings from work under a cooperative education program offered by a college. $ $ $ $ $ $,,,,,,,,,,,, 45. Student s 2013 Untaxed Income (Enter the combined amounts for you and your spouse.) a. Payments to tax-deferred pension and retirement savings plans (paid directly or withheld from earnings), including, but not limited to, amounts reported on the W-2 forms in Boxes 12a through 12d, codes D, E, F, G, H and S. Don t include amounts reported in code DD (employer contributions toward employee health benefits). b. IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans from IRS Form 1040 line 28 + line 32 or 1040A line 17. c. Child support received for any of your children. Don t include foster care or adoption payments. d. Tax exempt interest income from IRS Form 1040 line 8b or 1040A line 8b. e. Untaxed portions of IRA distributions from IRS Form 1040 lines (15a minus 15b) or 1040A lines (11a minus 11b). Exclude rollovers. If negative, enter a zero here. f. Untaxed portions of pensions from IRS Form 1040 lines (16a minus 16b) or 1040A lines (12a minus 12b). Exclude rollovers. If negative, enter a zero here. g. Housing, food and other living allowances paid to members of the military, clergy and others (including cash payments and cash value of benefits). Don t include the value of on-base military housing or the value of a basic military allowance for housing. h. Veterans noneducation benefits, such as Disability, Death Pension, or Dependency & Indemnity Compensation (DIC) and/or VA Educational Work-Study allowances. i. Other untaxed income not reported in items 45a through 45h, such as workers compensation, disability, etc. Also include the untaxed portions of health savings accounts from IRS Form 1040 line 25. Don t include extended foster care benefits, student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Investment Act educational benefits, on-base military housing or a military housing allowance, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels. j. Money received, or paid on your behalf (e.g., bills), not reported elsewhere on this form. This includes money that you received from a parent whose financial information is not reported on this form and that is not part of a legal child support agreement. See Notes page 2. Step Three (Student): $ $ $ $ $ $ $ $ $ $,,,,,,,,,,,,,,,,,,,, Answer the questions in this step to determine if you will need to provide parental information. Once you answer Yes to any of the questions in this step, skip Step Four and go to Step Five on page Were you born before January 1, 1991?... Yes 1 No As of today, are you married? (Also answer Yes if you are separated but not divorced.)... Yes 1 No At the beginning of the school year, will you be working on a master s or doctorate program (such as an MA, MBA, MD, JD, PhD, EdD, graduate certificate, etc.)? Yes 1 No Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training? See Notes page Yes 1 No Are you a veteran of the U.S. Armed Forces? See Notes page Yes 1 No Do you now have or will you have children who will receive more than half of their support from you between July 1, 2014 and June 30, 2015? Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2015? At any time since you turned age 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court? See Notes page As determined by a court in your state of legal residence, are you or were you an emancipated minor? See Notes page As determined by a court in your state of legal residence, are you or were you in legal guardianship? See Notes page At any time on or after July 1, 2013, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? See Notes page Yes 1 No 2 No 2 Yes 1 No At any time on or after July 1, 2013, did the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? See Notes page Yes 1 No At any time on or after July 1, 2013, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? See Notes page Yes 1 No 2 For Help Page 5 NASFAA 2008 Yes Yes Yes Yes No 2 No 2 No 2

22 If you (the student) answered No to every question in Step Three, go to Step Four. If you answered Yes to any question in Step Three, skip Step Four and go to Step Five on page 8. (Health professions students: Your college may require you to complete Step Four even if you answered Yes to any Step Three question.) If you believe that you are unable to provide parental information, see Notes page 9. Step Four (Parent): Complete this step if you (the student) answered No to all questions in Step Three. Answer all the questions in Step Four even if you do not live with your legal parents (your biological and/or adoptive parents). Grandparents, foster parents, legal guardians, aunts and uncles are not considered parents on this form unless they have legally adopted you. If your legal parents are married to each other or are not married to each other and live together, answer the questions about both of them. If your parent was never married or is remarried, divorced, separated or widowed, see Notes page 9 for additional instructions. 59. As of today, what is the marital status of your legal parents? 60. Month and year Never married Married or remarried they were married, MONTH YEAR divorced or widowed. together Widowed Unmarried and both parents living Divorced or separated... 3 remarried, separated, What are the Social Security Numbers, names and dates of birth of the parents reporting information on this form? If your parent does not have a Social Security Number, you must enter If the name includes a suffix, such as Jr. or III, include a space between the last name and suffix. Enter two digits for each day and month (e.g., for May 31, enter 05 31). Questions are for Parent 1 (father/mother/stepparent) 61. SOCIAL SECURITY NUMBER 62. LAST NAME, AND 63. FIRST INITIAL 64. DATE OF BIRTH Questions are for Parent 2 (father/mother/stepparent) 65. SOCIAL SECURITY NUMBER 66. LAST NAME, AND 67. FIRST INITIAL 68. DATE OF BIRTH 69. Your parents address. If you provide your parents address, we will let them know your FAFSA has been processed. This address will also be shared with your state and the colleges listed on your FAFSA to allow them to electronically communicate with your What is your parents state of legal residence? STATE 71. Did your parents become legal residents of this state before January 1, 2009? Yes 1 No If the answer to question 71 is No, give the month and year legal residency began for the parent who has lived in the state the longest. MONTH YEAR 73. How many people are in your parents household? Include: yourself, even if you don t live with your parents, your parents, your parents other children if (a) your parents will provide more than half of their support between July 1, 2014 and June 30, 2015, or (b) the children could answer No to every question in Step Three on page 5 of this form, and other people if they now live with your parents, your parents provide more than half of their support and your parents will continue to provide more than half of their support between July 1, 2014 and June 30, How many people in your parents household (from question 73) will be college students between July 1, 2014 and June 30, 2015? Always count yourself as a college student. Do not include your parents. You may include others only if they will attend, at least half-time in , a program that leads to a college degree or certificate. In 2012 or 2013, did you, your parents or anyone in your parents household (from question 73) receive benefits from any of the federal programs listed? Mark all that apply. Answering these questions will not reduce eligibility for student aid or these programs. TANF may have a different name in your parents state. Call FED-AID to find out the name of the state s program. 75. Supplemental Security Income (SSI) 76. Supplemental Nutrition Assistance Program (SNAP) 83. If your parents have filed or will file a 1040, were they eligible to file a 1040A or 1040EZ? See Notes page 2. For Help Page Free or Reduced Price Lunch Yes No Don t know Temporary Assistance for Needy Families (TANF) 84. As of today, is either of your parents a dislocated worker? See Notes page Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) If your answer to question 59 was Unmarried and both parents living together, contact FED-AID for assistance with answering questions For 2013, have your parents completed their IRS income tax return or another tax return listed in question 81? My parents have already completed their return... My parents will file but have not yet completed their return... My parents are not going to file. Skip to question What income tax return did your parents file or will they file for 2013? IRS IRS 1040A or 1040EZ A foreign tax return. See Notes page A tax return with Puerto Rico, another U.S. territory or Freely Associated State. See Notes page For 2013, what is or will be your parents tax filing status according to their tax return? Single... Head of household Married filed joint return... Married filed separate return... Qualifying widow(er) Don t know... Yes No Don t know 3 Step Four CONTINUED on page

23 For questions 85 94, if the answer is zero or the question does not apply, enter 0. Report whole dollar amounts with no cents. 85. What was your parents adjusted gross income for 2013? Adjusted gross income is on IRS Form 1040 line 37; 1040A line 21; or 1040EZ line 4. $ 86. Enter your parents income tax for Income tax amount is on IRS Form 1040 line 55; 1040A line 35; or 1040EZ line Enter your parents exemptions for Exemptions are on IRS Form 1040 line 6d or on Form 1040A line 6d. For Form 1040EZ, see Notes page 2. Step Four CONTINUED from page 6 $,,,, Questions 88 and 89 ask about earnings (wages, salaries, tips, etc.) in Answer the questions whether or not a tax return was filed. This information may be on the W-2 forms, or on IRS Form 1040 lines Box 14 (Code A) of IRS Schedule K-1 (Form 1065); on 1040A line 7; or on 1040EZ line 1. If any individual earning item is negative, do not include that item in your calculation. 88. How much did Parent 1 (father/mother/stepparent) earn from working in 2013? 89. How much did Parent 2 (father/mother/stepparent) earn from working in 2013? $ $,,,, 90. As of today, what is your parents total current balance of cash, savings and checking accounts? 91. As of today, what is the net worth of your parents investments, including real estate? Don t include the home in which your parents live. Net worth means current value minus debt. See Notes page As of today, what is the net worth of your parents current businesses and/or investment farms? Don t include a family farm or family business with 100 or fewer full-time or full-time equivalent employees. See Notes page Parents 2013 Additional Financial Information (Enter the amounts for your parent[s].) a. Education credits (American Opportunity Tax Credit and Lifetime Learning Tax Credit) from IRS Form 1040 line 49 or 1040A line 31. b. Child support paid because of divorce or separation or as a result of a legal requirement. Don t include support for children in your parents household, as reported in question 73. c. Your parents taxable earnings from need-based employment programs, such as Federal Work-Study and need-based employment portions of fellowships and assistantships. d. Your parents taxable student grant and scholarship aid reported to the IRS in your parents adjusted gross income. Includes AmeriCorps benefits (awards, living allowances and interest accrual payments), as well as grant and scholarship portions of fellowships and assistantships. e. Combat pay or special combat pay. Only enter the amount that was taxable and included in your parents adjusted gross income. Do not enter untaxed combat pay. f. Earnings from work under a cooperative education program offered by a college. 94. Parents 2013 Untaxed Income (Enter the amounts for your parent[s].) a. Payments to tax-deferred pension and retirement savings plans (paid directly or withheld from earnings), including, but not limited to, amounts reported on the W-2 forms in Boxes 12a through 12d, codes D, E, F, G, H and S. Don t include amounts reported in code DD (employer contributions toward employee health benefits). b. IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans from IRS Form 1040 line 28 + line 32 or 1040A line 17. c. Child support received for any of your parents children. Don t include foster care or adoption payments. d. Tax exempt interest income from IRS Form 1040 line 8b or 1040A line 8b. $ $ $ $ $ $ $ $ $ $ $ $ $,,,,,,,,,,,,,,,,,,,,,,,,,, e. Untaxed portions of IRA distributions from IRS Form 1040 lines (15a minus 15b) or 1040A lines (11a minus 11b). Exclude rollovers. If negative, enter a zero here. f. Untaxed portions of pensions from IRS Form 1040 lines (16a minus 16b) or 1040A lines (12a minus 12b). Exclude rollovers. If negative, enter a zero here. g. Housing, food and other living allowances paid to members of the military, clergy and others (including cash payments and cash value of benefits). Don t include the value of on-base military housing or the value of a basic military allowance for housing. h. Veterans noneducation benefits, such as Disability, Death Pension, or Dependency & Indemnity Compensation (DIC) and/or VA Educational Work-Study allowances. i. Other untaxed income not reported in items 94a through 94h, such as workers compensation, disability, etc. Also include the untaxed portions of health savings accounts from IRS Form 1040 line 25. Don t include extended foster care benefits, student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Investment Act educational benefits, on-base military housing or a military housing allowance, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels. $ $ $ $ $,,,,,,,,,, For Help Page 7 NASFAA 2008

