Fasfa tips

Money saved in the kids names really hurts.

Ironically, if you did everything you could to prepare financially for your son's college, you are likely to get LESS financial aid, then a similar wage earner who did nothing except buy cars, tvs and expensive vacations.

You can do some financial planning on this issue - but that planning needs to be finished as of the end of the year BEFORE your son matriculates into college.

quote:

Originally posted by Goosegg:
Money saved in the kids names really hurts.

Ironically, if you did everything you could to prepare financially for your son's college, you are likely to get LESS financial aid, then a similar wage earner who did nothing except buy cars, tvs and expensive vacations.

You can do some financial planning on this issue - but that planning needs to be finished as of the end of the year BEFORE your son matriculates into college.

i've been saving money in my sons name just for this reason BUT I dont want to liquidate the stocks pay taxes on them and have to use the money right away.I told admissions i did not want to be punished by doing the right thing.when i entered the amount which was approximately 14k the savings were about 1500 per year..The portfolio could make that easily in the right market..so of course these decisions make the process even more stressful.One thing i have realized over the last 3 years in particular is the more irresponsible you are the better off your pocketbook is.when the govt gets involved in education the right gets punished and the others get the rewards.I am basically going to ask for two reviews from each school and then try to present them with what i can afford.any tips on how to negotiate with private schools???

I understand your frustration,I really do.

The schools have extremely strict guidelines when it comes to giving out financial aid.You have the government aid which you arent going to get unless you are below povery level.The Cal Grant if you are in California has pretty low income amt as well.

Most private schools have institutional aid that they have for students that may not qualify for govenment money but are still in a very low income status.They have to account for every penny they give out especially to athletes.NCAA isnt going to allow schools to hand out money to athletes without them meeting the needs.

The paper work involved for institutional money is invasive to say the least.You will hand in everything.Savings, bank account numbers,at least past two years taxes,letters explaining why your in such a hardship with every detail possible.Very time consuming, and then it all goes in front of a committe to see if it meets the guidelines to qualify for institutional money.

You can appeal all you want,but if you have money saved for your childs school,you are going to be using it for his school.Maybe doesnt seem fair that only the very needy qualify,but that is the way it is.

I can say if you can proove a need they will help you.

Ivies and Stanford base it on your income now I beleive.

quote:

Originally posted by wogdoggy:
couple of questions if anybody knows..the fasfa..if parents are older does this help the chance of getting money? if the parents have no college does this help or hurt the chances of getting money? parents own their own biz..does this help or hurt ? money saved in kids name ,,does this help or hurt? what are some tips in getting more money..thanks in advance.

I work in higher education, not in the financial aid department, but in an area where I must be familiar with much of this information.

Age of the parents does not have a significant impact, as income and financial resources are the primary interest.

If both parents have no college that will open up more opportunities for grants and/or scholarships because first-generation college students are considered more at risk.

If the parents own their own business the assets of the business will be considered.

As stated elsewhere, money saved in the student's name actually works against him receiving aid.

I know much of this does sound backwards, and don't get me started on the plights of the parents who tried to save in state-funded educational plans to freeze the tuition rate for their students.

Another little-known fact is how divorced parents are considered. Here's a real-life example:

Johnny's mom and dad are divorced. He lives with Mom, who has re-married, and she has primary custody - the new husband has not adopted Johnny and has no legal guardianship of him. The terms of the custody agreement say that Johnny lives with her, she pays his medical insurance, etc., Dad sees him every-other weekend and provides child support, and he claims Johnny as a dependent on his tax return.

For terms of the FAFSA, the income considered for Johnny's financial aid eligibility will be his Mom and her new husband, the man who legally has no financial obligation to this young man.

2013 gave a good reply there.

I would add to this, however, by saying in my experience that if the parents are closer to requirement age than most, they can use that as a part of an appeal for special consideration.

If you son is a 1st generation going to college, he may qualify for some "Trio" program support, however I am fairly sure those have income caps that are fairly low. (Maybe 2013 knows, as I have been out of HE for a while.) And I don't even know if Trio is still funded....

If not, as 2013 stated, the 1st gen status will possibly give him a 'flag' for consideration in awarding institutional monies.

