ReadyToRoll

Would a professional financial aid counselor be a help for a situation in which EFC is very high, but debt is also very high because of a catastrophic medical situation that took place several years ago and is still being paid off (though home equity loan debt...the load was taken out to pay medical and living expenses while a parent caregiver could not work)? Do FA offices even look at special situations, and if so, how does one bring them to their attention?

Are there even such things as professional financial aid counselors?

Thanks.

mom2collegekids

I think that there are a few people on this board like Sybbie and SwimCatsMom (and others) who know so much about the F/A process (some work in F/A) that they could give you very good advice.

Ladies???

swimcatsmom

For FAFSA generally debt is not taken into account for FA purposes. One of the exceptions is when it is because of high medical expenses. You would have to contact the financial aid office of the school and ask for a special circumstances adjustment. You would be expected to provide a lot of documentation supporting the reason for the debt.

If a special circumstances adjustment is approved medical expenses from the base year (2009 for the 2010-2011 FAFSA) can be used to reduce income. We had a special circumstances adjustment for medical expenses and loss of income my daughter's 1st year of college. The school went into her FAFSA and reduced our income to reflect the adjustment (they can do this - you can not). The new numbers went through the EFC formula and produced a new EFC. It is not a $ for $ reduction in the EFC. As far as I can recall the adjustment was for around $15,000 and it reduced her EFC by @ 3,000. This would vary as the higher the income the higher the % of it that goes to the EFC.

I have no experience of an adjustment for debt but I think a medical debt from earlier expenses would be used to offset current reportable assets rather than income. Though if the debt is mortgage debt against the primary home then I don't think any adjustment would be allowed as the primary home is not a reportable asset. I am not an FA officer so ask the FAO at the school.

The financial aid officer at the school has the final say about whether to approve an adjustment or not for their school. And keep in mind that if the EFC is very high an adjustment may not reduce it to a level where much, if any, aid is forthcoming. For federal aid any grant aid requires a very low EFC (<4619 for the Pell for the 2009-2010 school year).

Finaid has a good article on adjustments for medical expenses
FinAid | Professional Judgment | Medical and Dental Expenses

I don't know how schools using CSSprofile would handle this. You would have to ask each school.

Calreader

RtoR - Is the scenario that there is a high income (which produces a high EFC), but a lot of the income is being used to pay an unusually high mortgage, and that mortgage is high because of the old medical expenses?

I wonder if you might have a greater possibility of an adjustment to income from a school that uses the institutional method (PROFILE). The special circumstances for which the federal methodology allows adjustments are carefully defined, and I'm sure someone else will be able to speak up about whether your circumstances fit - I bet not. Schools that use the institutional methodology can be more ad hoc in their analysis, which can work for you if they have deep enough resources and they want to help you.

bluebayou

And don't forget that since you took out a home equity line to pay them, those medical expenses are already figured into your Profile EFC which uses NET home equity.

mom2collegekids

^^^

Good point. Their home equity (an asset to CSS) has already been substantially reduced because of the home equity loan debt.

The only possibility is to explain that your high mortgage is not the result of a "life style choice" to have a super pricey home, but was caused by medical expenses.

Medical expenses (and their associated debt) caused by illness/injury are not considered "life style choices."

hmom5

You need to ask for 'professional judgment' st any school your child is accepted by. Different schools will see it different ways and treat it differently. There should certainly be lots of merit sid schools on your child's list if he's a candidate.

I don't see where a professional would help here and frankly, based on some of the so called professionals who have posted on this board, it's clear to me you'll get better advice from the FA pros who post here.

ReadyToRoll

Thank you for the input. I didn't realize that home equity (or lack thereof) would factor in. Of course, the money being used to pay it back is and will be far greater than the lump sum that is subtracted from the home value due to interest.

I will continue to research options. Thanks for the ongoing help.

elizabethh

I don't mean any disrespect, but I think it's kind of odd that there are people who pay for financial aid advise. Isn't that an oxymoron?

swimcatsmom

Yes, but people at CSSprofile schools also have to pay to apply for financial aid. In general I would think most people can get as good or better advice here for free rather than paying a counselor. Plus some of the counselors are trying to sell people a product (such as annuities etc).

rodney

elizabethh: you would think that, wouldn't you? I think that there are those in the upper middle income bracket who have extenuating circumstances that benefit from these "financial aid pros" that they pay for; apparently they "work" the system when the kid starts HS so that they become eligible for FA....

The only people I know who benefitted from this type of service are those who own their own businesses.....no idea how it works, but they have gotten FA while living in mini-mansions.....

elizabethh

I know a financial aid counselor who never went to college. For that matter, I know a college admissions counselor who never went to college. hmmmm...

Dad_of_3

I'm digesting Rodney's and Elizabethh's comments. I'm curious if you regard people who itemize deductions instead of taking the standard, or have tax sheltered retirement funds as "working the system", with an overtone of being unethical. Does paying a professional to do your taxes or do financial planning become an oxymoron? Just because someone makes more money than the next guy, is he obligated to ignore any means to save money unless he has extenuating circumstances?

Colleges have a right to price their tuition as they feel, so why should the consumer choose to pay the highest amount? Is it wrong for someone to get a buy-one-get-one-free at the supermarket, or not pay sticker price at the auto dealer because he lives in a "mini-mansion"?

Anyway, to the OP, my opinion is more in the direction of if you can tell between a counselor who'll take more money than he saves you versus someone who'll offer to help you only if he saves you more than he charges. I see absolutely nothing wrong in you getting the best deal that you legally can.

elizabethh

I said nothing about "working the system." I just think that for many who need financial aid, it stands to reason that they would be in a situation where money might be a bit tight. There are so many ways to find financial aid, loans, grants, etc just by spending some time on the internet. Having someone do your taxes who is a trained professional in accounting is not the same as having someone gather the same information that you can with some effort and time about financial aid availability. I am really not in a position to make a judgment, as I have no need for financial aid, but I do wonder about all of the "professionals" in the college business who are making a lot of money off of parent's and kid's anxiety - college counselors, financial aid advisors, essay readers, college tour organizers, interview coaches, etc. It seems to me that parents are handing over a lot of the responsibilities of getting their kids into college that possibly they don't want/don't have time/don't know how to do. I speak from experience about college counselors - we used one for our daughter ('08) and wound up firing her because she really gave us no information that we didn't already know.

Sojourner47

A famous quote by Judge Learned Hand (Judge, U. S. Court of Appeals)

"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."

I personally think that the same principle would apply to paying for college. However, it seems that not all college administrators feel the same way...

Below is part of a post from a member of the New Jersey Association of Student Financial Aid Administrators (NJASFAA). Here is the URL for the complete discussion:

"many (financial aid) consultants will teach families, as some have pointed out, how to “beat the system,” usually by manuevering income or assets around to paint what I argue is a deliberately misleading picture of their financial circumstances. I’ve debated this with some consultants, who claim that this practice is no different than itemizing deductions on an income tax return. My argument is that when (I) take my mortgage deduction, no one else has to pay more taxes to make up for it. When a 6-figure income family plays a shell game with their money and lowers their EFC as a result, some other kid who genuinely needs the help is going to get shortchanged. And this is what many consultants point to as their success stories."

Here is the URL for the complete discussion: http://talk.collegeconfidential.com/...1&p=1063427074