divorced families please speak up!

Parents Forum
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<p>Sigh… my husband and I have been together for 11 years and we have raised his son from a previous marriage along with three younger sibs we produced together. (Forgive the awkward sound of that, I am dead tired) This eldest child is the guy I’ve been staying up at night worrying about, our 17 yo homeschooled high school senior. DH and I have had some financial setbacks. To be specific, we lost our shirts in 2002 with the dot-com bust and have only started climbing out of the hole this year. I did the quickie calculator on college board (thanks for that tip!) and we were pleased with the reasonable amount of our EFC. Not a pittance, but certainly doable. Now here’s the rub, son’s bio mom has just revealed that she has a 30 k college fund set up in his name. How will this affect our EFC? I imagine that it will throw her earnings into consideration as well as that nice lump sum, and then OUR EFC will likely jump through the roof. SHE is worried that he’ll get a full ride and her money will sit unused or that she will be forced to pay a steep penalty. <em>I</em> am just wondering why the heck she never told us about this sooner, and how much more money will now be expected to come out of our pockets. Am I nuts to be upset about this? </p>

<p>Please explain if you know how this 2 family situation plays out financially. </p>

<p>thank you so much-</p>

<p>Rellie</p>

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<p>I believe they lowered the amount that the student is expected to contribute- so while he will still be expected to contribute a significant portion each year, it shouldn’t affect the parent efc
however- I believe private schools that use the PROFILE will need both the custodial parents financial information as well as non custodial parents</p>

<p>and of course schools may also have their own finaid forms that cover anything the PROFILE or FAFSA may have left out! ;)</p>

<p><a href=“http://www.collegeconfidential.com/dean/archives/000231.htm[/url]”>http://www.collegeconfidential.com/dean/archives/000231.htm&lt;/a&gt;&lt;/p&gt;

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<p>Since the 30K is in his name, it’ll affect the amount he’s expected to pay which is more significant than the EFC. On the bright side - this is what the money’s for.</p>

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<p>ummm…yeah. I think it’s nuts to be upset when the mom is contributing 30K to his education.</p>

<p>Why would she fear a penalty? If it’s a 529 & the son doesn’t spend it, I believe it can just sit there for grad school or be passed on to his siblings or his own kids for their education.</p>

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<p>I think you and your S are incredibly lucky to have $30,000 to use for his college education. IMO it’s far better to be able to rely on one’s own money than to hope for the best from colleges. While $30,000 would not pay for one year of an expensive private college, it would pay for more than a year at many public colleges, and that’s something to rejoice in.</p>

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<p>Rellie–does the mom have the money in her name or in his name? Who is custodial? </p>

<p>In general, any money in the kid’s name won’t impact the PARENTAL contribution; it will be that the kid will be expected to contribute more. Assets in kids’ names are fair game; when you think about it that’s fair; a dependent child with no obligations and a lifetime ahead of them; what else do they have to spend the money on?</p>

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<p>We set aside money for our kids education in their names and are spending it now which is what we had planned the money for. My sister has money in her daughter’s name and keeps asking me how she can “hide” the money. MAKES ME CRAZY. This kids bio mom but the money away for him to use for college. Use it to pay for the first year. That is what the money is for. After that, your FAFSA will change as you won’t have those funds listed in the student’s assets.</p>

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<p>Were you not including the bio mother’s income in your EFC? You have to provide her information as well as yours. My friend had to get her ex-husband’s tax return and enter the information on the FAFSA, even though he refused to contribute to their son’s college education. The financial aid places said they would not work on her son’s file at all without the father’s financial info–it would just be set aside as incomplete.</p>

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<p>That is not true, wackymother. The FAFSA should only have the income of the custodial parent’s household included. Colleges using CSS Profile require that the noncustodial parent fill out a separate form – however, that form is submitted separately and is kept confidential so that the custodial family does not have access to it.</p>

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<p>Thanks to all for the feedback. We did the EFC calculation based upon our six person one income family, though we did list bio mom’s very modest child support payment under “other income”. She has not contributed a lot over the years and I was astonished to hear that she has so much set aside. Apparently, she is still smarting (oops, excuse the pun) over her own experience of getting into MIT but not attending due to lack of finances. Thus the squirreled away assets. To the best of my knowledge, they are in a college fund earmarked for son’s use. </p>

<p>I don’t mean to look a gift horse in the mouth, but a higher EFC for us would be very challenging. I had not expected anything from bio mom, as she has not always been gainfully employed over the years, and she lives very frugally. It simply didn’t seem relevant to consider her income. She tells us now that her (self-owned) company is profitable this year for the first time. I don’t know enough about the whole process to comment wisely, and I appreciate the replies on this.</p>

<p>Rellie</p>

<p>I</p>

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<p>Calmom, my friend had joint custody with her ex. But maybe it was the CSS she was filling out rather than the FAFSA. Sorry for the mistake.</p>

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<p>Rellie, the funds that the mom has saved are not going to result in a higher EFC for you, but her income might effect aid eligibility at CSS Profile schools. If the funds are in your step-son’s name, then they will increase EFC by a percentage of those funds, but you are expected to withdraw that amount FROM those funds. </p>

<p>Try using a calculator at <a href=“http://www.finaid.org%5B/url%5D”>www.finaid.org</a> - enter in your data without those numbers, then redo the calculation and enter in the $30,000 as a student asset. You will see that the amount of the student contribution goes up. (It used to be +35% of the assets, but I think FAFSA methodology has changed so it is less, maybe 25%). So lets say that without the $30,000 your EFC is $8,000, of which $1000 is supposed to come from your stepson’s earnings and savings, and $7000 from you and your husband. Now you add $30K in his name, and let’s assume that EFC now increases by $7500 – so now the total EFC is $15,500 – BUT you are still supposed to contribute the same $7000 – only now the student contribution goes up to $8500. </p>

<p>The only difference is that your stepson has to withdraw money from an account he never new existed to pay part of his own college costs.</p>

<p>However – it may be that the situation is better than that, depending on the type of account his mom set up. If she has been contributing to a “529” account, then the assets will be counted less… and if she has the account in her name, but has merely been holding it “for” her son… then it will be treated as her asset, not his. So now is a good time to sit down with her and get the exact details as to the finances. </p>

<p>No matter how you look at it, you are better off than you were before. For one thing, there is absolutly no guarantee that your son’s college is going to give enough financial aid to meet EFC – so you now have cash to fill in a gap. Secondly, if you do the math, you will see that even though EFC goes up as income and assets increase, there is always a net gain for a family that has more money and assets. So you are bettter off with $30K in the bank and a higher EFC than without that money. </p>

<p>Think of it this way: how would you feel if you learned that your stepson had been awarded a $30,000 scholarship to attend college? That’s what he has – only the “scholarship” is sponsored by his mother.</p>

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<p>Think of it this way: how would you feel if you learned that your stepson had been awarded a $30,000 scholarship to attend college? That’s what he has – only the “scholarship” is sponsored by his mother.</p>

<p>Excellent point- and wouldn’t a $30,000 scholarship be thrilling!</p>