2017 FAFSA, PROFILE and Losing a Job

First time poster and I am very grateful for any advice, as this is our first child going to college (Bioengineering maybe pre-med) and we are newbs to the financial aid system. I am sorry for the longish post, but it’s a very confusing issue for me and it’s specific enough that I haven’t found any good answers yet.

We’ve run some numbers and calculators at some of the schools our child is considering. Based on our 2015 and 2016 income and assets, we won’t qualify for financial need-based aid when our child attends in fall, 2017, mainly due to my husband’s salary.

The concern is that my husband will not have a job at the end of this year. His company is closing his facility. He was offered relocation, but we opted to take a 9-month severance package rather than move our family of 3 kids. He could likely qualify for state unemployment if no new job appears and if we choose to apply for it.

Based only on my self-employment salary which should range between $75K to $125K, we would definitely qualify for modest or even substantial aid, depending on the school. It’s possible we could be living on my income for a year or more, depending on job prospects which appear to be poor at the moment. He could also land a new job tomorrow, of course, but let’s assume he’s unemployed for an extended time or finds a new job earning much less than before.

I understand the FAFSA changes for fall 2017 applicants and the application date is earlier and the lookback year is increased one year (remains 2015). I am trying to determine if our 2017 income will factor into the numbers even if our 2015 and 2016 income were too large for aid or if there are special exceptions for loss of job when the main wage earner loses a job.

The issue here is that our child is considering a few expensive private schools. Even if my husband wasn’t losing his job, we’re in that financial zone where our child could not afford to attend them at full price if accepted, unless we take on a lot of loans after the first year. If we did qualify for financial aid based on my salary only, this might open up some great possibilities outside of state flagship schools.

We do have some assets in my small business (also the source of my income) and college savings, which will pay for 1.5 years at full cost at the priciest schools being considered and still have a similar amount for our next child. But the problem is what happens if my husband is unemployed for an extended period, or more likely, accepts a job for a much lower salary to stay local. Based on severance and stock options, our 2017 income could still be borderline for aid, but by late 2017 and 2018, we will likely have a lot less disposable income for college right at the time our child enrolls!

Two years later, our second child will also attend college, so that will help a lot in the aid equation. But the dilemma is that if we say we could pay full price by using our savings for one year at a private school, then counting on aid in the following years (because of extended unemployment or having a 2nd child in college), there could be a big problem if we don’t qualify for aid for some reason in the future.

So, obviously I’d like to plan correctly and file our FAFSA and Profile accordingly and perhaps get some advice in regards to having our unemployment issue considered by private schools. If it matters, our child’s target and reach schools include Washington University in St. Louis, Vanderbilt, Northwestern, MIT and Stanford. Merit aid is a longshot, but possible since our child does have outstanding scores and grades, but we are not counting on it. Wisconsin, Purdue and Illinois are the financial and academic safety schools. UIUC is affordable regardless with in-state tuition, but if there’s anything we can do to afford one of the target or reach schools with minimal loans if accepted, we’d love to have some ideas, please.

If unemployment doesn’t matter because our 2015, 2016 and maybe 2017 combined income is too much, then we need to discourage our child from applying to these private schools, especially Stanford and MIT where there is essentially zero possibility of any merit aid. Northwestern, too, but in an emergency could be a commuter school in later years if absolutely necessary due to financial issues. I gather there is a possibility of some merit aid at WUSTL and Vandy. A $20K aid package could make the difference of minimal loans to big college loan debt. We are not any URM and aside from the small family business, have no other unusual circumstances. I know our situation is actually pretty good, but would love some advice from the experts.

To summarize, do schools consider current income, or just the income and assets for the look back year? If our lower 2017 income is considered, do we wait to submit FAFSA and Profile until January 1st 2017, when my husband is officially unemployed? Any other suggestions?

There are a number of things you need to consider. That severance package will count as income even if you do try to use your 2017 info. It would take the school using Professional Judgement to take into account a new reduced income. http://www.finaid.org/educators/pj/ Also

Many deductions you take related to your self employment will probably be added back into your income. That will kick that up a bit.

If UIUC is affordable based on in-state costs ($30K COA) then you are in a pretty good place. You might want to look at some other good merit options like Alabama.

You have a couple of issues.

  1. The 2017-2018 FAFSA and Profile will use 2015 income tax return data.
  2. Your husband is taking a 9 month severance package. So...he will have his full year of income for 2016 (right.,,since the company is closing at the end of the year)...but he will have 9 months of severance pay in 2017...right?

