<p>DC got accepted to two schools got 2K at one place 0 at other. If we decide to pay on our own are any advantages to taking home equity, student loan, decreasing 401K contributions, cashing in retirement accounts to increase chances of getting FA next year? Or what options provide the best tax breaks?</p>
<p>Cashing retirement or decreasing 401K will only increase your gross annual income making FA less attainable.</p>
<p>Reducing discretionary spending, loans and/or home equity are the only options in this case. But many schools aren’t looking at home equity because it’s not a stable figure right now. Exceptions are those homeowners with substantial equity remaining after the mortgage is deducted. But SSS will ask you how the funds were used.</p>
<p>Loans will increase your debt load and may then be a factor in reduced financial ability.</p>
<p>But honestly - the issue here is that there’s just too many families in need and not enough funds to go around.</p>
<p>Barring a significant drop in income AND assets (outside of retirement funds) there is little you can do to make yourself more attractive to financial aid other than to apply to schools with significant endowments for FA - unfortunately, their applications have gone sky high.</p>
<p>FA is usually reserved for those families who have no options to pay on their own, have modest assets and can’t tap money from any sources.</p>
<p>The schools will satisfy the needs for existing students first, then allocate remaining funds for incoming students based on actual ability to pay. But - in some cases - when funds are depleted - they’ll still offer a spot to a child, but without FA even if it’s clear the parents don’t have resources.</p>
<p>Exie, thanks for your insights. We a small savings reserve to cover emergencies, 401Ks but not much else. Both schools must have considered home equity because we have 7 years left on mortgage. I don’t see how else they figure we can come up close to 40K for tuition. </p>
<p>Is there a negative with stating on SSS form home equity loan is for tuition? Is it better to refinance our mortgage? I realize decreasing 401K makes income increase but aren’t boxes 12 on W2 where retirement contributions are listed go into FA calculation so a reduction may balance out increase to income?</p>
<p>A lot of DC friends are in same boat, lots of acceptances but little or no FA despite everyone saying they needed it.</p>
<p>I hear ya. I’m not convinced the tapping equity is ideal because the market is so darn iffy and if the market drops you could go underwater on the mortgage or find it difficult to refinance. Tapping retirement funds kicks off 10% tax penalties on top of the taxes. I suppose you could temporarily suspend 401K contributions but then you’d be taxed on that money which would make that money less, and you’d forgo matching funds from your employer. This is probably not a good questions for the board, but rather a good question to ask a tax consultant or financial advisor.</p>
<p>Everyone is in the same boat - no FA. People for whom the cost of tuition is a significant part of their income but whose children get admitted without aid. It’s the same net effect as getting a rejection. Schools aren’t necessarily saying you don’t deserve aid, they’re saying they don’t have it to give.</p>
<p>And looking at $120,000+ for loans right before college seems untenable. </p>
<p>I suppose that once you child is an existing student there’s a possibility you’ll have more priority for funds the next year. Schools do ask families without aid to file early if they need it for the next year. But that’s such a huge risk and what happens if they don’t come through? Is there enough funds to sustain more years of no help?</p>
<p>Gosh, I wish I could be of more help. </p>
<p>I wish you luck, though. Maybe other parents have ideas for what you can do.</p>
<p>actually some (many?) schools explicitly say if you did not qualify for FA originally, it is unlikely you would going forward, barring a significant material change in family circumstances. It is a catch 22 as you then struggle to go that first year and then what happens after that? This is a conversation I would have with the FA Director, about whether existing families who did not qualify originally can be reconsidered for the following year(s).</p>
<p>I’ve noticed a few posters (kids and parents) state that FA was not what they thought it would be/did not qualify…did the SSS’s EFC indicate that it might be otherwise?</p>
<p>I’m curious about this^^ too. I’ve heard from others off this site as well that their FA was not as much as they had hoped for, and I’m wondering, in general, how those offers jived with people’s EFC’s. We haven’t done ours yet for this year, so I can’t share anything at this point. Last year, our FA offers were the same as or considerably better than our EFC (which I honestly don’t think we could have afforded).</p>
