Students and parents may estimate their income and tax information when initially filing the Free Application for Federal Student Aid (FAFSA). Errors must be corrected later, after federal income tax returns have been filed. The IRS Data Retrieval Tool (IRS DRT) can help by transferring information from federal income tax returns into the FAFSA. However, families should try to provide estimates that are as accurate as possible, since errors in the data on the FAFSA can have a big impact on the Expected Family Contribution (EFC). Significant differences in the EFC can lead to a big revision in the student’s financial aid package.
Every $10,000 difference in parent income may yield about a $3,000 difference in the expected family contribution (EFC) for middle- and high-income students, about half of that for low-income students.
If the parents’ income is close to the $50,000 threshold for the simplified needs test (SNT), even a small difference in income might cause a big change in the EFC if it causes the parents’ income to cross the $50,000 threshold and the parents have significant assets.
A $10,000 difference in student income may result in as much as a $5,000 difference in the EFC.
A $10,000 difference in student assets can result in a $2,000 difference in the EFC, while a $10,000 difference in parent assets can result in a $564 difference in the EFC.
Errors in household size can yield as much as a $1,700 difference in the EFC.
Errors in the number in college can have a very big impact on the EFC, perhaps as much as doubling the EFC or cutting it in half.
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PrivateStudentLoans.com recommends you consider all financial aid alternatives including grants, scholarships and federal loans
(Federal Stafford, Federal Parent PLUS, Federal Grad PLUS) prior to applying for private student loans.