How Does Income Affect Financial Aid Eligibility?
Determining financial aid based on income.
By Kathryn Knight Randolph
July 28, 2016
As students and families approach the college search and financial aid season, questions begin to arise as to how much financial aid they might actually qualify for – before they complete the FAFSA. They search for algorithms or standardized benchmarks that may help to identify how much financial aid they will receive.
But there isn’t an exact formula for determining financial aid. It depends on a variety of factors, and believe it or not, there is no maximum income cutoff for financial aid.
One of the main influencers in determining aid eligibility is multiple children from the same family in college. If two or more students from the same family are in college at the same time, it greatly increases the chances that the family will qualify for financial aid. That’s also the case if one of the parents decides to return to school while their child attends college.
The formula for the Expected Family Contribution (EFC) is determined by dividing the parent financial contribution by the amount of children in college. Therefore, the more children in college at the same time, the better the chance for financial aid. That’s why it’s paramount to file the FAFSA every year. Though certain families may not qualify for aid one year, they could qualify once more than one child is in college.
In addition to financial aid, there are tax credits that families can take advantage of while children are enrolled in college. For instance, the Hope Scholarship tax credit is available to single filers who make $90,000 or less and married (or joint) filers with a combined income of $180,000 or less.
For families and students interested in getting an estimate of their financial aid package, they can do so with the FAFSA4caster. Families can get a financial aid estimate as early as middle school, although it’s more accurate when completed during a student’s junior year. However, using it early also allows for families to better plan to save for college.
Estimating financial aid and EFC can help students and parents better gauge college costs and how their income impacts the aid package. They should also consider maximizing their aid eligibility, which Fastweb outlines in Top Strategies for Maximizing Aid Eligibility.
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