Category: Financial Aids

What is Student Aid Report (SAR)?

Financial Aids

The Student Aid Report (SAR) is a document that provides information about your eligibility for federal student aid, including grants, scholarships, and federal student loans. You might receive your SAR in both mail or by logging into your StudentAid.gov account. SAR is a government-type report that summarizes everything that you provided on the FAFSA. It also shows the family’s EFC on the top right-hand corner of the form. If there’s a * next to the EFC on the SAR, it means your FAFSA has been selected for Verification. About 2-3 weeks after you fill out and submit the FAFSA, you will receive your Student Aid Report (SAR). If you do not receive the SAR, call the federal processor. They will ask for the student’s Social Security number and date of birth as verification and will tell you whether your FAFSA has been processed.

Make sure you review all of the information on the SAR. The item numbers printed on the SAR will correspond directly to the question numbers on the FAFSA form. Errors must be immediately corrected or updated on this form and the form re-filed. If an amended tax return is filed later in the year, the financial aid office should be contacted.

Copies of your SAR will be sent to all the schools you listed on the FAFSA. If you need additional copies of the SAR, contact the federal processor and ask for a duplicate SAR.

The College Scholarship Service (CSS) Data Confirmation Report is similar to the SAR. It gives parents and students a chance to correct data.

Verification

After the colleges receive your SAR, they may decide to do a verification (audit) of the financial information provided by the family. The federal government requires that a minimum of 30% of the FAFSAs be selected for verification. If your financial aid application is selected for verification, there will be a * by the EFC amount on the SAR. Each college will require you to submit support documentation, such as your IRS tax returns, W-2, and 1099 forms.

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What is FAFSA?

Financial Aids

To receive financial aid, you will need to apply and be accepted by the college. To apply, you will need to complete an application. The two basic types of financial applications are the Free Application for Federal Student Aid, or FAFSA, and the CSS PROFILE forms.

The FAFSA form is used to calculate EFC. All 2022–23 FAFSA® forms must be submitted by 11:59 p.m. Central time on June 30, 2023.

There are three ways to file a FAFSA:
1) by mailing it to the FAFSA,
2) by filing online through FAFSA on the WEB (www.fafsa.ed.gov),
3) by filing online directly through the college.

The need based analysis uses your financial information from the tax return from 2 years prior.

FAFSA® Process

You can click on the “Apply Now” button on the home page, and just follow the directions on the screen.

You will be assigned an FSA ID, username and password which let you sign FAFSA®. Your FSA ID also can be used to sign loan contracts. Your FSA ID is used to confirm your identity when accessing your financial aid information and electronically signing your federal student aid documents. You will need to fill out your name, social security number, date of birth, address, driver’s license, Tax info including w-2, untaxed info, and all your financial situation, etc.

You can list a few schools on the online FAFSA. You can add more schools later. Schools you list on your FAFSA will automatically receive your FAFSA results electronically.

In order to receive financial aid, the student must: 1) Demonstrate financial need, 2) Received a high school diploma, 3) Be enrolled in college, 4) Be a U.S. citizen or eligible non-citizen, 5) Have a valid social security number, 6) Make satisfactory progress while in college (2.0 GPA), 7) Certify the financial aid will be used for educational purposes, 8) Not be in default of a federal loan.

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Why is Household important?

Financial Aids

The student’s household is important because it decides whose income and assets are reported on the FAFSA, and if the student really qualifies as a dependent or independent student.

If the parents are married, their income and asset both need to be listed on FAFSA application. If the student has a stepparent, the stepparent’s income and asset will also need to be included. If the parents are divorced or separated, the income and asset of the parent with whom the student lived with the most during the last year must be listed. If the student live with both parents equal time (joint custody), the income and asset of the parent who provided the majority of financial support during last year must be listed. If the parent is widowed or single, only that parent’s income and asset is listed. The surviving parent must list only his/her income and assets. If both parents passed away when student signs the application, the student is considered “independent student.” Adoptive parents are treated the same as biological parents. Foster Parents‘ income and assets are not report.

