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Ask Kantro: How Much Income is Too Much When Applying for Need-Based Aid?
Mark Kantrowitz / Publisher of FinAid and Fastweb
September 22, 2009
In general, with the student not working and in a home with mom and dad both working, what is the maximum income they can earn and still qualify for financial aid? — Tracee N.
Federal student aid is awarded based on the student and parent income and assets, household size, number of children in college and a variety of other factors. It does not, however, have any explicit income cutoffs on need-based aid eligibility.
The number of children in college can have a big impact on aid eligibility. The Free Application for Federal Student Aid (FAFSA) is used to calculate the Expected Family Contribution (EFC), a somewhat harsh measure of the family’s ability to pay for college. The EFC is the sum of a student contribution and a parent contribution. The parent contribution is roughly divided by the number of children in college. So if the number of children in college increases, it can significantly cut the EFC and thereby allow a family to qualify for student aid despite having a higher income.
It is important to apply for financial aid every year even if you didn’t qualify for grants last year. Suppose you apply for financial aid for your freshman year in college and don’t qualify for any aid because you are the first in your family to enroll. If you give up and stop submitting the FAFSA, you might miss out on a lot of financial aid in a subsequent year when you and one or more siblings are enrolled in college at the same time.
For example, 95.9% of Pell Grant recipients in 2007-08 had an adjusted gross income (AGI) of $50,000 or less, 3.5% had an AGI of $50,000 to $75,000, 0.4% had an AGI of $75,000 to $100,000 and 0.2% had an AGI of $100,000 or more. But for families with two or more dependent children in college at the same time the percentages drop to 84.4%, 13.5%, 1.3% and 0.8%, respectively. With three or more children in college the percentages drop to 77.2%, 18.8%, 2.7% and 1.3%, respectively. Thus with more children in college at the same time, your chances of qualifying for the Pell Grant increase.
But even if you don’t qualify for a Pell Grant it is still worthwhile to submit the FAFSA. The unsubsidized Stafford loan and the PLUS loan are available without regard to financial need. You can be extremely wealthy and still qualify for these loans. The Hope Scholarship tax credit is available to families with income up to $90,000 (single filers) and $180,000 (married filing joint).
Note that student employment can have a big impact on aid eligibility, especially for independent students. A portion of student income is sheltered from the financial aid formula, but as much as half of income above this income protection allowance will be counted as part of the EFC.
For additional information on this topic see Targeting of Student Aid Programs According to Financial Need.
RenitaS15
3 days ago
My name is Renita Simpson, I was accept to Boricua College in New York City.
I apply for my Pell Grant, and that came through, but I am in need of other funds to cover
for my education. My Tap has ran out, so what do I do from here?
No, I will not take out a student loan, I am paying back on one now
I was told at Boricua College that I can apply for another scholarship, and they will
accept the scholarship.
For me I am having a hard time finding scholarship that meet my skill. (Human Service)
Yours truly,
Renita Simpson--renita.simpson@yahoo.com
BryanV20
over 1 year ago
less than a minute ago
We are in desperate need of a FAFSA overhaul. The cost of living in some states is much greater than in others. A family of 5 making $75,0000 in North Carolina are considered well off, when that same family living in New Jersey is struggling to put gas in their cars to go to work or school. Also NJ has no public trsndportation in the Southern region. You have to have a car to get around. Even my school district in high school did not use buses. We have 5 people in our family, 5 cars to insure, and our car insurance is over $9,000 a year, and our real estate taxes are just as high. Yet my parent's income of $75,0000 a year is too much for us to get financial aid. I have accumulated $100,000 in student loans for my undergrad, and since I can not find a job, I am now attending grad school and incurring more debt!!!! I understand if they will not consider family's debt for the calculation, but the cost of living is a factor they should consider.
KaelaM9
over 1 year ago
i personally know that i will never get financial aid, and i spend just about all i have on school. it annoys me that fafsa takes into account my parents income because they can't help me. my parents "make too much" (really they don't) but doesn't take into account any debt or other stupid things that get taken out of their paychecks. i have 3 other siblings, 1 in h.s. and the rest of us in college. we are all paying our own way.
bwotton
almost 2 years ago
How do I apply for the Hope Scholarship tax credi? What is the deadline for the FAFSA. I am waiting for my tax returns before I apply?