<p>@Sevendad, When we filled out the EFC it was very high which was indcredibly disapointing and frustrating. We were tempted to stop the process to avoid the issues that we have to deal with right now. So overall, we were hoping for the best but knew that we probably would not get a reasonable amount . Even though we received more than our SSS said, it is still not very substantial :[</p>
<p>The EFC was high for us but as stated previously I am assuming equity in house is what drove it up. Exie mentioned taking home equity for tuition will need to be stated on PFS next year and I am wondering if this is a negative. Would putting tution for reason for home equity loan makes it invalid for EFC contributions? While many take out home equity to buy cars, pay tuition , go on vacation or pay bills I am not sure if you are allowed to be claiming interest on taxes if not used for home improvements. I am also not sure if it is ethical for FA director to advise parents to use home equity for tuition if this is the case. I am trying to research before calling school. If anyone in CC land has been advised by FA to take home equity or done it on own and not had negative impact of EFC please let me know.</p>
<p>I’m certainly no financial advisor, but I would never take out a loan for bs. You’re going to need it for college!</p>
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<p>Whoa . . . I would never make an assumption about what caused your high EFC. I would first go through it with a fine-tooth comb and make sure there are no mistakes. Then I’d call SSS and ask them to explain it to you. By then, the AOs may be back from vacation and you can ask them for help in understanding it as well.</p>
<p>Really, one number entered on the wrong line can wreck havoc with your results . . . and the mistake may be far from obvious. Not saying that happened, but, if I were you, I’d start by asking questions.</p>
<p>It would be nice, though, wouldn’t it if the formula SSS uses was less of a mystery? Or the reasoning behind the EFC made clearer? </p>
<p>Dodgersmom is right on though: we went to the Financial Aid Office with our SSS form in hand and got a good explanation of what did and didn’t go into their evaluation. I never thought of calling SSS though–is there a number on the form?</p>
<p>There’s an “800” number right on the SSS website. Just click on “Support” at the top right-hand corner of the page after you log in.</p>
<p>Don’t how much detailed information they’ll be able to provide . . . but at least they’re not on vacation for the next two weeks!</p>
<p>Right - the SSS form is about as clear as mud.</p>
<p>I would check the figures. However, having said that - schools like Exeter do say that high assets is not in the spirit of the policies in place for issuing FA for families with incomes that would normally make the threshhold for FA. So if you have a lot of equity it might have been a factor for the school. Which is kind of odd because it’s really, really hard for many people to get loans these days.</p>
<p>@picoka - I think you misunderstood me. When you fill out the SSS it has a section that asks if you have a home equity loan and if so - what the money was used for. It’s perfectly okay to use the money for tuition and to put that on the form. That won’t hurt you. I think that section is meant to determine if -as you said - people used it for the car, the vacation, instead of tuition, emergencies, home repair, etc.</p>
<p>So I wasn’t telling you not to use the equity for tuition, I was suggesting to be cautious about the market so that the fluctuations in home prices doesn’t put you at risk of going underwater. And to check with the school - some schools look at equity, others don’t because so the market is not stable. </p>
<p>Really - this is where you need to have a heart to heart talk with the FA staff at the school and with a financial planner to make sure you’re thinking through all the issues.</p>
<p>My EFC is a bit on the high side of realistic but it pales in comparison to my FASFA previews. Even when assuming similar room/board expenses for both BS and college, it’s like we’re talking about two completely different families.</p>
<p>Is there a generally recognized annual income number over which you should not expect to receive financial aid?</p>
<p>Redirecting this back to your question on your other thread:</p>
<p><a href=“http://talk.collegeconfidential.com/prep-school-parents/1104591-who-gets-financial-aid.html[/url]”>http://talk.collegeconfidential.com/prep-school-parents/1104591-who-gets-financial-aid.html</a></p>