EFC is now figured to be $100k…’
Well so much for rechecking and recalculating, as our EFC went up by $10k!
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so, even if a $50k equity house was eliminated , that would only knock off 6% of that $50k…not much of a reduction at all.
This OP needs to cut the EFC in HALF really. Most colleges are in the $50,000 or less range. Their EFC is $100,000 as it stands right now. And it’s not all because of $100,000 in rental equity.
I have to say I’d love to have your problem. Our total income is ~$60k/year, we have 2 kids to put through college, and our main asset is the house we live in. We qualify for roughly $1000 of Pell but our income is too high to qualify for meaningful need based aid from schools. Even the most generous packages (at the sleep away schools my son applied to last year) would have required us to come up with $15k/year (not including the federal student loans he would have had to take out each year). We just don’t have the money for something like that. However, my kids will still be able to follow their dreams because their dreams don’t include a particular school. They include a particular life and that includes a college education {and low debt}, both of which they’ll be able to attain because they’re going to commute to a local state school.
I’m confident that your kids will be able to follow their dreams too. They just may have to alter them a little bit. At least we’re in a position to be able to send our kids to school.
i just want to mention that the four years of college is not really “the dream”…or at least should’t be. A person’s future life, career, spouse, children, grandchildren, etc are really “the dream”. ’
I’ve had 2 kids go thru undergrad and it passed with a blink of the eye. That was not their dream. lol
Yes that’s exactly what I meant. following their dreams. A school…whatever school is just a way to get to that dream. I honestly wish I had been smarter just starting out…saved money like crazy but wasn’t smart enough to realize to put the max every year in retirement! We only got smart with that in the last 15 years…if only I could go back and do things differently. We also made the mistake of saving up for a retirement house and possibly a business (we just don’t like borrowing money), as we thought DH may get out in the next few kids. That was lesson #2. Don’t stockpile money before kids go to college! Very dumb.
Yes, you might have done some things better (who couldn’t) but your savings give you options that many don’t have. You could have put everything in retirement accounts and a house and find that you couldn’t afford the EFC and any amount the school gapped you on top of that. Then ANY college might be off the table without loans. As it is, you could loan the money (not for a private full cost but maybe a in-state school) to your son and have the interest go to you rather than the government or bank.
Although FAFSA ignores retirement savings, I’m not sure that all CSS schools do. I remember reading an article that featured some FA officers and they said that they will look at large amounts in retirement accts.
And elective current year retirement contributions are added back in FAFSA EFC calculation.
Did your son consider military academies? Then your savings could be conserved for that future half-million+ retirement home.
Agreed with above…any of the service academies would be an option that would not be a financial burden for the family.
And this student already has acceptances to a few schools with good scholarships. So it’s not like he doesn’t have some options. With a full tuition scholarship, and the GI Bill benefits, this family would be looking at very little out of pocket cost for college.
What am I missing? The OP already has two homes that are used as rentals. One of those could at least be a retirement home temporarily. Need based financial aid is not really designed to help families keep rental properties. It is designed to help students who are not fortunate enough to have the cash for this type of thing. And yes, I realize these are investments for the future.
Please start looking at the cup as more than half full. Your kid has already received some full and partial tuition scholarships. You are fortunate that you have the assets you have, even if they affect college need based aid. You are fortunate to own two homes. You are fortunate that your husband has a good job with good benefits, pension and health insurance.
And you have a son who already has some affordable college acceptances on his plate.
Your kids absolutely CAN go to any college that accepts them because you have the money to fund it. You don’t want to. There is nothing wrong with making that choice, but recognize that you are making a choice. No one is here to judge how you choose to spend your half million in savings, but you can’t possibly believe you are being wronged by the FA system, can you? Where do you think the line should be drawn?
How much was your return on your investments last year? Colleges expect 5.6% contribution of your savings after a certain threshold, which varies by the college. You should be able to fund your savings portion of the EFC off of your ROI alone, and never have to touch your principal!
^^Good point–> 5% after tax earnings on a $500k portfolio is $25k, add in the $20k GI bill money and $15k from kid’s and parent’s current earnings and you are at $60k.
I think the issue is that sometimes savers feel that others with similar or better incomes wasted their money and then their kids get lots of FA.
