Do you qualify for the automatic zero EFC loophole?

by Grace

In determining eligibility for college financial aid, the lower your Expected Financial Contribution (EFC) the better position you’ll be in to receive money.  Even better than a low EFC is one that equals ZERO.

Some families can qualify for the automatic zero EFC “loophole” when completing the FAFSA, landing them in an ideal position for maximum benefits.  How do you qualify?  One common way is if your household Adjusted Gross Income is $31,000 or less and if you are eligible either to file the short tax form or no form at all.  Here are full details.

For the 2011-2012 school year, a dependent student automatically qualifies for a zero EFC if both (1) and (2) … are true.

(1) Anyone included in the parents’ household size (as defined on the FAFSA) received benefits during 2009 or 2010 from any of the designated means-tested Federal benefit programs: the SSI Program, the Food Stamp Program11, the Free and Reduced Price School Lunch Program, the TANF Program12, and WIC; OR
the student’s parents filed or were eligible to file a 2010 IRS Form 1040A or 1040EZ, they filed a 2010 Form 1040 but were not required to do so, or the parents were not required to file any income tax return; OR
the student’s parent is a dislocated worker.


(2) The 2010 income of the student’s parents is $31,000 or less.
• For tax filers, use the parents’ adjusted gross income from 2010 Form 1040A or 1040EZ to determine if income is $31,000 or less.
• For non-tax filers, use the income shown on the 2010 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $31,000 or less.

Details that apply to independent students, along with other information about the EFC formula, can be found in THE EFC FORMULA, 2011-2012 document.


4 Comments to “Do you qualify for the automatic zero EFC loophole?”

  1. This is not a loophole. This is deliberate strategy to help those who live in critical poverty. Arranging your income to appear that you are eligible for funds that you would otherwise not receive is morally reprehensible. Telling someone to do so is malpractice.


  2. I disagree with MaMa McWill: it is not morally re


  3. I disagree with MaMa McWill: it is not morally reprehensible: not more then a person that plans their income flow to lower taxes. Planning out your finances or how things will be paid for using financial management strategies is just one tool among many. It’s up to the person in that situation to make the judgement call on what’s right for them.


  4. I agree with JR. The government should understant a basic tenet of economics: Individuals respond to incentives.


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