ewoods

My wife and I have a son who will be a senior next year. He is #1 in his class and did very well on his 1st SAT(1250 Math and English). We make $85K a year and have 2 younger children(2 and 5) at home. We have no debt and own our home. My question is at this point we have saved $30k for college and I am not sure wher the best place to put cash is before I fill out the FAFSA. It is currently in regular savings account. Are there any other tips to minimize our expected contribution?

cptofthehouse

Are your total savings $30K or is that $30K earmarked specifically for college in addition to other savings?

My suggestion is for you to complete a FAFSA calculator and get some idea what your family EFC is. Then complete some NPCs for some colleges that your son might be considering, understanding that the number you get is an average, and where you son stands in terms of test scores for each schools could change those numbers drastically, unless the school is one that has no merit money and guarantees to meet 100% of need.

Just as rough estimate, you are likely to have an EFC of about $20K--just a guess here. Your son is not going to qualify for any PELL money. He will be allowed to borrow $55oo in Staffords for freshman year pretty much automatically.

When you fill out the FAFSA or other financial aid apps,make sure you pick a day when it isn't pay day or when your accounts are artificially inflated with earmarked funds because you can't switch days and explaining the extra money doesn't go over well. Also, if you son has money in his name/ssn, it's a good idea for him to start paying you for his expenses and you can add it to an account in your name and ssn for payment of his expenses. ANy assets HE has will be automatically hit 20% directly to EFC. In parent's names, there is a protection allowance and anything over that will usually be hit at 5.6%, a big difference.

Schools that use FAFSA alone do not tend to meet 100% of need, So when you look at schools, keep that in mind. The closer your son's numbers are to the top range of test scores, the better the chances are for him to get close to full need met and merit award consideration.

Those schools that guarantee to meet full need often use PROFILE or their own application and they tend to also include some home equity figures and may come up with a bigger figure.

Find a school or two that you know your son can gain admittance and that you know you can afford, and then you can take some chances on what other schools might give in financial aid and awards to make it affordable for you.

vballmom

Assuming the $30K in savings is in your name, not your son's, then having it in your regular savings account is just as good a place as any. You could transfer it to a 529 but that limits your flexibility if you need the cash for any other reason. Presumably you've got other cash saved for emergency purposes. If you have no other savings, about half of the $30K will fall under your asset protection allowance, so the net contribution of your college fund will be about $840 ($15K * 5.6%).

FinAid | Financial Aid Applications | Maximizing Your Aid Eligibility

cptofthehouse

This is a post I wrote about my husband's cousin whose son is now in college.How Families Sometimes Do It

IT gives you some idea how it worked out for one family.