how do I avoid divorce settlement from wrecking my sons' chances for financial aid?

cptofthehouse · August 31, 2010, 5:20pm

I am ever so sorry about the turmoil that you and your kids have undergone in the last couple of years. I can understand why buying a house and wanting your kids to go on to college as if things were “normal” are important to you. The realities of college financial aid processes may not take these things into account. As others have mentioned, you can always request for a special circumstances adjustment for your situation. That is never guaranteed, however, and you cannot count on it happening, though including some schools with that possibility is certainly not unrealistic. They would be the “reach” schools. Reach does not just mean getting accepted. It also means the feasibility of paying for the school, the logistics and other factors that make that possibility more remote than other schools.

Regardless of anyone’s situation, the first step in college search that I always recommend is finding a list of schools that will meet your kids needs and wants, are likely to accept your kids, and are affordable. So look nearby and see what schools that you know would fit those criteria. They may not be the ideal choices, but they are a good starting point, because you KNOW they would work out for you. Then start branching out from there adding the “if” factors of admissions, financial aid, merit aid, affordability. Those schools that will work out only if all of the pieces fall into place.

As others have said, it may be a good idea for your oldest to take a gap year so that you get 2 in college at the same time. There are activities that would enhance your student’s resume and be very much"normal" in that many kids are doing this these days.

Also run the numbers through some calculators to see what kind of hit you are taking with the cashing in of your assets. Play around with the calculators to see what kind of difference this would make at the schools you may have in mind. A friend of mine who was in a similar situation as you are found out that it really wasn’t going to make much difference for her. The colleges that her girls liked were going to still cost too much even without that blip year. They did not qualify for PELL grants so there really wasn’t much financial reason to hold off a year for college. This may or may not turn out to be the case for you.

3togo · August 31, 2010, 5:25pm

Let me pile on this and advice thinking about a gap year which has one other HUGE advantage … it removes the large capital gain from the income calculation of your oldest freshman year in college … if your oldest takes a gap year this gain will be in the past and not in consideration as far as income goes (if I understand the timing correctly)

SLUMOM · August 31, 2010, 5:45pm

Gap year & then two in college at the same time is definitely a plus.

Even with the house paid for 100%, there is still an asset allowance available that can be deducted vs. her assets. (the big asset being value of the house). This comes into play with private schools of course, who do consider home equity to be an asset.

Typically what are the assets assessed at for FAFSA only(FM-Federal Methodology) & private/CSS Profile schools, (IM-Institutional Methodology) something like 5.6% after the asset allowance is deducted?

With a lower income reported on the tax return & a gap year, it might work out. 
But even some FAFSA only (FM schools) ask for the non-custodial parent’s income as well. IM schools (use FAFSA & CSS PROFILE or their form similiar to the PROFILE) almost always ask for Non-Custodial parents’ income.

thumper1 · August 31, 2010, 6:06pm

To the OP…PLEASE understand that the above is NOT the case at all schools. It is what happened to the person who posted…but not all schools subscribe to this practice…in fact most don’t (and they shouldn’t …if your EFC goes DOWN…why should the college continue to subsidize your income at a higher rate??). Most schools compute need based aid annually. Your financial need is recomputed EACH YEAR (at most schools) and the need based award your kiddo receives can vary due to changes in your financial situation. Most schools do not continue to give MORE aid if the student does not demonstrate the same level of need.

I think you need to look at a LOT of options…including schools where your son might qualify for significant merit aid (see thread by momfromtexas). A gap year is certainly an option and should not be viewed as “bad”. It might end up being a wonderful gift to your child.

Above all…you need to have a plan to pay for these college costs. Someone will need to pay these bills…and it looks like this coming year, you won’t be eligible for need based aid at most places (from what you’ve posted). That being the case…consider any and all other options that are affordable and something your kiddo will consider doing.

