Should I quit my second job?

sketchy · May 18, 2006, 3:38am

I’m a single dad trying to figure out how to best pay for my son’s college tutition(this website is great, BTW.) Some of the colleges his teachers are recommending are running $40K a year! I currently gross about $80K on my primary job and anywhere from $24K to $36K on my part-time job. I know this sounds like a lot to some, but in my area (Wash. DC) I’m paying $2100/mo just to rent a townhouse, plus I also have two daughters.

Anyway, after running the numbers it looks like my second job increases my EFC by about half the income from that job. Killing myself working a second job makes little sense if I’m only go to effectively bring home less than half of what I make. The real question is how much “aid” does one get is in the form of grants vs. loans? If most of the aid I’d be offered would consist of student loans, I’d just keep my second job and take out my own loans to pay for college.

Can anyone shed any light on these questions?

Thanks in advance for any advice.

Todd

sybbie719 · May 18, 2006, 6:39am

I would suggest running your numbers throug a few of the financial aid calculators. Run the calculator using you income with and with out your second job.

Are either one of your daughters also attending college?

Are you paying for private H.S. for either of your daughters?

Based on having an income of between 104k and 116k, you may not get a lot in need based FA. Most schools look at your income and assets (money in the bank, stocks, etc) . Remember that if for the 2007-2008 school year, your FA package will be based on your income assets for tax year 2006. IF you quit the second job, you must balance the trade offs, yes you will have a lower EFC the following year, but how will it affect the other parts of your life.

At schools that use the CSS profile and grant institutional funds, they will also take into consideration the income/assets of your son’s mother also.

As far as “how much” the amount will vary from school to school because not all schools meet 100% of demonstrated need (they gap) and schools that meet 100% of demonstrated need do not give all grant aid (with the exception of Princeton). A school can offer you a PLUC (parent’s loan and will still have met your demonstrated need).

You can look up most of the schools that he is interested in on the College Board’s website. The site will break down what percentage of need based aid a school meets, and how the aid is packaged - % grants/ % loans, work study.

Make sure that your son applies to a wide arrange of schools including some schools where he could get Merit money. He should definitely have a financial saftey, that will be an affordable option for your family (this migh be the U of MD- College Park, which IMHO, is a good school).

system · May 18, 2006, 9:19am

So you quit a job so that taxpayers can pay for your son’s education? It’s hard for my parent’s too, but they’d never consider doing that.

hsmomstef · May 18, 2006, 10:29am

suze – don’t jump to conclusions, the OP is just trying to figure out how it all works right now.

sketchy – Unless the second job changes the income from less than $50,000 to just over $50,000 – it probably won’t help to quit it.

First, my guess is that most of the schools you are referring to ($40,000 a year) use the IM method (as Sybbie mentioned above).

You need to run those financial aid calculators. Do you have any assets? own any property? stocks and bonds?

As sybbie mentioned, the IM method also includes the mother’s financial aid information.

My gut feeling, from reading numerous posts here and learning about many, many situations, is that the difference in aid you would get if you dropped that second job would be in loans. free money (grants, etc) are usually reserved for those making under $50,000.

I would suggest you have your son look at some school that offer merit aid (if his stats and GPA are high enough) since that doesn’t depend on your financial situation.

If you read through this forum (and there are many pages to it) you will see that your situation is far from unique. It is the reality that college costs a significant amount of money and you many simply not be able to afford to send you son to a college that costs $40,000 a year.

It is better to figure it all out now – rather than have him dream of going to Harvard, get accepted and not be able to go because of money.

system · May 18, 2006, 10:46am

I think the OP clearly stated that he’d rather quit his second job than use the income to educate his son. I think he has figured out how it works–lower your income and let someone else pay. I’ve been reading this board for some time now. Question here have included how to hide assets, where to stash money to qualify for more aid and the like. What ever happened to integrity and teaching kids what’s right like working hard to pay for valuable things like education? Can you imagine explaining to a kid you’re quitting your job so they can be a drain on society? What about all those parents making huge sacrifices to paay for college?

lindalana · May 18, 2006, 11:07am

I do not see that OP wants us to judge his actions, he is only looking for more understanding of the process IMHO.
I would think that 80K of salary will get you somewhere close to 15-20 K EFC. So your son might be eligible for some help but it might be a lot of loans. You can look it up on USNews reports or collegeboard reports what is usual procentage of grants vs. loans. You and your kids might put financial generosity of school as one of primary consideration and also look up schools where your son will be close to the top% students. Start looking for for merit scholarships, while it is rare to get big bucks ,everything helps in the end.
If you need more assisatance consider hiring financial advisor, they are not that expensive in the long run specially that you need strategy for several kids.
I would not recommend quitting your part time job. Yes, it does increase your EFC but I do not think it will be significant trade off.

lkf725 · May 18, 2006, 11:39am

Wow suze, that’s harsh. Do you work two jobs? I think that there are plenty of underachieving families (in terms of work, savings, etc) so that we don’t have to bash a single parent for not working TWO jobs. I agree with Todd. If I effectively lost half of my second income, I wouldn’t work the second job either. How could anyone think that a single parent working a full time job is a drain on society?