24 Step Five (Student): Complete this step only if you (the student) answered Yes to any questions in Step Three. 95. How many people are in your household? Include: yourself (and your spouse), your children, if you will provide more than half of their support between July 1, 2014 and June 30, 2015, and other people if they now live with you, you provide more than half of their support and you will continue to provide more than half of their support between July 1, 2014 and June 30, How many people in your (and your spouse s) household (from question 95) will be college students between July 1, 2014 and June 30, 2015? Always count yourself as a college student. Include others only if they will attend, at least half-time in , a program that leads to a college degree or certificate. In 2012 or 2013, did you (or your spouse) or anyone in your household (from question 95) receive benefits from any of the federal programs listed? Mark all that apply. Answering these questions will not reduce eligibility for student aid or these programs. TANF may have a different name in your state. Call FED-AID to find out the name of the state s program. 97. Supplemental Security Income (SSI) 98. Supplemental Nutrition Assistance Program (SNAP) 99. Free or Reduced Price Lunch 100. Temporary Assistance for Needy Families (TANF) 101. Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) 102. As of today, are you (or your spouse) a dislocated worker? See Notes page 9. Yes 1 No 2 Don t know 3 Step Six (Student): Indicate which colleges you want to receive your FAFSA information. Enter the six-digit federal school code and your housing plans. You can find the school codes at or by calling FED-AID. If you cannot obtain the code, write in the complete name, address, city and state of the college. For state aid, you may wish to list your preferred college first. To find out how to have more colleges receive your FAFSA information, read What is the FAFSA? on page a 103. c 103. e 103. g 1ST FEDERAL SCHOOL CODE 2ND FEDERAL SCHOOL CODE 3RD FEDERAL SCHOOL CODE 4TH FEDERAL SCHOOL CODE OR OR OR OR NAME OF COLLEGE ADDRESS AND CITY NAME OF COLLEGE ADDRESS AND CITY NAME OF COLLEGE ADDRESS AND CITY NAME OF COLLEGE ADDRESS AND CITY Step Seven (Student and Parent): Read, sign and date. STATE STATE STATE STATE HOUSING PLANS 103. b on campus 1 with parent 2 off campus d on campus 103. f with parent off campus on campus with parent off campus 103. h on campus with parent off campus If you are the student, by signing this application you certify that you (1) will use federal and/or state student financial aid only to pay the cost of attending an institution of higher education, (2) are not in default on a federal student loan or have made satisfactory arrangements to repay it, (3) do not owe money back on a federal student grant or have made satisfactory arrangements to repay it, (4) will notify your college if you default on a federal student loan and (5) will not receive a Federal Pell Grant from more than one college for the same period of time. If you are the parent or the student, by signing this application you certify that all of the information you provided is true and complete to the best of your knowledge and you agree, if asked, to provide information that will verify the accuracy of your completed form. This information may include U.S. or state income tax forms that you filed or are required to file. Also, you certify that you understand that the Secretary of Education has the authority to verify information reported on this application with the Internal Revenue Service and other federal agencies. If you sign any document related to the federal student aid programs electronically using a personal identification number (PIN), you certify that you are the person identified by the PIN and have not disclosed that PIN to anyone else. If you purposely give false or misleading information, you may be fined up to $20,000, sent to prison, or both Date this form was completed MONTH DAY 2014 or Student (Sign below) 1 2 Parent (A parent from Step Four sign below.) If you or your family paid a fee for someone to fill out this form or to advise you on how to fill it out, that person must complete this part. Preparer s name, firm and address 106. Preparer s Social Security Number (or 107) 107. Employer ID number (or 106) 108. Preparer s signature and date 1 COLLEGE USE ONLY D/O 1 FAA Signature 1 DATA ENTRY USE ONLY: Homeless Youth Determination 4 FEDERAL SCHOOL CODE P * L E For Help Page 8

25 Notes for question 53 (page 5) Answer Yes if at any time since you turned age 13: You had no living parent (biological or adoptive), even if you are now adopted; or You were in foster care, even if you are no longer in foster care today; or You were a dependent or ward of the court, even if you are no longer a dependent or ward of the court today. For federal student aid purposes, someone who is incarcerated is not considered a ward of the court. The financial aid administrator at your school may require you to provide proof that you were in foster care or a dependent or ward of the court. Notes for questions 54 and 55 (page 5) The definition of legal guardianship does not include your parents, even if they were appointed by a court to be your guardians. You are also not considered a legal guardian of yourself. Answer Yes if you can provide a copy of a court s decision that as of today you are an emancipated minor or are in legal guardianship. Also answer Yes if you can provide a copy of a court s decision that you were an emancipated minor or were in legal guardianship immediately before you reached the age of being an adult in your state. The court must be located in your state of legal residence at the time the court s decision was issued. Answer No if you are still a minor and the court decision is no longer in effect or the court decision was not in effect at the time you became an adult. The financial aid administrator at your college may require you to provide proof that you were an emancipated minor or in legal guardianship. Notes for questions (page 5) Answer Yes if you received a determination at any time on or after July 1, 2013, that you were an unaccompanied youth who was homeless or at risk of being homeless. Homeless means lacking fixed, regular and adequate housing. You may be homeless if you are living in shelters, parks, motels or cars, or are temporarily living with other people because you have nowhere else to go. Also, if you are living in any of these situations and fleeing an abusive parent you may be considered homeless even if your parent would provide support and a place to live. Unaccompanied means you are not living in the physical custody of your parent or guardian. Youth means you are 21 years of age or younger or you are still enrolled in high school as of the day you sign this application. Answer No if you are not homeless or at risk of being homeless, or do not have a determination. You should contact your financial aid office for assistance if you do not have a determination but believe you are an unaccompanied youth who is homeless or are an unaccompanied youth providing for your own living expenses who is at risk of being homeless. The financial aid administrator at your college may require you to provide a copy of the determination if you answered Yes to any of these questions. Notes for students unable to provide parental information on pages 6 and 7 Notes for Step Four, questions (pages 6 and 7) Review all instructions below to determine who is considered a parent on this form: If your parent was never married and does not live with your other legal parent, or if your parent is widowed or not remarried, answer the questions about that parent. If your legal parents (biological and/or adoptive) are not married to each other and live together, select Unmarried and both parents living together and provide information about both of them regardless of their gender. Do not include any person who is not married to your parent and who is not a legal or biological parent. Contact FED-AID for assistance in completing questions If your parents are married, select Married or remarried. Consistent with the Supreme Court decision holding Section 3 of the Defense of Marriage Act (DOMA) unconstitutional, same-sex couples must report their marital status as married if they were legally married in a state or other jurisdiction (foreign country) that permits same-sex marriage, without regard to where the couple resides. If your legal parents are divorced but living together, select Unmarried and both parents living together. If your legal parents are separated but living together, select Married or remarried, not Divorced or separated. If your parents are divorced or separated, answer the questions about the parent you lived with more during the past 12 months. (If you did not live with one parent more than the other, give answers about the parent who provided more financial support during the past 12 months or during the most recent year that you actually received support from a parent.) If this parent is remarried as of today, answer the questions about that parent and your stepparent. If your widowed parent is remarried as of today, answer the questions about that parent and your stepparent. Notes for questions 84 (page 6) and 102 (page 8) In general, a person may be considered a dislocated worker if he or she: is receiving unemployment benefits due to being laid off or losing a job and is unlikely to return to a previous occupation; has been laid off or received a lay-off notice from a job; was self-employed but is now unemployed due to economic conditions or natural disaster; or is a displaced homemaker. A displaced homemaker is generally a person who previously provided unpaid services to the family (e.g., a stay-at-home mom or dad), is no longer supported by the husband or wife, is unemployed or underemployed, and is having trouble finding or upgrading employment. If a person quits work, generally he or she is not considered a dislocated worker even if, for example, the person is receiving unemployment benefits. Answer Yes to question 84 if your parent is a dislocated worker. Answer Yes to question 102 if you or your spouse is a dislocated worker. Answer No to question 84 if your parent is not a dislocated worker. Answer No to question 102 if neither you nor your spouse is a dislocated worker. Answer Don t know to question 84 if you are not sure whether your parent is a dislocated worker. Answer Don t know to question 102 if you are not sure whether you or your spouse is a dislocated worker. You can contact your financial aid office for assistance in answering these questions. Under very limited circumstances (for example, your parents are incarcerated; you have left home due to an abusive family environment; or you do not know where your parents are and are unable to contact The financial aid administrator at your college may require you to them), you may be able to submit your FAFSA without parental provide proof that your parent is a dislocated worker, if you answered information. If you are unable to provide parental information, skip Yes to question 84, or that you or your spouse is a dislocated worker, if Steps Four and Five, and go to Step Six. Once you submit your FAFSA you answered Yes to question 102. without parental data, you must follow up with the financial aid office at the college you plan to attend, in order to complete your FAFSA. Page 9 NASFAA 2008

26 SM What is the FAFSA? Information on the Privacy Act and use of your Social Security Number Why fill out a FAFSA? The Free Application for Federal Student Aid (FAFSA) is the first step in the financial aid process. You use the FAFSA to apply for federal student aid, such as grants, loans and work-study. In addition, most states and colleges use information from the FAFSA to award nonfederal aid. Why all the questions? The questions on the FAFSA are required to calculate your Expected Family Contribution (EFC). The EFC measures your family s financial strength and is used to determine your eligibility for federal student aid. Your state and the colleges you list may also use some of your responses. They will determine if you may be eligible for school or state aid, in addition to federal aid. How do I find out what my Expected Family Contribution (EFC) is? Your EFC will be listed on your Student Aid Report (SAR). Your SAR summarizes the information you submitted on your FAFSA. It is important to review your SAR to make sure all of your information is correct and complete. Make corrections or provide additional information, as necessary. How much aid will I receive? Using the information on your FAFSA and your EFC, the financial aid office at your college will determine the amount of aid you will receive. The college will use your EFC to prepare a financial aid package to help you meet your financial need. Financial need is the difference between your EFC and your college s cost of attendance (which can include living expenses), as determined by the college. If you or your family have unusual circumstances that should be taken into account, contact your college s financial aid office. Some examples of unusual circumstances are: unusual medical or dental expenses or a large change in income from last year to this year. When will I receive the aid? Any financial aid you are eligible to receive will be paid to you through your college. Typically, your college will first use the aid to pay tuition, fees and room and board (if provided by the college). Any remaining aid is paid to you for your other educational expenses. If you are eligible for a Federal Pell Grant, you may receive it from only one college for the same period of enrollment. How can I have more colleges receive my FAFSA information? If you are completing a paper FAFSA, you can only list four colleges in the school code step. You may add more colleges by doing one of the following: 1. Use the Federal Student Aid PIN you will receive after your FAFSA has been processed and go to FAFSA on the Web at Click the Login button on the home page to log in to FAFSA on the Web, then click Make FAFSA Corrections. 2. Use the Student Aid Report (SAR), which you will receive after your FAFSA is processed. Your Data Release Number (DRN) verifies your identity and will be listed on the first page of your SAR. You can call FED-AID and provide your DRN to a customer service representative, who will add more school codes for you. 3. Provide your DRN to the financial aid administrator at the college you want added, and he or she can add their school code to your FAFSA. Note: Your FAFSA record can only list up to ten school codes. If there are ten school codes on your record, any new school codes that you add will replace one or more of the school codes listed. Where can I receive more information on student aid? The best place for information about student financial aid is the financial aid office at the college you plan to attend. The financial aid administrator can tell you about student aid available from your state, the college itself and other sources. You can also visit our web site StudentAid.gov. For information by phone you can call our Federal Student Aid Information Center at FED-AID ( ). TTY users (for the hearing impaired) may call You can also check with your high school counselor, your state aid agency or your local library s reference section. Information about other nonfederal assistance may be available from foundations, religious organizations, community organizations and civic groups, as well as organizations related to your field of interest, such as the American Medical Association or American Bar Association. Check with your parents employers or unions to see if they award scholarships or have tuition payment plans. Page 10 We use the information that you provide on this form to determine if you are eligible to receive federal student financial aid and the amount that you are eligible to receive. Sections 483 and 484 of the Higher Education Act of 1965, as amended, give us the authority to ask you and your parents these questions, and to collect the Social Security Numbers of you and your parents. We use your Social Security Number to verify your identity and retrieve your records, and we may request your Social Security Number again for those purposes. State and institutional student financial aid programs may also use the information that you provide on this form to determine if you are eligible to receive state and institutional aid and the need that you have for such aid. Therefore, we will disclose the information that you provide on this form to each institution you list in questions 103a - 103h, state agencies in your state of legal residence and the state agencies of the states in which the colleges that you list in questions 103a - 103h are located. If you are applying solely for federal aid, you must answer all of the following questions that apply to you: 1-9, 14-16, 18, 21-23, 26, 28-29, 32-37, 39-59, 61-68, 70, 73-86, , If you do not answer these questions, you will not receive federal aid. Without your consent, we may disclose information that you provide to entities under a published routine use. Under such a routine use, we may disclose information to third parties that we have authorized to assist us in administering the above programs; to other federal agencies under computer matching programs, such as those with the Internal Revenue Service, Social Security Administration, Selective Service System, Department of Homeland Security, Department of Justice and Veterans Affairs; to your parents or spouse; and to members of Congress if you ask them to help you with student aid questions. If the federal government, the U.S. Department of Education, or an employee of the U.S. Department of Education is involved in litigation, we may send information to the Department of Justice, or a court or adjudicative body, if the disclosure is related to financial aid and certain conditions are met. In addition, we may send your information to a foreign, federal, state, or local enforcement agency if the information that you submitted indicates a violation or potential violation of law, for which that agency has jurisdiction for investigation or prosecution. Finally, we may send information regarding a claim that is determined to be valid and overdue to a consumer reporting agency. This information includes identifiers from the record; the amount, status and history of the claim; and the program under which the claim arose. State Certification By submitting this application, you are giving your state financial aid agency permission to verify any statement on this form and to obtain income tax information for all persons required to report income on this form. The Paperwork Reduction Act of 1995 According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless such collection displays a valid OMB control number, which for this form is Public reporting burden for this collection of information is estimated to average three hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The obligation to respond to this collection is voluntary. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Federal Student Aid Information Center, P.O. Box 84, Washington, D.C Please do not return the completed FAFSA to this address. We may request additional information from you to process your application more efficiently. We will collect this additional information only as needed and on a voluntary basis.

