We start with Adjusted gross income.
We subtract discounts for:
- Federal taxes paid
- State, local, property and sales taxes – estimated per state
- FICA tax
- Medical costs not covered by insurance that exceed five percent of total income
- Employment allowance (for families without a non-working parent in the house)
- Income protection allowance – (to adjust for basic living costs; based on family size)
- Income supplement (calculated at 2.5% of liquid assets [cash, checking, savings, and cash value of stocks])
To arrive at:
- Adjusted available income, used to derive parent or family contribution from the U.S. Department of Education's Need Analysis tables
If more than one family member is attending college, the parent contribution is divided by the number of students.
NOTE: Scholarship America does not factor in retirement funds, value of family residence, nor student earnings.