Is $70,000 Too Much for FAFSA? What It Really Means for Student Aid

When you hear someone say they made $70,000 a year and are wondering if that’s too much for FAFSA, you’re not alone. Many families assume if they earn more than $50,000 or $60,000, they won’t qualify for any help. That’s a myth. The truth? FAFSA doesn’t have a hard income cutoff - not even close. Even families earning $150,000 or more can get aid. So is $70,000 too much? No. But it’s not the whole story.

How FAFSA Actually Works

FAFSA - the Free Application for Federal Student Aid - doesn’t just look at your income. It looks at your whole financial picture. That includes assets, family size, number of kids in college, and even where you live. The government uses a formula called the Expected Family Contribution (EFC), now called the Student Aid Index (SAI), to figure out how much you can reasonably pay for college.

For example, a family earning $70,000 with two kids in college at the same time might get more aid than a family earning $60,000 with just one kid in school. Why? Because the cost is spread thinner. The formula assumes you can’t pay the same amount for two degrees as you can for one.

Also, where you live matters. A $70,000 income goes much further in rural Mississippi than it does in San Francisco. FAFSA’s formula accounts for cost of living differences, even if you don’t realize it.

What Gets Counted - and What Doesn’t

Not all money is treated the same. Your income from a job? Yes, that counts. But retirement savings in a 401(k) or IRA? No. The equity in your primary home? Not counted. Your car? Not counted. Even your child’s 529 plan - if it’s owned by the parent - only counts as a small percentage of its value.

Here’s what actually moves the needle:

• Wages, salaries, bonuses
• Taxable interest and dividends
• Business or farm income
• Unemployment benefits
• Non-taxable Social Security payments (sometimes)
• Parental assets (cash, savings, investments - but not home equity)

Let’s say you earn $70,000, have $10,000 in savings, and no other assets. Your EFC might be around $8,000 to $10,000. That means if your child goes to a $30,000-a-year public university, they could get up to $20,000 in aid - including grants, work-study, and loans.

Grants vs. Loans - The Real Difference

Just because you get aid doesn’t mean it’s all free money. FAFSA determines eligibility for three types of help:

1. Grants - money you don’t repay (like Pell Grants)
2. Work-study - part-time jobs on campus
3. Loans - money you must pay back (Federal Direct Loans)

At $70,000, you’re unlikely to get a Pell Grant - those are mostly for families under $50,000. But you can still get other grants from states or schools. And you’ll almost certainly qualify for federal student loans. The Direct Subsidized Loan, which doesn’t accrue interest while your child is in school, is available to students with demonstrated need - and that need is calculated based on the full formula, not just income.

Many families panic when they see they’re eligible for loans. But loans aren’t a punishment. They’re a tool. The federal government offers better rates, flexible repayment plans, and forgiveness options that private lenders don’t touch. Choosing not to take a federal loan because you think $70,000 is "too much" could cost your child more in the long run.

What Happens If You Don’t Apply?

Here’s the hard truth: if you don’t file FAFSA, you get zero federal aid. Not a dime. Not even a loan. Many families at $70,000 skip FAFSA because they assume they’re "too rich." But that’s like turning down a discount coupon because you think you can afford full price.

Some schools - especially private ones - use FAFSA to give out their own scholarships. You might not realize your dream school offers need-based aid until you file. At some colleges, families earning up to $120,000 get full tuition grants.

One parent I spoke with earned $75,000 and didn’t file FAFSA. Her daughter ended up taking out $45,000 in private loans at 8% interest. If she’d filed, she would’ve qualified for $28,000 in federal aid - $15,000 of it in grants. That’s $15,000 saved. Just by filling out a form.

Common Mistakes That Cost Families Money

Even when families file FAFSA, they often mess up the details. Here are the top three errors:

• Reporting assets in the wrong place - Putting a 529 plan in the student’s name instead of the parent’s can double its impact on aid eligibility.
• Waiting until the last minute - Some aid is first-come, first-served. File as soon as possible after October 1.
• Not using the IRS Data Retrieval Tool - Manually entering income leads to mistakes. The IRS tool pulls your tax data automatically and cuts errors by 70%.

Also, don’t assume your state’s deadline is the same as the federal one. Some states have earlier deadlines. California, for example, requires FAFSA by March 2. Miss it, and you lose state grants - even if you qualify federally.

What to Do If You Earn ,000

Here’s your simple action plan:

1. File FAFSA as soon as possible after October 1, 2025.
2. Use the IRS Data Retrieval Tool - no manual entry.
3. Don’t skip questions about siblings in college - even if they’re not going this year, if they’ll be enrolled next year, include them.
4. Check your Student Aid Report (SAR) for errors - you’ll get it in 3-5 days.
5. Contact the financial aid office at each school your child is applying to. Ask: "What kind of institutional aid do you offer families earning $70,000?"

And here’s one last thing: don’t compare your situation to someone else’s. Two families with the same income can get wildly different aid packages. One might own a home outright. The other might rent. One has two kids in college. The other doesn’t. FAFSA sees all of that.

Bottom Line

$70,000 isn’t too much for FAFSA. It’s not even close to the cutoff. It’s a common income level - and millions of families at that level get real, meaningful aid every year. The question isn’t whether you earn too much. It’s whether you’ve done everything you can to get the help you’re eligible for.

FAFSA isn’t about being poor. It’s about being smart. File it. Don’t guess. Don’t assume. Just do it. Your child’s future tuition bill will thank you.

If you’re unsure where to start, use the FAFSA4caster tool on the official studentaid.gov website. It gives you a rough estimate of your aid before you file. It takes less than 15 minutes. And it could save your family tens of thousands of dollars.