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Change in income half-way through college

Techno13Techno13 96 replies4 threadsRegistered User Junior Member
Hello-- I have three kids who will be entering college in the next few years. My oldest will initially not be eligible for any need-based aid. Really, I am 100% confident, zero finaid. By her junior year we plan to retire, and will simultaneously be sending her two younger siblings off to college. Our income will go down a LOT though we will have significant savings-- likely would qualify for some aid. Would any school who gives her initially zero offer her some later? Would she need to apply year one just to be denied or wait and apply later? Or is our best bet just to have the younger two apply and not bother with the oldest? She is only looking at private colleges most of which meet 100% need.
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Replies to: Change in income half-way through college

  • BelknapPointBelknapPoint 4408 replies16 threadsRegistered User Senior Member
    The biggest question will be, why are you retiring? If you are retiring because you can and you want to, and not because you have too, I think most schools will decline to take another look at your daughter's financial aid prospects in her junior year based on your decreased income.
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  • Techno13Techno13 96 replies4 threadsRegistered User Junior Member
    How about because we will be old, tired, and maxed out our pensions? Many people never work (by choice) and their kids get financial aid. I really just want to know how the financial aid systems work. Is everything set year 1 or is there a new need assessment done annually?
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  • sybbie719sybbie719 20718 replies1996 threadsSuper Moderator Super Moderator
    By the time your daughter is a junior, the school will use your income from freshman year to determine her aid, for senior year, the. School will look at your income her sophomore year. Unfortunately unless your other kids are in college it is most likely you will get aid while kid 1 is in college. One of the things you need to think about now is how you are going to fund 4 years.

    Well there be any year that you will have 2 or all 3 of your kids in college at the same time.
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  • thumper1thumper1 74205 replies3245 threadsRegistered User Senior Member
    edited September 11
    @Techno13
    Financial aid is applied for annually. There are a few colleges where your net cost is locked in for four years (IIRC, Northeastern is one. Ohio University is another). But in most cases...you apply every year.

    ***this is an important edit. Remember...for financial aid purposes, prior prior year income is used On the financial aid forms. So...if you retire her junior year...the income from her freshman calendar year will be used for her junior year financial aid forms, and the income from her sophomore calendar year will be used on her senior year forms.

    And those two younger sibs will be using income from the years you were working for the first two years they are in college.

    Example...for student starting college fall 2020, the tax year 2018 is what is used on the 2020-2021 FAFSA form.

    Whether you see an increase in aid will totally depend on the college.

    1. There are a very small number of colleges where you do need to apply as an incoming freshman or there are restrictions in subsequent years. So....check the schools your oldest child Is applying to and see.

    2. The vast majority of colleges do not meet full need for all accepted students. It your kid attends a college that doesn’t meet full need for all, its possible there could be no increase in need based aid anyway.

    Sample of one...our oldest went to a private university where full need was not met. He did receive a $10,000 merit award. Our family contribution at the time was $44,000 which exceeded the cost of attendance back in 2003. When our younger child enrolled in college, kid one had a calculated family contribution of $22,000. And the cost of the college had increased a lot. We submitted FAFSA and Profile and his aid increased by...$250. So...don’t count on a huge increase at most schools.

    3. If kid one goes to a college that guarantees to meet full need for all students, then when your younger kids are in college at the same time as that older student, you would likely see an increase in aid. BUT I can’t say that with certainty, because I don’t know your pension and SS amounts, and the value of your assets. It’s very possible that you have too much anyway to qualify for need based aid.

    Here is my suggestion. I think your kids, all of them, need to look for colleges where they would garner significant merit aid. Merit aid doesn’t take your income or assets into consideration at all. Is this something that your family has considered? Your older child wouldn’t cost as much the first year...or in subsequent years. And your younger kids could benefit from merit aid as well. It would be a win win for everyone, and you wouldn’t need to worry about how your income affects college costs.

    I was ready to retire also, and had maxed the amount for my pension in dollar amounts. BUT I chose to work for one year after my youngest graduated from college. Then I retired.

    Of course it’s your choice to retire when your first kid is part way through college and you have two additional kids in college...but depending on the colleges, you might not see need based aid sufficient to cover their costs.

    ETA..if you also have maxed out college savings for your kids, then ignore the above.

    edited September 11
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  • BelknapPointBelknapPoint 4408 replies16 threadsRegistered User Senior Member
    edited September 11
    How about because we will be old, tired, and maxed out our pensions? Many people never work (by choice) and their kids get financial aid.

