Adjustments to the FAFSA EFC Formula for 2017-2018
Unlike last year, when the Asset Protection Allowance in the FAFSA formula plummeted, adding thousands of dollars of family education savings back into the formula, this year’s numbers are generally modest changes from the 2016-2017 formula. The big ones that change annually are the Income and Asset Protection Allowances. Here are some examples of updated numbers:
Income: Family of 4 with 2 college students:
2016-2017: $24,390
2017-2018: $24,480
The dependent student IPA increased to $6,420 from $6,400
Assets: Married parents, oldest age 50:
2016-2017: $19,700
2017-2018: $21,200
There is also a modest increase in the Adjusted Available Income threshold for the 47% bracket (the level at which income is assessed at 47% available to pay for college), from $32,200 in 2016-2017 to $32,300 for 2017-2018. Yippee.
Adjustments to income are based on inflation rates (CPI-U specifically). The asset protection allowance formula is far more complex and has to do with the difference between moderate family income and average Social Security benefits. (And yes, the income protection allowance is based on inflation in consumer prices and the asset protection allowance is based on inflation in various forms of income.) If you want more details on how changes to the asset protection allowance are calculated, the best explanation I have found for it is from Edvisors, here.
See The FAFSA Formula Explained for more a deeper dive.
