OP, I was reading this thread together with your other thread on safety. These are both really important concerns IMO that don’t always receive enough attention. I think the advice in both threads has been good.
I’d just add this suggestion: make sure your daughter applies to enough colleges to ensure that you have an adequate range of choices in the end. My D was somewhat similar to yours in that she had a number of criteria that she felt needed to be met at each school, and finances were a concern. In the end, she had 8 admissions to choose from, with a wider range of merit scholarships than I ever would have expected (even though we had run the NPCs for each). She had visited all 8 before applying, which meant one less thing to do once the acceptances started coming in, and which may have contributed to the seriousness with which schools viewed her application.
Her first acceptance came before Thanksgiving–great scholarship, great school, didn’t quite meet all of her criteria (for example her sport was only a club sport, not varsity; location wasn’t her first preference), but it came close. Having that first acceptance as an affordable option took a lot of pressure off, and I can’t emphasize enough how important that was to us once January, February and March rolled around.
Had we limited her apps due to location or financial issues, she probably would have had half the choices in the end, and would have missed out on some excellent scholarships. I don’t advocate shotgunning at all. But I am a big fan of getting apps in early, visiting & interviewing/auditioning (as the case may be) and applying to enough schools so that you have legitimate choices in March and April.
I did (kind of) know about the retirement savings. I don’t think at this point I expect any of the schools to give much need based aid. Of course, I don’t really know, but none of the schools meet full need anyway. I also don’t think I fully understand “the process”. So, let’s throw up some numbers and see if I am comprehending:
$60,000 COA
(15,000) Merit academic scholarship
(10,000) Talent based scholarship
$35,000 balance (assuming the scholarships stack)
Now let’s say our EFC is $25K.
If they offer us $0 in grants, it won’t matter what we take from retirement, right?
Let’s pretend they give us $5K in a grant to help with the gap. We would still be on the hook for more than our EFC, so would they still reduce the imaginary grant if we took a few thousand out of our retirement?
Now lets say we also took $5K in Stafford loans (in both scenarios). Does that change things?
There are 2 schools on our list that are pretty transparent on their academic awards. I am rounding, but they look something like this:
$42,000 COA
(16,000) academic sch
(3,000) low end talent sch
23,0000 balance
If this is lower than our EFC, it doesn’t matter right? Would we still be able to take the Stafford loans?
@MidwestDad3 We are trying! Really we are! It is so hard when auditions are a part of the process. I mean, she really needs to apply to more schools because there are no true safeties where audition based admissions are involved. OTOH, it is so very hard to schedule and travel for that many auditions! Ugh! Some of the schools she is looking at have audition and non audition programs that are of interest to her. My goal in the next week or so is to call the schools and clarify if she can apply to both from the beginning or if she doesn’t get in on audition, but has been accepted to the main school, she can just reapply to the music school for the non audition program. I would think at least the latter is a possibility.
Congrats to your daughter! That’s great!
Just curious, you have been running the next price calculator for each individual school, right?
No, money taken out of your retirement account won’t magically reduce the grant from the college itself. They don’t care where the money is coming from to meet your EFC.
What will happen is that the withdrawal from retirement will appear as income when you file your financial aid paperwork the next year. That increased income will affect the amount of need-based aid your daughter will be awarded.
Most often Stafford loans are part of the financial aid package (in that case they might include both subsidized and unsubsidized loans). If they aren’t offered within the aid package, your daughter can still borrow them, but they will all be unsubsidized.
" There are plenty of colleges that are on rolling admissions and she is a relatively high stats kid. She could get in somewhere last minute if nothing else works out.
THOSE are the colleges she should apply to FIRST, not LAST!
If she has a high likelihood of being accepted then get those safety applications done asap!
Nothing is as nice as having the security of at least one acceptance in the bag EARLY!
There is no guarantee that rolling colleges will still have openings in April .
“Just curious, you have been running the next price calculator for each individual school, right?”
We did a year or so ago (using 2013 income). I realize there have been changes this year re: the EFC and I also realize tuition, etc has changed. Our income / assets are probably about the same for 2014 (the numbers I would have on hand now) but will be less for 2015. I don’t think we will qualify for financial aid from the gov’t and I have a general idea of our EFC. I also use several other websites for getting a feel for how financially generous a particular school is. Also, some schools have been pretty direct with what kind of academic merit $ we would likely receive or be eligible for and some have given us “ranges” as far as what they award for talent based awards.
@happymomof1 I guess my post was poorly worded. Yes, I did understand the retirement withdrawal counting as income on the FAFSA and that changing our EFC. I don’t think we will be eligible for any financial aid. So, the FAFSA would really just be for EFC purposes, right? I guess what I was wondering is if we are still paying more than our EFC (after our EFC goes up because of the retirement $) would the school adjust the imaginary grant $ (not scholarship $) to keep the “gap” the same. So using the first example:
Year 1: $35K cost after scholarships / $25K EFC / School grants additional $5K / leaves 5K gap
(Then we take $ from retirement and our EFC changes)
Year 2: $35K cost after scholarships / $26K EFC / School grants ? ($5K or reduced to $4K to keep gap the same?)
Follow up question being, if the scenario is that there is no need based aid awarded whatsoever, does my retirement withdrawal matter? (Other than getting taxed on the withdrawal, which I understand.)
It is fairly typical for colleges to offer a net price of what they consider your EFC (which may vary from one college to another and is not necessarily the same as the FAFSA EFC) plus an ESC (expected student contribution of federal direct loan and/or work study and/or expected work earnings). The ESC is commonly between $4,000 and $10,000; those in the lower range can often be covered with either the federal direct loan or some realistic work earnings, while those in the higher range need both.
Of course, your AFC (actual family contribution) and ASC (actual student contribution) may not be the same as the EFC and ESC at a given school.
When there is both need-based aid and merit scholarships involved, many colleges will apply the merit scholarships first to ESC (replacing loans and work earnings with the scholarship money) but then reduce need-based grants before reducing EFC.
No, your EFC doesn’t change from $25k, it’s just that you’ve been ‘gapped.’ If COA-scholarships= $35k, and your EFC is $25k, the school could fill that in with a grant, but probably will use the Stafford loan and maybe some work study for that $10k gap. If you still have a gap, you can pay it the same way you’ll pay the EFC (savings, earnings, more loans).
Honestly, in the scenarios you’ve given, you aren’t getting any need based aid, so whether you use the retirement in year 1 and it makes the EFC go up slightly in year 2 won’t really matter (except for your taxes).
Year 1: COA $60k, Merit $15k, Talent $10 = $35k. EFC $25k. You need to pay the $25k plus the gapped $10k ($5500 in Stafford loans, $25k your savings?, $5k retirement?)
Year 2: Same COA and Scholarships, but EFC is now $27k because of the retirement withdrawal upped your income. Still have to pay the $35k from savings, loans, and perhaps more retirement?