Good luck -

quote:

Originally posted by BaseballmomandCEP:
2013 gave a good reply there.

I would add to this, however, by saying in my experience that if the parents are closer to requirement age than most, they can use that as a part of an appeal for special consideration.

If you son is a 1st generation going to college, he may qualify for some "Trio" program support, however I am fairly sure those have income caps that are fairly low. (Maybe 2013 knows, as I have been out of HE for a while.) And I don't even know if Trio is still funded....

If not, as 2013 stated, the 1st gen status will possibly give him a 'flag' for consideration in awarding institutional monies.

Good luck -

Trio is still funded at our institution (a community college with an enrollment of approximately 9,000 credit students) although it has fluctuated in the past few years. I don't have enough knowledge of the income requirements to be anything other than dangerous. ;-) The FAFSA and most individual institutions will ask specifically if either parent has any college (not necessarily a degree - just if they ever attended).

quote:

any tips on how to negotiate with private schools???

Your best bet with private schools is 'merit' based aid. If you're looking for 'need' based aid then money in the child's name really hurts, money in taxable accounts is considered next.

Being old (like me!) and near retirement doesn't really help much since it is probably the time in your life when you assets are at there max value...

It doesn't seem fair that they seem to consider any money you have as 'available'....

quote:

Originally posted by Hawk19:

quote:

any tips on how to negotiate with private schools???

Your best bet with private schools is 'merit' based aid. If you're looking for 'need' based aid then money in the child's name really hurts, money in taxable accounts is considered next.

Being old (like me!) and near retirement doesn't really help much since it is probably the time in your life when you assets are at there max value...

It doesn't seem fair that they seem to consider any money you have as 'available'....

There was an article recently (that I can't immediately put my hands on) regarding how obsolete the formula has become for calculating Estimated Family Contribution. It's a very old formula, and is clearly far from accurate for today's families. I'll try to find the link.

I spent most of yesterday evening filling out the CSS Profile form for one of the colleges my son applied to. Basically, we have an amount in our mind that we are willing to contribute. If the college can't meet us at or near that amount, he doesn't go there.

My thought is that our savings is for an uncertain economy, uncertain job situations (our company is just starting to cut back), and for cash purchases since we believe in saving for our major purchases (besides our house). We do have quite a bit set aside for college but the market managed to take a big bite out of it in the last few years, so there is not as much as we anticipated.

We drive 8+ year old vehicles, save ahead of time for our big vacations that we take every other year, and have taught our son to avoid going into debt. Now he gets to learn the lesson that sometimes doing the "right thing" can work against you, but you need to stick to your principles. We cannot sacrifice our financial security for a high sticker price college education.

Fortunately, he does have some good alternatives that have offered merit based money (yes, working hard in school can still pay off even if the college and government think your parents have plenty of money).

Wog - while you don't want to sell the stock in your child's name, the college implicitly uses roughly 20% of the child's assets each year as part of the EFC. So, either you sell it or you cover that amount.

On the other hand, colleges expect a parent to use far less % of their assets each year. If only there was a way for the child's assets to return to mom and dad - as a whole the family unit is better off.

Gang....nobody said college was free!!! If you saved for it you left open doors for your children. Not to be mean but just because you get married doesn't mean the state (tax payers) need to pay for their education.

I don't make much right now but I fully expect to pay and although hope to get some aide, I am uncomfortable with the concept. I have never expected others to help pay for things and honestly, whatever we get in aide is really just other people's taxes or full payment.

In some cases it may be taxes, but in many cases - especially with private schools, you are getting financial aid due to the generosity of of past graduates or others with a connection to the university. If it were not for those people, very few in the middle class could afford schools like Vandy, johns Hopkins, rice, emory, wash u of st. Louis, the IVY schools, the claremont system, etc., etc.

IMHO, take that money with gratitude and then when your career allows, donate, donate, and donate so that other middle class kids can receive that same quality education.

You can look at your education as a capital investment - which means you can pay for it over time (through some loans or giving back in the future) (like an income producing asset) or you can look at it as a simple expense which should be paid for as you incur the expense. But, with the insane cost of private schools, and the budget cuts (and rapid increase in public university fees) impacting public schools, educating yourself on the intracacies of available financial aid is a must.