Sadly, sometimes life hands you lemons. You’ve been handed them. It’s your choice whether to make lemonade or not.

mom2collegekids · August 31, 2010, 6:17pm

swimcat…

You’re right…I was thinking of the money as an asset, not as capital gains/income.

Anyway…I’m still concerned that even without the capital gains/income, these kids won’t get the aid that they will need unless they carefully apply to the right schools.

Yes, when both are in school and each child’s EFC is about 2200, then each will get about $3400 in Pell. When you add $3400 in Pell grants to $5500 student loan plus $2000 in work study, that could mean that schools may only give them each about $11k. That’s not enough for tuition, room board, books, etc at most schools.

However, if each child accepted a full tuition scholarship somewhere, then the $11k in grants, student loans, and work-study, along with maybe some summer earnings, could pay for room, board, books, etc.

thumper1 · August 31, 2010, 6:31pm

Maybe…and maybe not…it depends on the school and the award. At some places, if the school awards a scholarship, this will REDUCE the financial need. The student would still get entitled money (like the Pell and the stafford loans) but there is no guarantee they would continue to get additional need based money from the college.

The Pell and the Stafford would cover the tuition costs at most state universities. Yes…the family would have to pay housing/board costs, but $10,000 a year is far less than the total cost including tuition. If the kids are able to live at home (in the house that is fully paid for) and commute, the Pell and Stafford loans would pay most of the cost of tuition at a public university in state.

calmom · August 31, 2010, 7:19pm

I think that’s overly pessimistic. Her son’s ACT composite is substantially higher than my daughter’s was, and my daughter was accepted at more than one 100% need college, and also received fairly generous need-based offers from colleges that do not promise to meet full need. My d. had a better GPA, but a GPA is always going to be weighed in the context of the school attended, and I don’t think a 3.5 unweighted GPA is all that bad.

I think the bigger problem is that 2010 income, on paper, is going to give an unrealistic picture of the family’s ability to pay for college-- that’s why I would encourage focusing on schools that give merit aid.

Another option could be to simply defer college for a year – an Americorps year could be a good option for the older son, as it would provide a great learning experience and a moderate income to help cover living expenses for the post-college year, as well as an educational benefit that could be applied to the following year’s tuition.

mom2collegekids · August 31, 2010, 7:54pm

Calmom…I realize that your D got accepted to a few full need schools with lower stats, but she had that Russian language or similar hook that was very attractive. Also, she was in an application pool of a few years ago, when competition at full need schools was less than it is today. Your child is also a girl and had all-women’s colleges (like Barnard) to accept her.

Right now, it’s harder for a 31 ACT non-URM male to get accepted to a full need school without possessing some hook, or be from an unusual state. From the sounds of it, these students may not have spectacular ECs since the family was distracted by all this chaos of recent years.

I’m not saying it’s impossible, just unlikely

<hr>

My quote…
*if each child accepted a full tuition scholarship somewhere, then the $11k in grants, student loans, and work-study, along with maybe some summer earnings, could pay for room, board, books, etc.

Thumpers response…

Maybe…and maybe not…it depends on the school and the award. At some places, if the school awards a scholarship, this will REDUCE the financial need. The student would still get entitled money (like the Pell and the stafford loans) but there is no guarantee they would continue to get additional need based money from the college.

My response…

I don’t think my calculations include any aid that would be reduced by scholarships. When 2 are in school, their EFC is very low. Pell is an entitlement.

Even with a full tuition scholarship, virtually any school is going to have a COA of at least $15-20k more since schools add about $12k for R&B, $1k for books, and then further pad their COAs with another $2k - 3k for fees, personal expenses, and travel

It would be almost impossible for a full tuition scholarship to cause a reduction in the aid that I proposed…$5500 for fed loans, $3400 Pell, $2000 in work study (about $11k total). Even with the aid I proposed and adding in the low EFC, the student would still likely have a gap according to a padded COA But…it would be a gap that included controllable personal expenses and books that could be covered with a summer job.

