Question About FA and Leftover Money

Paying for College
1

Hello, please note that before you read, my purpose in making this thread isn’t to complain or anything, I am just curious is all and if anyone has info or experience to explain I’d gladly appreciate it.

About me: I am a UC student, and my family is upper-middle class, making ~$150,000 a year. My EFC ended up being 30,000+, so the money to pay for college came mostly from family + loans I took out.

Consider these two friends of mine:

Friend 1: Attends Cal State and commutes. His tuition is covered fully, and he has leftover money at the end of the semester sent to him in the form of a check, roughly several hundred dollars.

Friend 2: Attends UC, lives on campus. He has extra money leftover and gets a check at the end of the quarter, free to spend on whatever he wants (I presume?) He told me he was getting a Wii U with it, which is funny, but hey good for him!

The question I have is, how are people getting leftover money in the form of checks from the colleges? I assume the bottomline is that their incomes are significantly lower so the gov helps pay most/all of tuition, which is reasonable. And I guess I can understand for Friend 1’s situation given that Cal States cost less + he’s commuting.

But I’m a little confused for Friend 2’s situation. Other info I know is that he isn’t working, so I’m just wondering how FA works in its distribution. I’m not bitter or anything, I’m just wondering that if there’s extra money leftover from FA, shouldn’t it go to other students who have ( - ) need? Perhaps not me, but reading several CC posts I see so many people in dire situations because the system worked against them, and I can’t help but feel curious because these friends have it going pretty well. Maybe they just knew how to work the system?

2

Every student gets a set cost of attendance that includes things other than mandatory expenses such as tuition and fees. These other budgeted expenses include books and supplies, room and board, transportation, and personal expenses. If your financial aid covers tuition and fees and then some, the reimbursement check is issued. It is your friends decision to spend the money on a Wii U instead of gas for his car or books for the year.

3

Maybe Friend 2 is taking out loans of $12k (if parents denied a Parent Plus loan), and getting fed/state grants.

4

Also, a set income at the UC can qualify a student for the Cal Grant and the blue and gold program. Add federal loans or a merit scholarship to the aid package and that is a decent amount of funding. I doubt your friends are working the system.

5

@kgos16 thanks for your response, I did not know that that was set in stone. I guess that makes sense, at least for Friend 1, but I still question how Friend 2’s aid works given that he’s living on campus. And @Madison85 ah, I didn’t think about the fact that he could be taking out loans too. I just assumed his FA was giftaid since he was getting a check at the end of the quarter (which normally would go toward covering fees automatically(?)) but maybe it’s possible he misprojected his costs and took out loans unwittingly, it would be the only explanation for how he can be living on campus too since I know that even though B&G and most grants cover tuition, a lot should have to come out of the student portion to cover board fees (should someone plan to live on campus).

6

A parent can also borrow the PLUS loan for the student and on the application they can indicate to give any refund check directly to the student - even though the refund would be considered as coming from the parent’s loan. There are a myriad of possibilities when it comes to aid packages.

7

@kgos16 I see, I guess if I want to know more I should just ask my friends themselves haha. I just didn’t wanna come off as nosy or invasive

That solves that mystery, but do you think you (or anyone else) can help me with another issue I have? I was going to make another topic but I didn’t want to spam the forum and I guess it still applies under “Question About FA”

So I submitted my FAFSA just a few hours ago, and my EFC this year is 45000. I’m kind of shocked because it’s way higher than last year’s, and the numbers are pretty much the same. On one hand, I guess it shouldn’t matter either way, because given the COA for UC, it’s not gonna change the amount of gift aid I get (which is 0). But one thing that does worry me is if I don’t qualify for a loan.

Assuming it’s no error and I have an EFC of 45000, then COA - EFC would be -15000. Is it possible that I might not even get a loan? I’m trying to lesson my financial burden to my family as much as I can, given that I have a younger sibling who is going to college soon.

Or at the end of things, no matter what my EFC is, I’ll still be able to take out loans(?) and if that’s the case, then that would be fine.

8

You are still going to be able to borrow the Stafford loans at the amount set for your grade level, however the difference would be if the loan amount is subsidized or unsubsidized. So don’t worry about losing any money necessarily. Have you reviewed your FAFSA for any errors? Or was there a change in your family situation (one less in college or the household)? Otherwise if your parents’ income went up or they invested more, etc. that could allow for a higher EFC from last year to this year.

9

You will always ‘qualify’ for the loan if you correctly file the FAFSA but it may make a difference if it is subsidized or not. If you had a loan last year, and it was subsidized, try to figure out what figures were different this year (grandparent gift to you, a job). It may be that you just put some figure in wrong (either this year or last).

