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FAFSA Financial Aid Case Studies

FAFSA Financial Aid Case Studies. Fall 2019. Separated/Divorced - - Which Parent?. Parents were divorced or separated as of two months before FAFSA i s being filed. They haven’t lived in the same house since then. Which parent should be used on the 2020-2021 FAFSA?

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FAFSA Financial Aid Case Studies

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  1. FAFSA Financial Aid Case Studies Fall 2019

  2. Separated/Divorced - - Which Parent? Parents were divorced or separated as of two months before FAFSA is being filed. They haven’t lived in the same house since then. Which parent should be used on the 2020-2021 FAFSA? What tax year will be used for FAFSA? Should the IRS DRT (Data Retrieval Tool) still be used?

  3. A Change in Income The family income in 2018 was $100K. • 2019 looks like it will be under $50K in income • 50% less Does the family have any recourse? • In another scenario the family will make $90K in 2019 • 10% less Does the family have any recourse?

  4. Which Assets to Report? The student is completing the 2020-2021 FAFSA. She/he is using 2018 tax returns for the student and the parents. The parents assets at the end of 2018 were $55,000. Currently parents assets are $120,000. Which amount should they report?

  5. Does Dad Get Counted on FAFSA? Parents are “separated”…but dad lives in the garage. How does the student complete FAFSA with regard to who are the parents and which income gets used?

  6. Impact of Student Assets on EFC The student has $50K in assets. If the student reports this on FAFSA how will it affect the EFC?

  7. Impact of Student Income on EFC The student made $10,840 income in 2018 How will that affect the EFC on the 2020-2021 FAFSA?

  8. Good Investment Opportunity? A family is presented with an investment opportunity that requires $100K, but they only have $20K. They are thinking about taking $80k from the equity in their home. Their income in 2018 was $55K. Their son will be attending his second year at CSU Chico. He has been awarded a Cal Grant.

  9. Different Types of Assets Impact EFC Differently Sara is a HS senior wanting to attend CSU Chico in the fall. Her parents (family of 4) have $200,000 in savings from an inheritance two years ago (their only assets). The family’s 2018 AGI is $25,800. EFC=$O Tim is also a HS senior at the same school and also wants to go to CSU Chico in the fall. His parents (family of 4) have a 2nd home that is used as a rental and has $200,000 in equity (their only assets). Their family’s 2018 AGI is $23,500. EFC=$1,995

  10. Household Size/Number in College Tom and Mary are married. They have 2 children. Sally, age 21, is graduating from college this year and going into grad school next year. Bobby will be attending his first year of college in the fall. Tom and Mary are paying about 2/3 of Mary’s mother’s expenses while she is living with them. They will also continue paying for the education for both children. Tom will also be enrolled in college next year. For FAFSA purposes: • How many are in the household? • How many are in college?

  11. Education Savings Plans and Grandparents Grandparents want to save for the grandkids college fund. A financial planner suggests a 529 plan. He tells them that the 529 assets will not be reported on the FAFSA that their grandchild completes. • True or False? Will the grandchild need to declare 529 proceeds (annual contributions) from the grandparents as income on FAFSA? If so, at what point will it no longer matter?

  12. Impact of Financial Aid on Student Assets One of the FAFSA questions asks for the total current balance of the student’s cash on hand, savings account and checking account. This student has $5,500 in their checking account ($3,000 of that is remaining from unspent Pell Grant proceeds). What amount does the student report?

  13. Is Their Such a Thing As Having Too Many Assets? Mom and Dad realize that their income and their daughter’s high school GPA qualify her for a Cal Grant, however, their assets are over the Cal Grant asset ceiling. If they want to qualify for the Cal Grant, what are their options?

  14. Who Is My Parent? Student is not living with their biological parents, but is living with the following groups of people. None of them have adopted the student. Are any of them considered the parents for the purpose of the FAFSA? • Foster Parents • Legal Guardians • Grandparents • Older Brothers or Sisters • Aunts or Uncles • Widowed Stepparent

  15. I’m An Independent Student, Right? Student does not live with his parents - - • That makes him “independent” for the purpose of FAFSA reporting right? Student’s parents are not going to help him pay for college - - • That makes him “independent” for the purpose of FAFSA reporting right? Student’s parents refuse to provide information for filling out the FAFSA - or – student has no contact with his parents. • What should the student do? • Is the student considered homeless?

  16. What Financial Information to Use? Don is a student who has lived with dad and his dad’s girlfriend for the past 12 years. Dad and the girlfriend have never married. The girlfriend claims Don on her taxes. Which financial information (income & assets) does Don use to fill out his FAFSA? • Dad? • Girlfriend? • Both?

  17. Carr Fire Impact–Dramatic Change to Financial Situation Tim and Mary had an Adjusted Gross Income (AGI) well beyond the Cal Grant ceiling in 2016. However, their 2017 income was dramatically lower and in July 2018 they lost their home and their family business (on the same property as their home) in the Carr Fire. 2018 income will be even lower and well below the Cal Grant ceiling. Their daughter, Jan, has been accepted to a CSU school for the fall of 2018 and is headed there in 2 weeks. Based on their FAFSA filing for the 2018-2019 school year (using 2016 financial data) Jan did not qualify for any financial aid assistance. With their changed financial status, they are hoping for some financial assistance. What should they do? Do they have any recourse?

  18. That’s a Lot of 529 Plans Dependent student A has two siblings, B and C. A, B and C are beneficiaries of two 529 savings plans each. • The mother of A, B and C owns a 529 plan for each of the children. Each account is worth $25,000. • The aunt of A, B and C owns a 529 plan for each of the children. Each account is worth $10,000. • What should A report in the asset questions on the FAFSA? • Should the answer be reported as a student asset or a parent asset?

  19. Are These Retirement Assets??? Mary is an independent student who has six rental properties that have a current value after mortgages of $500,000. In order to buy these properties five years ago, Mary cashed in her 401k holdings. Mary considers these properties to be her retirement assets. Does Mary need to report these $500,000 of assets on her FAFSA?

  20. This Untaxed Income is Confusing Me!!! Donald is a dependent student living with his mother. Donald’s father and mother have been divorced for over ten years. For the first two years of college, Donald’s dad paid the bulk of his collegiate expenses. His father made the following payments annually to cover his educational expenses: • $15,000 from a 529 Savings Plan • $10,000 from a Parent PLUS Loan (government loan) • $5,000 from a private parent loan • How much “Other Untaxed Income” should Donald report on his FAFSA this year?

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