Jmw
Brian_xo_90
about 2 years ago
I am starting colllege on Feb. 8th, 2010. I am looking for more help with grants as I am only 19 just starting out and have no money to pay for college. I have recieved the fafsa, but it does not help very much as the college tuition is very much more. Can someone guide me as to where i can get more financial aid . I already have to pay back quite a bit of money from Sallie Mae foundation. I need some of that free help with college that our President was suppose to provide. I don't see it. Nothing has changed and I still need so much finacial help. Thanks for your time and consideration and help in this matter.
B.H.S
tjreiter2001
about 2 years ago
I am a returning adult student. Are there any specific grants/loans that I can qualify for? I am 1600 dollars short. and I am already getting help through the state with a Vocational Rehab. program. I am meeting with my financial aid advisor today. Can you steer me in the right direction? THank you!!
TJR
tjreiter2001
about 2 years ago
I am a returning adult student. Are there any specific grants/loans that I can qualify for? I am 1600 dollars short. and I am already getting help through the state with a Vocational Rehab. program. I am meeting with my financial aid advisor today. Can you steer me in the right direction? THank you!!
TJR
Mark_Kantrowitz
about 2 years ago
The statistics are based on an analysis I conducted using the data analysis system for the 2007-08 National Postsecondary Student Aid Study (NPSAS).
lymenjuice
about 2 years ago
do u have the sources for those statistics? i'm writing a paper and i would love to include them!
JonathanD580
over 2 years ago
my oldest , age 26, has to complete 6 units before his financial aid will be considered. What are you to do to pay for those units without financial aid. He has tried to cut costs, moved home, smaller car ergo less gas and insurance but where can he go for financial aid?
SimonR16
over 2 years ago
I am a older students that was hit with job loss and depend on my spouses support and i'm still turned down for the pell grant. Our annual income is less than 45,000. Where do i look for help.
MelissaES
over 2 years ago
I have no idea how these estimates work. I made under $8,000 one year and it was estimated I could pay $10,000 out of pocket... How can you pay more than your gross income in a year?! I have no idea why debt in general is out of control!
PineMarten
over 2 years ago
What a lot of people don't know is that the awards from schools can be negotiable, especially if a school really wants a student. The world of college financing is really twisted and difficult to understand. I found a book that helps. Go to the library and borrow Paying for College without Going Brok from the Princeton Review. Only don't really expect to not go broke...you'll just understand the system better. It does have a lot of information that anybody paying for college needs to understand.
MaryC836
over 2 years ago
This is one confusing paragraph:
For example, 95.9% of Pell Grant recipients in 2007-08 had an adjusted gross income (AGI) of $50,000 or less, 3.5% had an AGI of $50,000 to $75,000, 0.4% had an AGI of $75,000 to $100,000 and 0.2% had an AGI of $100,000 or more. But for families with two or more dependent children in college at the same time the percentages drop to 84.4%, 13.5%, 1.3% and 0.8%. With three or more children in college the percentages drop to 77.2%, 18.8%, 2.7% and 1.3%. With more children in college at the same time, your chances of qualifying for the Pell Grant increase.
If you have an income of $75-100K your percentage 'drops from 0.02% with 1 child to 0.08% with 2 and to 1.3% wirth 3? Must be that new math they teach ......
Cheryl & Matthew - FAFSA has some difficult income requirements to meet to qualify for grants, I would think you can qualify for loans like Stafford. but FAFSA only looks at a few parameters about income does NOT take in too account any debt. I for one lost all savings and incurred large debt for the 2 years after 9/11 and still to this day trying to recover, I live paycheck to paycheck (my 2 cars have over 100,000 miles on them) but yet FAFSA says that I can contribute $15000 per year .... just plain crazy. This program is really for the welfare and poverty levels not for working American families. Good luck to both of you and hope that you don't incurr too much debt getting your degrees.
LaJenny
over 2 years ago
What about a head of household, who has lost a job? Can't find another job equal and is living on unemployment?