Number of Household Members: 1) Student 2) Parents 3) Siblings 4) Student’s children, if any 5) Parent’s unborn children.

Number of Household Members in College: If you have additional Household Members currently enrolled in college, it will reduce EFC greatly.

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What are Parent’s Incomes

Financial Aids

Parent’s Income is the critical piece in Financial Aid calculations. Incomes and benefits are assessed more (22 – 47%) than parent’s assets (5.64%) (see page : “WHAT IS EFC (EXPECTED FAMILY CONTRIBUTION) OR SAI (STUDENT AID INDEX)?”). The parent’s income are: any AGI (Adjusted Gross Income) reported on IRS 1040, 1040A, 1040EZ, and any untaxed income along with any benefits parents receive. Untaxed income and benefits include: earned income credit + child tax credits + this year’s child support + untaxed social security benefits paid to parents on behalf of children + Room/Board Allowances + this year’s retirement contributions (untaxed portion of 401(k), 403(b)) + this year’s untaxed retirement withdrawals + Veteran’s benefits + worker’s comp + + welfare benefits

What are the untaxed income and benefits that are not assessed?

All the grants, scholarships, loans, which students receive are not assessed as “untaxed income”. Any rollover pensions, food stamps, non-monetary gifts and assistance such as a car, stocks, FSA, etc.

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WHAT IS EFC (EXPECTED FAMILY CONTRIBUTION) OR SAI (STUDENT AID INDEX)?

Financial Aids

The EFC (Expected Family Contribution) is the amount of money family is expected to contribute towards COA (cost of attendance).

Parents’ AGI (Adjusted Gross Income) + Untaxed Income & Benefits–Income Allowance
Fed Income Taxes
SS (Social Security) Taxes
State Taxes
Employment Exp. Allowance		x 22 – 47% (assessed at a variable rate)=Parents’ Contribution from Income
Parents’ Assets–Asset protection Allowancex 5.64% (assessed at a variable rate, no asset protection allowance as of 2023-2024, FAFSA)=Parents’ Contribution from Assets
Students’ AGI (Adjusted Gross Income) + Untaxed Income & Benefits–Income Allowance
Fed Income Taxes
SS (Social Security) Taxes
State Taxes		x 50% (assessed at a flat rate)=
Students’ Contribution from Assets
Students’ Assets–x 20% (assessed at a flat rate)=
Students’ Contribution from Assets
EFC (Expected Family Contribution)

In the EFC calculation: The family’s home/farm (if family lives in the home/farm) are not assessed. Business assets are not counted if the owner employs 100 or fewer full time employees. Above 100 employees are assess at a special net worth adjustment. Parental asset protection allowance is based on the age of the older parent. The allowance increases with the age of the older parent.

What are the assets included in FAFSA:
Included: 529s (Parent Assets), Bonds, Checking, CDs, Mutual Funds, Other Real Estate, Savings, Stocks, UTMA/UGMA & Trusts.

Excluded: 401K, Annuities, Family owned small business and Farms (2024-2025 + will be included), Home Equity, IRA, Life Insurance Values, Pension, Personal Property.

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What is Cost of Attendance (COA)?

Financial Aids

Admissions office and financial aids office work hand in hand, usually they are run by one umbrella, the department called “Enrollment Management”. There are many types of Admissions: ED (Early Decision), EA (Early Action), EV (Early Evaluation), RA (Regular Admission), Rolling, Open, Deferred Admission.

ED (Early Decision):
ED is when students apply to Early Deadline and if accepted, they are obligated to or committed to attend. Students are typically notified either acceptance or rejection by early December, sometime right before Christmas. This can be one of the best Christmas gifts!