Thumper quote…

"The Pell and the Stafford would cover the tuition costs at most state universities. Yes…the family would have to pay housing/board costs, but $10,000 a year is far less than the total cost including tuition. If the kids are able to live at home (in the house that is fully paid for) and commute, the Pell and Stafford loans would pay most of the cost of tuition at a public university in state. *

I agree that if the students commuted and went to a local state school they might be able to cover tuition with Pell and Stafford loans (depending on the state and the school).

However, I don’t understand what you’re saying here…
*The Pell and the Stafford would cover the tuition costs at most state universities. Yes…the family would have to pay housing/board costs, but $10,000 a year is far less than the total cost including tuition. *

Yes, $10k for R&B is less than they’d have to pay at most schools, but it would be better if they could get free tuition somewhere and then their Pell and Stafford loans could go towards Room, board, and books. And, for students who already have Stafford loans and probably work-study, where are they supposed to come up with $10k each?

suddenlysingle · August 31, 2010, 8:05pm

<ol>
<li> Regarding my cashing in securities and purchasing a house for all cash. There was no real choice. I bought the house because I couldn’t afford to rent anymore. </li>
</ol>

When my husband and I separated, I thought it would be short term, and there were very few decent rentals available for less than a year. The boys and I moved into a 3 bedroom apartment on a 6 month lease. Although I had no income, I could show money in the bank and the apartment building accepted my application for a lease.

<pre><code>Instead of being there 6 months, we were there for 2 1/2 years. My rent kept increasing, I couldn’t move to a less expensive rental because I didn’t have a regular income and I went through the money I had paying for lawyers, doctors, furnishings, and food.

I was frightened that I would not have money for rent some day, so I started looked for a house. We live in a very expensive area but moving away would have caused tremendous psychological harm to my high school aged sons. In addition to the destruction of their family, it would have ended all of their friendships and remaining support systems [I obtained professional medical advice about moving]. Additionally, it would have re-started the custody battle since my husband would have tried to keep the boys in our area.

I could not qualify for a mortgage because I have no regular income. I found a house near the high school that was ideal and offered $150,000 less than the list price, all cash with no contingencies. I was lucky to get it. Plus the seller left his furniture so we didn’t have to eat on a card table anymore.

I can assure you, I am not hiding my assets in the house – I had no choice.
</code></pre>

<ol>
<li> I am willing to pay whatever I can for college, and the boys have about $30,000 each in a 529 account [but my husband controls them and I don’t know how accessible they will be]. I cannot obtain a second mortgage or use my house as collateral because I cannot show an income stream that will enable me to pay back the loan. </li>
</ol>

I hope that will change in the future but things are bad because of the economy. I am also having a difficult time getting employment because I am too experienced [and old] and the hiring managers are looking for younger workers. I can’t even get temporary jobs! I even tried to register as a substitute teacher but my school system has too many already. As I said, I am doing consulting and earning a little but not enough to cover our current expenses yet, so covering college is not an option this year any way. I don’t know why, but I still have hope that I will find work.

<ol>
<li>Gap year is also not an option. My oldest son, the senior, has been in the middle of our family’s conflict for 4 years – my husband relies on him as his only friend. My son is depressed and anxious, and desperately needs to participate in college life – that’s what I meant by returning to normalcy. I fear he would spend a gap year still mired in our conflict and without any structure in his life, something he needs in order to do well. He is not interested in participating in a Peace Corps type program – he can’t take anymore sadness, poverty, etc in his life right now. He is not old enough to live on his own, but he needs to move away [not too far away] to start growing up and removing himself from conflict. He already works part time in a bakery – the only one of us with a job. But it would not be helpful to his depression to work there in a gap year situation.</li>
<li>I have nothing against community colleges, but they are not a solution for us right now for the above reasons. </li>
<li>I have 2 degrees from state schools and 1 from a private school – I believe in state schools. I am stunned by the cost of private schools – perhaps if they would stop sending expensive glossy catalogues to every high school student they would be able to reduce their tuition. </li>
<li>We have an excellent state university [Maryland] that my son can probably get into. Unfortunately, I do not believe it is the right place for him. A number of my friends’ and relatives’ children transferred out of Maryland because of its size – they never found their path forward. My son needs a much smaller school. I will encourage him to apply to the smaller state colleges. No need to give me a pep talk about state schools.</li>
<li>There is a private university nearby that is ideal for my son. Small classes, exactly the major he wants, close enough to home but not at home, advisers assigned to students, work internships, etc. But it costs $40,000+ without room and board. That’s crazy! I told my son he has to focus on state schools. </li>
</ol>