    Working (or not) is a choice. Continuing to earn money so your kids have more options in selecting schools (or not) is a choice. But don't expect any school to make up for all of your foregone income because of a choice that you made.

    It's not unheard of for a meets-full-need school to take into account the fact that a parent could be working (and chooses not to) when calculating an EFC for the student. That student may still get institutional need-based aid, but at least some amount of potential income is imputed to the non-working parent, resulting in a higher EFC (and less institutional aid).
    edited September 11
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  • thumper1thumper1 74205 replies3245 threadsRegistered User Senior Member
    Colleges will calculate what they decide your need based aid should be based on the info on your financial aid forms.

    For your first daughter, unless you retire when she is a freshman, you will have your earned incomes on her financial aid forms all four years...because of prior prior tax year usage.

    In your case, there is no likelihood that the colleges would view your loss of income from an elective retirement as a special circumstance. So if your income decreases while your kid is in school...the schools won’t make an adjustment. I think this is what @BelknapPoint means.

    In other words, if you retire and then have less income available (not the income on your financial aid forms), that would be a choice.

    For your younger kids, again..prior prior will be used. If you don’t have that income available once your kids start college, some colleges will consider this a special circumstance...but not likely for an elective retirement. These are usually for things like...job layoffs, death of a parent after the forms were submitted, some kind of huge unreimbursed medical expenses...that sort of thing.
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  • cptofthehousecptofthehouse 29210 replies57 threadsRegistered User Senior Member
    The answer to all of these questions is: it depends. It depends upon the colleges your kids attend. It depends upon how much you make each year and what your assets are.

    How much are you willing and able to pay for your daughter’s college while you are still working? How much do you think you can afford in college costs when you have all 3 in college, and for the two when you expect your daughter to be finished?

    You are sure that while you are working that you qualify for zero financial aid, so your NPCs and EFC are upwards to the $80k a year point What it be at various colleges , say a full need met private school, your state flagship, another school that appears on your kids’ and your lists? I suggest you run some NPCs at expected financial points at various schools with your combination of students. This way you have some hard numbers in various situations.

    If your daughter is starting college in fall of 2020, your 2018 Income will be the main driver of what you will be expected to pay.

    Her second year, 2021-22 Expected contribution will be based primarily on this yesr’s income. So if you decide to retire in 2020, that year’s drop in pay won’t be reflected until the 2022-23 school year, at which point, you expect to have 3 in college.

    Ideally, under that scenario, your kids would get financial aid, if say, they all go to schools that guarantee to meet full need, and your daughter’s college allows for need based aid to be given even if none was applied for freshman year—or you planned for this contingency by applying for aid the first two years even though you knew none was forthcoming..

    Yes, it could all work that way, if all the planets line up just right. All the numbers have to work out too. Run the scenario, using a sample school, using its NPC. Run it for the next 6 years with your kids going to that school.

    You could possibly have an additional year with 3 kids in college if your DD takes a gap year. I’ve known folks who have done that to maximize the years they were eligible for financial aid.

    But be aware, that most schools do NOT guarantee to meet need. They gap. My friend who had a child, then twins a year later, didn’t get more than a bit in subsidized loans and small merit scholarships for her three even with all three in college together, and the FAFSA EFC being more than the combined costs. One was at an OOS public college (that jacked up the OOS premium while she was there), the twins went to Flagship U.


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  • thumper1thumper1 74205 replies3245 threadsRegistered User Senior Member
    edited September 11
    @Techno13

    In June, you wrote this...it was referencing the favorable costs of colleges in your home state of CA.
    Very good price, but she's fortunate that doesn't have to be a consideration.

    Why the change??

    Here is your thread...

    https://talk.collegeconfidential.com/college-search-selection/2145950-help-me-balance-the-apply-to-list-p1.html

    Your daughter has great stats but if cost is a factor even for two years, I don’t see an affordable school on this list. None give auto guaranteed merit aid.