There is a big difference between saddling a college graduate with too much debt and taking advantage of financial aid (grants) which you can mark down as a moral debt to be gtiven back in the future. It is not a weakness or moral failure to invest in your future.

quote:

Originally posted by calisportsfan:
Gang....nobody said college was free!!! If you saved for it you left open doors for your children. Not to be mean but just because you get married doesn't mean the state (tax payers) need to pay for their education.

I don't make much right now but I fully expect to pay and although hope to get some aide, I am uncomfortable with the concept. I have never expected others to help pay for things and honestly, whatever we get in aide is really just other people's taxes or full payment.

nobody's looking for free JUST FAIR..dont want to be taken advantage of becuase i did the right thing and have some cash in the bank.there are ways around it,,unfortunately I did not want to liquidate my kids stock portfolio that i have been putting money away every month for years so i dont have to pay 10k more in tuition over 4 years..save do the right things in life but watch your neighboor who buys himself cars and doesnt have a penny in the bank go to the same place way cheaper ..when the govt took over our education syatem they also incorporated values that punish the good and reward the "bad".

I have read that you shouldnt put any 401K info on there for parents info, does that still hold true?

quote:

I have read that you shouldnt put any 401K info on there for parents info, does that still hold true?

It didn't ask for our 401K balance but we we're required to put down what we contributed the previous year.

Do they assume that your contribution could be 'reassigned' to pay college expenses??

"Do they assume that your contribution could be 'reassigned' to pay college expenses?? " [/QUOTE]

Yes, that is how I understand it. That money could be put toward college costs.

quote:

Originally posted by keewart:
"Do they assume that your contribution could be 'reassigned' to pay college expenses?? "

Yes, that is how I understand it. That money could be put toward college costs.[/QUOTE]


tough system to beat,,sounds like a safety deposit box, cash, silver coins are the only way around it..again just do the right thing and you'll pay for the people that do the wrong things.

It looks like they count the cash in the safety deposit box and under the mattress:

"Assets include:

•Money in cash, savings, and checking accounts
•Businesses
•Investment farms
•Other investments, such as real estate (other than the home you live in), UGMA and UTMA accounts for which you are the owner, stocks, bonds, certificates of deposit, etc.

Assets do not include:

•The home you live in
•UGMA and UTMA accounts for which you are the custodian, but not the owner
•The value of life insurance
•Retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)"

I just filled out the CSS Profile over the past couple of days. It asks for much more than the FASFA including cost of your home when you bought it, current market value, and how much you still owe on your mortgage.

Trouble is, I can give the current market value; however, I don't think anyone is currently buying around here from the homes that have been on the market for over six months down the block.

I also did the "Net Price Calculator" on College Board. After it gave me the reply that I can afford to pay the entire price of one of my son's top choices, I had to break the news to my son that this may not be a possibility. I'm calling Financial Aid next week to see if I get a different answer.

Anyone else filled out the CSS Profile?

quote:

Originally posted by VaRHPmom:
I just filled out the CSS Profile over the past couple of days. It asks for much more than the FASFA including cost of your home when you bought it, current market value, and how much you still owe on your mortgage.

Trouble is, I can give the current market value; however, I don't think anyone is currently buying around here from the homes that have been on the market for over six months down the block.

I also did the "Net Price Calculator" on College Board. After it gave me the reply that I can afford to pay the entire price of one of my son's top choices, I had to break the news to my son that this may not be a possibility. I'm calling Financial Aid next week to see if I get a different answer.

Anyone else filled out the CSS Profile?

the more you have the more of it they think they deserve,,i would super low ball any estimate on home valuations

quote:

Originally posted by Goosegg:
Wog - while you don't want to sell the stock in your child's name, the college implicitly uses roughly 20% of the child's assets each year as part of the EFC. So, either you sell it or you cover that amount.

On the other hand, colleges expect a parent to use far less % of their assets each year. If only there was a way for the child's assets to return to mom and dad - as a whole the family unit is better off.

