Sadly, many middle-income and high-income families miss out on thousands of dollars in financial aid because they think they make too much money to even bother filling out the Free Application for Federal Student Aid (FAFSA). A few things can make you ineligible for financial aid, so you're wise to fill out the FAFSA and see what kind of offers you receive from financial aid offices.
Technically, there is no cutoff point where the federal government no longer offers aid to families. Instead, the Department of Education calculates a family's expected contribution (EFC) to a student's education. The more a family is expected to pay for an education, the less likely a college will award aid. A high income is more likely to result in a high expected family contribution, but the EFC uses several factors, and one of the most important is the student budget. For example, a family that earns $50,000 will have a much higher EFC at a college with an anticipated student budget -- including tuition and fees -- of $3,000 than a private college that has an an expected cost of $30,000.
The EFC formula changes from year to year and sometimes excludes certain assets. For instance, the EFC used to count a family's primary residence as an asset, but not anymore as of 2011, according to Petersons. Other factors, such as other students in the family, have a huge impact on federal aid. For example, 0.2 percent of Pell Grant recipients came from families earning $100,000 or more a year, but this number jumps to 1.3 percent for families with three or more children in college in 2008, according to Mark Kantrowitz of FastWeb.
No matter how much you or your family earns, you can always ask for a professional judgment, which occurs when a director of financial aid for a college looks at mitigating circumstances that do not show up on the FAFSA, such as a recent job loss. An assessment of your financial situation cannot directly alter the EFC or exclude income to raise your financial aid package, but the assessor can add to your expected costs to qualify you for more aid.
Plan your FAFSA application well before you start applying to colleges because FAFSA only asks for information that is current as of the time you submit the application. As long as you do not lie on the application, asset planning is fair game. For example, FAFSA "penalizes" student savings more than parental savings, so it may lower the student's EFC to spend as much money as possible on expenses before dipping into the parent's expenses. Parents and anyone else in the family should attend college too.
- Stevens Instiute of Technology: Frequently Asked Questions
- U.S. Department of Education: The EFC Formula, 2011-2012
- Petersons: Financial Aid Opportunities for Higher-Income Families
- FastWeb; Ask Kantro: How Much Income is Too Much When Applying for Need-Based Aid?; Mark Kantrowitz; September 2009
- FinAid: Professional Judgment
- FinAid: Maximizing Your Aid Eligibility