27 Case Study 1 Income of parents Institutional Methodology Case Studies AGI/taxable income $60,993 $57,993 IM FM Comments Untaxed income and benefits $19,795 $13,607 IM treats negative income, such as capital gains losses, as a zero. IM includes additional child tax credit as income as well as some business deductions such as depreciation. Income adjustments Total income $80,788 $71,600 Allowance $0 $0 Federal income tax $0 $0 State and other taxes $8,483 $5,728 FICA $5,703 $5,703 IM state and other tax depends on zip code of primary residence and accounts for differences is cost of living. Medical/dental expense allowance $0 Employment allowance $3,053 $2,429 Annual education savings allowance $1,228 Income protection allowance $28,430 $26,830 Total allowances $46,897 $40,690 Available income $33,891 $30,910 Total PC from income $8,507 $11,650 Assets Cash, savings, checking $118,925 $107,000 IM Parent cash, checking, and savings includes student cash, checking, and savings. Home equity $161,576 Investment equity $231,500 $231,500 Other real estate equity $0 $0 Adjusted business/farm equity $0 $0 Parent assets in siblings names $29,000 Net worth $541,001 $338,500 Asset protection allowances $0 $33,800 Emergency reserve allowance $27, NASFAA 23 Prepared by T&PD Committee

28 Cumulative education savings allowance IM FM Comments $32,235 Low income asset allowance $0 Other asset allowance $0 Discretionary net worth $481,346 $304,700 Total PC from assets $23,062 $13,781 Contribution Total parent contribution $31,569 $25,431 Number in college adjustment 1 1 Parent contribution $31,569 $25,431 Income of student AGI/taxable income $12,912 $12,912 Untaxed income and benefits $0 $0 Taxable student aid $0 $0 Total income $12,912 $12,912 Allowances U.S. income tax $15 $15 State and other taxes $0 $775 FICA $181 $181 Income protection allowance $0 $6,260 Total allowances $196 $7,231 Available income $12,716 $5,681 Student contribution from income Assets Cash, savings, checking $0 $2,250 For IM student assets counted as parent assets. Home equity $0 $0 Investment equity $0 $0 Other real estate equity $0 $0 Business/farm equity $0 $0 Trust value $0 $0 Net worth $0 $0 Student contribution from assets $0 $450 Total student contribution $6,358 $2,841 Total family contribution $37,927 $28,722 Prepared by T&PD Committee NASFAA

29 Case Study 2 Income of parents AGI/taxable income $97,302 $97,302 IM FM Comments Untaxed income and benefits $11,453 $11,453 Child support received and contributions to tax-deferred plans. Income adjustments $0 $0 Total income $108,755 $108,755 Allowance Federal income tax $11,896 $11,896 State and other taxes $9,244 $5,438 FICA $6,753 $6,753 Medical/dental expense allowance $0 Allowance for unusually high unreimbursed medical/dental expense as a function of a percent of total income. FM allowance is 11% of IPA. Employment allowance $3,970 $4,000 Annual education savings allowance $0 No siblings so no allowance. Income protection allowance $20,470 $17,440 Total allowances $52,333 $45,527 Available income $56,422 $63,228 Total PC from income $16,882 $23,435 Difference is more generous allowances in IM formula. Assets Cash, savings, checking $333 $0 No assets reported on FAFSA because under the threshold amount. Home equity $77,000 Investment equity $0 0 Other real estate equity $0 0 Adjusted business/farm equity $0 0 Parent assets in siblings names $0 0 Net worth $77,333 0 Asset protection allowances $ $9,000 Emergency reserve allowance $19,740 Cumulative education savings allowance $23,650 Low income asset allowance $ NASFAA 25 Prepared by T&PD Committee

30 Other asset allowance $0 Discretionary net worth $33,943 $-9,000 Total PC from assets $1,020 $0 Contribution Total parent contribution $17,902 $23,435 Number in college adjustment 1 1 Parent contribution $17,902 $23,435 Noncustodial parent contribution $11,050 Total contribution for student $28,952 $23,435 Income of student AGI/taxable income $500 $500 Untaxed income and benefits $0 $0 Taxable student aid $0 $0 Total income $500 $500 Allowances U.S. income tax $0 $0 State and other taxes $8 $20 FICA $38 $38 Income protection allowance $0 $6,260 Total allowances $46 $6,318 Available income $454 $-5,818 Student contribution from income Assets IM FM Comments Cash, savings, checking $0 $50 No IM Student assets because counted as parent assets. Home equity $0 Investment equity $0 $0 Other real estate equity $0 $0 Business/farm equity $0 $0 Trust value $0 $0 Net worth $0 $50 Student contribution from assets $0 $10 Total student contribution $1,800 $10 IM assumes a minimum SC of 1,800 Total family contribution $30,752 $23,445 Prepared by T&PD Committee NASFAA

31 Case Studies Now that we have reviewed the principles of need analysis and have practiced manual calculations let s see if we would be able to apply what we learned in everyday situations. Scenario 1 Twin sisters Kim and Kay both attend Somewhere College in Somewhere, California. They are returning sophomore students who did not work during their last year in high school or their freshman year in college. They received their award notices and realized that Kim is scheduled to receive a larger amount of Pell grant. A review of the files revealed the following: Kim Student Information: will not file taxes, zero income earned from work, no untaxed income or assets reported. Kim Parental Information: parents married, number in household is 5 with 2 in college, AGI is $70,666, father s income earned from work is $61,320; mother s income earned from work is $9,332. Also $3,181 as tax deferred pensions and zero assets are reported. Kay Student Information: will not file taxes, zero income earned from work, no untaxed income or assets reported. Kay Parental Information: parents married, number in household is 5 with 2 in college, AGI is $70,666 father s income earned from work is $61,320; mother s income earned from work is zero. Also $3,181 as tax deferred pensions and zero assets are reported. Task: How you would counsel the sisters, also highlight what your institution would do to assist these students? Role play can be used to depict this scenario and the outcome. Scenario 2 Mary Brown is a 22-year old full-time student at Anywhere College, in Big City, Missouri. Mary is one of those students who completed her FAFSA as soon as her parents filed taxes on February 2 nd. Mary worked at a work-study position last year where she earned $4,280, and she didn t file a return. Her parents are married and filed a 2013 IRS 1040 form, with a filing status of married filing jointly, with 4 exemptions; and Mary s younger brother John attends college out of state at Somewhere University. Mary currently lives at home with her parents in Big City, MO. Her parents reported an AGI of $29,200; father s wages of $16,500 plus $2,200 net income from his cleaning business; Mary s mother is a dislocated worker with $8,500 in unemployment. Task: How would you counsel Mary if she comes into your office concerned because when she completed the FAFSA on February 1 st, she didn t have to report asset information as she had in prior years when her parents income was more but they had less money in the savings account than they do now. She tells you her mother received an inheritance of $250,000 on January 13 th, from her maternal grandmother s life insurance policy. Mary is a very conscientious student so she is concerned that the government may come after her because she didn t report the money in her mother s saving account. Role play can be used to depict this scenario and the outcome NASFAA 27 Prepared by T&PD Committee

32 Scenario 3 Jose is an independent student who lives and attends college in Florida. When Jose completed the FAFSA he only reported his information and indicated his marital status as single based on the advice of a family friend who told him same sex marriages are not recognized in Florida. Jose was married in 2012 in Maryland to his same sex partner. When Jose arrived at Big College in his home town to submit his verification documents his spouse accompanied him and he mentioned what he had done on his FAFSA based on his friend s advice. Task: What should be the financial aid officers conversation with Jose and his spouse? Be sure to include the advice that should be given to Jose to correct his FAFSA to ensure the EFC calculation is accurate. Role play can be used to depict this scenario and the outcome. Scenario 4 Sam is a returning dependent student who lives with his unmarried biological parents. Sam is at his school s financial aid office requesting to see a counselor. He states that he recently went to a community event to try to complete his FAFSA but was confused because they were telling him to include both parents information on the FAFSA. Sam stated that last year when he completed the FAFSA he only reported his mother s information, since his parents were not married but lived together. He further stated that using his mother s information he was able to get a full Pell Grant and that his dad made most of the family income and his friend told him that will hurt his chances at getting the Pell Grant this year. Task: What is the conversation that the counselor should have with Sam? Based on your knowledge of the need analysis how will this change impact Sam s eligibility? Role play can be used to depict this scenario and the outcome. Prepared by T&PD Committee NASFAA

33 Hand Calculation Scenarios Model A: Melanie Knox, Dependent Student Melanie will be a second-year undergraduate student Fall Her date of birth is June 25, She lives in Nashville, TN, with her parents, Sarah and Jennifer, and her younger brother Michael, who is a high school junior. Melanie s parents were married in New York on September 1, Sarah s birthdate is June 3, 1976 and Jennifer s birthdate is August 1, Melanie s parents filed an IRS Form 1040 for the 2013 tax year. Sarah owns and operates a small coffee shop with five full-time employees. In 2013, she earned $23,500 in business income (as reported on Schedule C of the 1040). Jennifer works as a teacher and earned $53,000 in They reported an adjusted gross income (AGI) of $71,744, $244 in interest income, and their federal income tax liability was $7,035. Jennifer contributed $5,000 to a tax-deferred pension plan. No one in the family received benefits from a means-tested federal program in 2012 or Sarah and Jennifer claim Melanie and her brother as exemptions. Sarah s business value is $500,000 with debt of $436,000. Sarah and Jennifer have $12,848 in a joint savings account, $1,600 in a checking account for Sarah and $2,367 in Jennifer s checking account. They also have 529 college savings plans for both children; the balance of Melanie s is $32,000 and Michael s is $40,000. In 2013, Jennifer received $400 each per month for Melanie and Michael from their birth father. The support for Melanie will end in when she begins college. Melanie earned $2,575 in 2013 working part-time over the summer. She will not file a tax return for She will use the money to pay for books, supplies, and personal expenses and has no assets NASFAA 29 Prepared by T&PD Committee

34 Model B: Courtney Fletcher, Independent Student Without Dependents Other Than a Spouse Courtney is a 28-year old Minneapolis, MN, paralegal who can finish her bachelor s degree at XYZ University in the fall if she attends full time as she would like. Her 2013 salary was $34,000 and with $828 of interest income, her adjusted gross income was $34,828. Her pre-tax contribution to her company s 401K was $6,000. She is single and filed a 1040A and paid federal income tax of $2,450. She claimed the American Education Opportunity Tax Credit for $2,500. She has $25,000 in her 401K, $1,300 in checking and $12,000 in savings. Prepared by T&PD Committee NASFAA

35 Model C: Kurt Smith, Independent Student with Dependents Other Than a Spouse Kurt Smith is married to Whitney and is father to one-year old twin daughters. He is 20 years old and working in an auto repair shop. He wants to pursue education to further his career as an automotive technician. Whitney is employed part-time since the children were born and earned $4,500 in The couple lives in Mesquite, TX and Kurt earned $15,000 in They filed a 1040A with an adjusted gross income of $19,500 and had no federal tax liability. They have $125 in checking as their only asset. The family qualifies for Supplemental Nutrition Assistance Program (SNAP) benefits NASFAA 31 Prepared by T&PD Committee

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37 WORKSHEETS AND TABLES Dependent Students Formula A Worksheet...pages Simplified Formula A Worksheet...pages Tables A1 through A7...pages Independent Students Without Dependents Other than a Spouse Formula B Worksheet...pages Simplified Formula B Worksheet...pages Tables B1 through B4...pages Independent Students With Dependents Other than a Spouse Formula C Worksheet...pages Simplified Formula C Worksheet...pages Tables C1 through C6...pages Note: Do not complete the shaded areas in the simplified worksheets; asset information is not required in the simplified formulas.

