Both the federal government and individual colleges typically use needs analysis, which considers available income and assets, to determine eligibility for financial aid. Consider a simplified version of needs analysis in which grant aid is awarded in the following manner: - Line A: Total adjusted gross income as reported on income tax form
Both the federal government and individual colleges typically use needs analysis, which considers available income and assets, to determine eligibility for financial aid. Consider a simplified version of needs analysis in which grant aid is awarded in the following manner: - Line A: Total adjusted gross income as reported on income tax form
Chapter12: The Public Sector
Section: Chapter Questions
Problem 18SQ
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Both the federal government and individual colleges typically use needs analysis, which considers available income and assets, to determine eligibility for financial aid. Consider a simplified version of needs analysis in which grant aid is awarded in the following manner:
- Line A: Total adjusted gross income as reported on income tax form
- Line B: Supplement from assets, equal to 0.2 × assets per year
- Expected Family Contribution (EFC):0.35 × [Line A + Line B]
- Aid Rule: Grant = max(0,$15,000 − EFC)
a. What are the maximum levels of income (assuming zero assets) and assets (assuming zero income) at which an individual could be expected to receive financial aid?
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