It’s that time of year again when college parents across the country are forced to wrestle with the complicated process of completing the FAFSA application to determine how much federal financial aid they may be eligible for. . This assistance takes the form of grants (Pell Grants, Federal Supplemental Educational Opportunity Grants, SMART Grants and TEACH Grants) or loans (Perkins Loans and Subsidized Stafford Loans) and is determined by the following formula:
Cost of attendance
minus resources (employer education assistance funding, VA education benefits, scholarships, non-family funding)
less expected family contributions
= Financial need.
The amount of the expected family contribution is determined as follows:
1. Parents contribution on income which = Parents adjusted gross income plus exempt income plus 401(K) plan contributions plus IRA distributions plus workers compensation plus military allowances plus untaxed Social Security benefits plus child support plus veterans disability plus veterans pension Benefits received minus Income Protection Benefit minus Federal Income Tax minus Social Security taxes minus State Benefit minus Child Care Expense Benefit the employer. Multiply this amount by 22% to 47%.
(100 employees or less). Multiply this amount by 2.64% – 5.64%.
3. Plus student’s contribution on income which = student’s adjusted gross income plus exempt income plus 401(K) contributions plus untaxed Social Security benefits minus Child Protection Allowance income less federal income tax less Social Security taxes less state allowance less employer expense allowance. Multiply this amount by 50%.
4. Plus student contributions from assets which = total student assets minus annuities minus cash cash value of life insurance minus retirement accounts minus assistance financial less personal assets.
Adding items 1 through 4 gives the expected family contribution, which is the amount parents and the student are expected to contribute towards the cost of a college education. Of course, the devil is in the details, but it gives you an idea of how to determine what, if anything, you can expect to receive in financial aid. Whether this financial assistance is in the form of grants or loans depends on your income level. Generally, individuals may qualify for grants and subsidized student loans when their income level is below $50,000.