MomOFour · May 18, 2006, 12:14pm

Where’s the limit on how much someone should have to work in order to ethically deserve financial aid? Two jobs, three jobs? Maybe he could add a paper route at 4am too.

I don’t see how he’s ripping off taxpayers either by hoping to get grant aid from private colleges.

Todd, the question you are asking seems to be a mystery, until you get the financial aid awards in hand. All need based aid at Princeton is in the form of grants, at other schools it may well be largely loans, or you could be left with large gaps. The makeup of the package can be hard to predict but if you read the boards here for a while you’ll see trends. Be sure to consider financial safeties, schools where your son would qualify for merit aid based on his stats.

system · May 18, 2006, 1:49pm

He already works two jobs, I didn’t suggest the second one. I’m shocked so many of you find his approach OK. Boy do I appreciate what my parents do to send us to great schools.

sketchy · May 18, 2006, 3:50pm

I appreciate all the helpful advice. One of the schools my son’s teacher is suggesting is USC, which states they offer 100% need based aid. It sounds like most of the aid I’d receive with one job would be in the form of loans, which is the info I was looking for.

I probably shouldn’t even bother responding to Suze’s posts, but it’s too hard to ignore that kind of sniping. Being a 46 year old single dad working 64 to 88 hours a week is not only taking it’s toll on my health, but more importantly takes time that I could spending with my kids. Finding a balance between making money and spending time with my kids isn’t easy, but I’ll always choose my kids over money. I think I could explain this to my kids and they would respect me.

usna_reject · May 18, 2006, 4:02pm

I feel it is okay for you to quit that second job. Growing up my father worked day and night and I hardly got to see him, plus it made him a grumpy person. You should not have to work so hard just to pay for your son’s college. Help him as much as you can but he’s gonna have to save up himself to get his degree. My parents did not give my brother a penny and he went to UIC working at Burger King to pay his tuition. Not the easy way but parents have done so much for their children that we need to work on our own and help them out too someday.

sjmom2329 · May 18, 2006, 4:50pm

Sketchy, I don’t think it will help your kids if you keel over from a heart attack!!! Honestly, I’d run the numbers and see how things work out both with and without the second job. Maybe your son could work two jobs during the summer, one during the school year and take out some loans in his own name. You are talking about coming up with $12K - $18K, maybe less if your numbers above didn’t take out taxes. Either way, while you still have young children, maybe you could take a PLUS loan and pay it back over time. It may not matter to you if you work a second job when your children are grown.

bluebayou · May 18, 2006, 4:58pm

is that Univ of Southern California? If so, they have a generous merit program for national merit scholars.

However, I would not assume that your aid would all be in loans bcos it depends on the schools – some are more generous than others when it comes to self-help. As MomofFour notes, P’ton is generous with all grants, and I believe Brown offers grants in the first year. Other schools (JHU, NYU) beleive in a lot more ‘self-help’ at least what I’ve read on these boards.

Thus, it also helps to check individual school websites – some finaid offices have (somewhat) clear examples of what a package might look like for someone in the $80k salary range; perhaps $4k Stafford, $3k workstudy, $4k parent Plus loan and the rest in grant/scholarship $$.

btw: Grant money at many private schools is voluntarily donated; ‘taxpayers’ only indirectly subsidize scholarships thru the giver’s tax deduction, which they receive regardless to whom the grant is awarded.

zagat · May 19, 2006, 2:43am

I’m surprised that nobody has brought up what seems to be the bottom line for people in your income bracket (and mine), especially those with 3 kids: unless you’ve saved like crazy, you probably can’t afford to send one to a school that costs 40 thousand.

Of course there are exceptions such as a kid qualifying for a lot of merit money, but in general those making one hundred thousand more or less who live in high COL places do not end up with retirement savings if they pay for pricy colleges.

If your son is not aiming at schools like iviews, expect to be gapped and for you both to take large loans. And even ivies are unaffordable for most in your income range whichis why they all have such a low percentage of middle class students.

Am I correct that DC residents get in state tuition anywhere? I think you probably want to look at state schools as financial safeties.

sketchy · May 19, 2006, 3:57am

Bluebayou: yes, that would be the Univ. of So. Cal. I’ll follow the suggestions and see if I can pin down what USC’s aid package might look like.

Zagat: I live in the D.C. suburbs(Rockville, MD) so I can’t take advantage of DC’s tuition assistance program. Thanks for your sobering view of the economic realities of paying for college. My son is extremely talented and has worked so hard I was hoping to provide the best education he could qualify for. I guess everyone wants that for their kids, and not everyone can send their kids to Ivy League schools. I’m obviously pretty naive about this stuff, I guess I thought that somehow colleges would make it work if your kid was accepted.

calmom · May 19, 2006, 4:01am

sketchy – I’ve done the math myself – I figured every extra dollar I earn increases EFC by 44%. I don’t know if the 44% rate holds constant, but I ran several different hypothetical scenarios on an EFC calculator, and it kept coming out that way. If you also factor in the taxes you pay, as well as the possibility that higher earnings put you in a higher tax bracket, you can end up keeping very little of your paycheck - especially if you have to pay state income tax as well.

