1. Hands on EFC Calculation
Michelle Stipp
Director, Student Finance Operations
DeVry Education Group
ILASFAA, President-Elect

2. Objectives for the session:
Review the various EFC models and formulas
Understand the methodology used in the calculation
Calculate an EFC for a dependent student

3. Federal Methodology
Method for assessing ability to pay consists of two steps:
Measuring a family’s financial strength
Assessing a portion of family’s financial resources as being available to contribute toward educational costs
It’s a consistent approach applied to all financial aid applicants

4. Knowledge is power!
Understanding how the formulas work can enhance the counseling we provide to students
Is this professional judgment going to impact the EFC?
The more we know, the more confidently we can answer all those EFC questions from families!

5. How is an EFC Determined?
Three models
Dependent student
Independent student without dependents other than a spouse
Independent student with dependents other than a spouse

6. How is an EFC Determined?
Three distinct formulas
Regular
Simplified Needs Test (SNT)
Does not include assets
Automatic Zero

7. SNT Formula To qualify:
Parents’ combined AGI or wages was less than $50,000 AND
Either:
Parent was not required to file an IRS 1040 Form
One parent was a dislocated worker OR
Anyone counted in the household size received a means- tested benefit during 2014 or 2015
Independent students are also considered
Noted on ISIR in the FAA information section
SNT Flag (yes or no)

8. Automatic Zero An “Auto 0” EFC will be calculated when:
Parents’ total AGI / earnings was $25,000 or less AND
Either
Parents were not required to file an IRS 1040
A parent is a dislocated worker OR
Anyone counted in the household size received a means- tested federal benefit in 2014 or 2015
Also applies to Independent Students with Dependents other than a Spouse
Does not apply to Independent Students without Dependents other than a Spouse
Noted on the ISIR in the FAA Information section:
Auto Zero Flag (yes or no)

9. Dependent Student EFC Components
Parents’ contribution (PC) consisting of:
Contribution from parents’ available income and assets
Student contribution (SC) consisting of:
Contribution from student’s available income and assets

10. Independent Student EFC Components
Contribution from student’s (and spouse’s) available income and assets

11. Factors that Impact the EFC
This includes:
Number in Household
Number in College
Taxed and Untaxed Income
Taxes Paid
Assets and Investments
Age of the Older Parent
Number of Wage Earners

12. What do we need? Student ISIR
EFC Dependent Student Forms and Tables

13. So, let’s get calculating!

14. First, SNT or Auto 0 Check Does our student qualify for either?
No, the AGI is over the threshold.

15. Determining the Parent Contribution (PC)
Calculate Available Income
Calculate Contribution from Assets
Divide by Number in College

16. Parent’s Total Income

17. Parent Total Allowances
These items reduce the parents available income.
That’s a good thing!

18. A Closer Look at IPA
An automatic protection of income to support the basic living expense of the family
Varies based upon family size and the number in college
Includes:
30% for food
22% for housing
9% for transportation
16% for clothing / personal expenses
11% for medical care
12% for other necessities

19. What about our student? The IPA is $32,380, which includes:
$9714 for food
$7124 for housing
$2914 for transportation
$5181 for clothing / personal expenses
$3562 for medical care
$3886 for other necessities
What if our student requests special circumstances for $3000 in medical expenses?

20. IPA for Other Students Independent students:
without dependents other than a spouse have a greater IPA of $9960.
with a spouse who is not enrolled at least half time have an IPA $15,960.
with dependents other than a spouse have an IPA table, similar to what we saw for the parent.

21. Parent Available Income

22. Parent’s Assets
This is where the age of the parent makes a difference.
The formula understands that parents are saving for their retirement and protects a portion of their assets accordingly.

23. Parent Contribution
The number in college can make a big difference in the parent contribution.

24. Determining the Student Contribution (SC)
Calculate Available Income
Calculate Contribution from Assets

25. Student Total Income
Federal Work Study earnings are included in line 34 and is subtracted from the student’s income.

26. Student Total Allowances
Income protection is the same for all students.
If the parent’s AAI is negative, it’s added as a positive. Why?

27. Student Contribution from Income
50% of the student’s available income goes toward the contribution

28. Student Assets
Student assets are assessed at 20% while parent assets are only 12%.

29. Bringing it all together!

30. But, what if?

31. Wage Earners
If both parents are wage earners, but report all of the income under one parent. Does this impact the EFC?
Take a look at line 13
Two parent households with two working parents provide an employment expense allowance. In a two parent family with only one working parent, there is no employment expense allowance
For our student, this would have increased the parent allowances by 4000, which would have reduced the EFC to 3171.

32. Other Factors What if the family lived in Iowa, instead of Illinois?
The state allowance for Iowa is less than that of Illinois, which means less income is protected.
This would have increased the parent contribution from 4127 to 4274.
What if the family was paying $3000 in child support?
This would reduce the parents total income, which would reduce the parent contribution from 4127 to 3424.

33. Key Takeaways!
Remember how all of the information on the FAFSA can impact the EFC.
Common items can be overlooked and make a difference in the EFC.
Age, how many working parents, etc.
Share your knowledge with families!

34. Questions?