EA (Early Action):
EA is when students apply to Early Deadline and if accepted, they are NOT obligated to or NOT committed to attend. EA application are usually due in Fall, and students receive decisions before the year end.

EV (Early Evaluation):
EV is when student apply in Early (by November) and were sent a decision (not an acceptance letter) by January about their chance of getting in.

RA (Regular Admission):
RA is the common type. Students usually send applications between November and January. Schools have minimum requirements, such as GPA, SAT or ACT, high school diploma, personal statement, essays, letters of recommendations. Schools usually compare students’: academic performance, extracurricular activities (EA), letters of recommendations.

Rolling (Rolling Admission):
Rolling allows students to apply ANYTIME during admission period (between September thru July).

Open (Open Admission):
Open are normally for community college students and online students. They allow students who meet minimum requirements to be admitted.

Deferred (Deferred Admission):
Deferred allows students who have personal, financial and other concerns to postpone their enrollment for up to one year.

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What is a 529 Plan?

Financial Aids

Families that save early pay less for school, reduce their needs to borrow and have more funds available later in life. How you save, where you save, when and who do you save for are big questions.

529 plans are the best way to save for college. It’s an investment account that has Tax Benefits. You can use it to pay for college, k-12 tuition, even student loans repayment. Your state have tax breaks as well (Besides the federal tax benefits, over 30 states offer a full or patient tax deduction or tax credit for 529 contributions). 529 are low maintenance accounts, yet highly flexible. You can also roll 529 funds into a Roth IRA.

Here are the best plans of 529 in 2023.

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What are considered Parents’ Assets?

Financial Aids
Yes – Count as AssetsNo – Don’t count as Assets
529s401(k)
Bonds403(b)
CDsAnnuities
Checking AccountIndividual retirement account (IRA)
Family-owned small business
and farms (starting 2024)		Life Insurance
Investment in Real Estate other than
your Primary Resident		Pension
Saving AccountPersonal Property (Jewelry, car, etc)
TrustsPrimary Resident Home Equity



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How much financial aids can I receive for school?

Financial Aids

Parents often ask, “How much financial aids can my son/daughter receive for school?” 

First thing you will need to do is to: fill out your FAFSA Form (Free Application for Federal Student Aid). Once the Office of U.S. Dept of Education process your application, they will send your info to all of the schools you listed on FAFSA. It’s kind of like a One-Stop Shop, each school will use the FAFSA information to make decision on how much financial aid you are eligible. Each school’s schedule is totally different. You must check with each school to find out when you can expect to receive a financial aid offer.

Different schools have different formulas, but basically, they use these three factors:

1. Status: Your status of school enrollment (FT – full-time, HT – Half-time, LHT – less than half-time, etc.)

Your status of school enrollment will impact the dollar amount you qualify for. For example, certain student loans are available only to students enrolled more than half-time.

2. COA: Cost of Attendance (👍metrics to compare schools)

COA is usually available on the school’s website. COA usually includes: a) Tuition and Fees, b) Room and Board, c) Books, supplies, living expenses, transportation, loan fees, and more. COA varies from school to school and it’s a very realistic metrics when comparing schools in a whole. Some schools may have lower tuition, but living expenses are much more higher.

3. EFC: Expected Family Contribution ()

EFC is the main piece of the puzzle. It’s the main info you wrote on FAFSA. The EFC is not necessarily the amount of money your family will have to pay out of pocket for college. It’s not just income and it’s not the financial aid you will receive. However, it is a main # used by your school to calculate how much financial aid you are eligible for at that school.

If you have questions about your EFC, contact the financial aid office at your selected college.

Schools then use this formula to determine your financial need:

Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need

Once the school determined your needs + accepted you, you will receive financial aid offers from the schools. All your financial aid offers will be different. Different schools have different aids programs and even same school has different aids available in different years. So you have to be in it to win it.

Different offers can come from different sources: school itself, private foundations, state or federal level. Make sure you understand the type of funding and if you will need to pay back or not.

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