38 EFC FORMULA A : DEPENDENT STUDENT PARENTS INCOME IN Parents Adjusted Gross Income (FAFSA/SAR #85) If negative, enter zero. 2. a. Parent 1 (father/mother/stepparent) income earned from work (FAFSA/SAR #88) 2. b. Parent 2 (father/mother/stepparent) income earned from work (FAFSA/SAR #89) + Total income (from line 7) Total allowances (from line 14) AVAILABLE INCOME REGULAR WORKSHEET Page AVAILABLE INCOME (AI) May be a negative number. = A Total parents income earned from work = 3. Parents Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.)* 4. Total untaxed income and benefits: (Total of FAFSA/SAR #94a. through 94i.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (Total of FAFSA/SAR #93a. through 93f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = ALLOWANCES AGAINST PARENTS INCOME U.S. income tax paid (FAFSA/SAR #86) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table A1) If negative, enter zero Parent 1 (father/mother/stepparent) Social Security tax allowance (Table A2) Parent 2 (father/mother/stepparent) Social Security tax allowance (Table A2) Income protection allowance (Table A3) Employment expense allowance: Two working parents (Parents Marital Status is married or unmarried and both parents living together ): 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Two-parent families, one working parent: enter zero TOTAL ALLOWANCES = *STOP HERE if the following are true: Line 3 is $24,000 or less and The parents are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the parents household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated meanstested federal benefit programs or Either of the parents is a dislocated worker. If these circumstances are true, the Expected Family Contribution is automatically zero. PARENTS CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #90) 17. Net worth of investments** (FAFSA/SAR #91) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #92) If negative, enter zero. 19. Adjusted net worth of business/farm (Calculate using Table A4.) Net worth (sum of lines 16, 17, and 19) = 21. Education savings and asset protection allowance (Table A5) 22. Discretionary net worth (line 20 minus line 21) = 23. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. = PARENTS CONTRIBUTION AVAILABLE INCOME (AI) (from line 15) CONTRIBUTION FROM ASSETS (from line 24) Adjusted Available Income (AAI) May be a negative number. = 26. Total parents contribution from AAI (Calculate using Table A6.) If negative, enter zero. 27. Number in college in (Exclude parents) (FAFSA/SAR #74) 28. PARENTS CONTRIBUTION (standard contribution for nine-month enrollment)*** If negative, enter zero. = **Do not include the family s home. ***To calculate the parents contribution for other than nine-month enrollment, see page 11. continued on the next page

39 REGULAR WORKSHEET Page 2 ASTUDENT S INCOME IN Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 30. Income earned from work (FAFSA/SAR #39) 31. Taxable Income (If tax filer, enter the amount from line 29 above. If non-tax filer, enter the amount from line 30.) 32. Total untaxed income and benefits (Total of FAFSA/SAR #45a. through 45j.) Taxable and untaxed income (sum of line 31 and line 32) = 34. Total additional financial information (Total of FAFSA/SAR #44a. through 44f.) 35. TOTAL INCOME (line 33 minus line 34) = May be a negative number. ALLOWANCES AGAINST STUDENT INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 37. State and other tax allowance (Table A7) If negative, enter zero Social Security tax allowance (Table A2) Income protection allowance + 6, Allowance for parents negative Adjusted Available Income (If line 25 is negative, enter line 25 as a positive number in line 40. If line 25 is zero or positive, enter zero in line 40.) + STUDENT S CONTRIBUTION FROM ASSETS 45. Cash, savings & checking (FAFSA/SAR #41) 46. Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 47. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero Net worth (sum of lines 45 through 47) = 49. Assessment rate STUDENT S CONTRIBUTION FROM ASSETS = EXPECTED FAMILY CONTRIBUTION PARENTS CONTRIBUTION (from line 28) STUDENT S CONTRIBUTION FROM AI (from line 44) + STUDENT S CONTRIBUTION FROM ASSETS (from line 50) EXPECTED FAMILY CONTRIBUTION (standard contribution for nine-month enrollment)** If negative, enter zero. = *Do not include the student s home. **To calculate the EFC for other than nine-month enrollment, see the next page. 41. TOTAL ALLOWANCES = STUDENT S CONTRIBUTION FROM INCOME Total income (from line 35) Total allowances (from line 41) 42. Available income (AI) = 43. Assessment of AI STUDENT S CONTRIBUTION FROM AI = If negative, enter zero.

40 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. Calculation of Parents Contribution for a Student Enrolled LESS than Nine Months A1. Parents contribution (standard contribution for nine-month enrollment, from line 28) Calculation of Parents Contribution for a Student Enrolled MORE than Nine Months B1. Parents Adjusted Available Income (AAI) (from line 25 may be a negative number) REGULAR WORKSHEET Page 3 A2. Divide by 9 9 A3. Parents contribution per month = A4. Multiply by number of months of enrollment A5. Parents contribution for LESS than nine-month enrollment = B2. Difference between the income protection allowance for a family of four and a family of five, with one in college + 4,820 B3. Alternate parents AAI for more than nine-month enrollment (line B1 + line B2) = B4. Total parents contribution from alternate AAI (calculate using Table A6) B5. Number in college (FAFSA/SAR #74) B6. Alternate parents contribution for student (line B4 divided by line B5) = B7. Standard parents contribution for the student for nine-month enrollment (from line 28) B8. Difference (line B6 minus line B7) = B9. Divide line B8 by 12 months 12 B10. Parents contribution per month = B11. Number of months student will be enrolled that exceed 9 B12. Adjustment to parents contribution for months that exceed nine (multiply line B10 by line B11) = B13. Standard parents contribution for nine-month enrollment (from line 28) + B14. Parents contribution for MORE than nine-month enrollment = Calculation of Student s Contribution from Available Income (AI) for a Student Enrolled LESS than Nine Months* C1. Student s contribution from AI (standard contribution for nine-month enrollment, from line 44) C2. Divide by 9 9 C3. Student s contribution from AI per month = C4. Multiply by number of months of enrollment C5. Student s contribution from AI for LESS than nine-month enrollment = *For students enrolled more than nine months, the standard contribution from AI is used (the amount from line 44). Use next page to calculate total EFC for enrollment periods other than nine months A

41 REGULAR A WORKSHEET Page 4 Calculation of Total Expected Family Contribution for Periods of Enrollment Other than Nine Months Parents Contribution use ONE appropriate amount from previous page: Enter amount from line A5 for enrollment periods less than nine months OR Enter amount from line B14 for enrollment periods greater than nine months Student s Contribution from Available Income use ONE appropriate amount from previous page: Enter amount from line C5 for enrollment periods less than nine months OR + Enter amount from line 44 for enrollment periods greater than nine months Student s Contribution from Assets Enter amount from line 50 + Expected Family Contribution for periods of enrollment other than nine months =

42 EFC FORMULA A : DEPENDENT STUDENT PARENTS INCOME IN Parents Adjusted Gross Income (FAFSA/SAR #85) If negative, enter zero. 2. a. Parent 1 (father/mother/stepparent) income earned from work (FAFSA/SAR #88) 2. b. Parent 2 (father/mother/stepparent) income earned from work (FAFSA/SAR #89) + TOTAL INCOME (from line 7) AVAILABLE INCOME TOTAL ALLOWANCES (from line 14) SIMPLIFIED WORKSHEET Page AVAILABLE INCOME (AI) May be a negative number. = A Total parents income earned from work = 3. Parents Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.)* 4. Total untaxed income and benefits (sum total of FAFSA/SAR #94a. through 94i.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (sum total of FAFSA/SAR #93a. through 93f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = ALLOWANCES AGAINST PARENTS INCOME U.S. income tax paid (FAFSA/SAR #86) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table A1) If negative, enter zero Parent 1 (father/mother/stepparent) Social Security tax allowance (Table A2) Parent 2 (father/mother/stepparent) Social Security tax allowance (Table A2) Income protection allowance (Table A3) Employment expense allowance: Two working parents (Parents Marital Status is married or unmarried and both parents living together ): 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Two-parent families, one working parent: enter zero TOTAL ALLOWANCES = *STOP HERE if the following are true: Line 3 is $24,000 or less and The parents are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the parents household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated means-tested federal benefit programs or Either of the parents is a dislocated worker. If these circumstances are true, the Expected Family Contribution is automatically zero. 1 PARENTS CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #90) 17. Net worth of investments** (FAFSA/SAR #91) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #92) If negative, enter zero. 19. Adjusted net worth of business/farm (Calculate using Table A4.) Net worth (sum of lines 16, 17, and 19) = 21. Education savings and asset protection allowance (Table A5) 22. Discretionary net worth (line 20 minus line 21) = 23. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. = PARENTS CONTRIBUTION AVAILABLE INCOME (AI) (from line 15) CONTRIBUTION FROM ASSETS (from line 24) Adjusted Available Income (AAI) May be a negative number. = 26. Total parents contribution from AAI (Calculate using Table A6.) If negative, enter zero. 27. Number in college in (Exclude parents) (FAFSA/SAR #74) 28. PARENTS CONTRIBUTION (standard contribution for nine-month enrollment)*** If negative, enter zero. = **Do not include the family s home. ***To calculate the parents contribution for other than nine-month enrollment, see page 15. Note: Do not complete the shaded areas; asset information is not required in the simplified formula. continued on the next page

43 SIMPLIFIED WORKSHEET Page 2 A STUDENT S INCOME IN 2013 STUDENT S CONTRIBUTION FROM ASSETS 29. Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 30. Income earned from work (FAFSA/SAR #39) 31. Taxable Income (If tax filer, enter the amount from line 29 above. If non-tax filer, enter the amount from line 30.) 32. Total untaxed income and benefits (Total of FAFSA/SAR #45a. through 45j.) Taxable and untaxed income (sum of line 31 and line 32) = 34. Total additional financial information (Total of FAFSA/SAR #44a. through 44f.) 35. TOTAL INCOME (line 33 minus line 34) May be a negative number. = ALLOWANCES AGAINST STUDENT INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 37. State and other tax allowance (Table A7) If negative, enter zero Social Security tax allowance (Table A2) Income protection allowance + 6, Allowance for parents negative Adjusted Available Income (If line 25 is negative, enter line 25 as a positive number in line 40. If line 25 is zero or positive, enter zero in line 40.) TOTAL ALLOWANCES = STUDENT S CONTRIBUTION FROM INCOME 45. Cash, savings & checking (FAFSA/SAR #41) Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 47. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero Net worth (sum of lines 45 through 47) = 49. Assessment rate STUDENT S CONTRIBUTION FROM ASSETS = EXPECTED FAMILY CONTRIBUTION PARENTS CONTRIBUTION (from line 28) STUDENT S CONTRIBUTION FROM AI (from line 44) + STUDENT S CONTRIBUTION FROM ASSETS (from line 50) EXPECTED FAMILY CONTRIBUTION standard contribution for nine month enrollment. If negative, enter zero.** = *Do not include the student s home. **To calculate the EFC for other than nine-month enrollment, see the next page. Note: Do not complete the shaded areas; asset information is not required in the simplified formula. Total income (from line 35) Total allowances (from line 41) 42. Available income (AI) = 43. Assessment of AI STUDENT S CONTRIBUTION FROM AI If negative, enter zero. =

44 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. Calculation of Parents Contribution for a Student Enrolled LESS than Nine Months A1. Parents contribution (standard contribution for nine-month enrollment, from line 28) SIMPLIFIED WORKSHEET Page 3 A2. Divide by 9 9 A3. Parents contribution per month = A4. Multiply by number of months of enrollment A5. Parents contribution for LESS than nine-month enrollment = A Calculation of Parents Contribution for a Student Enrolled MORE than Nine Months B1. Parents Adjusted Available Income (AAI) (from line 25 may be a negative number) B2. Difference between the income protection allowance for a family of four and a family of five, with one in college + 4,820 B3. Alternate parents AAI for more than nine-month enrollment (line B1 + line B2) = B4. Total parents contribution from alternate AAI (calculate using Table A6) B5. Number in college (FAFSA/SAR #74) B6. Alternate parents contribution for student (line B4 divided by line B5) = B7. Standard parents contribution for the student for nine-month enrollment (from line 28) B8. Difference (line B6 minus line B7) = B9. Divide line B8 by 12 months 12 B10. Parents contribution per month = B11. Number of months student will be enrolled that exceed 9 B12. Adjustment to parents contribution for months that exceed nine (multiply line B10 by line B11) = B13. Standard parents contribution for nine-month enrollment (from line 28) + B14. Parents contribution for MORE than nine-month enrollment = Calculation of Student s Contribution from Available Income (AI) for a Student Enrolled LESS than Nine Months* C1. Student s contribution from AI (standard contribution for nine-month enrollment, from line 44) C2. Divide by 9 9 C3. Student s contribution from AI per month = C4. Multiply by number of months of enrollment C5. Student s contribution from AI for LESS than nine-month enrollment = *For students enrolled more than nine months, the standard contribution from AI is used (the amount from line 44). Use next page to calculate total EFC for enrollment periods other than nine months

45 SIMPLIFIED WORKSHEET Page 4 A Calculation of Total Expected Family Contribution for Periods of Enrollment Other than Nine Months Parents Contribution use ONE appropriate amount from previous page: Enter amount from line A5 for enrollment periods less than nine months OR Enter amount from line B14 for enrollment periods greather than nine months Student s Contribution from Available Income use ONE appropriate amount from previous page: Enter amount from line C5 for enrollment periods less than nine months OR + Enter amount from line 44 for enrollment periods greater than nine months Expected Family Contribution for periods of enrollment other than nine months =

