The financial aid process begins when a student submits the FAFSA application online or through the mail. Applicants are advised to apply online to receive results more quickly and because questions online are given based on the answers to prior questions, which results in less errors. After the application is processed, a Student Aid Report (SAR) is sent informing the student of his or her EFC amount.
The first step in calculating a student's EFC is determining whether or not the student is a dependent. To be considered independent, a student must be at least 24 years old, be married, have a dependent or be enrolled in a graduate program. Other criteria include, but are not limited to, the student being currently in active duty in the military, a veteran of the U.S. Armed Forces or a ward of the court. A student is only required to meet one of these qualifications to be considered independent. No parental financial information is required for independent students.
A dependent student's EFC is calculated according to the parent's earned income, adjusted gross income, taxable income and taxes paid. The parent's assets are also used in the formula, such as cash, checking and savings account balances, business net worth and education savings. The number of college students in the household is also part of the equation.
A student who is a dependent will be required to fill out financial and asset information as part of the EFC calculations, which includes the following information: adjusted gross income, amount earned from jobs, along with information about checking and savings accounts, investments, business and farm assets. If the student is independent, the information required will be the student's adjusted gross income and asset information, as well as his or her spouse's income and assets if married.
Eligibility for Zero EFC is possible when the student is a dependent and anyone in the parent's home is eligible for financial assistance through federal programs such as the Food Stamp Program, WIC, Social Security Income or the Free and Reduced Price School Lunch Program. In addition, the parents must have an adjusted gross income less than $30,000 a year or be a dislocated worker. An independent student qualifies under the same rules.
The simplified form does not require that you fill out the asset section. In addition, the amount of aid received is based on whether the student attends college nine months a year or more. The FAFSA4caster can be used to enter basic information and receive an estimate of the amount of financial aid the student can expect to receive.