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Federal student aid relies on Expected Family Contribution (EFC), defined as what the federal government expects parents and students to afford out of their own pocket to pay for higher education. Exact calculations depend on individual circumstances, but federal calculations take into account the size of a household, dependent children, estimated school costs, adjusted gross income, scholarships, bank account balances and assets. Less wealthy households receive more benefits.
The federal government determines aid for higher education by classifying a student as either independent or dependent. A dependent student must include his parent’s income and assets when filling out a FAFSA form. Since his parents will probably have more earning power and a higher net worth, a student under the age of 24 must usually claim dependent status, resulting in him receiving less federal aid than if he could claim himself as an independent.
A married student can file independent status on her FAFSA, claiming the income of both herself
and her spouse on her FAFSA. Since students will typically have few assets due to the high costs of education and little income due to their part- or full-time school work, they can receive thousands of dollars more in direct grants and subsidized student loans every year that they attend college. Universities may also offer additional financial aid to married students in excess of federal guidelines.
If a student and his spouse do not have children, earn $10,000 in a year and file independent status, he has an expected contribution of zero, which qualifies him for the maximum Pell Grant amount of $5,550 per year and $9,500 in subsidized Stafford Loans his first year of college as of 2011, according to Adventures in Education. If an unmarried student files dependent status on his FAFSA, his expected contribution can total thousands of dollars, resulting in a lower Pell Grant and only up to $5,500 in Stafford Loans his first year of college, according to the U.S. Department of Education.
Category: Personal Finance