46 Table A1: State and Other Tax Allowance for EFC Formula A Worksheet (parents only) STATE PERCENT OF TOTAL INCOME STATE PERCENT OF TOTAL INCOME $0 $14,999 $15,000 or more $0 $14,999 $15,000 or more Alabama... 3%... 2% Alaska... 2%... 1% American Samoa... 2%... 1% Arizona... 4%... 3% Arkansas... 4%... 3% California... 8%... 7% Canada and Canadian Provinces... 2%... 1% Colorado... 4%... 3% Connecticut... 8%... 7% Delaware... 5%... 4% District of Columbia... 7%... 6% Federated States of Micronesia... 2%... 1% Florida... 3%... 2% Georgia... 5%... 4% Guam... 2%... 1% Hawaii... 4%... 3% Idaho... 5%... 4% Illinois... 5%... 4% Indiana... 4%... 3% Iowa... 5%... 4% Kansas... 5%... 4% Kentucky... 5%... 4% Louisiana... 3%... 2% Maine... 6%... 5% Marshall Islands... 2%... 1% Maryland... 8%... 7% Massachusetts... 7%... 6% Mexico... 2%... 1% Michigan... 5%... 4% Minnesota... 6%... 5% Mississippi... 3%... 2% Missouri... 5%... 4% Montana... 5%... 4% Nebraska... 5%... 4% Nevada... 3%... 2% New Hampshire... 5%... 4% New Jersey... 9%... 8% New Mexico... 3%... 2% New York... 9%... 8% North Carolina... 6%... 5% North Dakota... 2%... 1% Northern Mariana Islands... 2%... 1% Ohio... 5%... 4% Oklahoma... 3%... 2% Oregon... 7%... 6% Palau... 2%... 1% Pennsylvania... 5%... 4% Puerto Rico... 2%... 1% Rhode Island... 7%... 6% South Carolina... 5%... 4% South Dakota... 2%... 1% Tennessee... 2%... 1% Texas... 3%... 2% Utah... 5%... 4% Vermont... 6%... 5% Virgin Islands... 2%... 1% Virginia... 6%... 5% Washington... 4%... 3% West Virginia... 3%... 2% Wisconsin... 7%... 6% Wyoming... 2%.....1% Blank or Invalid State... 2%... 1% OTHER... 2%... 1% Multiply Parents Total Income (EFC Formula A Worksheet, line 7) by the appropriate rate from the table above to get the State and Other Tax Allowance (EFC Formula A Worksheet, line 9). Use the parents State of Legal Residence (FAFSA/SAR #70). If this item is blank or invalid, use the student s State of Legal Residence (FAFSA/SAR #18). If both items are blank or invalid, use the State in the Student s Mailing Address (FAFSA/ SAR #6). If all three items are blank or invalid, use the rate for a blank or invalid state above.

47 Table A2: Social Security Tax Calculate separately the Social Security tax of father, mother, and student. Income Earned from Work* Social Security Tax $0 $113, % of income $113,701 or greater $8, % of amount over $113,700 *Parent 1 (father/mother/stepparent) 2013 income earned from work is FAFSA/SAR #88. Parent 2 (father/mother/stepparent) 2013 income earned from work is FAFSA/SAR #89. Student s 2013 income earned from work is FAFSA/SAR #39. Social Security tax will never be less than zero. Table A3: Income Protection Allowance Number in parents household, including student (FAFSA/SAR #73) Number of college students in household (FAFSA/SAR #74) $17,440 $14, ,720 18,750 $15, ,830 23,840 20,870 $17, ,650 28,670 25,700 22,710 $19, ,020 34,040 31,070 28,090 25,120 Note: For each additional family member, add $4,180. For each additional college student (except parents), subtract $2, Table A4: Business/Farm Net Worth Adjustment for EFC Formula A Worksheet (parents only) If the net worth of a business or farm is Less than $1 $0 Then the adjusted net worth is $1 to $125,000 40% of net worth of business/farm $125,001 to $375,000 $ 50, % of net worth over $125,000 $375,001 to $620,000 $175, % of net worth over $375,000 $620,001 or more $322, % of net worth over $620,000

48 Table A5: Parents Education Savings and Asset Protection Allowance for EFC Formula A Worksheet (parents only) Age of older parent as of 12/31/2014* Allowance if there are two parents** Allowance if there is only one parent Age of older parent as of 12/31/2014* Allowance if there are two parents** Allowance if there is only one parent 25 or less. $0 $ , , ,500 1, ,300 1, ,100 2, ,900 2, ,700 2, ,600 3, ,400 3, ,200 4, ,000 4, ,800 5, ,700 5, ,500 5, ,300 6, ,900 6, ,500 6, ,200 6, ,000 6, $30,700 $7, ,500 7, ,200 7, ,000 7, ,800 7, ,600 8, ,700 8, ,500 8, ,600 8, ,500 8, ,700 9, ,600 9, ,800 9, ,000 9, ,200 9, ,500 10, ,800 10, ,100 10, ,500 11, ,900 11, or over... 52,600 11,600 *Determine the age of the older parent listed in FAFSA/SAR #64 and #68 as of 12/31/2014. If no parent date of birth is provided, use age 45. **Use the two parent allowance when the Parents Marital Status listed in FAFSA/SAR #59 is married or remarried or unmarried and both parents living together. Table A6: Parents Contribution from AAI If parents AAI is The parents contribution from AAI is Less than -$3,409 -$750 -$3,409 to $15,600 22% of AAI $15,601 to $19,600 $3, % of AAI over $15,600 $19,601 to $23,500 $4, % of AAI over $19,600 $23,501 to $27,500 $5, % of AAI over $23,500 $27,501 to $31,500 $6, % of AAI over $27,500 $31,501 or more $8, % of AAI over $31,500

49 Table A7: State and Other Tax Allowance for EFC Formula A Worksheet (student only) Alabama... 2% Alaska... 0% American Samoa... 2% Arizona... 2% Arkansas... 3% California... 5% Canada and Canadian Provinces... 2% Colorado... 3% Connecticut... 5% Delaware... 3% District of Columbia... 5% Federated States of Micronesia... 2% Florida... 1% Georgia... 3% Guam... 2% Hawaii... 3% Idaho... 3% Illinois... 2% Indiana... 3% Iowa... 3% Kansas... 3% Kentucky... 4% Louisiana... 2% Maine... 4% Marshall Islands... 2% Maryland... 5% Massachusetts... 4% Mexico... 2% Michigan... 3% Minnesota... 4% Mississippi... 2% Missouri... 3% Montana... 3% Nebraska... 3% Nevada... 1% New Hampshire... 1% New Jersey... 4% New Mexico... 2% New York... 6% North Carolina... 4% North Dakota... 1% Northern Mariana Islands... 2% Ohio... 3% Oklahoma... 2% Oregon... 5% Palau... 2% Pennsylvania... 3% Puerto Rico... 2% Rhode Island... 4% South Carolina... 3% South Dakota... 1% Tennessee... 1% Texas... 1% Utah... 3% Vermont... 3% Virgin Islands... 2% Virginia... 4% Washington... 1% West Virginia... 3% Wisconsin... 4% Wyoming... 1% Blank or Invalid State... 2% OTHER... 2% Multiply the student s total income (EFC Formula A Worksheet, line 35) by the appropriate rate from the table above to get the state and other tax allowance (EFC Formula A Worksheet, line 37). Use the student s state of legal residence (FAFSA/SAR #18). If this item is blank or invalid, use the state in the student s mailing address (FAFSA/SAR #6). If both items are blank or invalid, use the parents state of legal residence (FAFSA/SAR #70). If all three items are blank or invalid, use the rate for a blank or invalid state above.

50 EFC FORMULA B : INDEPENDENT STUDENT Without Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) + Total student/spouse income earned from work = TOTAL INCOME (from line 7) TOTAL ALLOWANCES (from line 14) REGULAR WORKSHEET Page 1 CONTRIBUTION FROM AVAILABLE INCOME 15. AVAILABLE INCOME (AI) = 16. Assessment rate CONTRIBUTION FROM AI = May be a negative number. B 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 18. Cash, savings & checking (FAFSA/SAR #41) 19. Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 20. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 21. Adjusted net worth of business/farm (Calculate using Table B3.) Net worth (sum of lines 18, 19, and 21) = ALLOWANCES AGAINST STUDENT/SPOUSE INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table B1) If negative, enter zero Student s Social Security tax (Table B2) Asset protection allowance (Table B4) 24. Discretionary net worth (line 22 minus line 23) = 25. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. 11. Spouse s Social Security tax (Table B2) Income protection allowance: $9,730 for single, separated or divorced/widowed student; $9,730 for married student if spouse is enrolled at least 1/2 time; $15,600 for married student if spouse is not enrolled at least 1/2 time Employment expense allowance: If student is not married or is separated, the allowance is zero. If student is married but only one person is working (the student or spouse), the allowance is zero. If student is married and both student and spouse are working, the allowance is 35% of the lesser of the earned incomes, or $4,000, whichever is less. + EXPECTED FAMILY CONTRIBUTION CONTRIBUTION FROM AI (from line 17) May be a negative number. CONTRIBUTION FROM ASSETS (from line 26) Contribution from AI and assets = 28. Number in college in (FAFSA/SAR #96) 29. EXPECTED FAMILY CONTRIBUTION for nine month enrollment. If negative, enter zero.** = *Do not include the student s home. **To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the nine-month EFC (line 29 above). 14. TOTAL ALLOWANCES =

51 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. Expected Family Contribution (standard contribution for nine-month enrollment, from line 29) Divide by 9 9 Expected Family Contribution per month = Multiply by number of months of enrollment Expected Family Contribution for less than nine-month enrollment* = REGULAR WORKSHEET Page 2 Calculation of Expected Family Contribution for a Student Enrolled for Less than Nine Months B *Substitute the student s EFC for less than nine-month enrollment in place of the EFC for the standard nine-month enrollment (EFC Formula B Worksheet, line 29).

52 EFC FORMULA B : INDEPENDENT STUDENT Without Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) + Total student/spouse income earned from work = TOTAL INCOME (from line 7) TOTAL ALLOWANCES (from line 14) SIMPLIFIED WORKSHEET Page 1 CONTRIBUTION FROM AVAILABLE INCOME 15. AVAILABLE INCOME (AI) = 16. Assessment rate CONTRIBUTION FROM AI = May be a negative number. B 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 18. Cash, savings & checking (FAFSA/SAR #41) 19. Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = 20. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 21. Adjusted net worth of business/farm (Calculate using Table B3.) Net worth (sum of lines 18, 19, and 21) = ALLOWANCES AGAINST STUDENT/SPOUSE INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table B1) If negative, enter zero Student s Social Security tax (Table B2) Asset protection allowance (Table B4) 24. Discretionary net worth (line 22 minus line 23) = 25. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. 11. Spouse s Social Security tax (Table B2) Income protection allowance: $9,730 for single, separated or divorced/widowed student; $9,730 for married student if spouse is enrolled at least 1/2 time; $15,600 for married student if only the student is enrolled at least 1/2 time Employment expense allowance: If student is not married or is separated, the allowance is zero. If student is married but only one person is working (the student or spouse), the allowance is zero. If student is married and both student and spouse are working, the allowance is 35% of the lesser of the earned incomes, or $4,000, whichever is less TOTAL ALLOWANCES = EXPECTED FAMILY CONTRIBUTION CONTRIBUTION FROM AI (from line 17) May be a negative number. CONTRIBUTION FROM ASSETS (from line 26) Contribution from AI and assets = 28. Number in college in (FAFSA/SAR #96) 29. EXPECTED FAMILY CONTRIBUTION for nine-month enrollment. If negative, enter zero.** = *Do not include the student s home. **To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the nine-month EFC (line 29 above). Note: Do not complete the shaded areas; asset information is not required in the simplified formula.

53 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. SIMPLIFIED WORKSHEET Page 2 Calculation of Expected Family Contribution for a Student Enrolled for Less than Nine Months Expected Family Contribution (standard contribution for nine-month enrollment, from line 29) B Divide by 9 9 Expected Family Contribution per month = Multiply by number of months of enrollment Expected Family Contribution for less than nine-month enrollment* = *Substitute the student s EFC for less than nine-month enrollment in place of the EFC for the standard nine-month enrollment (EFC Formula B Worksheet, line 29.)