Wog, like Goosegg mentioned you could cover the amount from your other funds or paycheck, equal to what should be contributed from your child's account. I am far from a tax accountant, but if you give to a church or charity, you could "donate" part of your child's stocks to that charity each year, and then take that now available cash and use toward college costs. You would avoid capital gains taxes on the donated stock. We have successfully done this several times. It is a nice, charitable, way to avoid taxes on any gains. If the stocks are in the form of a mutual fund, check with your charity first, which you will have to do anyway to complete some paperwork for the transfer.

Not sure if the stock, if solely in your child's name, would complicate this?

We were told that in computing value of real estate, estimate the value based upon a 30 day listing (i.e., what price would you get for your property if you had to sell it within 30 days). Also, deduct from that amount all closing costs (comission, taxes, etc.).

That was really helpful info everyone posted. Here is my question if anyone knows....my husband is disabled and receives social security. Does this in any way have an effect on the FASFA??? Son already has a verbal commitment to a D 1 school, but I need to figure out how to finance the rest.

quote:

Originally posted by Goosegg:
We were told that in computing value of real estate, estimate the value based upon a 30 day listing (i.e., what price would you get for your property if you had to sell it within 30 days). Also, deduct from that amount all closing costs (comission, taxes, etc.).

A 30 Day listing would probably cut my house's value in half. Not a lot moving in this market.

SportTmom22,

This link may provide some information:

Effect of Social Security-Disability on FAFSA

http://talk.collegeconfidentia...isability-fafsa.html

/QUOTE]
tough system to beat,,sounds like a safety deposit box, cash, silver coins are the only way around it..again just do the right thing and you'll pay for the people that do the wrong things.[/QUOTE]

Believe it or not, you did indeed hit the nail on the head!

Looks like my son's current #1 choice just got taken off the list. Apparently, we are supposed to afford more than my annual take home pay to pay for his college education each year! Somehow, I just don't see a very great return on that investment when other schools with merit scholarships can get him to the same place.

He's disappointed but then I suspect that his current #2 was going to end up as his #1 since he always liked it best. He just got hung up on academic reputations (and they really aren't that far apart on that level).

I did start wondering who does attend these extremely expensive ($50,000+) schools because I don't see anyone who has managed their money well going into debt when a comparable education could be obtained at a lower price. I'm beginning to think that if a study was done, there would be an inverse bell curve representing the household incomes of the students in the college. Anyone know if there has been such a study on the effect of the elimination of merit scholarships in favor of financial need only on the relative family "wealth" of the student populations at these schools?

Schools which have no (or limited) merit aid and rely soley on fafsa experience the "bow-tie" effect. Students of middle class parents are squeezed out; children of wealthy parents can afford the price and children of poorer parents get decent FA. I think an example is Wash U of St. Louis (which as of last year did not do need-blind admission decisions) and runs over 55k per year. At the other end of the spectrum are the Ivy league schools - especially Harvard, Yale, and Princeton whose FA is in the form of grants and make the price of a HYP education, for middle class families, in line with a state school. A better deal cannot be had.

As a parent who has two older sons who are and have went to college my experience is that the poorer you seem on paper (your taxable income) the better your results for scholarships.

My older son received the maximum scholarship from a private university as well as grants that totaled about $35,000/ yr for a $40,000 / yr school. He took $5000.00 / yr in student loans to cover the rest. Although he is now in the military that will pay off all his loans. Plus he should be able to get his RN license by the time his enlistment is up.

My next older son who is in his second year at a D1 university received a fellows scholarship that paid everything (tuition, room and board, books, supplies) plus gave him money for a laptop.

My advice would be not to save one dime for your child for college. This is easy for me because I have a wife who stays home (even though she is a degreed electrical engineer) and homeschools my younger kids.

Make sure your son studies for the ACT the summer after his sophomore year and try to score a 27 or better. Also have your son take as many dual credit courses (classes that will count toward college) as these are cheaper while in high school. Both my sons ended up with about 24 hrs of dual credit courses before starting college.

There are some D2 schools in our area that will give a full ride to any student scoring a 27 or better on their ACT.

Also the military can be an option. It will pay for your tuition (GI Bill or Montgomery Bill).

I have a 13 yr old son who has demonstrated a knack for baseball and football. I will plan for him to get a full ride on academic but won't look away from a potential athletic scholarship. :O)

BTW, I don't think the education of the parents affect scholarships because both my wife and I are degreed engineers.

