It is higher than that. The income protection amout historically has went up every year.
The 2017/18 FAFSA EFC formula had an income protection amount for the dependent student of $6,420
The 2018/19 EFC formula has an income protection amount of $6.570
Also subtracted from student income are federal, state and social security taxes paid.
Work through the FAFSA EFC formula and see how much the impact would be.
What you earn this year, in 2018, will be reported on the 2020/21 FAFSA.
We don’t know what the income protection amount is going to be for that FAFSA yet.
So far the IPA seemed to be close to the standard deduction. Last year the maximum standard deduction for a dependent student for federal tax return was $6,350.
It is going to increase to up to $12,000 this year.
So I am wondering if the IPA will be increased as well.
Your FAFSA EFC for a dependent student depends first of all on parent income.
Then parent assets. And then student income and assets.
If your EFC is low enough that you are in danger of losing a Pell Grant if your EFC increases, then it makes sense to watch your income and assets to make sure they don’t increase your FAFSA EFC too much, but usually more money earned will enable you to borrow less money.