<p>If one parent retires while a student is still in college, what is the impact on the student’s financial aid?</p>
<p>There really is no exact answer to your question. It depends on the retirement income of that retired parent. If there is still taxable retirement income, that is still counted as income.</p>
<p>It may have no impact at all if the school doesn’t meet need. Many schools don’t increase aid even when EFC drops. </p>
<p>If this is a state school or a private that doesn’t promise to meet need, then you may see no change at all in aid. Many schools reserve their best aid to give to incoming frosh to entice them to attend.</p>
<p>Also…</p>
<p>Aid is based on the previous year’s income, so if you were to retire now for instance, your EFC would be based on 2011 earnings. And, of course, you’d now have retirement income and social security income.</p>
<p>If you’re asking whether you can go to a school and say…“Well, I’m retiring now, so my income THIS year will be less so will you make an adjustment?” I doubt schools will care because retiring at a certain point is often an option - a personal choice. Many parents purposely AVOID retiring while kids are in college so that they can afford to pay for college.</p>
<p>Keep in mind that schools consider parents as the first line of paying for college. They’re not going to be sympathetic when parents intentionally reduce income.</p>
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<p>Some jobs have a mandatory retirement age, mom2. Just saying.</p>
<p>The thing that the OP needs to realize is that their income is income, regardless of the source. It can be in the form of retirement income or it can be in the form of earned income.</p>
<p>Schools calculate need based aid annually based on the previous year’s income. When the OP does their future financial aid applications, they will list the retirement income on the forms. Income is income.</p>
<p>And if the school does meet full need, you could see a change in your aid. If the school does NOT meet full need, they may not change your financial aid package anyway (as mom2 noted).</p>
<p>Yes, a small number of professions have a mandatory retirement age…I think air traffic controllers is one. But, I think the age is still highish…like 70ish.</p>
<p>If the OP or spouse is in one of those rare professions and is at the mandatory age, then maybe the school will give some consideration IF the school is known to be generous with aid. But, again, most schools don’t meet need, so at many schools reducing your EFC from - say 25k to 15k - will mean little to no increase in aid.</p>
<p>And if the school does meet full need, you could see a change in your aid.</p>
<p>Yes, after you’ve had a year with a lower income…not generally during the year that you retired. So, if you retire during your child’s second semester of junior year in college, you may not see any change in EFC for the senior year.</p>
<p>I can only speak for one school, a very generous, 100% need, grant only school. </p>
<p>Of course, each year of FA was based on the previous year of income: one year I had my maximum salary, the next was intermediate because I worked part of the year, and the final year was in full retirement and thus the lowest income. Each year FA was increased with my decrease in income. I don’t think the fact that I was retired mattered, it was simply by the numbers.</p>
<p>Thanks, everyone, for weighing in on this question.</p>
<p>Agreed with Entomom. The schools do NOT care where your income comes from. The numbers are the numbers. Also, my understanding is there is actually something factored into the FAFSA formula (a favorable something) if one of the parents is at or very close to retirement age. I am quite sure that the college will NOT “penalize” you because a parent has made a decision to retire.</p>
<p>*Also, my understanding is there is actually something factored into the FAFSA formula (a favorable something) if one of the parents is at or very close to retirement age. *</p>
<p>I think the FAFSA formula allows for more protected assets as you age (approach retirement age).</p>
<p>I am quite sure that the college will NOT “penalize” you because a parent has made a decision to retire.</p>
<p>No, you won’t be penalized. My point was that if a family were to say something like, “My EFC is $25k based on last year’s income, but I decided to retire this year, so my EFC based on what I will earn this year should really be about $15k, so will I get more aid for this year (not just next year when I file based on the reduced income).” EFC is based on the previous year’s income, so I don’t think FA offices are going to be sympathetic and make adjustments in family contribution when the drop in income was (likely) by choice. </p>
<p>When people as for adjustments based on lay-offs/unemployment, some have reported that FA offices ask to see all the paperwork regarding the lay-off. Perhaps that’s to see whether the change in employment truly was a lay-off and not someone quitting their job???</p>
<p>Hopefully the OP was not asking about/expecting a change in FA for the current year, at least I didn’t read it that way.</p>
<p>ANY choice to change employment/income is not going to result in a change in FA until the year that information is used in FAFSA/Profile.</p>
<p>This is a completely different case from something that happens unexpectedly and that is not under the family’s control such as a lay off.</p>
Yes, a small number of professions have a mandatory retirement age…I think air traffic controllers is one. But, I think the age is still highish…like 70ish.
No, in fact mandatory retirement for air traffic controller is 56. The only way to avoid it is to become a supervisor or go into the management side.
Please use old threads only for research.