But this school really is perfect for him and I wanted to try to figure out how to get private money to add to what we have saved up and what I can contribute. That’s why I wrote to college confidential – I was hoping for guidance on explaining our financial situation and the aberation of 2010.

But now I know, based on the sympethetic and competent advice I received from all of you, that there is no genie in the bottle solution for us. How very sad for my son.

<ol>
<li> One final question. My husband may be able to qualify for social security disability due to mental health issues that prevent him from working. I have been trying to get him to file. Does anyone know if there are college benefits for his children if he does file and obtain benefits? </li>
</ol>

Thanks again for your help. It was surprisingly cathartic to spill out my guts to you.

PS My other son is a high school junior so college is around the corner for him also.

thumper1 · August 31, 2010, 8:09pm

What I’m saying is that the Pell and Stafford loans will cover the cost of tuition at many instate public universities. It’s cheaper to pay JUST for room/board, than to pay for tuition AND room/board as well.

The cost of housing is less than the cost of paying for EVERYTHING.

In some geographic areas, the cost of housing is actually lower. And as I said…if the student lived at home…the Pell (if they qualified) and the Stafford loan would probably pay the tuition costs.

The house is FULLY PAID FOR…they may as well take advantage of that situation.

thumper1 · August 31, 2010, 8:15pm

Please please…don’t allow yourself or your son to fall in love with a school you cannot afford to pay for…and where you won’t be able to get need based aid this year to pay the bills. Please please…look for some other schools that have the same qualities of this school and go from there.

As I mentioned earlier…look for the thread by momfromtexas who found sizable MERIT scholarships for both of her kids…close to or at full rides. The info is old, but valuable. There might be something in that thread to help you.

bthomp1 · August 31, 2010, 8:15pm

The house was $150,000 less than the list price. . . . You must have paid what many on this board consider a lot of money for a house even with the lowered price.

I am on disability and do not know of any programs that give college aid based on disability alone. Some states have programs for children whose parent’s disability is related to military service, if that applies.

I don’t see how you can prejudge UMCP based on the experience of some of the people you know. Really, it couldn’t be all bad there.

sk8rmom · August 31, 2010, 8:37pm

Doesn’t MD have a public LAC? If not, have you investigated other states that may have similar schools but give him substantial scholarships? If you’re committed to sending him next year to a residential college, scholarships are going to be crucial.

There are no SSDI benefits at all for dependents once they turn 18, unless they too are disabled or still in high school. SSDI is not easy to get and if your ex has not even applied yet then it’s unlikely that benefits will be paid before your older son graduates.

psych_2 · August 31, 2010, 8:43pm

St. Mary’s College of Maryland is the public LAC.Tuition is about $11,000 in state; total COA is in the $23,000-$24,000 range. It looks like the OP’s son may qualify for some merit aid there. [St</a>. Mary’s College of Maryland - Costs & Aid - Financial Aid - Types of Aid](<a href=“http://www.smcm.edu/admissions/costs/financial/costs_fin_types.html]St”>http://www.smcm.edu/admissions/costs/financial/costs_fin_types.html)

OP: It sounds like you and your family have gone through some really tough times in the past few years. My sympathies. hugs

notrichenough · August 31, 2010, 8:55pm

There are public schools that will give substantial merit aid if your senior can get his test scores up a little.

