Simplified Needs Test and Auto Zero EFC

on March 3, 2017

The Simplified Needs Test and Auto Zero EFC are simplified versions of the Free Application for Federal Student Aid (FAFSA) that are available to some low-income families.

  • The Simplified Needs Test eliminates the asset questions on the FAFSA
     
  • Auto Zero EFC automatically sets the expected family contribution (EFC) to zero, qualifying the applicant for the maximum Federal Pell Grant

If a student’s parents (if the student is a dependent student) or a student and spouse (if the student is an independent student) satisfy certain income criteria and a type of tax return requirement, the applicant might qualify for the Simplified Needs Test or Auto Zero EFC. There also are two alternatives to the type of tax return requirement.
 

Independent students without dependents other than a spouse are not eligible for Auto Zero EFC.
 

Income Criteria
 

The income criteria compare income with two thresholds: $25,000 and $50,000.

  • If income is less than $50,000, the applicant might qualify for the Simplified Needs Test
     
  • If income is less than or equal to $25,000, the applicant may qualify for Auto Zero EFC

Type of Tax Return Requirement
 

The type of tax return requirement requires parents (if the student is a dependent student) or a student and spouse, if any (if the student is an independent student) to be eligible to file an IRS Form 1040A or IRS Form 1040EZ or to not be required to file a federal income tax return.
 

Alternatives to the Type of Tax Return Requirement
 

There are two main alternatives to the type of tax return requirement.

 

One occurs when a student’s parent (if the student is a dependent student) or a student or spouse (if the student is an independent student) is a dislocated worker or a displaced homemaker.

 

The other occurs when anyone in the household received one of the following means-tested federal benefits in the last two calendar years prior to the award year.

  • Medicaid
     
  • Supplemental Security Income (SSI)
     
  • Supplemental Nutrition Assistance Programs (SNAP), formerly known as Food Stamps
     
  • Free and Reduced Price School Lunch
     
  • Temporary Assistance to Needy Families (TANF)
     
  • Special Supplemental Nutrition Program for Women, Infants and Children (WIC)

Dislocated Worker Status
 

A person can be considered to be a dislocated worker if he or she

  • Lost his/her job
     
  • Has been laid off or received a layoff notice
     
  • Is receiving unemployment benefits due to being laid off or is losing a job and is unlikely to return to a previous occupation
     
  • Is self-employed but is unemployed due to economic conditions or a natural disaster
     
  • Is the spouse of an active duty member of the U.S. Armed Forces and has experienced a loss of employment because of relocating due to a permanent change in duty station

Displaced Homemaker
 

A displaced homemaker generally is a person who previously provided unpaid services to the family (e.g., a stay-at-home mom or dad), no longer supported by the husband or wife, unemployed and having trouble finding or upgrading employment.
 

Exceptions to the Simplified Needs Test
 

Applicants in certain states nevertheless can be required to provide asset information, even if they qualify for the Simplified Needs Test. These states require asset information to determine eligibility for state grant programs. Although the FAFSA will collect the asset information to provide to the states, the asset information will not be used to determine eligibility for federal student aid.
 

The states that require asset information include:

  • Colorado
  • District of Columbia
  • Georgia
  • Hawaii
  • Illinois
  • Minnesota
  • New Jersey
  • New Mexico
  • Ohio
  • Oklahoma
  • South Carolina
  • Vermont
  • Washington
  • Wisconsin
  • Wyoming

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