1. NCASFAA - November 2009 1 Federal Methodology Calculations & Professional Judgment Jackie Copeland Assistant Director, Scholarships & Grants UNC-Chapel Hill Lisanne Masterson Director, Financial Aid Brevard College

2. NCASFAA - November 20092 Federal Methodology  Is a method for assessing a family’s financial strength & the amount available to contribute toward education (EFC)  Classifies students as: Dependent Dependent Independent without dependents (other than spouse) Independent without dependents (other than spouse) Independent with dependents (other than spouse) Independent with dependents (other than spouse)

3. NCASFAA - November 20093 Federal Methodology Basics  Uses base-year income (e.g. 2009 income for the 2010-11 academic year)  A portion of student and parent assets are protected  Looks at the number in college (other than parents)  Based on 9-month enrollment period

4. NCASFAA - November 20094 Federal Methodology Formulas  Automatic Zero EFC AGI or Wages <$30,000 AGI or Wages <$30,000 If File, 1040EZ or 1040A (or eligible) If File, 1040EZ or 1040A (or eligible) Qualify if dislocated worker or Federal means-tested benefit Qualify if dislocated worker or Federal means-tested benefit Not applicable for Indp students without dependents Not applicable for Indp students without dependents  Simplified AGI or Wages <$50,000 AGI or Wages <$50,000 If File, 1040EZ or 1040A (or eligible) If File, 1040EZ or 1040A (or eligible) Qualify if dislocated worker or Federal means-tested benefit Qualify if dislocated worker or Federal means-tested benefit  Regular

5. NCASFAA - November 20095 Expected Family Contribution Components  Student Contribution Student Available Income Student Available Income Student Assets Student Assets  Parents’ Contribution (if dependent) Parents’ Available Income Parents’ Available Income Parents’ Assets Parents’ Assets

6. NCASFAA - November 20096 Factors That Affect The EFC  Number in Household  Number in College  Taxed and Untaxed Income  Taxes Paid  Investments  Age of Older Parent  Number of Wage Earners  Wages Earned

7. NCASFAA - November 20097 Dependent Student FM  Total Income = AGI (or total income earned for non-filers) +Untaxed Income Worksheet - Additional Financial Information (Worksheet)

8. NCASFAA - November 20098 Dependent Student FM  Total Allowances = US Tax Paid +State Tax Allowance + Social Security Allowance (Father) +Social Security Allowance (Mother) +Employment Expense Allowance (parent) +Income Protection Allowance ($3,000 for student) +Allowance for parents’ negative AGI (student)

9. NCASFAA - November 20099 Dependent Student FM  Total Income -  Total Allowances =  Available Income (Student x.50)

10. NCASFAA - November 200910 Dependent Student FM  Contribution from Assets Cash, Savings, Checking +Other Real Estate & Investments + Adjusted Business/Farm - Asset Protection Allowance (parent) x Asset Conversion Rate [.12 (p);.20 (ds & indp no dep);.07 (indp w/ dep)]

11. NCASFAA - November 200911 Dependent Student FM  Parent Contribution Available Income + Contribution from Assets = Adjusted Available Income Use Chart to calculate PC Divide by # in college (excluding parent)  Student Contribution Contribution from Available Income +Contribution from Assets

12. NCASFAA - November 2009 12 NOW….. Let’s Do A Hand Calculation!!!

13. NCASFAA - November 200913 PJ Adjustments  Loss of Employment  Loss of Other Taxable Income  Loss of Untaxed Income  Divorce/Death

14. NCASFAA - November 200914 PJ Adjustments  Dependent Care Costs (may adjust COA)  Private Primary/Secondary School  High Medical/Dental  Other Unusual Expenses (e.g. funeral, tax debt)

15. NCASFAA - November 200915 PJ Adjustments Policy & Procedures YOUR Policy & Procedures: What situations merit a PJ What situations merit a PJ What documentation is needed What documentation is needed Who is authorized to make adjustments Who is authorized to make adjustments How you calculate what amounts you will use How you calculate what amounts you will use Where in the formula you make your adjustments Where in the formula you make your adjustments