10

If absolutely nothing changed then your EFC should remain more or less the same. It definitely shouldn’t increase by such a hard amount.

As far as loans, you can borrow up to the cost of attendance regardless of your EFC as kgos16 points out. Your FAFSA EFC would mostly only matter for grant aids, subsidized Stafford loans, Perkins loans, and federal work study. If you haven’t been getting those before then your EFC going up wouldn’t change that. I would definitely check though since I can’t think of anything that would change other than if your family had two people in college last year and only one this year or something like that. It may even be something small like an extra 0 somewhere turning someone’s bank account balance from $10,000 to $100,000.

11

@everyone, as of now I can’t tell because my FAFSA is currently being processed and it says I have to check back in a few days, so I can’t view the FAFSA report (and compare it with last year’s). Dang, I should have done it simultaneously before submitting it.

With that being said, is it possible to make a change/update to my FAFSA (if there happens to be an error somewhere) that would change my EFC? One thing I’m worried about is if this might trigger an automatic audit (not that I’m worried because I wasn’t truthful [why would I lie to have an EFC over 30000], just that it seems troublesome haha).

In the end, should I even care that much? Like you all said, the fact that the EFC is already high (even before it was raised) won’t change my FA that much given that I’m just getting loans.

Regardless, I guess I’ll check back in a few days when I can view my student report to see if there even were discrepancies

12

If it were me, the difference between subsidized and an unsubsidized loan is important enough to make corrections. It won’t be suspicious, especially if you make the corrections after your parents have filed their taxes and you use the data retrieval tool - which makes the corrections official.

13

All students at UCs on aid get student loans in their package. If the student got a package that ‘meets need’, then they are given money that first goes to tuition, fees, room and board. Then a refund is issued for the excess COA for that college, which includes an allocation for books, personal and transportation (see the college website.) Usually kids just make due on that. If you have larger expenses or need to go home more you have to come up with that money yourself. But if they don’t need as much because they got a discount on books buying used, don’t go home that often or got a free ride and didn’t buy much else then, yes, they might be able to buy a Wii. But it would be smarter to save for a unplanned future expense or make a loan payment.

14

@kgos16 okay, I’ll be sure to keep that in mind when I’m able to view my FAFSA in a few days.
@BrownParent that makes sense, I wish I were in a similar situation and had the option to save up money/pay off loans with leftover FA. But in the very least I guess I should be grateful my family makes as much as they do.

Again thanks to everyone who responded, I’ll be sure to update in a few days probably once I can double check my student report and make necessary corrections (if needed)

15

Don’t be fooled, you are much better of, most kids don’t have ‘leftover FA’, they are just squeaking by and don’t have money for clothes and extras that aren’t included in FA.

16

What was your EFC last year? @collegecoolbeans

17

@Madison85 it was ~30,000 last year, so I only qualified for loans. I assume no matter how high my EFC is, anything above 30,000ish would just be loans right? But as kgos16 said, it might just be the difference between subsidized and unsubsidized loans

18

Oh, right, as you mentioned in your first post.

19

The UCs do have departmental awards, I’m not sure if you have to apply for them, but there are ways to get merit awards. Likewise you can still apply for outside scholarships each year. There are some professionals organizations that give them.

If you do take a student loan you can always have the option that low income students do, reduce costs for books by used, borrow or rent, spend less on personal fees, find cheaper housing and make your own food, spend less on personal expense, travel less and then you will have excess you can use to pay back the loan or buy a Wii.

20

Okay I found the disparity between last year’s and this year’s FAFSA. It might be that this year’s FAFSA is actually the correct one and last year’s I missed something

“94a. Parents’ Payments to Tax-Deferred Pensions & Retirement Savings:” says to look at the W-2s and put the number you have for 12a-d. Last year, I must have skipped or simply breezed over it, because I have 0. This year though, I was more thorough and I did find a number, which was 21,000ish and I put that there.

Can anyone who is finance-savvy explain what that line means? I’m just guessing, but I’d think it would count as assets and even if there was a number or not my EFC shouldn’t change much (given that EFC is mainly based on income). And even if the difference in 21,000 in assets DID change my EFC, that shouldn’t warrant a 15,000 increase! Then again I could be wrong, because again I don’t know what effects putting a number in that line had on my EFC. But given the amount my EFC has increased, it’s like they’re counting it as 21,000 extra in income (just to try to achieve the same EFC, I used EFC calculators and changed my income from 150,000 to 170,000 and whadya know, EFC is 40,000+).

I searched this phrase up in CC and some people said you could just ignore that line (which I did in the past). But I’m totally unsure now, mainly because I have no idea what Payments to Tax-Deferred Pensions & Retirement Savings means.

Anyone have an explanation/can explain this to me in laymen’s terms? I would appreciate it lots