Should I write an appeal letter?

calmom
Mon, 21 Jun 2010 19:25:59 +0000

Once your income hits a certain threshold, you can reasonably expect your EFC to go up by $440 for every additional $1000 earned. That’s built right into the FAFSA formula.

It’s not a percentage of your overall family income. Think of it this way: the financial aid system is built on the assumption that your family needs a certain amount of money to pay for basic needs, and above and beyond that amount, income is discretionary: it can be spent on a new car, paying down old debt, a vacation, college tuition. The financial aid system doesn’t expect families to give up on basic needs, but they don’t feel any need to subsidize the “discretionary” part – that is, from their perspective, why should they pay out their limited grant funds to help some family with discretionary income go on vacation?

I think your family has to be aware that as the income increases, you will lose eligibility for financial aid. I mean – BC isn’t going to care that you were “poor” (though $63K is actually comfortably middle class) when you came in, if your parents are raking in $145K.
And your parents are going to have to recognize that their good fortune is going to mean that you will probably be eligible for little or no need-based aid during your junior & senior year.

The best thing your parents can do is work with good CPA for tax and investment advice. If they look at the cost of college as the only factor, then it will seem like a frustratingly large piece of their new found money is going off to pay for your college. But they can make choices that will save them money in other areas, as well as provide a better foundation for the future. Also, there may be tax advantages to them if they deposit money in 529 account as they earn it, and then pay your tuition from that account. So please encourage them to talk to someone who can help them make responsible decisions over the next few years.

Also, your parents are eligible for PLUS loans, and if they expect the new income level to last for years to come, then PLUS loans are kind of a way to “pay it forward”. That is, rather than paying $50K out of pocket for your senior year, they could pay $20K and borrow $30K, paying that off over the next several years – and thus reducing the impact on their current cash flow. Or - they may find it more cost effective and flexible to use some other sort of borrowing, such as a home equity loan.

I know its frustrating, but the overall picture is quite rosy – I mean… look how much your parents are making now! You’ve gotten a substantial discount on tuition for your freshman year, and still have a big discount your sophomore year – so as far as the whole package is concerned, your parents had the help when they needed it the most.

Every college has its own procedures, so you can’t really compare BC to Cornell’s… but I do have one question – is Cornell’s award possibly based on older information than BC’s? I have sometimes done a FAFSA early, based on estimates, and then later had to go back to correct it once my tax returns were files. By the time the amended FAFSA was done, our choices were narrowed down… so I always kept in mind that the earlier, “better” offers might have been subject to change based on the new information.