# Presentation: 411375

## Overview

- Expected Family Contribution

## Objectives

- Identify the correct EFC formula to use for a student applicant
- Determine when a student qualifies for a simplified or automatic zero EFC calculation
- Identify the content of the EFC Formula Guide
- Identify professional judgment  situations

## Need Analysis

- Student and family have primary responsibility to pay educational costs
- Student and parents expected to contribute to extent they are able
- Need-based funds available to assist
- Need = Cost of Attendance (COA) - Expected Family Contribution (EFC)
- EFC measures family’s available discretionary resources

## Calculate EFC

- Central Processing System (CPS):
- Collects and processes application data
- Makes assumptions for field values, as needed
- Determines dependency status
- Determines which EFC formula to use
- Calculates EFCs
- Reports EFCs on output documents

## EFC Federal Methodologies

- Dependent
- Independent without dependents other than spouse
- Independent with dependents other than spouse

## EFC Formulas

- Regular
- Family resources devoted first to subsistence
- Assesses strength at time of application
- Considers number in household, number in college, income, taxes paid, assets, etc.
- Simplified (assets not included)
- Automatic zero (assets not included)
- Other than 9-month

## Dependent Simplified EFC

- Dependent student qualifies for simplified calculation when:
- Parents’ combined AGI or income earned from work      $49,999 **and**
- Either
- Parents not required to file IRS Form 1040 or
- Anyone counted in household size received a means-tested federal benefit during base year

- 

## Means-Tested Federal Benefit

- Alternative to tax form requirement for simplified and automatic zero EFC
- If someone counted in household size received means-tested federal benefits, student can qualify for simplified and automatic zero EFC
- Receiving benefit any portion of past year

## Independent Simplified EFC

- Independent student qualifies for simplified calculation when:
- Student’s and spouse’s combined AGI or income earned from work      $49,999 **and**
- Either
- Student and spouse not required to file IRS Form 1040 or
- Anyone counted in household size received a means-tested federal benefit during base year

- 

## Dependent Automatic Zero EFC

- Dependent student qualifies for an automatic zero EFC when:
- Parents’ combined AGI or income earned from work      $20,000 **and**
- Either
- Parents not required to file IRS Form 1040 or
- Anyone counted in household size received a means-tested federal benefit during base year

- 

## Independent Automatic Zero EFC

- Independent student with dependents other than spouse qualifies for an automatic zero EFC when:
- Student’s and spouse’s combined AGI or income earned from work      $20,000 **and**
- Either
- Student and spouse not required to file IRS Form 1040 or
- Anyone counted in household size received a means-tested federal benefit during base year

- 

## EFC Methodology/Formula 

**Jamie, a senior at State University, just celebrated her first wedding anniversary. The couple has no dependents and her husband is a full-time architect. Can Jamie qualify for an Automatic Zero EFC?**
**Yes**
**No**

**Live Meeting Poll**

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## Other Than 9-Month Calculation

- Regular EFC calculation based on nine-month enrollment period
- Enrolled fewer than nine months
- Prorated EFC = Calculated EFC     9    (# months enrolled)
- Enrolled more than nine months
- Independent student: EFC remains at nine-month amount
- Dependent student: EFC prorated using appropriate worksheet

- 

- 

## Question: EFC Calculated by Hand

-    Why would you need to understand the EFC formulas or calculate an applicant’s EFC by hand when the CPS provides a calculated EFC?

## Review of EFC Formula Guide

- Regular Worksheet A pages 9-12
- Simplified Worksheet A pages 13-16
- Tables A1 - A7 pages 17-20
- Regular Worksheet B pages 21-22
- Simplified Worksheet B pages 23-24
- Tables B1 - B4 pages 25-27
- Regular Worksheet C pages 29-30
- Simplified Worksheet C pages 31-32
- Tables C1 - C6 pages 33-35

## Activity

- PW pages 1-7 to 1-9

## Debrief Scenario 1

- Simplified Worksheet B
- AGI = $40,000
- Not required to file 1040
- Pages
- Simplified Worksheet B, pages 23-24
- Tables B1-B4, pages 25-27
- Social Security Tax percentage
- From Table B2
- 7.65%

## Debrief Scenario 2

- Regular Worksheet A
- Lisa is a dependent student
- Parents’ combined AGI = $56,000 (do not qualify for automatic zero or simplified needs)
- Pages
- Regular Worksheet A, pages 9-12
- Tables A1-A7, pages 17-20
- Lisa’s state tax allowance
- From Table A7 for students
- 3%

## Debrief Scenario 3

- Regular Worksheet C, Automatic Zero
- Income earned from work = $15,600
- Tina qualified for free or reduced price lunches
- Pages
- Regular Worksheet C, pages 29-30
- Tables C1-C6, pages 33-35
- Income Protection Allowance?
- $15,320

## Professional Judgment (PJ)

- Applies to special circumstances on case-by-case basis
- Option to exercise if CPS-calculated EFC does not fit real financial situation
- Resolve inconsistencies, inaccuracies, and conflicting information before applying PJ
- PJ decisions fully documented

## PJ Adjustments Allowed

- Adjust values of specific application data reported and used in EFC
- Adjust cost of attendance
- Change dependency status

## PJ Adjustments Not Allowed

- Modify EFC formulas or tables
- Adjust data because you do not believe in adequacy or appropriateness of EFC formulas or tables
- Waive student eligibility requirements to circumvent law’s or regulation’s intent