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FAFSA Treatment of Disability Income

Fred's MomFred's Mom Posts: 141Registered User Junior Member
My relative had a question that I'm passing to to the experts here, since I've done a search and can't find where, if ever, it's been answered before. In a nutshell: one child, just entering college this year. One parent, whose sole income, though substantial, is from SSDS (Social Security Disability), of about $2000, and non-taxable monthly disability insurance payments of about $7000. If it's relevant, there are no assets, e.g. investments or home ownership. Because all of the income is non-taxable, there is no requirement that income tax returns be filed. The schools are FAFSA only. Intuitively, my answer is that the only financial aid will be in the form of loans, inasmuch as that's a lot of income, but I can't find an appropriate reference to back that up. However, I've read through the threads here that there are "automatic zeros," or something like that, which, on it's face looks like it should apply because they qualify for 1040-A or 1040-EZ filing, assuming tax returns are required at all. If anyone could point me in the right direction, we'd appreciate it. Thanks.
Post edited by Fred's Mom on

Replies to: FAFSA Treatment of Disability Income

  • swimcatsmomswimcatsmom Posts: 14,941Registered User Senior Member
    Automatic 0 requires an AGI of below $30,000.

    If none of the disability income is taxable then it seems likely they will qualify as the AGI will be below $30k

    Here is the description from the EFC formula

    http://www.ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf
    Which students qualify for an automatic zero EFC
    calculation?
    Certain students are automatically eligible for a zero EFC.
    New for 2009-2010: Provisions in the CCRAA mandate an increase in the income threshold
    for an automatic zero EFC from $20,000 to $30,000.
    New for 2009-2010: The CCRAA extends the time that an individual who received benefits
    from a means-tested Federal benefit program can qualify for an automatic zero EFC calculation
    from 12 to 24 months.

    For the 2009-2010 award year, a dependent student utomatically qualifies for a zero EFC if both (1) and (2) below are true.
    (1) Anyone included in the parents’ household size (as defined on the FAFSA) received benefits during 2007 or 2008 from any of the designated means-tested Federal benefit programs: the SSI Program, the Food Stamp Program, the Free and Reduced Price School Lunch Program, the TANF Program, and WIC; OR
    the student’s parents filed or are eligible to file a 2008 IRS Form 1040A or 1040EZ (they are not required to file a 2008 Form 1040), or the parents are not required to file any income tax return; OR the student’s parent is a dislocated worker.
    AND
    (2) The 2008 income of the student’s parents is $30,000 or less.
    • For tax filers, use the parents’ adjusted gross income from 2008 Form 1040A or 1040EZ to determine if income is $30,000 or less.
    • For non-tax filers, use the income shown on the 2008 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $30,000 or less.

    An independent student with dependents other than a spouse automatically qualifies for a zero EFC if both (1) and (2) below are true:
    (1) Anyone included in the student’s household size (as defined on the FAFSA) received benefits during 2007 or 2008 from any of the designated means-tested Federal benefit programs: the SSI Program, the Food Stamp Program, the Free and Reduced Price School Lunch Program, the TANF Program, and WIC; OR the student (and the student’s spouse, if any) filed or is eligible to file a 2008 IRS Form 1040A or 1040EZ (he or she is not required to file a 2008 Form 1040) , or
    he or she is not required to file any income tax return; OR the student (or the student’s spouse, if any) is a dislocated worker.
    AND
    (2) The student’s (and spouse’s) 2008 income is $30,000 or less.
    • For tax filers, use the student’s (and spouse’s) adjusted gross income from 2008
    Form 1040A or 1040EZ8
    to detemine if income is $30,000 or less.
    • For non-tax filers, use the income shown on the student’s (and spouse’s) 2008
    W-2 forms (plus any other earnings from work not included on the W-2s) to determine if income is $30,000 or less.
    Note that the automatic eligibility criteria for a zero EFC is not applicable to a single or married independent student without dependents other than a spouse
  • Fred's MomFred's Mom Posts: 141Registered User Junior Member
    Thanks for the info and link. I'll pass it on.
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