I work in non profits as does my partner. Currently we are under the 200k threshold and got a good aid package that the FA officer said wouldn’t change unless our circumstances changed. I see jobs for a higher level/slightly different position that would have me making 7k to 15k more but I don’t want to screw up aid (and might not even get them). I love my work and how it helps people and it’s kind of the same everywhere so have been thinking I should stay put but wonder when it won’t matter for the FA? It seems after the 2028 tax year? Partner’s job is clear cut progressive raises.
I think it’s 2027 taxes that will matter. Our D26 (so expecting graduation in spring 2030) started her first year and that used 2024 returns. Next year will be 2025 tax year. Then third year is 2026 and fourth year is 2027.
Also, in talking with financial aid folks, it doesn’t look like the numbers will be as dramatic as what some NPCs seem to indicate. Basically, you’ll only pay some fraction of your income above $200k. So for the most part, it’s always worth earning more.
FAFSA uses prior prior year tax info, and asset info as of the day you file the form.
So, for a 2030 grad (it sounds like you mean college grad based on the quote below?), 2027 tax return would be the one used for FAFSA 2029-2030, which would be the student’s last FAFSA.
Since you have spoken with FA staff, why not ask them this question? You might also use the college’s NPC to model this change.
In the big picture, even if FA decreased, it’s likely it would be lower than your increase in earnings. Said differently, I would be looking at the total financial impact before hesitating to apply for a promotion/job with greater pay simply because of the impact on financial aid.
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This! Because taking a better job is an investment in your future earnings most likely.
I am sure I won’t get this quite as it has been stated by another poster…but IMHO, your job and income situation should not be driven by financial aid. UNLESS…your kid is getting a full free ride that is means tested and you will go over the threshold.
But agree with others. The 2027 tax year (for 2029-2030 academic year) is the last one you will need for those financial aid applications.
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Thank you everyone. The reason I am wondering
is because I had a one time payment of around $10k on the return we filed for the original FA assessment. When I appealed the original FA decision explaining this, they cut $20k off our contribution! I really don’t need a promotion or $7k - 10k more in income as much as I need to know that the FA will stay at an amount I can afford. (A promotion in my field isn’t always better. Think of it as maybe teaching one fewer class and doing more admin of the dept. when you actually really like the teaching best. ) I just like to think through the ramifications of my decisions and of course I know the FA office knows best but it’s hard to get an answer you can count on with a hypothetical scenario. I think I’d prefer to hold tight for another 18 months through the end of 2027.
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Have you walked through the holistic implications of more money?
Retirement contributions- have you already maxed out, or would you be able to contribute more, tax deferred? Other benefits- does this push you into a better/more comprehensive at less cost health care plan, life insurance, disability? Pension-- does more money in the years before retirement net you a significantly greater payout? For some employers the answer is yes, for others, no.
I’d be more focused on the big picture. I have a friend who is an employee of a non-profit who discovered late in the game that the promotion she had turned down (for quality of life issues-- more stress and a slightly longer commute) would have pushed her into a different category for her retirement benefits. Her rationale for turning it down was “I don’t need the money”. But a bigger check (for the rest of her life, with a survivor benefit for her spouse) post-retirement had not been part of her math. The formula was so heavily weighted towards “past three years earnings” that taking the new job would have been a no-brainer.
Do the math!
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If you put in your finances in the college net price calculator, does it give something that matches your actual financial aid? If so, and you then change your income to be $7k-15k more, does it worsen the estimated financial aid by more than $7k-15k * marginal_income_tax_rate?
Obviously, also consider the “big picture” effects as noted above.
You would certainly think so, and in most cases this is likely true, but it does depend on the school. Our family income was close to the $200k threshold when we first began looking at schools for D26, and the NPC for one well-resourced LAC was showing $20k family contribution at $199k income but $40k+ family contribution at $205k. This seemed absurd, so I called the Fin Aid office. While it took a lot of probing, they acknowledged each of my points and ultimately conceded that, yes, their special program for sub-$200k incomes is an overlay on top of the usual financial aid process - and those who cross that $200k income threshold are no longer a part of the “program” and thus are back in the “normal” financial aid pool with far less generous aid.
Big picture, I would always check with the financial aid office at your specific college before making the kind of job move that OP is considering. In fact, exceeding a specific threshold is only part of the issue - at many schools, aid diminishes sharply between $200k and $300k. As others have said, there may be various career ladder benefits or additional perks that come with a promotion to a higher comp level that make it an easy decision. But I would generally not advise anyone to grind away at a second job that puts you further up in the 200k-300k bracket unless the family isn’t making ends meet, which is very possible for larger families in high COL areas. Indeed, even in medium-high COL areas like ours, 200k isn’t what it used to be.
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This seems to be common among many schools. Not just income, assets may also push you off cliff (cliff effect). The cliff is different at different schools. The FA is not like income tax return (bracket based).
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Exactly…the fine print at many schools says the family must have ‘typical’ assets. Purposely vague. People can run scenarios on the NPCs to see the various breaking points, but there’s not much you can do if the family has greater than typical assets.
This is what I had noticed too-that after the threshold, things really changed with this school too. $10k in additional income, which was not even $10k net, seemed to increase our price by $20k. My opinion is that it is just not worth it. As I mentioned I am ambivalent about the job change (will not affect my retirement witj any significance) and can always make a change in two years.
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