For example, if he can get is ACT up to 32 (or get a 1400 M/CR SAT) he can get free tuition at U of Alabama. His current test scores and GPA would get him a scholarship worth 2/3 of OOS tuition. Auburn is similar.

It’s not small - 23,000 or so students, although smaller than UMCP, which is 35,000 or so. You said you thought small would be better, but a lot of times you can get a “small school within a large school” effect. My S attends a school with around 25,000 students, and he found this to be true.

Free tuition would put the COA at around $15K (or less if you choose less expensive housing and food options and are careful with personal expenses), which could be covered by loans, tapping the 529, and maybe some summer earnings.

In year two, when your capital gains income is off the financial aid forms and there are 2 in college, your FA picture should improve, giving both kids more money.

JustAMomOf4 · August 31, 2010, 9:37pm

thumper, I think you are confused. If EFC does down then you have MORE need not less.
In fact, most colleges determine your need based grant as an entering freshman. They budget for this and if your circumstances change for the worse you probably won’t get much more than was awarded initially. This was the case for 3 of my 4 kids.
This is why you want to set the bar low when you enter college.

annikasorrensen · August 31, 2010, 9:39pm

The problem I see is that the OP finds a problem with most of the suggestions. “Can’t do X because of Y. Can’t do Z because of A. Can’t do B because of C.” The reasons are a combination of hard facts (don’t have cash) and speculated fears (even if they sound well reasoned).

When I get myself into one of these circular set of issues, what I usually have to do is drop one of the criteria. Unless money works out in the form of finding more money or scholarships to give this family the freedom to choose from a wider set of options, that is what ends up happening anyways.

A gap year doesn’t have to happen at home. Six months of living with a good friend or relative several towns away paired with volunteer work or a part-time job can be considered.

You dismissed the Maryland school because it was too big and/or other relatives did not do well there. The reality is that if your son wants to make it there, he probably can. And you can certainly prepare him for the pitfalls that you perceive. And of course, while as parents we often feel that we know what is a best fit for our young adults, they can also surprise us in new situations. It is just that you have dismissed the option with a bunch of “reasons” that haven’t even occured yet for your son.

Put in other words, you probably won’t get to pick a 1st or 2nd or 3rd choice for your son because of financial limitations…but you also seem to be dismissing available 4th and 5th and 6th choices as “wrong fits” for one reason or another. This is the frustrating issue of trying to help our children get to college with limited resources and coming to realize that at least one criteria may have to be “sacrificed” in order to move constructively to making a list of colleges that now “work” and your son have some room to contemplate a real list of possibilities.

Btw - I would vote for a gap year with a relative in other city. “College life” should not be used as a cure for depression. Perhaps the depression is situational and will rebound once away from the family drama, but if it doesn’t, it opens a whole host of new problems. A gap year (if finances don’t work out) actually gives him the widest range of college options.

Good luck.

thumper1 · August 31, 2010, 9:49pm

oops…if your EFC gets HIGHER…then your need would be less…that’s what I meant!! Thanks for catching that.

The point is…most schools look at the EFC annually and make their need based awards based on THAT year…not previous years. So…if your need decreases…your aid will likely decrease as well…not stay the same (as that one poster put…that is the exception rather than the rule when computing need based aid).

mom2collegekids · August 31, 2010, 9:57pm

*6. We have an excellent state university [Maryland] that my son can probably get into. Unfortunately, I do not believe it is the right place for him. A number of my friends’ and relatives’ children transferred out of Maryland because of its size – they never found their path forward. My son needs a much smaller school. I will encourage him to apply to the smaller state colleges. No need to give me a pep talk about state schools.

