Thanks to various economic factors, it has become extremely difficult for American parents to put their kids through college. Tuition fees are higher than ever, showing no signs of coming down anytime in the future. Fortunately, we have federal financial aid (FAFSA) to help us through this.
But the thing about FAFSA is that the regulations keep changing, so most parents have no idea whether they should apply for it or not. One of the most frequently asked questions is “what is the maximum income to qualify for financial aid?” This is primarily because the numbers change every year. In this article, we will discuss the following to help you understand the answer to this and more:
- What is the Maximum Income to Qualify for Financial Aid?
- What is Expected Family Contribution (EFC)?
- Eligibility Criteria for Different Types of Financial Aid
- How to Apply for Financial Aid in 2020
- Why You Should Apply for FAFSA
Let’s get started, shall we?
What is the Maximum Income to Qualify for Financial Aid?
As told above, the amount of federal grant depends on family income and a few other factors. If parents have a single child and their income is below $350,000 a year, there is a good chance that their kids will get qualified for this, given they have filled out the FAFSA application.
In today’s market, piling up college funds for children is definitely not an easy task. There are apps designed to help parents regulate and maintain funds for their kid’s higher education. From the beginning till the end, right from setting up your child’s account to managing it forward they help out with the entire process.
Good News: For this year there is no specified income limit for filling the FAFSA form.
However, there are a few points you should remember about the process of qualifying for FAFSA. Usually, the decision is made by comparing the Expected Family Contribution (EFC) to the cost of school attendance.
What is Expected Family Contribution (EFC)?
If you’re wondering how much is too much for qualifying for FAFSA, EPC or the Expected Family Contribution can tell you that! The EPC is basically an analysis of the family income to determine the amount that the parents can pay to cover their child’s educational expenses.
Common items that are considered while calculating EFC are the income of the family, its assets, unemployment in the family, number of dependable members in the family, number of siblings who are also attending school or college.
As mentioned above, there is no income limit for FAFSA this year. But, there is a cap on the earning, technically the lowest threshold of income, which means your Expected Family Contribution (EFC) will stand at $0.
If you’re a dependent student and your family’s annual income if less than $26,000, your EFC will be considered zero. Similarly, even if you’re married and your spouse’s income is less than $26,0000 annually, your EFC will be counted as zero. Zero EFC means that your family is not in a financial position to bear your educational expenses.
Once the EFC is calculated it is subtracted from the school/college attendance cost to determine the required amount of Financial Aid. Every school has its own cost of attendance. It is not the same for all. Based on this, students can decide where they should join for their studies. The cost of attendance mainly includes, tuition fees, book costs, loan fees, transport costs, boarding costs, among others. Sometimes it also includes child care costs.
Eligibility Criteria for Different Types of Financial Aid
When it comes to eligibility for getting Financial Aid, a very important point to note is that there are no income limits which will help decide if a student is eligible.
The eligibility in the case of the Federal Pell Grant depends on the EFC or the Expected Family Contribution. According to a survey it was found that those who were approved of the Pell grant had an income of around $60,000 annually. Parents having two or more children might also get this grant as their contribution gets divided between the children.
Some other kinds of grants include institutional grants. Those parents who are earning a handsome 6 figures of annual income are considered for institutional grants.
Merit-based grants and Need-based grants are some of the other kinds that students can avail of. For parents, we suggest you plan for your kids’ education well in advance.
How to Apply for Financial Aid in 2020
First and foremost, fill out the FAFSA form. To fill up the FAFSA application visit the official website of the Department of Education.
It is a good idea to have a Federal Student Aid ID (FSA ID) before applying for Financial Aid. Having a FSA ID makes the overall grant process a lot easier. FSA ID can ease out the process of filling up the FAFSA every year. It is also easy to retrieve information about the various Financial Aids that you can avail during your college years using the same ID.
A few other data that you would require are financial account statements, income tax returns, any other record of money earned, and social security number.
Why You Should Apply for FAFSA
You might not qualify for a federal grant but that doesn’t lower your chances of getting any other kind of financial benefit. Filling up the FAFSA form will make you eligible to apply for federal loans at considerably low interest rates. Also, there are loans specifically for students. Even those who are well off can enjoy federal loans at lower rates. We say, take a try!
As most parents are concerned about the income caps, so as to check their eligibility to secure a Financial Aid, we assure you there is no specific income limit. It is always advisable that every parent fill-up the FAFSA form or try out alternate options of Financial Aids as discussed above.
Hope this article clears your confusions regarding Financial Aid and help to make informed choices when it comes to your child’s education!