Great advice trad!

In this weekend's Wall Street Journal, page B7, there is a really good article: "The College-Aid Shuffle" which really gives great insight into the FA game and how to play the game by the rules.

I recommend that all parents read and absorb those insights.

Sorry I don't have the web address for the article, I read the old fashioned way.

Thanks for the heads up Goosegg. Here is the link.

WSJ- College Aid Shuffle

Another comment I have is that college is not for everyone.

If any of my sons couldn't score at least a 25 on the ACT, didn't have good study habits and keep an A/B average in high school I would have steered them to a trade school or the military.

Also I forgot that the FAFSA gives you the result in the form of EFC Expected Family Contribution).

You want that number to be as low as possible of course.

I have been doing some homework on FA since my Son wants to play for a D3 private school. I own my own business and thought I would have to include that value= NO not unless I have over 100 employees. Also, if you live on a farm you don't include that either. Below is quoted from here what you do include:
http://www.getreadyforcollege....b4f361d124427003dc7c
Family-owned business with more than 100 employees
A farm that the family does not live on

I met with the school FA person. I used an example. Let's say I live in a 10M home paid for and my business was owned by an ESOP retirment plan. I sold my business for 20M in 2010. I took enough income in 2010 to live for 4 years so I don't have any income in 2011. I am worth 30M and my kid would get free college! She said "that is just their criteria to not count retirement or home....

After the FA process the coach said he would get admissions to "sharpen their pencil" The $42K is down to 30K so far with academics and I am hoping they do some sharpening!!

BTW, I don't qualify for any money as my income is too high. Hopefully I will qualify for some loans!!

Well this may depress you but College Conspiracy

quote:

Originally posted by Brawnko:
I met with the school FA person. I used an example. Let's say I live in a 10M home paid for and my business was owned by an ESOP retirment plan. I sold my business for 20M in 2010. I took enough income in 2010 to live for 4 years so I don't have any income in 2011. I am worth 30M and my kid would get free college! She said "that is just their criteria to not count retirement or home....

I have pondered this for several days....mostly wondering what it would be like living in a paid-for 10M house! But for those that may read throught this thread in the future:

1) Assuming you kept the proceeds from the sale of your business farm in a retirement vehicle, drawing out living expenses for 4 years would be a taxable event from a non-Roth retirement plan, plus penalty if you are not of retirement age. You would would need to add about ~15-20% ? more to cover the tax.

2) The 4 years of living expenses would need to be put in a non-risk account, which today would draw about 1% interest. I can only guess what yearly living expenses would be for a family living in a 10M house, but the real estate tax would be ~$95,000 yearly in my county. Add in a new (luxury) car or two in those 4 years, upkeep to the estate, and travel expenses to see your son play in college plus other living and college tuition expenses.....let's just assume you would need $250,000/yr or $1,000,000 for those 4 years. In the safe, 1%, account that would generate about $10,000 in interest (dominished yearly), which is part of the AGI for the FAFSA. Plus, the $1M sitting in the interest bearing account for household expenses, now is a parent asset of which <6% is considered available for college ($60,000 the first year).

3) Some/most private schools require the CSS profile which could include the equity in your home ($10M).

In your example, it really doesn't look like your son could go to college for free. The financial aid representative gave you the correct answer, but there is WAAYY more to it.

Here is a link I found of ways to maximize financial aid legally:

http://www.finaid.org/fafsa/maximize.phtml

I have an interesting bit to share. I saved for my oldest child's college and wrote the checks each semester without any loans. MISTAKE !! When she got her first job, they asked how much her student loan payments were because they wanted to help with a monthly stipend. That news really hurt, so if you have it, don't spend it, continue to save it until all the cards are played.

quote:

I have an interesting bit to share. I saved for my oldest child's college and wrote the checks each semester without any loans. MISTAKE !! When she got her first job, they asked how much her student loan payments were because they wanted to help with a monthly stipend. That news really hurt, so if you have it, don't spend it, continue to save it until all the cards are played.

Is that something that is typical at the company where she works or the industry? I might want to steer son in the 'right' direction...