54 Table B1: State and Other Tax Allowance Alabama... 2% Alaska... 0% American Samoa... 2% Arizona... 2% Arkansas... 3% California... 5% Canada and Canadian Provinces... 2% Colorado... 3% Connecticut... 5% Delaware... 3% District of Columbia... 5% Federated States of Micronesia... 2% Florida... 1% Georgia... 3% Guam... 2% Hawaii... 3% Idaho... 3% Illinois... 2% Indiana... 3% Iowa... 3% Kansas... 3% Kentucky... 4% Louisiana... 2% Maine... 4% Marshall Islands... 2% Maryland... 5% Massachusetts... 4% Mexico... 2% Michigan... 3% Minnesota... 4% Mississippi... 2% Missouri... 3% Montana... 3% Nebraska... 3% Nevada... 1% New Hampshire... 1% New Jersey... 4% New Mexico... 2% New York... 6% North Carolina... 4% North Dakota... 1% Northern Mariana Islands... 2% Ohio... 3% Oklahoma... 2% Oregon... 5% Palau... 2% Pennsylvania... 3% Puerto Rico... 2% Rhode Island... 4% South Carolina... 3% South Dakota... 1% Tennessee... 1% Texas... 1% Utah... 3% Vermont... 3% Virgin Islands... 2% Virginia... 4% Washington... 1% West Virginia... 3% Wisconsin... 4% Wyoming... 1% Blank or Invalid State... 2% OTHER... 2% Multiply the total income of student and spouse (EFC Formula B Worksheet, line 7) by the appropriate rate from the table above to get the state and other tax allowance (EFC Formula B Worksheet, line 9). Use the student s State of Legal Residence (FAFSA/SAR #18) reported on the FAFSA. If this item is blank or invalid, use the State in the Student s Mailing Address (FAFSA/SAR #6). If both items are blank or invalid, use rate for blank or invalid state above.

55 Table B2: Social Security Tax Calculate separately the Social Security tax of student and spouse. Income Earned from Work* Social Security Tax $0 $113, % of income $113,701 or greater $8, % of amount over $113,700 *Student s 2013 income earned from work is FAFSA/SAR #39. Spouse s 2013 income earned from work is FAFSA/SAR #40. Social Security tax will never be less than zero. Table B3: Business/Farm Net Worth Adjustment If the net worth of a business or farm is Then the adjusted net worth is Less than $1 $0 $1 to $125,000 40% of net worth of business/farm $125,001 to $375,000 $ 50, % of net worth over $125,000 $375,001 to $620,000 $175, % of net worth over $375,000 $620,001 or more $322, % of net worth over $620,000

56 Table B4: Asset Protection Allowance Age of student as of 12/31/2014* Married Student Allowance for Unmarried Student Age of student as of 12/31/2014* Allowance for Married Student Unmarried Student 25 or less. $0 $ , , ,500 1, ,300 1, ,100 2, ,900 2, ,700 2, ,600 3, ,400 3, ,200 4, ,000 4, ,800 5, ,700 5, ,500 5, ,300 6, ,900 6, ,500 6, ,200 6, ,000 6, $30,700 $7, ,500 7, ,200 7, ,000 7, ,800 7, ,600 8, ,700 8, ,500 8, ,600 8, ,500 8, ,700 9, ,600 9, ,800 9, ,000 9, ,200 9, ,500 10, ,800 10, ,100 10, ,500 11, ,900 11, or over... 52,600 11,600 *Determine student s age as of 12/31/2014 from student s date of birth (FAFSA/SAR #9)

57 EFC FORMULA C : INDEPENDENT STUDENT With Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) + Total student/spouse income earned from work = 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = TOTAL INCOME (from line 7) AVAILABLE INCOME TOTAL ALLOWANCES (from line 14) 15. AVAILABLE INCOME (AI) May be a negative number. = STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #41) 17. Net worth of investments** (FAFSA/SAR #42) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. REGULAR WORKSHEET Page Adjusted net worth of business/farm (Calculate using Table C4.) Net worth (sum of lines 16, 17, and 19) = 21. Asset protection allowance (Table C5) 22. Discretionary net worth (line 20 minus line 21) = C ALLOWANCES AGAINST STUDENT/SPOUSE INCOME A U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table C1) If negative, enter zero Student s Social Security tax (Table C2) Spouse s Social Security tax (Table C2) Income protection allowance (Table C3) Employment expense allowance: Student and spouse both working: 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Student or spouse working (not both): zero TOTAL ALLOWANCES = *STOP HERE if the following are true: Line 3 is $24,000 or less and The student (and the student s spouse, if any) are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the student s household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated means-tested federal benefit programs or The student (or the student s spouse, if any) is a dislocated worker. 23. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. EXPECTED FAMILY CONTRIBUTION AVAILABLE INCOME (AI) (from line 15) CONTRIBUTION FROM ASSETS (from line 24) Adjusted Available Income (AAI) May be a negative number. = 26. Total contribution from AAI (Calculate using Table C6.) If negative, enter zero. 27. Number in college in (FAFSA/SAR #96) 28. EXPECTED FAMILY CONTRIBUTION for nine month enrollment. If negative, enter zero.*** **Do not include the student s home. ***To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the nine-month EFC (line 28 above). If these circumstances are true, the Expected Family Contribution is automatically zero.

58 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. Calculation of Expected Family Contribution for a Student Enrolled for Less than Nine Months REGULAR WORKSHEET Page 2 C Expected Family Contribution (standard contribution for nine-month enrollment, from line 28) Divide by 9 9 Expected Family Contribution per month = Multiply by number of months of enrollment Expected Family Contribution for less than nine-month enrollment* = *Substitute the student s EFC for less than nine-month enrollment in place of the EFC for the standard nine-month enrollment (EFC Formula C Worksheet, line 28).

59 EFC FORMULA C : INDEPENDENT STUDENT With Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN 2013 AVAILABLE INCOME SIMPLIFIED WORKSHEET Page 1 C 1. Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) + Total student/spouse income earned from work = 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = TOTAL INCOME (from line 7) TOTAL ALLOWANCES (from line 14) 15. AVAILABLE INCOME (AI) May be a negative number. = STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #41) 17. Net worth of investments** (FAFSA/SAR #42) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = ε. 19. Adjusted net worth of business/farm (Calculate using Table C4.) Net worth (sum of lines 16, 17, and 19) = 21. Asset protection allowance (Table C5) ALLOWANCES AGAINST STUDENT/SPOUSE INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table C1) If negative, enter zero Student s Social Security tax (Table C2) Spouse s Social Security tax (Table C2) Income protection allowance (Table C3) Employment expense allowance: Student and spouse both working: 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Student or spouse working (not both): zero TOTAL ALLOWANCES = *STOP HERE if the following are true: Line 3 is $24,000 or less and The student (and the student s spouse, if any) are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the student s household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated means-tested federal benefit programs or The student (or the student s spouse, if any) is a dislocated worker. If these circumstances are true, the Expected Family Contribution is automatically zero. 22. Discretionary net worth (line 20 minus line 21) = 23. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. EXPECTED FAMILY CONTRIBUTION AVAILABLE INCOME (AI) (from line 15) CONTRIBUTIONS FROM ASSETS (from line 24) Adjusted available income (AAI) May be a negative number. = 26. Total contribution from AAI (Calculate using Table C6.) If negative, enter zero. 27. Number in college in (FAFSA/SAR #96) 28. EXPECTED FAMILY CONTRIBUTION for nine month enrollment. If negative, enter zero.*** **Do not include the student s home. ***To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the ninemonth EFC (line 28 above). Note: Do not complete the shaded areas; asset information is not required in the simplified formula.

60 Note: Use this additional page to prorate the EFC only if the student will be enrolled for other than nine months and only to determine the student s need for Campus-Based aid, or a Federal Direct Subsidized Loan. Do not use this page to prorate the EFC for a Federal Pell Grant or TEACH Grant. The EFC for the Federal Pell Grant Program is the nine-month EFC used in conjunction with the cost of attendance to determine a Federal Pell Grant award from the Payment or Disbursement Schedule. SIMPLIFIED WORKSHEET Page 2 Calculation of Expected Family Contribution for a Student Enrolled for Less than Nine Months Expected Family Contribution (standard contribution for nine-month enrollment, from line 28) Divide by 9 9 Expected Family Contribution per month = Multiply by number of months enrollment C Expected Family Contribution for less than nine-month enrollment* = *Substitute the student s EFC for less than nine-month enrollment in place of the EFC for the standard nine-month enrollment (EFC Formula C Worksheet, line 28).

61 Table C1: State and Other Tax Allowance STATE PERCENT OF TOTAL INCOME $0 $14,999 $15,000 or more STATE PERCENT OF TOTAL INCOME $0 $14,999 $15,000 or more Alabama... 3%... 2% Alaska... 2%... 1% American Samoa... 2%... 1% Arizona... 4%... 3% Arkansas... 4%... 3% California... 8%... 7% Canada and Canadian Provinces... 2%... 1% Colorado... 4%... 3% Connecticut... 8%... 7% Delaware... 5%... 4% District of Columbia... 7%... 6% Federated States of Micronesia... 2%... 1% Florida... 3%... 2% Georgia... 5%... 4% Guam... 2%... 1% Hawaii... 4%... 3% Idaho... 5%... 4% Illinois... 5%... 4% Indiana... 4%... 3% Iowa... 5%... 4% Kansas... 5%... 4% Kentucky... 5%... 4% Louisiana... 3%... 2% Maine... 6%... 5% Marshall Islands... 2%... 1% Maryland... 8%... 7% Massachusetts... 7%... 6% Mexico... 2%... 1% Michigan... 5%... 4% Minnesota... 6%... 5% Mississippi... 3%... 2% Missouri... 5%... 4% Montana... 5%... 4% Nebraska... 5%... 4% Nevada... 3%... 2% New Hampshire... 5%... 4% New Jersey... 9%... 8% New Mexico... 3%... 2% New York... 9%... 8% North Carolina... 6%... 5% North Dakota... 2%... 1% Northern Mariana Islands... 2%... 1% Ohio... 5%... 4% Oklahoma... 3%... 2% Oregon... 7%... 6% Palau... 2%... 1% Pennsylvania... 5%... 4% Puerto Rico... 2%... 1% Rhode Island... 7%... 6% South Carolina... 5%... 4% South Dakota... 2%... 1% Tennessee... 2%... 1% Texas... 3%... 2% Utah... 5%... 4% Vermont... 6%... 5% Virgin Islands... 2%... 1% Virginia... 6%... 5% Washington... 4%... 3% West Virginia... 3%... 2% Wisconsin... 7%... 6% Wyoming... 2%.....1% Blank or Invalid State... 2%... 1% OTHER... 2%... 1% Multiply the total income of student and spouse (EFC Formula C Worksheet, line 7) by the appropriate rate from the table above to get the state and other tax allowance (EFC Formula C Worksheet, line 9). Use the student s State of Legal Residence (FAFSA/SAR #18) reported on the FAFSA. If this item is blank or invalid, use the State in the Student s Mailing Address (FAFSA/SAR #6). If both items are blank or invalid, use the rate for blank or invalid state above.

62 Table C2: Social Security Tax Calculate separately the Social Security tax of student and spouse. Income Earned from Work* Social Security Tax $0 $113, % of income $113,701 or greater $8, % of amount over $113,700 *Student s 2013 income earned from work is FAFSA/SAR #39..Spouse s 2013 income earned from work is FAFSA/SAR #40..Social Security tax will never be less than zero. Table C3: Income Protection Allowance Number in student s household, including student (FAFSA/SAR #95) Number of college students in household (FAFSA/SAR #96) $24,650 $20, ,690 26,490 $22, ,890 33,690 29,500 $25, ,710 40,490 36,300 32,090 $27, ,290 48,080 43,900 39,670 35,480 Note: For each additional family member, add $5,900. For each additional college student, subtract $4, Table C4: Business/Farm Net Worth Adjustment If the net worth of a business or farm is Then the adjusted net worth is Less than $1 $0 $1 to $125,000 40% of net worth of business/farm $125,001 to $375,000 $ 50, % of net worth over $125,000 $375,001 to $620,000 $175, % of net worth over $375,000 $620,001 or more $322, % of net worth over $620,000

63 Table C5: Asset Protection Allowance Age of student as of 12/31/2014* Allowance for Married Student Allowance for Unmarried Student Age of student as of 12/31/2014* Allowance for Married Student Allowance for Unmarried Student 25 or less. $0 $ , , ,500 1, ,300 1, ,100 2, ,900 2, ,700 2, ,600 3, ,400 3, ,200 4, ,000 4, ,800 5, ,700 5, ,500 5, ,300 6, ,900 6, ,500 6, ,200 6, ,000 6, $30,700 $7, ,500 7, ,200 7, ,000 7, ,800 7, ,600 8, ,700 8, ,500 8, ,600 8, ,500 8, ,700 9, ,600 9, ,800 9, ,000 9, ,200 9, ,500 10, ,800 10, ,100 10, ,500 11, ,900 11, or over... 52,600 11,600 *Determine the student s age as of 12/31/2014 from the student s date of birth (FAFSA/SAR #9) Table C6: Student s Contribution from AAI If student s AAI is The student s contribution from AAI is Less than -$3,409 -$750 -$3,409 to $15,600 22% of AAI $15,601 to $19,600 $3, % of AAI over $15,600 $19,601 to $23,500 $4, % of AAI over $19,600 $23,501 to $27,500 $5, % of AAI over $23,500 $27,501 to $31,500 $6, % of AAI over $27,500 $31,501 or more $8, % of AAI over $31,500

