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Calculating the EFC

Calculating the EFC. Mandy Peterson March 8, 2007. Need Analysis Overview. Need Analysis Overview/Financial Need. Need analysis. Overall process of determining a student’s financial need and eligibility for certain programs. Generate the EFC.

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Calculating the EFC

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  1. Calculating the EFC Mandy PetersonMarch 8, 2007

  2. Need Analysis Overview

  3. Need Analysis Overview/Financial Need • Need analysis. • Overall process of determining a student’s financial need and eligibility for certain programs. • Generate the EFC. • EFC is a measurement of a family’s ability to contribute toward education cost.

  4. Need Analysis Overview/Financial Need • Need Equation: Cost of Attendance -- Expected Family Contribution Financial Need

  5. Need Analysis Overview/Financial Need • General elements of need analysis. • Information reported by the family. • Income. • Number of dependents. • Number of family members attending college. • Assets. • Marital status of the student. • Age of older parent of a dependent student.

  6. Need Analysis Overview/Financial Need • General elements of need analysis. • Items considered by federal methodology prior to EFC calculation. • Additional expenses incurred. • Income and asset protection allowance.

  7. Need Analysis Overview/Financial Need • General Elements of need analysis. • Dependency status. • Independent-student definition. • Age 24 or older as Dec. 31 of the award year. • Orphan or ward of the court. • Veteran. • Graduate or professional student. • Married student. • Student with legal dependents. • Person with unusual circumstances. • Active-duty members of the armed forces.

  8. Need Analysis Overview/Financial Need • General elements of need analysis. • Dependency status. • Dependent-student definition. • All other students not referenced in the previous slide. • Must use parental information in determining EFC.

  9. Need Analysis Overview/Financial Need • Federal methodology. • Only methodology for determining EFC. • Three models under FM. • Three formula options exists under FM.

  10. Need Analysis Overview/Financial Need • Components of federal methodology. • Regular formula. • Income. • Allowance against income. • Assets. • Education savings and asset protection allowance.

  11. Need Analysis Overview/Financial Need • Components of federal methodology. • Simplified-needs test. • Assets not considered. • Eligibility for simple formula. • Benefits from a federal means-tested program. • AGI less than $50,000.

  12. Need Analysis Overview/Financial Need • Zero expected contribution. • AGI below $20,000. • Parents of dependents must be eligible to file 1040A or 1040EZ or not be required to file a federal tax form.

  13. Need Analysis Overview/Financial Need • Guidelines for divorced or separated parents. • Rule 1. • Rule 2. • Rule 3. • Guidelines for remarried parents.

  14. Need Analysis Overview/Financial Need • Definitions in Need Analysis (pages 5 – 7)

  15. Race to Calculate the EFC

  16. EFC Calculation What is an EFC? Why do you need to understand the EFC formulas?

  17. EFC Calculation Which EFC worksheet should be used? What is Mario’s EFC?

  18. 40,550 17,500 24,000 41,500 40,550 0 0 0 40,550 0 40,550

  19. 3,394 406 1,339 1,836 18,680 6,125 3,200 28,855

  20. 40,550 28,855 11,695

  21. 11,695 11,695 2,573 1 2,573

  22. 5,000 5,000 5,000 0 0 0 5,000 0 5,000

  23. 0 0 383 0 3,383

  24. 5,000 3,383 1,617 809

  25. 2,573 809 3,382

  26. Calculating the EFC Mandy PetersonMarch 8, 2007

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