<p>My income from last year was 4k (did not file) and my parents AGI was 25k (already filed). Shouldn’t I qualify for automatic zero EFC? The money they put into 401k and IRA is not added back into income to calculate EFC as long as AGI is under 31k, from what the worksheet on ifap says. So why is my EFC 4k?</p>
<p>A few weeks ago they changed the cut off for auto 0 to an AGI of 23,000.</p>
<p><a href=“http://www.ifap.ed.gov/efcformulaguide/010512EFCFormulaGuide1213.html[/url]”>http://www.ifap.ed.gov/efcformulaguide/010512EFCFormulaGuide1213.html</a></p>
<p>so any retirement contributions will be added back to income as the AGI is not below $23k</p>
<p>Thank you swimcatsmom. A reduction in the maximum by 9k is absurd. Good job, congressmen.</p>
<p>“Higher education can’t be a luxury — it is an economic imperative that every family in America should be able to afford.” - Barack Obama today, after he signed the act that reduced the automatic zero efc limit from 32k to 23k. What a joke of a president.</p>
<p>Have your parent thought about writing a book? I know I would love to read how to afford to put money away for retirement on an income of $25,000. ;)</p>
<p>AGI was $25K, not gross income, but kudos to them for saving for retirement!</p>
<p>At the risk of totally sidetracking this post…
You mean the Consolidated Appropriations Act of 2012 which was passed by Congress?</p>
<p>Yup, EVERYONE in Washington had a hand in this. They will probably all tell you how important it is that we become a more educated nation, students need to go to college, blah, blah, blah. When push comes to shove, and the dollars are in short supply, it seems that pork-barrel spending trumps investing in our low income students. It’s sad.</p>
<p>I did notice the $25k AGI with retirement savings … I have seen negative AGI’s from people who actually earn a whole lot more than that … but they have some nice write offs that bring the AGI way down. I never paid attention to names when I verified, but one day I verified a file that was Pell eligible … then saw the student’s name. I know her family from our community. They live in an expensive house on an in-demand lake. Mom is a masters educated teacher and dad is a business owner. I wanted to cry, because I saw so many students whose parents were truly struggling with their low income/no benefits jobs that earned them just a bit too much to qualify for Pell. No wonder Profile schools dig deeper!</p>
<p>Isn’t AGI before deductions & credits? ( maybe I am doing my taxes wrong)</p>
<p>It’s after all the magic that can be performed on business income, rental income, and the S-corporation income!</p>
<p>ohhh- we don’t have any of that-</p>
<p>Neither do we. :)</p>
<p>So Kelsmom, did you adjust anything in that verification (post #8)? So curious on how it all works.</p>
<p>No, because the formula used by FAFSA schools is very simple and straight-forward. Its aim is to be fair to most people … so there are situations that get a pass from and others that get sc***ed by the formula. This particular family completed the FAFSA correctly, so they truly qualified for Pell. They also got some institutional grant money; again, they qualified. Profile schools have a different way of looking at things, and this family would still have received Pell (they did qualify based on the formula used to qualify for Pell) … but because their EFC most likely would be higher using the Profile formula, the institutional aid from a Profile school would take into account that higher EFC. I obviously don’t know that family’s financial secrets, so it is possible that the business was bleeding money … in which case a Profile school may have taken that into consideration. From what I could tell given what information I had, though, it looked like they got a really good deal.</p>
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<p>Yes, and signed by the President. What’s your point?</p>
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<p>Can you elaborate, kelsmom? How can those sources reduce AGI? And are there any ways for my parents to reduce their AGI? It is unfair that because my parents made 2k more last year that they have a 4k EFC, which makes my Pell Grant reward go down by another 4k. How does Congress expect a family living on 25k to pay for college? In fact, why is retirement money that is untouchable without penalty counted as usable income?</p>
<p>When people have businesses, rentals, partnerships … they are able to claim deductions on their tax return that reduce their earnings. For example, someone who runs a mobile pet grooming service can reduce his earnings through deductions for his van, gas, maybe the portion of his home he uses for an office, supplies, etc. (just an example - not sure exactly what he really could write off! :)). So his reportable income, on which he pays taxes, is less. Rental home income can be reduced, as can partnership income. You can’t do it unless you have a business, a rental property, a partnership …</p>
<p>Can’t my mom cooking for me when I go home for the weekend count as a sole proprietorship? Deductions for gas, supplies, etc. 
just kidding!</p>
<p>Swim good, you might feel better if you looked at this another way. Your EFC is 4000. If you were fortunate enough to be accepted to a school meeti g full need, you would end up owing $16000. That could be paid off in 2 years if you lived at home.</p>