The Free Application for Federal Student Aid (FAFSA) includes two simplified financial aid formulas in addition to the full federal need analysis methodology, the Simplified Needs Test and Automatic Zero EFC. Each of these formulas combines an income threshold with a set of other eligibility criteria. The Simplified Needs Test causes assets to be ignored on the FAFSA for eligible applicants.
Dependent students are eligible for the simplified needs test if the annual income of the student’s parents is less than $50,000 and any of the following criteria apply:
Means-tested federal benefits. Anyone in the parents’ household received certain federal means-tested benefits during either of the last two years (the prior year and the prior-prior year).
Type of tax return. The dependent student’s parents filed IRS Form 1040 but were not required to file Schedule 1, with certain exceptions, or they were not required to file a federal income tax return.
Income is based on the adjusted gross income (AGI) or, if the dependent student’s parents are not required to file an income tax return, their total income earned from work.
Independent students are also eligible for the simplified needs test using similar rules, substituting the independent student and the independent student’s spouse (if married) for the dependent student’s parents.
An applicant who qualifies for the simplified needs test may nevertheless still be required to report assets on the FAFSA if they live in a state that requires asset information to determine eligibility for state grant programs. The asset information will be used only to determine eligibility for state grant programs. It will not be used to determine eligibility for federal student aid. The states include Colorado, Georgia, Hawaii, Illinois, Minnesota, New Jersey, New Mexico, Ohio, Oklahoma, South Carolina, Vermont, Washington, Washington D.C., Wisconsin and Wyoming.
Mark Kantrowitz is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make informed decisions about planning and paying for college.
Mark writes extensively about student financial aid policy. He has testified before Congress and federal/state agencies about student aid on several occasions.
Mark has been quoted in more than 10,000 newspaper and magazine articles. He has written for the New York Times, Wall Street Journal, Washington Post, Reuters, Huffington Post, U.S. News & World Report, Money Magazine, Bottom Line/Personal, Forbes, Newsweek and Time Magazine. He was named a Money Hero by Money Magazine. He is the author of five bestselling books about scholarships and financial aid, including How to Appeal for More College Financial Aid, Twisdoms about Paying for College, Filing the FAFSA and Secrets to Winning a Scholarship.
Mark serves on the editorial board of the Journal of Student Financial Aid and the editorial advisory board of Bottom Line/Personal (a Boardroom, Inc. publication). He is also a member of the board of trustees of the Center for Excellence in Education. Mark previously served as a member of the board of directors of the National Scholarship Providers Association.
Mark is currently Publisher of PrivateStudentLoans.guru, a web site that provides students with smart borrowing tips about private student loans. Mark has served previously as publisher of the Cappex.com, Edvisors, Fastweb and FinAid web sites. He has previously been employed at Just Research, the MIT Artificial Intelligence Laboratory, Bitstream Inc. and the Planning Research Corporation.
Mark is President of Cerebly, Inc. (formerly MK Consulting, Inc.), a consulting firm focused on computer science, artificial intelligence, and statistical and policy analysis.
Mark is ABD on a PhD in computer science from Carnegie Mellon University (CMU). He has Bachelor of Science degrees in mathematics and philosophy from MIT and a Master of Science degree in computer science from CMU. He is also an alumnus of the Research Science Institute program established by Admiral H. G. Rickover.
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