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65 Solutions

66 EFC FORMULA A : DEPENDENT STUDENT AVAILABLE INCOME PARENTS INCOME IN Parents Adjusted Gross Income (FAFSA/SAR #85) If negative, enter zero. a. Parent 1 (father/mother/stepparent) income earned from work (FAFSA/SAR #88) 23,500 53, Parents Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.)* 4. Total untaxed income and benefits: (Total of FAFSA/SAR #94a. through 94i.) 5. Taxable and untaxed income (sum of line 3 and line 4) 76,500 = Total parents income earned from work + = 6. Total additional financial information (Total of FAFSA/SAR #93a. through 93f.) 7. TOTAL INCOME (line 5 minus line 6) May be a negative number. = 71,744 14, Parent 1 (father/mother/stepparent) Social Security tax allowance (Table A2) + 1, Parent 2 (father/mother/stepparent) Social Security tax allowance (Table A2) Income protection allowance (Table A3) Employment expense allowance: Two working parents (Parents Marital Status is married or unmarried and both parents living together ): 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Two-parent families, one working parent: enter zero TOTAL ALLOWANCES = , Net worth of investments** (FAFSA/SAR #91) If negative, enter zero. 72, = 88,815 27, Discretionary net worth (line 20 minus line 21) = 61, Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. = 7,382 CONTRIBUTION FROM ASSETS (from line 24) + 41,763 7, Adjusted Available Income (AAI) May be a negative number. = 49,145 PARENTS CONTRIBUTION 4,055 26,830 AVAILABLE INCOME (AI) (from line 15) 26. Total parents contribution from AAI (Calculate using Table A6.) If negative, enter zero. 4,000 44,581 *STOP HERE if the following are true: 16, Number in college in (Exclude parents) (FAFSA/SAR #74) PARENTS CONTRIBUTION (standard contribution for nine-month enrollment)*** If negative, enter zero. = 16,816 **Do not include the family s home. Line 3 is $24,000 or less and The parents are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the parents household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated means- tested federal benefit programs or Either of the parents is a dislocated worker. If these circumstances are true, the Expected Family Contribution is automatically zero. NASFAA Training Materials Prepared by T&PD Committee 41,763 PARENTS CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #90) 21. Education savings and asset protection allowance (Table A5) 7,035 + = 20. Net worth (sum of lines 16, 17, and 19) 86, State and other tax allowance (Table A1) If negative, enter zero. 15. AVAILABLE INCOME (AI) May be a negative number. 19. Adjusted net worth of business/farm (Calculate using Table A4.) ALLOWANCES AGAINST PARENTS INCOME U.S. income tax paid (FAFSA/SAR #86) (tax filers only) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #92) If negative, enter zero. 86,344 Total allowances (from line 14) A 86,344 44,581 Total income (from line 7) 71, b. Parent 2 (father/mother/stepparent) income earned from work (FAFSA/SAR #89) + REGULAR WORKSHEET Page 1 ***To calculate the parents contribution for other than nine-month enrollment, see page 11. continued on the next page NASFAA

67 REGULAR WORKSHEET Page 2 A STUDENT S INCOME IN 2013 STUDENT S CONTRIBUTION FROM ASSETS 29. Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero Cash, savings & checking (FAFSA/SAR #41) Income earned from work (FAFSA/SAR #39) 2, Taxable Income (If tax filer, enter the amount from line 29 above. If non-tax filer, enter the amount from line 30.) 46. Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 2, Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 32. Total untaxed income and benefits (Total of FAFSA/SAR #45a. through 45j.) Taxable and untaxed income = (sum of line 31 and line 32) 0 0 2, Social Security tax allowance (Table A2) Income protection allowance Allowance for parents negative Adjusted Available Income (If line 25 is negative, enter line 25 as a positive number in line 40. If line 25 is zero or positive, enter zero in line 40.) 26 6,260 = ,816 STUDENT S CONTRIBUTION FROM AI (from line 44) + 0 STUDENT S CONTRIBUTION FROM ASSETS (from line 50) EXPECTED FAMILY CONTRIBUTION (standard contribution for nine-month enrollment)** If negative, enter zero. = 16, *Do not include the student s home. 0 + = 41. TOTAL ALLOWANCES 0 EXPECTED FAMILY CONTRIBUTION State and other tax allowance (Table A7) If negative, enter zero. + PARENTS CONTRIBUTION (from line 28) ALLOWANCES AGAINST STUDENT INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 49. Assessment rate 50. STUDENT S CONTRIBUTION FROM ASSETS = 2, Total additional financial information (Total of FAFSA/SAR #44a. through 44f.) 35. TOTAL INCOME (line 33 minus line 34) = May be a negative number. 48. Net worth (sum of lines 45 through 47) **To calculate the EFC for other than nine-month enrollment, see the next page. 6,483 STUDENT S CONTRIBUTION FROM INCOME Total income (from line 35) Total allowances (from line 41) = 42. Available income (AI) 43. Assessment of AI.50 = STUDENT S CONTRIBUTION FROM AI If negative, enter zero NASFAA 2,575 6,483-3, NASFAA Training Materials Prepared by T&PD Committee

68 EFC FORMULA B : INDEPENDENT STUDENT Without Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table B1) If negative, enter zero Student s Social Security tax (Table B2) Spouse s Social Security tax (Table B2) Income protection allowance: $9,730 for single, separated or divorced/widowed student; $9,730 for married student if spouse is enrolled at least 1/2 time; $15,600 for married student if spouse is not enrolled at least 1/2 time Employment expense allowance: If student is not married or is separated, the allowance is zero. + Total student/spouse income earned from work = 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 34, TOTAL INCOME (line 5 minus line 6) May be a negative number. = ALLOWANCES AGAINST STUDENT/SPOUSE INCOME 0 34,828 34,000 34,828 6,000 40,828 2,500 38,328 2,450 1,533 2, ,730 TOTAL INCOME (from line 7) TOTAL ALLOWANCES (from line 14) REGULAR WORKSHEET Page 1 CONTRIBUTION FROM AVAILABLE INCOME 15. AVAILABLE INCOME (AI) = 16. Assessment rate CONTRIBUTION FROM AI = May be a negative number. STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 18. Cash, savings & checking (FAFSA/SAR #41) 19. Net worth of investments* (FAFSA/SAR #42) If negative, enter zero. 20. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 21. Adjusted net worth of business/farm (Calculate using Table B3.) Net worth (sum of lines 18, 19, and 21) = 23. Asset protection allowance (Table B4) 24. Discretionary net worth (line 22 minus line 23) = 25. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. EXPECTED FAMILY CONTRIBUTION CONTRIBUTION FROM AI (from line 17) May be a negative number. CONTRIBUTION FROM ASSETS (from line 26) Contribution from AI and assets = 28. Number in college in (FAFSA/SAR #96) 29. EXPECTED FAMILY CONTRIBUTION for nine month enrollment. If negative, enter zero.** = B 38,328 16,314 22,014 11,007 13, ,300 1,300 12,000 2,400 11,007 2,400 13, ,407 If student is married but only one person is working (the student or spouse), the allowance is zero. If student is married and both student and spouse are working, the allowance is 35% of the lesser of the earned incomes, or $4,000, whichever is less TOTAL ALLOWANCES = 0 16,314 *Do not include the student s home. **To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the nine-month EFC (line 29 above). NASFAA Training Materials Prepared by T&PD Committee NASFAA

69 EFC FORMULA C : INDEPENDENT STUDENT With Dependent(s) Other than a Spouse STUDENT/SPOUSE INCOME IN Student s and spouse s Adjusted Gross Income (FAFSA/SAR #36) If negative, enter zero. 2. a. Student s income earned from work (FAFSA/SAR #39) 2. b. Spouse s income earned from work (FAFSA/SAR #40) + Total student/spouse income earned from work = 3. Student/spouse Taxable Income (If tax filers, enter the amount from line 1 above. If non-tax filers, enter the amount from line 2.) 4. Total untaxed income and benefits (sum total of FAFSA/SAR #45a. through 45j.) + 5. Taxable and untaxed income (sum of line 3 and line 4) = 6. Total additional financial information (sum total of FAFSA/SAR #44a. through 44f.) 15,000 4, TOTAL INCOME (line 5 minus line 6) May be a negative number. = 19,500 19,500 19, ,500 ε. 0 19,500 TOTAL INCOME (from line 7) AVAILABLE INCOME TOTAL ALLOWANCES (from line 14) SIMPLIFIED WORKSHEET Page AVAILABLE INCOME (AI) May be a negative number. = STUDENT S/SPOUSE S CONTRIBUTION FROM ASSETS 16. Cash, savings & checking (FAFSA/SAR #41) 17. Net worth of investments** (FAFSA/SAR #42) If negative, enter zero. 18. Net worth of business and/or investment farm (FAFSA/SAR #43) If negative, enter zero. 19. Adjusted net worth of business/farm (Calculate using Table C4.) Net worth (sum of lines 16, 17, and 19) = 21. Asset protection allowance (Table C5) C ALLOWANCES AGAINST STUDENT/SPOUSE INCOME U.S. income tax paid (FAFSA/SAR #37) (tax filers only) If negative, enter zero. 9. State and other tax allowance (Table C1) If negative, enter zero Student s Social Security tax (Table C2) Spouse s Social Security tax (Table C2) Income protection allowance (Table C3) Employment expense allowance: Student and spouse both working: 35% of the lesser of the earned incomes, or $4,000, whichever is less One-parent families: 35% of earned income, or $4,000, whichever is less Student or spouse working (not both): zero TOTAL ALLOWANCES = *STOP HERE if the following are true: 22. Discretionary net worth (line 20 minus line 21) = 23. Asset conversion rate CONTRIBUTION FROM ASSETS If negative, enter zero. EXPECTED FAMILY CONTRIBUTION AVAILABLE INCOME (AI) (from line 15) CONTRIBUTIONS FROM ASSETS (from line 24) Adjusted available income (AAI) May be a negative number. = 26. Total contribution from AAI (Calculate using Table C6.) If negative, enter zero. 27. Number in college in (FAFSA/SAR #96) 28. EXPECTED FAMILY CONTRIBUTION for nine month enrollment. If negative, enter zero.*** 0 Line 3 is $24,000 or less and The student (and the student s spouse, if any) are eligible to file a 2013 IRS Form 1040A or 1040EZ (they are not required to file a 2013 Form 1040) or they are not required to file any income tax return or Anyone included in the student s household size (as defined on the FAFSA) received benefits during 2012 or 2013 from any of the designated means-tested federal benefit programs or The student (or the student s spouse, if any) is a dislocated worker. If these circumstances are true, the Expected Family Contribution is automatically zero. **Do not include the student s home. ***To calculate the EFC for less than nine-month enrollment, see the next page. If the student is enrolled for more than nine months, use the ninemonth EFC (line 28 above). Note: Do not complete the shaded areas; asset information is not required in the simplified formula. NASFAA Training Materials 2014 NASFAA 65 Prepared by T&PD Committee

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71 Attachment B to DCL GEN Changes to Parental Information FAFSA Collection Frequently Asked Questions (FAQ) April 29, 2013 Q1. What changes will be made to the collection of parental information on the Free Application for Federal Student Aid (FAFSA)? A1. Beginning with the FAFSA, a dependent student 1 will be required to include income and other information about both of the student s legal parents (biological or adoptive) if the parents are living together, regardless of the parents marital status or gender. Q2. Is this a change from previous FAFSA parental information collection? A2. Yes. Despite the statutory provisions that only use the terms parent and parents, the FAFSA has long been constructed to collect information about both of a dependent student s parents only if the parents are married. Thus, the FAFSA has used the gender-specific terms mother/stepmother, and father/stepfather. As a result, the FAFSA did not collect income and other information from one of a student s legal parents if the parents are unmarried, even if they are living together. Moreover, because the Defense of Marriage Act (DOMA) provides that same sex marriages are not recognized for federal purposes, and because the FAFSA only collected parental information if the parents were married, it similarly excluded income and other information from a same sex spouse when the same sex parents are married under state law. Q3. Why is this collection of FAFSA information for both of the legal parents being made? A3. Collecting parental information from both of a dependent student s legal parents will result in fair treatment of all families by eliminating longstanding inequities that were based on the legal relationship of the parents (married or not married) rather than on the parents relationship with their child. This change will ensure that limited taxpayer resources are directed to students with the most need, regardless of the student s parents marital status or gender, when those parents reside in the same household. It also recognizes the diversity of today s American families. 1 For federal student aid purposes a dependent student is one who does not meet one of the qualifications for independent student status in section 480(d) of the Higher Education Act of 1965, as amended. 67 Prepared by T&PD Committee

