By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.
The Expected Family Contribution (EFC) no longer exists. Since the 2024-25 FAFSA it has been replaced by the Student Aid Index (SAI), which you calculate by taking parent income, subtracting a short list of allowances, adding 12% of countable parent assets, and running the result through a table whose top rate is 47%. For a two-parent W-2 household earning $750,000 or more, that math produces an SAI in the hundreds of thousands of dollars, well above any college’s annual cost, so federal need-based aid is effectively off the table.
That is not a reason to ignore the formula. It tells you which accounts count, which do not, and why the real college decisions for this family are about tax-efficient saving and merit aid, not about qualifying for need.
EFC vs. SAI: what changed and what College Board’s number means
Two different systems produce a “family contribution” number, and families often mix them up.
- The federal SAI. Calculated from the FAFSA using a formula published each year by the Department of Education. For 2026-27 it can range from -1,500 up to 999,999 (2026-27 SAI and Pell Grant Eligibility Guide). It decides federal aid such as Pell Grants and subsidized loans, and many public universities use it for their own grants too.
- The College Board number. Searches for a “College Board EFC” usually lead to the CSS Profile, College Board’s separate application used by participating colleges to award their own, nonfederal money (CSS Profile). Each college applies its own institutional rules, and those rules can count things the FAFSA ignores. The Profile is free for families earning up to $100,000 a year; above that, most families pay a fee.
Neither number is a bill. The SAI is an index that colleges subtract from their cost of attendance to measure need. What you actually pay depends on each school’s price and its aid policy. If you want to know how that price is built, see how cost of attendance is determined.
How the 2026-27 SAI is calculated for a two-parent household
For a dependent student with married parents (Formula A in the federal guide), the parent side works in five steps:
- Start with income from two years earlier. The 2026-27 FAFSA uses 2024 tax information (FSA Handbook 2026-27, Chapter 3). Under current rules, a child starting college in fall 2038 would be assessed on 2036 income.
- Subtract allowances. Federal income tax paid, a payroll tax allowance, an income protection allowance ($44,880 for a family of four in 2026-27) and an employment expense allowance (the lesser of 35% of combined income or $5,000). There is no line for state income tax, so a California family’s state tax does not reduce its SAI.
- Add 12% of countable net worth. Cash, brokerage accounts, investment real estate and parent-owned 529s for the student being assessed count. The handbook says 529s designated for the family’s other children are not included. The asset protection allowance for parents is $0 at every age in 2026-27, so the 12% applies from the first dollar.
- Apply Table A5. Adjusted available income above $43,900 is assessed at 47%, on top of $11,870 for the first $43,900.
- Add the student’s share. 50% of the student’s available income and 20% of the student’s own assets.
Two exclusions matter a lot for this reader. Retirement accounts (401(k), IRA, pensions) are not reported, and neither is the family’s primary home (FSA Handbook 2026-27, Chapter 2). Also, the number of children in college at the same time is no longer used in the SAI calculation, which removed the old discount families got for overlapping tuition years.
Worked example: a $900,000 household in California
Assumptions (illustrative, not a forecast): two W-2 parents in the Bay Area, married filing jointly, two children, family of four. 2024 wages of $900,000 ($600,000 and $300,000, including RSU vests), with adjusted gross income assumed equal to wages for simplicity. Federal income tax paid of $230,000 (an assumed figure for this example). $100,000 in cash, $400,000 in a joint brokerage account, $250,000 in parent-owned 529s ($125,000 for each child), $1,200,000 in 401(k)s and IRAs, and a home with substantial equity. The child being assessed has a $30,000 UTMA account and no earnings.
| Step | Amount |
|---|---|
| Parent income (AGI, assumed equal to wages) | $900,000 |
| Less federal income tax paid (assumed) | -$230,000 |
| Less payroll tax allowance: Social Security (6.2% of $337,200 MFJ cap for 2024) plus Medicare (1.45% of first $250,000, 2.35% above) | -$20,906 and -$18,900 |
| Less income protection allowance (family of four) | -$44,880 |
| Less employment expense allowance | -$5,000 |
| Parents’ available income | $580,314 |
| Plus 12% of $625,000 countable assets (cash, brokerage, this child’s $125,000 529; sibling’s 529, retirement and home excluded) | +$75,000 |
| Adjusted available income | $655,314 |
| Parents’ contribution: $11,870 + 47% of ($655,314 – $43,900) | about $299,235 |
| Student contribution from assets: 20% of $30,000 UTMA | +$6,000 |
| Estimated SAI | about $305,235 |
The result is several times the annual cost at any US college, public or private. Even with zero countable assets, income alone would still keep the SAI far above cost. The same is true for a Washington family at this income: Washington has no individual income tax in 2026 (a 9.9% tax on income over $1 million is scheduled from 2028, per the Washington Department of Revenue), but the FAFSA formula gives no credit for state tax either way, so the outcome is essentially the same.
