Income Limits: Adjusted Gross Income & FAFSA®

When you use the FAFSA® to apply for need-based financial aid, your Adjusted Gross Income (AGI) affects the amount of aid you qualify for and the amount that your family is expected to contribute to your education.

Find out how your AGI factors into your Expected Family Contribution (EFC) and learn about how both numbers affect your financial aid eligibility.

What Is Adjusted Gross Income?

As you fill out the FAFSA®, you’ll notice that the form requires you to supply your Adjusted Gross Income. This income-related figure comes from your federal tax return and reflects how much you earn minus a few standard deductions. If you’re filing as a dependent student, you’ll also need to supply your parents’ AGI.

Although your family’s Adjusted Gross Incomeis an important factor in determining how much you’re expected to contribute toward your college costs, it isn’t the only number that goes into the equation. Your family’s savings and investments also affect the total, as does the net worth of any family businesses.

How does Adjusted Gross Income affect Expected Family Contribution?

Your family’s Adjusted Gross Income and assets minus specified allowances equals your expected family contribution (EFC). The FAFSA® uses a standardized form to ensure that every applicant has the same criteria for calculating income and assessing need-based aid.

Essentially, your EFC helps your school’s financial aid office assess your family ability to contribute to your education for the upcoming academic year. This number could range from thousands of dollars to zero, which means you’ve demonstrated substantial financial need.

Keep in mind that your EFC isn’t necessarily the amount that your family has to spend on your education. Instead, it’s a figure that helps your program assess your financial aid needs.

How Does EFC Impact the FAFSA®?

After you’ve submitted the FAFSA® to your school, the financial aid office will compare your EFC to the total cost of attendance. From there, the administrator will develop a financial aid package that includes both need-based aid and non-need-based financial aid.

If you demonstrate financial need, you could be eligible for Subsidized Stafford Loans, Pell Grants, Perkins Loans, and the Federal Work-Study program. Whether you have financial needs, you could qualify for Unsubsidized Stafford Loans, PLUS Loans, and a range of private grants or scholarships. Remember that you may need to negotiate with your school’s financial aid office to get an aid package that works for your family.

Does the FAFSA® Have Income Limits?

One of the biggest perks of the FAFSA® is that it doesn’t have income limits via your adjusted gross income. Although a high EFC may make it difficult to receive need-based financial aid, it won’t disqualify you from getting financial aid altogether.

Whether your family has a relatively low or high income, completing the FAFSA® always increases your chances of getting access to student financial aid. Since your school may require you to submit a FAFSA® before being considered for even merit-based scholarships or grants, filling out the FAFSA® is always a good idea.

Don’t wait to get the financial aid you need. Fill out your FAFSA® and start establishing a strategy to help you pay for college.