While that sometimes happens, because the FA world isn’t perfect, most times the student doesn’t have the stats to get into a full need school, so the child from the wasteful family also gets screwed.
Going to pricey schools is a LUXURY. And, people are asking those schools to give them money so that their kids can be educated. When you think about it, that is an odd situation anyway. For other desired pricey items, you’re expected to pay for yourself/kids.
It’s also about economics. Is the pricy private school worth the $250K+ that it’s going to cost for a 4 year degree? I agree that the system does seem to favor people who don’t save over people who do. If you choose to live below your means most of your life and accumulate savings and little debt then you are at a marked disadvantage to those who spend above their means and live in deep debt. At least when it comes to FA. The net reality is though that above a certain level you are limited to merit aid. Good news though, it is very possible to get amazing merit aid from some great schools, but the choices are limited a bit.
The system (which system?) favors people who don’t save so they can get a whopping $5830 or less (proposed 2015-2016) Pell grant?
I’m a bit confused. With 500K in non-retirement assets, and not the primary residence equity, what would one expect?
Salary seems to be the first thing people mention when they talk about paying for college, but if college will cost 240K over four years, as most private colleges do, if you have twice that in the bank, wouldn’t they assume you can pay the 240K?
A thread from a while ago noted that the parents were making “nothing” yet they had a lot of assets because the grandfather was rich, and the student could not understand how they didn’t qualify for FA. Yes, I assume that if you do have stocks and bonds and so on, you are expected to liquidate them for your child’s college. My father had inherited some money from his brother (long-term union shift worker with stock options of a Fortune 50 company included) and he went from my oldest siblings getting a lot of FA to cashing out the stock to pay full for my college (a mere pittance compared to now).
I assume you’ve looked into using your spouse’s GI Bill for your children? There are many websites with not only information on military dependent tuition benefits, but there are also many scholarships available for military dependents.
Another thought is to check with the support services at the base. You cannot be the first person to go through this.
(And, some people do incorporate when they receive rental income, and they can run their rentals as a business and move around assets and salary. Due to the nature of the military, you might find some assistance in that regard.)
Financial aid is designed for very low income and very low asset people. People don’t purposely make less money so they can get credits like the EIC or qualify for other entitlement programs like free lunch or TANF- it would be better to make more money.
As others have said, if the OP didn’t have any savings or assets, the EFC would be determined based entirely on income. Even if it was low enough to get full pell, that’s $5600/year, unless at a full need school. Is there something else the OP would rather have spent the money on, like trips or furs or jewelry? Cause you can’t have saved it, you have to have spent it. And while spending it you have to know that your child is smart enough to get into a meets full needs school or all you are going to end up with is the $5600 pell grant good at a school where you’ll need to make up $20k in unmet need.
Fo FAFSA purposes, the $500,000 in assets will be assessed at 5.6%, not 100%. That means that $28,000 will be added to the EFC just because of the asset. BUT wait. That asset is likely earning interest, right. So really, the family wouldn’t be losing $28,000 a year, they would be losing a bit less than that…because they could add back in the interest earned each year.
Even IF $28,000 was assessed each year…that would still leave the family with about $380,000 after four years…and that is before adding in any interest the accounts earn.
Plus, they have a well earned GI Bill benefit that is added to this.
And then the balance would need to be paid out of current earnings, or a 529 if they have it.
This family seems to have the resources to make this all work…if they want it to.
And their kid already has acceptances with full or partial tuition scholarships.
They are in good shape in terms of college, in my opinion.
EFC question, as I have a friend whose spouse is in the military. Do they actually RAISE the EFC because they assume a certain amount of GI Bill aid? Like, as if there was a scholarship for X dollars?
http://department-of-veterans-affairs.github.io/gi-bill-comparison-tool/
Put in Harvard, making sure to select “child”.
You get $20,235 per year for tuition.
You get $2,817 per month housing allowance.
You get $1,000 per year for books.
They actually tell you on the site that 249 kids are going to Harvard with GI Bill benefits (and I picked the plain GI Bill, so I’m not sure how the other choices might work).
They do not assume GI Bill aid but military members have to include untaxed benefits like housing allowance. That can be a hefty chunk added on.