In order to use the simplified formula, a child's parents must not make more than $50,000 per year and must file, or at least have the option to file, a 1040A or 1040EZ tax form. A dependent may also qualify if they or their parents received government assistance, such as food stamps.
Because assets are not included, a simplified needs test considers the prospective students as more needy, leading to a greater amount of financial aid.
The Internal Revenue Service raised the limit on filing the 1040EZ to $100,000 in 2004, but the simplified needs test still uses the $50,000 standard adjusted gross income as its barometer.
People do not need to use their current year tax return for filling out the Free Application for Federal Student Aid. Waiting to complete the current tax return could make the parent and student miss out on some forms of aid.
In years past, the FAFSA qualified a student for an EFC of 0 under the simplified needs test if the parent made less than $16,000, but as of 2010, this limit stands at $20,000.