Category Archives: Worksheets & Resources

What Year? (2020 Edition)

It’s hard keeping track of what matters when in the prior-prior year world of the FAFSA and CSS Profile. Here is a table summarizing tax year and asset dates for the next few college years:

School Year 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025 2025-2026 2026-2027
FAFSA/ PROFILE Income Tax Year 2018 2019 2020 2021 2022 2023 2024
Assets As Of Oct* 2019 2020 2021 2022 2023 2024 2025
AOTC Tax Year** 2020, 2021 2021, 2022 2022, 2023 2023, 2024 2024, 2025 2025, 2026 2026, 2027

To summarize based on where you are in high school:

Sophomores, this year is your first FAFSA income year. This year is your base year for EFC purposes. All future years will be compared to 2020.

Juniors (and seniors), 2020 income will also count for you for FAFSA purposes, but not until your second year of college. Families of juniors should think about what retirement contributions they can make this year and what to do with student summer job earnings to remove assets from the calculation come fall.

* Assets are as of the filing date, which may be as early as October or into the following year depending on the school’s filing date.

** Remember that the AOTC can only be claimed for four tax years, so families should decide whether the fall of freshman year is better than spring of senior year for claiming. With the income limit of $160,000 (married filing joint) or $80,000 (single), some families might not be eligible every year.

Parents may find that different strategies are needed during different years. For example, a family with a student beginning college in fall of 2022 might reduce pre-tax retirement contributions this year (to increase taxes, which are deducted from income on the FAFSA and therefore reduce EFC) and then maximize contributions beginning in 2022 to reduce AGI for AOTC claiming purposes.

Retirement Contributions and College

Perhaps the most frequently asked question we get is how to balance saving for retirement and college. And I can’t answer that in a blog post because the right way to balance depends on your specific circumstances. We have told clients to pause retirement savings to meet college years cash flow needs, we have told clients to stop funding college and focus exclusively on retirement, and everything in between. What I can do is help you to understand how retirement savings impact college. Continue reading Retirement Contributions and College

EFC Formula Guide 2020-2021 & FAFSA Basics

Last week, the Department of Education released the FAFSA Formula Guide for the coming FAFSA. Before I give you that link, I want to share some basics about the FAFSA. I’ll also break out each section of it in depth in the coming weeks– hopefully before the new FAFSA arrives on Oct. 1. Continue reading EFC Formula Guide 2020-2021 & FAFSA Basics