72 Changes to the FAFSA - FAQs Page 2 Q4. How will the collection of information from both of a dependent student s legal parents (if they are living together) be used in determining the student s eligibility for federal student aid. A4. The income and other information from both parents will be used to calculate the dependent student s expected family contribution (EFC), which, in turn will determine the student s eligibility for aid from the need-based federal student assistance programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA). Q5. What is an Expected Family Contribution (EFC)? A5. Expected family contribution (EFC) is a statutorily established term that represents a financial index used to determine, in part, the student s eligibility for, and amount of, need-based Title IV HEA student assistance. Generally, the lower a student s EFC the more need-based federal student aid eligibility the student has. A dependent student s EFC includes a parental contribution that is based on parental information collected on the FAFSA. The EFC formulas are provided in Part F of Title IV of the HEA. Q6. What are the Title IV need-based student assistance programs? A6. The need-based Title IV HEA student assistance programs are the Federal Pell Grant, Federal Direct Subsidized Loan, Federal Perkins Loan, Federal Work Study (FWS), and Federal Supplemental Educational Opportunity Grants (FSEOG) programs. Q7. What is the legal basis for using information from the unmarried legal parent of a dependent student in the calculation of the student s EFC? A7. The collection of information from both of a dependent student s parents is statutorily supported in the section of the Higher Education Act (HEA) that describes the information to be used in the calculation of a dependent student s expected family contribution (EFC). HEA section 475 generally includes the terms parent and parents and not terms like mother, father, or spouse. Q8. Does this change the parental information that must be provided on the FAFSA when the student s parent is divorced from the student s other legal parent? Prepared by T&PD Committee 68

73 Changes to the FAFSA - FAQs Page 3 A8. This change does not impact the longstanding and statutorily required provision that when a dependent student s parents are divorced information is reported only for the parent with whom the student resided for the greater portion of the 12 months preceding the date of completing the FAFSA. Collecting information from the unmarried legal parents of a dependent student will mirror that provision by not requiring the second legal parent s information if the student s unmarried parents do not live together. Under longstanding policy, in both circumstances, if the other parent provides financial support to the student, that support should be reported on the FAFSA in the Untaxed Income section. Q9. Will information about a stepparent continue to be used in the calculation of a dependent student s EFC? A9. Yes. The HEA provides that when a dependent student s parent is married to a person who is not the student s legal parent the stepparent s information is used in the EFC calculation [see HEA section 475(f)(3)]. Q10. Does the stepparent provision apply when the student s parent is married, under state law, to a person of the same sex but is not one of the student s legal parents? A10. It does not. The Defense of Marriage Act (DOMA) does not recognize, for federal purposes, same sex marriages. Therefore, for purposes of the FAFSA, under DOMA there can be no stepparent who is of the same sex as the student s parent. Q11. Which dependent students will be impacted by the collection of FAFSA information for both of the student s legal parents? A11. Most dependent students will not be impacted because those students are already reporting parental information for their legal parent or married parents. Only in the limited number of instances where both of the student s legal parents are living together but are unmarried, or are of the same sex and whose marriage is recognized under State but not Federal law, will information that was not previously collected be collected and used in the EFC calculation. Q12. What will be the impact of the collection of FAFSA information for both of the student s legal parents on the dependent student s Title IV eligibility? 69 Prepared by T&PD Committee

74 Changes to the FAFSA - FAQs Page 4 A12. In most of instances there will be less eligibility as more income and other financial resources are included in the EFC calculation. In a small number of cases there will be more Title IV eligibility because under the statutory formulas the offset for the additional person in the household will be greater than the limited income from that person. Q13. What is the estimated savings or costs to the Title IV student assistance programs of this change? A13. We are unable to estimate the impact of these changes, either in terms of number of students impacted or to the total cost/savings to the programs. There are no available data regarding students whose parent was reported on the FAFSA as single, but who is living with the student s other legal parent. Q14. How will FAFSA applicants and their families know about this change in the parental information that must be reported on the FAFSA? A14. The instructions on the FAFSA will be modified to explain to the applicant that questions about the student s parents relate to the student s legal parents regardless of their marital status or gender, if those parents live together. A student s legal parents are the student s biological and/or adoptive parents. The Department will continue to work with the financial aid community and other interested constituencies, to develop the exact language of these instructions. Q15. How will financial and other information about a student s unmarried parents be collected on the FAFSA? A15. The FAFSA will include a new response of Unmarried and both parents living together to the FAFSA question that asks for the marital status of the dependent student s parents. Thus, the possible responses will be Never married, Married or remarried, Unmarried and both parents living together, Divorced or separated, and Widowed. Expanded FAFSA instructions and help text will be provided to explain to the dependent student applicant that the parents marital status question and other questions that refer to the student s parents mean the student s legal (biological or adoptive) parents if those parents are living together. Since parents who are not married could not have filed a joint IRS tax return together, FOTW will provide instructions on how the family should respond to questions such as tax filing status, type of tax return, and to Adjusted Gross Income (AGI) and other tax return questions. This also applies to married parents whose IRS filing status is Married filing separately. Prepared by T&PD Committee 70

75 Changes to the FAFSA - FAQs Page 5 Q16. Will the collection of income and other information from the second parent impact state, institutional and private student aid programs? A16. Many state and some institutional and private aid programs use the EFC calculated from the FAFSA for determining a student s eligibility. The administrators of those programs will need to determine, after considering the impact of this change and the reasons for it, whether to continue to use the FAFSA calculated EFC. Q17. How will this change impact independent students? A17. This change will not impact independent students. This change is only about using information about a dependent student s legal parents. Married students of the opposite sex will continue to be considered independent, under HEA section 480(d), and information about both spouses will be collected and used in the calculation of the student s EFC. Consistent with provisions of the Defense of Marriage Act (DOMA), a student in a same-sex marriage under state law must answer the student marital status question as single. This means that the income and other information from the student s same-sex spouse is not collected and used in the calculation of the student s EFC, as it would be for opposite sex married couples. Q18. What impact could the Supreme Court decision in the case involving a challenge to the constitutionality of the Defense of Marriage Act (DOMA) have on the subjects discussed above? A18. We cannot provide information about such an impact until the Court has issued and we have reviewed the decision. 71 Prepared by T&PD Committee

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77 Need Analysis The following is a presentation prepared for: Name of Conference City, ST Date 1 Name of Presenter Title School 2 Prepared by T&PD Committee NASFAA Today s Agenda and Goals Describe the different Federal Methodology (FM) Models and when each should be used Explain each of the three expected family contribution (EFC) formulas Complete an EFC hand calculation Review Revisions to Need Analysis based on the Defense of Marriage Act (DOMA) 2014 NASFAA NASFAA 73 Prepared by T&PD Committee

78 Need Analysis Basic Components of Need Analysis Cost of attendance (COA) Expected family contribution (EFC) = Financial need 2014 NASFAA 4 Knowledge of the Formula Can Help All Take a minute to think about a student/parents who come to you to discuss their contribution as calculated from data submitted on the FAFSA During this discussion, you discover that one parent has been unemployed for 20 weeks since filing the FAFSA Equipped with the knowledge of how the formula works and your ability to exercise professional judgment the example is one where updating the data would assist and better reflect the family s financial circumstances 2014 NASFAA 5 Dean John Monro s Formula Need Analysis Family s income x 15% = Initial contribution $100 x children in public school $200 x children in private school = Family s ability to pay for college 2014 NASFAA 6 Prepared by T&PD Committee 2014 NASFAA

79 Need Analysis Components of Need Analysis Parents income Taxable income from work, income from investments, income from business and/or farm, nontaxable sources of income, e.g., pensions, Social Security, gifts Income offsets State taxes paid, federal taxes paid, FICA tax, business/farm expenses, unusual medical expenses, other taxes if applicable 2014 NASFAA 7 Components of Need Analysis Assets Cash, stocks, bonds, home value, other land/property, summer savings (for the student it was assumed they would work during the summer and save either $900 or $1,200) Offsets against assets Home debt, other assets less any debt, and if a Dependent student parents received an Asset Protection Allowance (still used today) 2014 NASFAA 8 Components of Need Analysis Dependent model Reduction in contribution based on children in private or public elementary, middle or secondary schools vs. number in household in college (current model) Student s earnings and assets 2014 NASFAA NASFAA 75 Prepared by T&PD Committee

80 Need Analysis Principles of Need Analysis Need analysis is the system used to allocate limited financial aid resources. Over the years, the statements listed below have become the underlying principles for need analysis. 1. Parents and students have the primary responsibility for meeting postsecondary education costs. 2. The distribution of financial aid resources should be based on the family s ability to pay, not willingness to pay. 3. The assessment of a family s ability to pay should be independent of the amount of financial aid available and the cost of attending postsecondary school NASFAA 10 Principles of Need Analysis (cont d) 4. There should be horizontal equity (also referred to as equity across the board) in the distribution of limited financial aid resources. That is, families in similar circumstances with similar resources should be expected to make similar contributions. 5. Families in different circumstances should be expected to make contributions appropriate to their financial resources. This is known as vertical equity, and sometimes is referred to as leveling the playing field. 6. The need analysis formula should provide a snapshot of the family s financial circumstance at the time of application. 7. The need analysis results are a benchmark. As such, the final assessment of the family s ability to contribute to the student s postsecondary education costs is subject to the professional judgment of the financial aid administrator NASFAA NASFAA 12 Prepared by T&PD Committee NASFAA

81 Need Analysis Dependent Student Model A Regular Parents income Adjusted gross income (AGI) or income earned from work + Untaxed income Additional financial information = Total income 2014 NASFAA 13 Dependent Student Model A Regular Parents allowances U.S. income tax paid State and other taxes Social Security tax Income protection allowance Employment expense allowance 2014 NASFAA 14 Dependent Student Model A Regular Parents available income Total income Total allowances = Parents available income 2014 NASFAA NASFAA 77 Prepared by T&PD Committee

82 Need Analysis Dependent Student Model A Regular Parents assets Current balance of cash, savings, and checking accounts Net worth of investments, including real estate Net worth of businesses and investment farms 2014 NASFAA 16 Dependent Student Model A Regular Parents contribution from assets Parents net worth Educational savings and asset protection allowance = Discretionary net worth x Asset conversion rate = Parents contribution from assets 2014 NASFAA 17 Dependent Student Model A Regular Parents adjusted available income Available income + Contribution from assets = Parents adjusted available income 2014 NASFAA 18 Prepared by T&PD Committee NASFAA

83 Need Analysis Dependent Student Model A Regular Parents contribution Contribution from adjusted available income Number in college = Parents contribution 2014 NASFAA 19 Dependent Student Model A Regular Student s contribution from income Student s income Student s allowances Student s contribution from assets 2014 NASFAA 20 Prepared by T&PD Committee NASFAA Dependent Student Model A Regular Parents contribution (income and assets) + Student s contribution from available income + Student s contribution from assets = Expected family contribution (9 month) 2014 NASFAA NASFAA 7 Prepared by T&PD Committee

84 Need Analysis Dependent Student Model A Simplified Needs Test Any member of the parents household received benefits from certain federal means-tested benefit programs in 2012 or NASFAA 22 Dependent Student Model A Simplified Needs Test Parents Filed or were eligible to file 2013 Form 1040A or 1040EZ; Filed 2012 Form 1040 but were not required to do so; Were not required to file any tax return; or Filed income tax return required by tax code for Puerto Rico, Guam, American Samoa, the U. S. Virgin Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau; and AGI or earned income is less than $50, NASFAA 23 Dependent Student Model A Simplified Needs Test Parents total income, total allowances, and available income is calculated the same way as under the regular formula Contribution from parents adjusted available income calculated using a table Divide contribution from parents adjusted available income by number in college to calculate parent contribution 2014 NASFAA 24 Prepared by T&PD Committee NASFAA

85 Need Analysis Dependent Student Model A Simplified Needs Test Student s contribution from income calculated the same way as under the regular formula EFC is the sum of parents contribution and the student s contribution from available income 2014 NASFAA 25 Dependent Student Model A Automatic Zero EFC Eligibility criteria Tax filing status, receipt of benefits from certain means-tested federal benefit programs, or dislocated worker status Income 2014 NASFAA NASFAA NASFAA 81 Prepared by T&PD Committee

86 Need Analysis Independent Student with Dependent(s) Regular Formula Student and spouse (if married) total income Student (and spouse) AGI or Student (and spouse) income earned from work if no tax return filed + Total untaxed income & benefits Other additional financial information = Student total income (could be negative) 2014 NASFAA 28 Independent Student with Dependent(s) Regular Formula Student allowances against income U.S. income tax paid State and other taxes (from table) Student Social Security taxes Spouse Social Security taxes Income protection allowance (from table) Employment expense allowance 2014 NASFAA 29 Income Protection Allowance 12.00% Food 11.00% FM FORMULA 16.00% 9.00% 30.00% 22.00% Housing Transportation Clothing & Personal Care Medical Care Other family consumption 2014 NASFAA 30 Prepared by T&PD Committee NASFAA