To determine the Estimated Annual Income, the Review Team will first verify the accuracy of the parent’s employment by inspecting the provided paystubs.  The highest gross income amount is used, excluding overtime and bonuses, and multiply it by the parent’s pay period to determine an annual estimate.  If the parent’s estimate exceeds the Review Team’s findings, the parent’s estimate is used in the calculation (to account for bonuses, overtime, potential raises or promotions, etc.).  If the parent is self-employed, the previous year’s net income will be used in the calculation, unless the parent enters a higher estimate for this amount, in which case the parent's estimate will be used.  Furthermore, any Monthly Income (child support, alimony, social security, etc.) or Other Annual Income (unemployment, disability) are also verified by the Review Team for accuracy.  These fields combine to find the Total Household Income.

Next, living expenses are considered: Housing Expenses (rent, mortgage, utilities, etc.), Daycare/Elderly Expenses, Alimony/Child Support Expenses, Medical Expenses, and Charity Contributions.  The allowed amounts are added to find the Reported Annual Deductions - Allowed.  Then, the calculation will approximate additional living expenses, based on several factors such as US Region, household size, and Adjusted Gross Income as found on the submitted Federal Tax Returns.  These deductions include Subsistence Allowance, Health/Dental Insurance Deduction, Employment Expenses, Interest on Household Debt, State Income and Sales Tax, and FICA Tax.  The sum of these approximated living expenses are referred to as the Calculated Annual Deductions.

Thirdly, the calculation considers the assets.  The Gross Assets comprise of all the assets that were entered into the application, in addition to any potential business assets the Review Team discovered while examining the supporting documents.  Next, parent-entered debts are subtracted to determine the Net Assets, and the proprietary formula then assigns a weight to each category of assets (Current Assets, Recreational and Vehicles, Other Real Estate, Business Equity, Household Owner, and Retirement Plan); the sum of which can be found under the Weighted Assets.  The Retirement Allowance is then subtracted (which represents how much the family “should” have saved for retirement) to determine the Net Weighted Assets, and 35% of this amount becomes the Total Available Capital.

Finally, the Total Household Income is added to any Total Available Capital, and the Reported Annual Deductions - Allowed and Calculated Annual Deductions are subtracted to determine the Household Refined Income (HRI).  The HRI is then put through a tiered calculation to determine how much the Family should be able to afford towards the tuition expense, or the Household Contribution to Education (HCE).  The best visual representation of this formula can be found on the Family Report.