Income Protection Allowance for Students

It’s summer job time! If your student is a rising high school junior or above, they should be aware of the FAFSA’s Income Protection Allowance for dependent students. For the 2017-2018 FAFSA, it’s $6,420. That means that the first $6,420 they earn in 2016 does not increase their EFC, but any earnings above that do, to the tune of 50 cents per $1 of income. So a student earning $7,000 in 2016 would increase their EFC by $290.

Likewise, parents who employ their student in their own business can pay the student up to $6,420 this year both to reduce their own income taxes and to transfer that income out of the parent income calculation of the EFC.

2 thoughts on “Income Protection Allowance for Students

    1. That is correct. Only the amount over $6,420 (less any taxes) counts towards EFC. Here is the current FAFSA formula guide. Go to page 10 and you’ll see how student income is calculated.

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