    She has the stats for merit at schools that aren’t quite as elite. Would she open her mind to any other places?
    edited September 11
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  • Techno13Techno13 96 replies4 threadsRegistered User Junior Member
    So yes, we can and are willing to fund 100% COA for all three kids at any school they choose and can get in to. Yes, they will all three be in college for at least 2 years. However, if we can qualify for non-loan aid after we retire we will gladly take it, we have saved well but are not made of money. The prior prior info is new to me, thank you! With that in mind, at best our twins might qualify their junior and senior years then. My oldest would likely never qualify because our income would reflect our working income, which is extremely high. Our jobs are high-stress and exhausting and we have no intention of continuing past age 60 or so.
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  • cptofthehousecptofthehouse 29210 replies57 threadsRegistered User Senior Member
    Well, your oldest very likely would get financial aid when she is one of three in college her junior and senior years, if your financials so indicate AND if the school she chooses has financial aid policies that support it. You have to ask each school in consideration about thst situation.
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  • thumper1thumper1 74205 replies3245 threadsRegistered User Senior Member
    edited September 12
    Your oldest child might get more aid when there are three in college. Might. If the school she attends guarantees to meet full need for all, this could happen. If the school does not meet full need for all, then all bets are off.

    Is the money saved for college in 529 accounts for all three kids...accounts you parents have? If so, keep in mind that the total of all those 529 accounts must be listed as a parent asset on the financial aid application forms.

    Your first student is applying to some $70,000 a year schools. If you can full fund, you have $280,000 just for that student. If you have that amount in 529 times three, you have almost $900,000 in assets just in those accounts. $900,000 in those accounts would add $50,000 to your family contribution...just from those accounts.

    Your retirement income would also be included in the mix...

    How much aid would you realistically get?

    Are you self employed? Do you own real estate in addition to your primary residence? If NO, then run the net price calculators for the colleges of interest using the retirement incomes you project, all of your savings and assets, and the values of all of the 529 accounts. Put in 3 kids in college (as that is hopefully going to be the case when oldest kid is a junior). This would give you a rough estimate...very rough because they update those NPCs annually!

    I read your other threads. Your oldest child has great stats. Any chance she plans to apply to any schools that would give her merit aid?
    edited September 12
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  • cptofthehousecptofthehouse 29210 replies57 threadsRegistered User Senior Member
    Here is the thing: as a general rule, the more money you have available for college, the more. options your students have. You are dealing with THREE teenagers. They are entering young adulthood, a time fraught for all kinds of emotional, behavioral, mental, physical upheavals. All kinds of things happen to them. Having available money can make all of the different in the world in the options you and they might have. Trust me, things don’t always turn out as planned and college is not the highest priority in lifr

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  • Techno13Techno13 96 replies4 threadsRegistered User Junior Member
    Thanks everyone-- yes my kids have 3 fully funded 529s. (enough for undergrad). I have run a few calculators to get an idea and seems like at best $15k/yr grant aid per kid once they are all in college (from a full needs met school). That's nothing to sneeze at and saves some 529 for grad school. I did include the 529s in assets. Since we'll be 60+ the % of asset they expect you to spend on college actually decreases. Yes, I know things can happen-- fingers crossed, they are on good paths so far! My oldest is applying to some schools that have merit but they are very competitive (Smith, Scripps, Macalester maybe) so merit is a long shot; she'll feel fortunate to get accepted at all. I had to make that tradeoff and give up JHU and Duke to attend a local college for merit aid. I have worked hard to ensure my kids do not have to make that trade unless by choice. Thanks for the heads up on 'prior prior'-- that extra years makes a big difference.
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  • cptofthehousecptofthehouse 29210 replies57 threadsRegistered User Senior Member
    I’d run some models using certain school combos and possibilities. You can’t hit them all but it will give you some guideposts. 2018 income is set in stone, 2019 is about 3/4 done. If you are not retiring next year, 2020 is still going to have your pay in the picture, not to mention any possible payouts—watch for those, they can really rock the boat for financial aid.

    So you are possibly lookin at 2023-24 school as the first year without work income if 2021 is the first full calendar year as retirees. Your daughter is going into senior year then, and your other two sophomores.
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  • thumper1thumper1 74205 replies3245 threadsRegistered User Senior Member
    edited September 12
    Since we'll be 60+ the % of asset they expect you to spend on college actually decreases

    That’s the parent asset protection amount. As an FYI, that number drops just about every year. And it’s not a % of assets. It’s a fixed amount based on the age of the oldest parent.

    Read this article...

    https://www.savingforcollege.com/article/the-fafsa-s-asset-protection-allowance-continues-to-crash

    Plus, there is no asset protection allowance at Profile Schools. That asset protection allowance is a FAFSA number.

    Even with your drop in income, your kids will not be eligible for federally funded grant aid. Any aid they receive will be institutional need based aid.

    Your kids are very lucky that they will have the option to attend any college to which they get accepted...even if they don’t receive any need based aid from the colleges.
    edited September 12
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