dad makes 65k, mom doesnt work, 5 kids, 2 in college, how much finaid should i expect

thecalccobra · 02-17-2008, 12:46 PM

he's paying 20k/year total for my two sisters who are in college

tphssenior · 02-17-2008, 06:04 PM

To get a good estimate, try the EFC calculator at:

FinAid | Calculators | Expected Family Contribution (EFC) and Financial Aid

Columbia_Student · 02-17-2008, 11:38 PM

If he files 1040EZ, college is free.

swimcatsmom · 02-18-2008, 12:00 AM

^^^^^ not true

Hemp · 02-18-2008, 08:33 AM

As a 3rd student, your folks' EFC per student will be one-third of the original EFC. In effect, your folks will end up paying - very roughly, not knowing all your financial circumstances - a little more than what they are paying now. That's a VERY rough guess because you didn't indicate the value of family assets and incomes of siblings.

JustAMomOf4 · 02-18-2008, 08:40 AM

Even though the EFC for will be lower for the two older children - don't expect a big change in the financial aid package.
If the two older kids now get a need based grant - don't expect that to change much. IMO he can expect to continue to pay what he is paying now for the two older kids.

EFC and what you are expected to pay often are not very close numbers.

Columbia_Student · 02-18-2008, 01:53 PM

1040EZ

Quote:

Before we begin discussing the components of taxable income, it is important to understand that even the decision as to which tax form to file (1040 long form vs. the 1040EZ or the 1040A) can have a significant impact on your eligibility for financial aid.

Not All Tax Returns Are Created Equal
By filing one of the short forms, and meeting certain other requirements, you may be able to have all of your assets excluded from the federal financial aid formulas, which could qualify you for increased federal aid. This is a relatively new middle class financial aid loophole known as the "Simplified Needs Test." Here's the way it works: If the parents have adjusted gross income below $50,000, have income earned from work (i.e. wages reported on a W-2) below $50,000, and everyone in your family who must file a tax return uses the 1040EZ or the 1040A form (or doesn't file at all) then all your family's assets will be excluded from the federal financial aid formulas. This means that eligibility for the Pell Grant and the subsidized Stafford loans will be determined without regard to how much money you have in the bank or your brokerage accounts.

It can also be vital to parents with large assets, but little real earned income. You can have $49,999 of interest income, and still possibly meet the simplified needs test -- in which case even assets of several million dollars will not be used in calculating your EFC. This can be particularly vital to parents with income below $40,000 but who have significant assets because they now may be able to qualify for the Pell Grant, which is free money that does not have to be paid back. Of course, many colleges use the institutional methodology (which does not utilize the simplified needs test) in awarding their own grant money. They may also insist that assets be used to determine eligibility for certain federally funded campus-based aid programsÑsuch as the SEOG grant, Perkins loan, and work-study.

However, if you meet the simplified needs test, they cannot use the family assets in determining eligibility for the Pell Grant and subsidized Stafford loans. If you arenÕt sure if you can use the short tax forms, consult the IRS instructions to the forms, or your tax preparer. A few examples of people who can't use the short form: a self-employed individual, a partner in a partnership, a shareholder in an S corporation, a beneficiary of an estate or trust. In addition, if you had rental or royalty income and expenses, had farm income and expenses, took certain types of capital gains or losses, or itemized deductions, you will have to file the long form.

10 characters

jbrown · 02-18-2008, 02:14 PM

where did you get the above info?
Thanks!

thumper1 · 02-18-2008, 02:18 PM

>>In effect, your folks will end up paying - very roughly, not knowing all your financial circumstances - a little more than what they are paying now. >>

Not necessarily. It all depends on where this student enrolls in college. MANY colleges do not meet full need...in fact MOST colleges do not meet full need. This student could be attending a college where 25% of need is met...or she could be attending a school where 100% of need is met.

Columbia_Student · 02-18-2008, 03:52 PM

Financial Aid and Your Income Tax Return

From the above link. But I also read books that mentioned similar thing.

hsmomstef · 02-18-2008, 11:48 PM

columbia student -- the problem with your information is that the family has to file a 1040EZ or 1040A AND have an earned income of less than $50,000. the original poster stated that her father made 65,000 a year, so this won't apply to her situation.

Additionally -- the simplified needs test does not mean that college is free. What it means is that assets are excluded from the calculation of the EFC.

Finally -- students need to understand two other important points: not all school meet 100% of demonstrated need AND many school require the Profile, which calculates the EFC differently.

dt123 · 02-19-2008, 03:21 AM

Just for the record, the requirement re tax returns is that the parents not be required to file a 1040. They can file any form they want, 1040, 1040A or 1040EZ. The simplified EFC formula kicks in if, among other things, it was -possible- they could file the 1040A or 1040EZ, even if they actually used a 1040.

Columbia_Student · 02-19-2008, 02:02 PM

Quote:

AND have an earned income of less than $50,000. the original poster stated that her father made 65,000 a year, so this won't apply to her situation.

I don't know this family's specific, but sometimes 401K contribution can reduce your actual earned income from $65K to $50K. I think this year if you are 50+ you can contribute more than $20K+.

emeraldkity4 · 02-19-2008, 02:07 PM

I was just thinking- dad makes 65K ( before taxes I am assuming)
5 kids- two in college
I wouldn't say this mom "doesn't work" but I think she should write a book on how she does it!

hsmomstef · 02-19-2008, 02:09 PM

be realistic -- even if a 401K contribution can decrease earned income (and I am not sure that it does), that is simply not a solution for this family nor any other family in a similiar situation. Family of 5 with an income of $65,000 -- paying $20,000 for college for two kids (which tells me at least one college is gapping). after taxes, they are barely making ends meet -- they could hardly afford to pay $15,000 into a 401K.

Plus -- money that is contributed into a retirement account is added back into the available income for both FAFSA and Profile. Assets in retirement accounts are protected, but not current income used to fund them.

the rules are very specific and can be hard to interpret -- but I can tell you that most of the loopholes were closed many years ago.