FWIW, the reason I was doing the math is because I wanted a raise… I decided to go ahead and ask for it because obviously I am doing the work anyway. I’m still in a low tax bracket – but bottom line if I were to make $10K more, about $3000 would go to FICA & state & federal income taxes, $4400 to increased EFC, leaving a net gain of $2600.

You are probably paying a higher marginal tax rate than me, but lets assume conservatively that 30% of your pay check also goes to taxes & withholding. So out of $30K in earnings, you would net $7800.

If I were in your shoes I’d quit the second job. You can ignore the naysayers here – its not your fault that the financial aid system is built in a way that is a disincentive to earning more. (And I’m pretty sure that the people clucking their tongues don’t work as hard as you do, never have and never will) It’s even worse with student earnings, which get assessed at a full 50% rate, and then double assessed when whatever is saved from work is viewed as an “asset”. The very worst thing a student can do for their financial aid situation is to take a semester or a year off from school and work full time.

If the financial aid system were better, it would create incentives - not disincentives - to earn more. Right now it is structured in such a way that it simply doesn’t allow either a student or parent to really get ahead with modest increases to earnings… so why bother?

However, you asked another question, which is how much of the aid will be grants, and what will be loans. The answer to that is: you won’t know until your kid gets in. You can get some information from data reported by colleges – what you want to find is colleges that guarantee to meet 100% of need, and then check to see what the average amount of a loan to freshman is. If the average under $3000, you’re doing great --that school probably packages the aid as mostly grants. But keep in mind that the college, not you, gets to say what “need” is - they will use their own formulaes, will certainly count your home equity, and may consider other assets as well-- their definition may leave you with an EFC much, much higher than FAFSA figures.

However, here’s the rub: MOST colleges do NOT guarantee to meet full need. And almost all colleges that do could be considered “reaches” for most students – the minute you start looking at the type of school where your son could be reasonably sure of getting in, you are out of the realm of the well-endowed, generous-with-grants, 100%-need schools… and into the world of maybe, maybe not. So basically you face at least 2 possible scenarios, where your damned if you do, damned if you don’t.

Here is what I would suggest: quit knocking yourself out. If you like your 2nd job and the hours are flexible, then work at whatever your comfort level is. If you hate the job and are coming home exhausted, then quit the job - you can always get another. The reason I say this is that since you can’t really win the financial aid game, you should at least follow a course of action that you are comfortable with. If you are being paid only 24 cents on the dollar, then there is no point in working beyond your comfort level.

(* Disclaimer: my math is very rough – the financial aid formulaes actually do take into account taxes to a certain extent, so it may be that you net a little better in the long run. I don’t want to get into a debate with people over whether it really is 24 cents or maybe its 35 cents that you keep out of your check – the point is, its well under half when you account for everything. )

sketchy · May 19, 2006, 7:02am

Thank you so much for stating my predicament much clearer than I could. Your math matchs up with mine almost exactly.

I like my full-time job but dislike my second job. I started out working there 16 hours a week which was fine, then they upped my hours to 24, then 32 and sometimes more.

lkf725 · May 19, 2006, 7:46am

This seems to be the experience of those in my public school district, but do you know if it is really true that ivies have a low percentage of middle class students? Do you know where I could find this information?

calmom · May 19, 2006, 8:18am

Ivies do have a very low percentage of middle class students; the financial aid issue is one reason, but it is also harder for poor & middle class to win admission in the first place, simply because they are less likely to have attend the type of high schools that prepare students for Ivy admissions and less likely to have the sort of resources that would help win admission. In other words, it’s a lot harder to get into an Ivy if you attend a public high school in a small town and your main EC is your afterschool job at McDonalds than if you are coming from an elite private prep school. Barrier #1: getting in; barrier #2: the money. (If barrier #1 wasn’t so great, there would be a lot more lower class and poor students, since the Ivies pretty much give a full ride to Pell-grant qualifiers)

Sketchy – I ran a scenario based on the financials you provided using the calculators at finaid.org – it isn’t quite as bad as I said in my earlier post, probably because I should have subtracted out the taxes first – it looks like the EFC increases by about 47% of your after-tax net. So this leaves you getting about 35 cents on the dollar. I still think you are better off home with your family – maybe you could quit the 2nd job you now have but think of a less stressful way to earn a little bit extra, such as a home-based business. Something that nets you a greater return for less effort in terms of time expended.

As to college - you need to have your son focus primarily on colleges where there are good prospects for merit aid, and also let him apply to Ivies or other top colleges, but make sure he knows he won’t be able to go without good financial aid. An Ivy-caliber student should be able to get excellent merit aid, including full ride scholarships, at many excellent but less prestigious colleges.

zagat · May 19, 2006, 9:38am

If you follow posts on this site, you will read about lots of kids who got into schools they could not attend in the end because of money. It seems that believing if you get in the money will follow is common.

I think it’s essential to get as best a handle you can before the student applies to prevent dissapointment.

There ws a recent thread on the parent’s forum about not being able to go to dream schools, it’s a good read.

Should I quit my second job?

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