<ol>
<li>There is a private university nearby that is ideal for my son. Small classes, exactly the major he wants, close enough to home but not at home, advisers assigned to students, work internships, etc. But it costs $40,000+ without room and board. That’s crazy! I told my son he has to focus on state schools.</li>
</ol>

But this school really is perfect for him and I wanted to try to figure out how to get private money to add to what we have saved up and what I can contribute. That’s why I wrote to college confidential – I was hoping for guidance on explaining our financial situation and the aberation of 2010.

But now I know, based on the sympethetic and competent advice I received from all of you, that there is no genie in the bottle solution for us. How very sad for my son.

<ol>
<li>One final question. My husband may be able to qualify for social security disability due to mental health issues that prevent him from working. I have been trying to get him to file. Does anyone know if there are college benefits for his children if he does file and obtain benefits? *</li>
</ol>

<hr>

What private school is this? Is it a school that meets need or gives merit scholarships. If it’s a school that gives a lot of need-based aid (but not merit) then your son will have to take a gap year in order to get that aid.

Before your son applies to this expensive private school, I would advise sitting your son down and getting some agreement with him that this school is a super financial reach and only do-able if some near-miracle happens. As mentioned earlier, discourage your child from falling in love or digging his heels in with a particular school.

It sounds to me that before the job losses and separation, you and your husband had a very high income and picking colleges that would be perfect fits would have been an affordable luxury. Unfortunately, when there are financial issues, picking schools that are “perfect fits” is often unaffordable.

If your son decides not to do a gap year and go to college in Fall 2011, then that will be an even greater reason as to why he may have to give up on some “fit” requirements.

If he goes to college in Fall 2011, then he will almost certainly not get much aid, and therefore will have to rely on mostly merit scholarships, small loans, summer job and part-time job income to cover his costs.

your son needs to understand that. He can’t have it both ways…he can’t go to school next year AND get great need-based aid.

Your son has to pick between…

1) delaying a year and possibly getting great aid the following year with a lower EFC. (don’t take any CC classes in the meantime.)

2) going to school in 2011 to a cheap commuter school or another school with big merit.

A number of my friends’ and relatives’ children transferred out of U Maryland because of its size – they never found their path forward. My son needs a much smaller school. I will encourage him to apply to the smaller state colleges.

I don’t know if UMaryland has an honors program, but often larger schools can be made to feel smaller with a good honors program. There may be some other schools with honors programs that will provide more of a “path.”

Colleges with Honors programs typically offer small class-sizes. At my kids’ large public, their honors classes are limited to 15 kids…some of the classes only have 8 - 10 students.

I agree with the person who says not to pre-judge UMaryland based on others’ experiences. Sometimes people leave a school for their own reasons (poor grades, etc) but just throw out the “it’s too big excuse” as a cover-up. I would visit and judge for myself.

What smaller state schools do you like in Maryland? Are any close enough to commute to?

You mention that your husband has control of the boys’ college funds. Is that part of the divorce decree? Can he decide not to let the boys use the money for college?

Also, some colleges are going to want your H’s income/assets, so if he has that money, that will also hurt your children’s chances at aid.

Again, I think you need to start coming up with a list where your son will have some **assured **big merit scholarships because those will be his financial safeties.

What is his likely major?

I don’t think there’s any special funds when an NCP is on disability. There was a child last year with a similar issue.

JustAMomOf4 · August 31, 2010, 9:58pm

If you need decreases, then your grant will decrease …
BUT if your need increases don’t count on an increase in your grant. It’s not a dollar for dollar thing.
The office at my daughter’s school told me they crunch the FAFSA’s through a computer program that looks for significant increases in EFC. If they find it they adjust the grant by decreasing it. They don’t look for significant decreases.
My daughter’s EFC looks like a roller coaster - she got back the grant she was awarded as a freshman but not more than that.
My concern is that with an initial high EFC it might be difficult to get a need based grant in the later college years when need is higher.

OP - I sent you a PM.

how do I avoid divorce settlement from wrecking my sons' chances for financial aid?

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