NCASFAA - November 2009 1 Federal Methodology Calculations & Professional Judgment Jackie Copeland Assistant Director, Scholarships & Grants UNC-Chapel

NCASFAA - November 2009NCASFAA - November 2009 11

Federal MethodologyFederal MethodologyCalculations & Calculations &

Professional JudgmentProfessional JudgmentJackie CopelandJackie Copeland

Assistant Director, Scholarships & GrantsAssistant Director, Scholarships & GrantsUNC-Chapel HillUNC-Chapel Hill

Lisanne MastersonLisanne MastersonDirector, Financial AidDirector, Financial Aid

Brevard CollegeBrevard College


Federal MethodologyFederal Methodology

Is a method for assessing a family’s Is a method for assessing a family’s financial strength & the amount available financial strength & the amount available to contribute toward education (EFC)to contribute toward education (EFC)

Classifies students as:Classifies students as: DependentDependent Independent without dependents Independent without dependents (other than spouse)(other than spouse)

Independent with dependents Independent with dependents (other than spouse)(other than spouse)


Federal Methodology BasicsFederal Methodology Basics Uses base-year income (e.g. 2009 income for Uses base-year income (e.g. 2009 income for

the 2010-11 academic year)the 2010-11 academic year)

A portion of student and parent assets are A portion of student and parent assets are protectedprotected

Looks at the number in college (other than Looks at the number in college (other than parents)parents)

Based on 9-month enrollment periodBased on 9-month enrollment period


Federal Methodology FormulasFederal Methodology Formulas

Automatic Zero EFCAutomatic Zero EFC AGI or Wages <$30,000AGI 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 benefitQualify if dislocated worker or Federal means-tested benefit Not applicable for Indp students without dependentsNot applicable for Indp students without dependents

SimplifiedSimplified AGI or Wages <$50,000AGI 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 benefitQualify if dislocated worker or Federal means-tested benefit

RegularRegular


Expected Family Contribution Expected Family Contribution ComponentsComponents

Student ContributionStudent Contribution Student Available IncomeStudent Available Income Student AssetsStudent Assets

Parents’ Contribution (if dependent)Parents’ Contribution (if dependent) Parents’ Available IncomeParents’ Available Income Parents’ AssetsParents’ Assets


Factors That Affect The EFCFactors That Affect The EFC

Number in HouseholdNumber in Household Number in CollegeNumber in College Taxed and Untaxed IncomeTaxed and Untaxed Income Taxes PaidTaxes Paid InvestmentsInvestments Age of Older ParentAge of Older Parent Number of Wage EarnersNumber of Wage Earners Wages EarnedWages Earned


Dependent Student FMDependent Student FM

Total Income =Total Income =

AGI AGI (or total income earned for non-filers)(or total income earned for non-filers)

++ Untaxed Income WorksheetUntaxed Income Worksheet

- Additional Financial Information (Worksheet)Additional Financial Information (Worksheet)



Total Allowances =Total Allowances =US Tax PaidUS Tax Paid

++ State Tax AllowanceState Tax Allowance

+ Social Security Allowance (Father)+ Social Security Allowance (Father)

++ Social Security Allowance (Mother)Social Security Allowance (Mother)

++ Employment Expense Allowance Employment Expense Allowance (parent)(parent)

++ Income Protection Allowance Income Protection Allowance ($3,000 for ($3,000 for student)student)

++ Allowance for parents’ negative AGI Allowance for parents’ negative AGI (student)(student)



Total IncomeTotal Income

--

Total AllowancesTotal Allowances

==

Available IncomeAvailable Income (Student x .50) (Student x .50)



Contribution from AssetsContribution from Assets

Cash, Savings, CheckingCash, Savings, Checking

++ Other Real Estate & InvestmentsOther Real Estate & Investments

+ Adjusted Business/Farm + Adjusted Business/Farm - Asset Protection Allowance (parent)Asset Protection Allowance (parent)

x Asset Conversion Rate x Asset Conversion Rate

[.12 (p); .20 (ds & indp no dep); .07 (indp w/ [.12 (p); .20 (ds & indp no dep); .07 (indp w/ dep)]dep)]



Parent ContributionParent ContributionAvailable IncomeAvailable Income

+ Contribution from Assets+ Contribution from Assets

= Adjusted Available Income= Adjusted Available Income

Use Chart to calculate PCUse Chart to calculate PC

Divide by # in college (excluding parent)Divide by # in college (excluding parent)

Student ContributionStudent ContributionContribution from Available IncomeContribution from Available Income

++ Contribution from AssetsContribution from Assets


NOW…..NOW…..

Let’s Do A Hand Let’s Do A Hand Calculation!!!Calculation!!!


PJ AdjustmentsPJ Adjustments

Loss of EmploymentLoss of Employment

Loss of Other Taxable Income Loss of Other Taxable Income

Loss of Untaxed IncomeLoss of Untaxed Income

Divorce/DeathDivorce/Death


PJ AdjustmentsPJ Adjustments

Dependent Care CostsDependent Care Costs (may adjust COA)(may adjust COA)

Private Primary/Secondary SchoolPrivate Primary/Secondary School

High Medical/DentalHigh Medical/Dental

Other Unusual ExpensesOther Unusual Expenses (e.g. funeral, tax (e.g. funeral, tax debt)debt)


PJ AdjustmentsPJ AdjustmentsPolicy & ProceduresPolicy & Procedures

YOUR Policy & Procedures:YOUR Policy & Procedures:

What situations merit a PJWhat situations merit a PJ What documentation is neededWhat documentation is needed Who is authorized to make adjustmentsWho is authorized to make adjustments How you calculate what amounts you will useHow you calculate what amounts you will use Where in the formula you make your Where in the formula you make your

adjustmentsadjustments

Documents

NCASFAA - November 2009 1 Federal Methodology Calculations & Professional Judgment Jackie Copeland Assistant Director, Scholarships & Grants UNC-Chapel