What the SAI means for your decisions today
With children under 12, the useful questions are not “how do we lower our SAI” but these:
- Do not distort your finances for aid you will not get. Deferring an RSU sale, skipping a Roth conversion or keeping cash in odd places to shave the SAI rarely changes anything at this income level. Tax and investment logic should drive those choices.
- Pick the right account for college money. A parent-owned 529 counts among parent assets, assessed at up to 12%, while money in the child’s own name (a UTMA or UGMA) is assessed at 20%. At your income that difference will not create need-based aid, but the 529’s tax treatment still makes it the better default for education money. See 529 plans vs. custodial accounts.
- Grandparent 529s are not reported. The handbook says a 529 where the student is the beneficiary but not the owner is not reported as a student asset, and accounts owned by others are not parent assets either. If grandparents want to help, their own 529 is a clean way to do it. For 2026, each donor can front-load up to $95,000 per beneficiary with the five-year gift election (5 x the $19,000 annual exclusion, reported on Form 709; IRS Form 709 instructions). More in our note on superfunding a 529.
- Merit aid is the realistic discount. Many private colleges and out-of-state public universities offer merit scholarships regardless of income. That is a choice about which schools to consider, made years from now, not an account structure you set up today.
- Run the net price calculator anyway. Some CSS Profile colleges have unusual policies. Checking takes minutes once your child has a list, and it confirms the budget you are planning around.
Common mistakes high-earning parents make with EFC and SAI
- Using an old EFC calculator. Formulas from before 2024-25 split contributions across siblings in college and used different asset rules. Results will be wrong.
- Assuming the SAI is what you will pay. It is an index, not a price. A school costing less than your SAI simply means no need-based aid there.
- Reporting retirement accounts or home equity on the FAFSA. They are excluded. (A CSS Profile college may ask about home equity; that is its own rule.)
- Putting large sums in a UTMA “for college”. Besides the 20% assessment, the child gets legal control at the age your state sets, typically 18 or 21 in California and Washington, and investment income above $2,700 for 2026 is taxed at the parents’ rate under the kiddie tax.
What to write down for your kids
Because aid will not do the work, the family’s own plan does. A one-page note can record what the college budget is, which accounts pay for it, what you expect your children to contribute (a summer job, a scholarship search, a share of costs above a set amount), and why. Children who understand how the bill is being paid make better choices about schools, majors and debt. Conversations fade. Documentation compounds. Our Age Five Wealth Education work helps parents turn that thinking into something their kids can read.
FAQ
Can we still file the FAFSA if we earn $900,000?
Yes, and some families should. A few colleges require a FAFSA for merit scholarships, and it is needed for federal Direct Unsubsidized Loans, which are not based on need. Filing takes little time with IRS data sharing. It will not produce a Pell Grant or other need-based federal aid at this income, but it keeps those non-need options open for your child.
Does a large 401(k) balance raise our SAI?
No. Retirement plans such as 401(k)s, IRAs and pensions are not reported as assets on the FAFSA. The formula uses income from two years earlier plus non-retirement assets. Retirement distributions, and deductible IRA, SEP, SIMPLE or Keogh payments, do count as income. So retirement balances sit outside the formula, and college account placement matters less than it seems at this income.
Next step
Look at where your college money sits today (529, UTMA, brokerage) and confirm each dollar is in the account that suits its purpose. If you want a second set of eyes on that alongside your RSU and tax picture, the Tax & Wealth Assessment through our tax management team is the place to start. This is general education, and the right move depends on your family’s full picture.
Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.
Connect on LinkedIn → · About KevinThis is part of how we approach Age Five Wealth Education for high-income W-2 families at Bright Advisers.
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