1. NCASFAA 2015 Fall Pre-Conference New Aid Officers Training Workshop 1

2. Understanding the Expected Family Contribution (EFC) Calculation 2

3. Why Do You Care? Students receive their EFC from the Federal Processor. – Do they ever have questions? – Do they ever make mistakes on the FAFSA Student Indebtedness is on the rise, you can help students potentially receive more grants Helps you make better Professional Judgment decisions.

4. Basic EFC Formulas Dependent students Independent Students Independent Students with dependents

5. Calculations Regular Federal Methodology Simplified Formula – Parents (or independent student) AGI < $50,000 and – 1. not required to file IRS 1040, – 2. one of them is a dislocated worker or – 3. anyone in household received a means-tested federal benefit in 2013 or 2014

6. Automatic Zero EFC Same rules as Simplified with the following differences: – The income threshold is $24,000 or less instead of less than $50,000 – Independent students without dependents do not qualify for automatic zero EFC.

7. Iraq and Afghanistan Service Grant For Pell Eligible students, the EFC will be considered to be zero if the student was less than 24 or enrolled in college when a parent or guardian who was a member of the U.S. armed forces and died as a result of service in Iraq or Afghanistan after September 11, 2001. CPS will identify these students.

8. Alternate EFCs For enrollment periods other than nine months. EFC found in the upper right corner of first page of SAR is based on nine-month enrollment and should be used for awarding Pell Grant (even if student is attending longer or shorter period). FAA Information area contains a table of alternate primary and secondary EFCs for periods of 1 – 12 months.

9. Why would you file a 1040 if you did not have to? Tax preparers generally get paid by the type of form prepared: 1040, 1040A or 1040EX and by the number of schedules and other additional forms. Foreign tax returns count as IRS Form 1040, but tax returns for Puerto Rico, Guam, American Samoa or the Virgin Islands count as Form 1040A or 1040EZ.

10. Case Study Ashley is a 21 year old single student who is a NC resident. She is one of four children and both parents work to support the family. Her father is 51 years old and her mother is 48 years old. Her older sister is also a college student. Her father’s income from work was $30,000. Her mother’s income from work was $25,000. They took an early, taxable IRA distribution of $5000. Ashley’s mother also received child support for her sister in the amount of $6000. Her parents are residents of North Carolina. The parents completed a 1040 for their tax return with itemized deductions and paid U.S. tax of $5900. Their Adjusted Gross Income (AGI) is $53,000 due to $2000 in a Tuition and Fees deduction. The parents have a balance of cash/savings/checking of $49,000. Ashley’s parents have no other investments and do not own a business or farm. Ashley had a part-time federal Work-Study job during the academic year and earned $2000. She worked full-time in the summer and earned $4000 from that job. Her Adjusted Gross Income was $6000. Ashley lived off-campus and her grandmother paid her rent one semester in the amount of $1000. Ashley paid $264 in U.S. income taxes. Ashley has as her balance of cash/savings/checking an amount of $50. She has no investments or business/farm income.

11. Comments and questions 11