This discussion was created from comments split from: My son has been accepted to Indiana University and I don’t know what to do.
I just wanted a guess. For a family of 4, earning 100,000 a year, but about 1.4 million in assets - would applying for FAFSA help?
Help what? Unlikely to get any need based financial aid, but could still have the unsubsidized loans if the FAFSA is filed. Might get some grants just for filing the FAFSA (a few schools do this). Might get merit or special grants from the school that require filing the FAFSA.
In this situation, the aid you received would be form schools that only look at the FAFSA. The FAFSA does a great job of sheltering this retirement income. If however you apply to a school that wants a CSS profile, then it might change. That is the reason schools want the profile, to see if you have assets that the FAFSA ignores.
You(r child) can get a student loan. That’s it. You’ll be full pay anywhere ($1.4M assets @ 5.6% = $78K EFC, not including the income).
Please clarify. Is the $1.4 million in retirement assets as referred to in post 3…or other assets?
Regardless @MassDaD68 what evidence do you have that Profile,schools use the balance in retirement accounts to compute need based aid? I believe you are wrong. While the Profile asks how much is IN those accounts, that figure is not used to calculate institutional need based aid. That figure would only come into question of the retirement account was very substantially higher than what the income would indicate it might be. Then the college could rightfully wonder how a family (this is an example…not referring to the OP of this thread) with $30,000 a year in. Income could have millions in their retirement accounts.
Depends on where the assets are held. If much or all of the assets are qualified retirement accounts and/or primary home real estate, need-based financial aid is a good bet, depending of course on the school.
@thumper1 You might be right. I just looked over the CSS Profile I completed and they asked for that number on PD-175A. Why ask if it would not be considered? It most likely is a judgement call on them as to how much is too much but I feel much safer if they did not even know - like on the FAFSA. Although a million is not what it used to be, I still think people hear that number and think “wow a millionaire”. Who knows how the FIN AID clerks feel about that.
It’s used to put the family’s financial situation into a broader context. There probably is some point at which a very large amount of qualified retirement savings impacts institutional EFC, but no one except the FA officials at the schools knows where that point is.
To build on what @BelknapPoint wrote, I doubt that there is ever a point at which one would be expected to withdraw from your qualified retirement savings to pay your child’s college costs, but if you do have significant qualified retirement savings you might be expected to stop making contributions for a while, so that that income could be redirected to paying college costs. And it may be (total speculation here) that having significant qualified retirement savings opens the door to tapping your other available assets a bit more deeply than might otherwise be expected. As BP said, it’s about looking at your family’s overall financial situation in a broader context.