EFC Hand calculation Workshop 2018 ILASFAA Annual Conference: Celebrating the superhero in all of us!

Shani charles Sr. Associate Director The University of Chicago

Workshop Objectives Review “What is an EFC?” Go Over EFC Formulas Analysis EFC Methodologies Review Income Protection Allowances (IPA) Calculate an EFC for an independent Student Recap Available Resources for You!

What is an EFC? Simple answer - The Expected Family Contribution (EFC) is a number that determines students’ eligibility for federal student aid. Complex conversation – Not so cut and dry when discussing with a student who demonstrates need, but not enough for gift aid.

Resource Tip! The methodology for determining the EFC is found in Part F of Title IV of the Higher Education Act of 1965, as amended (HEA).

EFC Formulas Formula C For independent students with dependents other than a spouse Formula A Dependent Students Formula B For independent students without dependents other than a spouse

Simplified EFC Formulas Assets are not considered in the simplified EFC formulas A student qualifies for the simplified EFC formula if: Anyone in the parents’ household size (dependent student) or the students household size (independent student) received benefits during 2014 or 2015 from any of the designated means-tested federal benefit programs, or; The student’s parents (dependent student) or the student and students’ spouse (independent student) filed or were eligible to file a 2015 IRS Form 1040A or 1040EZ, filed a 2015 IRS form 1040 but were not required to do so, were not required to file any income tax return, or; The student’s parent (dependent student) or the student and/or student’s spouse (independent student) is a dislocated worker, and; The combined 2015 income of the student’s parents (dependent student) or the combined 2015 income of student and spouse (independent Student) is $49,999 or less

Automatic Zero EFC Certain students automatically qualify for a zero EFC. Students must meet the simplified EFC requirements, except for these differences: The income threshold for the parents of dependent students and for independent students and their spouses is $25,000 or less, and; Independent students without dependents other than a spouse cannot receive an automatic zero EFC

Calculation Tip! All calculations should be carried to three decimal places and rounded to the nearest whole number Round up for .500 to .999, round down for .001 to .499

Why does this matter? Pow! Financial Aid Professionals may not need to use routinely; understanding the components of the EFC calculation can help with exercising professional judgement for income adjustments. Pow!

Income Protection Allowance Food 30% Housing 22% Transportation 9% Clothing & Personal Care 16% Medical Care 11% Family Consumption 12%

When should we use this May want to use to determine if a professional judgement is warranted. If a student requests to examine how their EFC was calculated. You have idle time!

2017–2018 EFC FORMULA B : INDEPENDENT STUDENT Case Study : Alec Green (independent) Alec will be a fourth-year undergraduate student starting in Fall 2017. He is married, and his wife, Monique, also will enroll half time as a fourth-year undergraduate student in Fall 2017. They have no children. Alec’s date of birth is April 13, 1989. He and his wife live in Indianapolis, Indiana. Alec and Monique filed an IRS Form 1040A for the 2015 tax year, as allowed. They reported an adjusted gross income (AGI) of $35,706, 2 exemptions, no interest or dividend income, a $2,500 American Opportunity Tax Credit, and a tax liability of $1,623. During 2016, Alec had $14,424 in earnings, of which $9,600 was from a cooperative education program through his school. Monique’s 2016 earned income was $21,282. Neither Alec nor Monique received benefits from a means-tested federal program in 2014 or 2015. Alec’s and Monique’s only assets are $2,798 in their joint checking account, which Alec reported on his FAFSA. NASFAA CORE | Federal Methodology | Module 6 | Page 6-21 Participant Handout

Income summary Student/Spouse AGI: $35,706.00 Student Income $14,424.00 Spouse Income $21,282.00 Tax Liability $1,623.00 Cooperative Education Program $9,600.00 Education Credit $2,500.00 Cash/Check/Savings $2,798.00

Matrix

Additional Financial Aid information

2017–2018 EFC FORMULA B : indEPENDENT STUDENT Student/Spouse Contribution – Nine-Month EFC –

Helpful resources Higher Education Act of 1965, Part F - https://www2.ed.gov/policy/highered/leg/hea98/index.html?exp=3 Electronic Code of Federal Regulations, Title 34, Part 600 – 679 http://www.ecfr.gov/cgi-bin/text-idx?SID=c8ea03a3730f417e36915794bc7cfacb&mc=true&tpl=/ecfrbrowse/Title34/34cfrv3_02.tpl#600 Electronic Code of Federal Regulations, Title 34, Part 680 – 699 http://www.ecfr.gov/cgi-bin/text-idx?SID=c8ea03a3730f417e36915794bc7cfacb&mc=true&tpl=/ecfrbrowse/Title34/34cfrv4_02.tpl#0 Federal Student Aid Handbook - https://ifap.ed.gov/ifap/byAwardYear.jsp?type=fsahandbook

More resources Verification/ Tax Transcript Matrix https://ifap.ed.gov/eannouncements/011217TaxReturnMatix20172018.html IRS Publication 17 - https://www.irs.gov/pub/irs-pdf/p17.pdf IRS Publication 501 - https://www.irs.gov/pub/irs-pdf/p501.pdf ISIR Guide - https://ifap.ed.gov/ifap/byAwardYear.jsp?type=isirguide EFC Formula Guide - https://studentaid.ed.gov/sa/sites/default/files/2017-18-efc-formula.pdf FAFSA PDF’s - https://fafsa.ed.gov/options.htm

Questions