Spring 2012 issue of Horizons

The AVG includes a section on computing the applicant’s EFC. While the overall formula to compute this crucial amount (which has a significant determination on how much Federal Student Aid the applicant will receive) has remained relatively consistent, the maximum income for an application to default to a zero EFC has been reduced from $31,000 in the 2011/2012 award year to $23,000 in the 2012/2013 award year. This decrease could possibly result in a reduction of Pell awards for certain applicants at certain institutions.

• Certain students who were previously exempt from verification (Pacific Islanders, Incarcerated, and recent immigrants) are no longer excluded • The institution must have a correct, valid ISIR or SAR for subsidized Title IV programs (includes Pell, SEOG, Work Study, Perkins and Direct Subsidized Loans). • The $400 verification tolerance has been removed • Provides some clarification on when/how dependency overrides can be utilized In addition, the AVG stipulates several different changes in items that have to be verified for the 2012 award year, with a long-term goal of customizing such items on a student-by-student basis. For the 2012 award year, the following items are required to be verified: • Household size • Number of dependents in college • Supplemental Nutritional Assistance Program (previously food stamps) • Adjusted Gross Income (for tax filers only) • U.S. Income taxes paid (for tax filers only) • Education credits claimed (for tax filers only) • IRA distributions on which no tax was paid (for tax filers only) • Pension distributions on which no tax was paid (for tax filers only) • IRA deductions • Tax-exempt interest The AVG also stipulates that an institution must complete the verification process prior to exercising professional judgment to adjust the Expected Family Contribution (EFC). It should be noted that this only applies to applicants who were already chosen by the institution or ED for verification. In other words, the use of professional judgment does not always require an institution to complete the verification process.

www.rubinbrown.com

30