How much salary and asset can save parents time not to fill in FAFSA?

I was in school one night. They had couple guests from state govt to promote FAFSA. They said unless you are Bill Gate or Warren B, you will get some sort of financial aid or need based scholarship. (I assume loan is not included) I am skeptical about their claims.
Excluding primary resident, I think parents have 500,000 asset will get them nothing from State U financial aid, and parents have asset of 800,000 to 1,000,000 basically gets nothing from private school.
My numbers are 500,000 and 800,000 asset for public and private universities, respectively, that students will not get aid and need based scholarship. What would your number/guess be?

No need to make wild guesses when you can use the net price calculators on college web sites to estimate financial aid (if any).

But also check if any merit scholarships require FA forms, even if the scholarships are not need based.

Let’s start with the basics.

  1. Each college has a net price calculator on it. Use that. It will give you an estimate of your aid and net cost at each college.

If your parents are divorced, self employed, own a business, own real estate other than your primary residence…the NPC might not be as accurate.

  1. The FAFSA formula is primarily based on parent INCOME. So...what is your parent annual income?
  2. Assets...what ARE these assets? For FAFSA purposes, the equity in your primary residence doesn’t count. Balances IN tax deferred retirement accounts like TSA or IRA accounts...don’t count.

So…what ARE your parent assets?

Assets are assessed at 5.6% of their value for FAFSA purposes. So…if you have $1,000,000 in assets! Your family contribution just from assets…would be $56,000.

  1. The vast majority of colleges in this country do not guarantee to meet full need for all accepted students. Many students get NO aid except the federally funded loans...which are $5500 for your freshman year.
  2. MOST important question...how much can your parents actually pay per year for you to attend college. If you don’t know...find out.
  3. Any assets held in your name are assessed at 20%of value except 529 accounts which are generally assessed at the parent rate.
  4. [quote] My numbers are 500,000 and 800,000 asset for public and private universities

    [/quote]

Is the difference the equity in your home? Schools assess this differently.

Those guys were wrong. Even Bill Gates’ kids would get loans if they fill out the FAFSA. So will your kids.

Assets don’t all come in the same form. FAFSA doesn’t consider the corpus of any retirement funds, just contributions made in the tax year being evaluated. A parent who has $500k in a 401k might very well have a student who qualifies for need based FA. That parent might be earning very little, have 5 kids in college, but was one terrific saver in his early working life.

There is no number.

The FAFSA formula changes a bit from year to year, and it freely available on the web. Google EFC formula 2019 and you will get a link to the PDF for academic year 2018-2019. You can print out the PDF and work through it on paper to see what federal aid you would qualify for https://ifap.ed.gov/efcformulaguide/attachments/071017EFCFormulaGuide1819.pdf

Once more…what is your parent income?? And how much WILL your parents contribute to your college costs annually.

Hi @lemonlulu - yes, you’re right. When it comes to need-based, non-loan financial aid there are certain levels of income and assets that disqualify you for aid… and those levels are far below the ultra-wealthy. But it’s not “assets only” as as mentioned before - not all assets count the same - home equity doesn’t count for FAFSA but is included by many private schools. @happymom1 has provided the link to the EFC formula but you might also just take the most expensive school you are considering and use their online EFC calculator to figure out if you have any chance of aid. One thing to consider, though - some schools won’t offer you merit aid unless you fill out the financial aid paperwork. So even if your family doesn’t qualify for need-based aid you might find it’s worth filling out the FAFSA/CSS forms to ensure you qualify for all possible means of tuition help! :slight_smile:

@CaMom13

Using the most expensive school is NOT necessarily a good idea. Some of the most expensive schools also have the most generous need based aid and even for higher income earners.

For example…if you use Princeton or Yale or Harvard net price calculator (they are expensive schools with very generous need based aid for even higher income earners) this will have NO relationship to less costly schools with less generous need based aid policies.

The net cost you get for H, P, Y is likely to be less than for many other colleges with less generous need based aid awarding policies.

Also, many…many of these generous schools use the CSS Profile or their own financial aid form (Princeton has its own form)…and their institutional need based aid is determined using the info on the Profile or their form…not the FAFSA.

For high income earners/asset holders, if you don’t get aid from the most expensive/generous school you are looking at, you probably won’t get need-based aid from anyone. And that’s the question the OP asked. He/she didn’t ask for a EFC estimate, he/she asked what levels of parental assets made filling out the FA forms a total waste of time. Therefore the most generous school’s caculation is exactly the one to look at.

You’re suggesting two different things. The most expensive school is not necessarily going to be the most generous school. That’s why the best answer to OP’s question, when considering institutional need-based aid, is “it depends.” The best way to make an early estimate of how much, if any, need-based aid might be offered is to use the NPC of each school that is of interest.

Folks, there is an earnings cutoff, no? Are we saying that families that earn (not save or assets, earn) 500k+ per year have a chance at getting any aid at any school? I think not.

[quote]
I think parents have 500,000 asset will get them nothing from State U ]/quote]

No, the question in the original post was about assets.

There are some merit scholarships that require the FAFSA, the loans require FAFSA, and there are even a few schools that give a bonus for filing FAFSA. Even to millionaires.

If you think it is a waste of time, don’t bother. My daughter is taking a summer class and they told us to add the school to the FAFSA. Took 2 seconds. Probably won’t get anything, but you never know.

Asking the same question as @suzyQ7 above. For high earners (mortals who earn much less than Bill Gates but in the low 7-figure range), do they really have any chance? What are the “donut-hole” families I kept reading about?

A million in earned income? No chance of anything but loans.

Folks, there’s no hard and fast cutoff number like food stamps. If the household income is $500k, financial aid will not be forthcoming in almost every case. Then again, there could be a circumstance in which such a family WOULD get FA—let’s say the earned income was $100k and unearned income was $400k due to an early distribution from a 401k that was used to pay medical bills and to rebuild the house after super-storm Sandy and the school is Yale. See where I’m going? In that case, Yale would likely use professional judgment to ignore the $400k. That’s why the answer is IT DEPENDS.

And if the family with $500,000 in income has five kids in college at the same time…it’s very possible that need based aid might be forthcoming at very generous schools.

scenario is a family with one kid going to college, low 6 figure household income, asset undisclosed here.

@lemonlulu - This student will not qualify for a Pell grant unless there is a huge reason for professional judgment. This student will most likely not qualify for federal workstudy money unless there is a pretty big reason for professional judgment. Provided the student qualifies to file the FAFSA, the student will get the federal loan, some of which might even be subsidized. So it really is up to the parents to decide whether they want to bother to file any financial aid paperwork. If they can cover all the costs themselves, they certainly are free to do that.

Low six figure like $300,000 vs $800,000?

And sorry…but assets count in the formulas for institutional need based aid.

$101,000 income with $1,000 assets is a lot different from $300,000 income with $10,000,000 assets.

Anyway, no need to guess. Run the net price calculator on all colleges under consideration to see if there will be any financial aid at any of them. If not, and there are no merit scholarships that require FA forms, then there is no need to file FA forms.