Erin’s Dad, thank you! I had somehow overlooked the PJ information, that does seem to be what we may need to use.As you said, having UIUC as a “safety” for engineering is a very good place to be, even thou gh it’s not a top choice at the moment. Perhaps someone can offer us a package that works for our situation that way.

thumper1, right, those are among my concerns. Our 2017 income will likely be borderline or still too high for need-based aid, but we will have much less income starting around the time our child starts college. By the time the lookback year is 2018, it will be almost time for graduation. That’s what makes planning so difficult with the loss of a job, since 2018 is still the second semester freshman year when we will likely have a much lower income. We just learned about the job closing so it’s still a shock and maybe I’m too pessimistic right now to see the big picture, but it seems like there may be too many unknowns to have him apply to some of his top schools due to costs and the unemployment outlook. Very unfortunate I have to say, but he has a few very good alternatives at least.

So I’m guessing it doesn’t matter if we file FAFSA/Profile this fall or early next year? Is there any advantage of filing them early or late with the timing of applications?

If your current income is substantially lower than the base year, let the school know and ask for professional judgment (see the link that Erin’s Dad provided).

A FAFSA form that is submitted on January 1, 2017 will use 2015 income only. Profile does ask basic questions about income for the year before and the year after the base year, but again the form would be using 2015 income for the base year.

I’ll hope for,the best for your family.

My husband lost his job the first term our older kid was a college freshman. We contacted the college and got all the necessary information about a special circumstances consideration…which is what you would be looking at.

We were told a couple of things:

  1. They would not even look at anything until after DH's severance was no longer being paid.
  2. At our son's school, they wait 90 days after the income loss to make a determination because it is hoped that the parent will find a job.
  3. Unemployment compensation would also be considered by DS's University.

We just got all of the info…just in case. As it happened, DH found a new job.

Things to remember…these are handled on a case by case basis.

Also, your remaining income isn’t exactly low income. What amount of need based aid were you anticipating on your income alone. Also another thing…some of the deductions allowed by the IRS for self employed folks are added back in as income for financial aid purposes.

Are you anticipating that your son will attend a college that guarantees to meet full need for all? If so, he likely will have excellent GPA and standardized test scores. If that is the case, you might want to seek out colleges with generous guaranteed MERIT awards which are not income dependent.

If it is an FAFSA only school, having one parent make $125k is going to exclude a lot of need based FA. If the other parent gets severance or unemployment income, the taxable income is going to be pretty high. I wouldn’t expect Professional Judgment to do much if they are looking at 2015 income of over $200k but looking at 2017 income still over $125k.

Don’t expect too much as an override of the EFC, especially at a public school.

Right, the public schools are safeties and UW-Madison is one of the top choices now so if our child is not even accepted to current favorites Stanford or MIT, this might all be just theoretical.

What I really need to know is if there is any benefit to filing the aid forms before or after job loss, or if there is zero hope of even a modest need package based on 2017-2018 current income at a $$$ school like Stanford or MIT. In that case, it’s not worth the heartbreak of applying and possibly being accepted. It sounds like we just file FAFSA and CSS Profile anytime and if needed, request a judgement after January 1st if there is an acceptance letter?

Submit the forms when they come available in October. That way the school will have THAT income as part of your student record. When your husband is no longer getting paid, you would request a special circumstances consideration because of loss of income. One of the things you will need to demonstrate is the reduction of income.

To be honest…this might be considered at Stanford or MIT where full need is met. Also both have oretty generous need based aid (with Stanford being more generous by a lot). With $100,000 or so of income you might net some need based aid.

At the public universities, all you will see is a Direct Loan…which you can get anyway…even with your husband employed.

thumper1 thanks! 90 days after would be right at about acceptance time which makes it even tougher. I expect need aid is unlikely for the first year at any school, but we can pay for that from savings. We understand severance is a lump sum paid Dec 31st or shortly thereafter, so that could add to our savings with much more frugal living for next year. The question then is stretching the rest of our savings and income for 3 more years. Even if I assume a worst case scenario of no new job and low-end earnings in my business (now I worry if it really goes bust too of course) that could still mean a professional judgment in years 2 and 3, when we could still be earning much less, but still have high income in tax years 2016 and 2017. Even $10K a year in years 2-3-4 could mean 30K less loans if necessary.

I expect once both kids are in college, the worst case aid could be significant enough to let get us through with minimal loans which maybe is worth one of those dream schools for this program. And obviously there could be a merit aid surprise at one of the other schools making it more attractive, but I think the schools I mentioned are mostly locked in now but kids do change their minds until the last minute! Just the fact that there is a judgement system opens some possibilities for our worst case job outlook a year or two down the road.

What if your EFC is $20k? Could you pay that with one income? It is not guaranteed that with two in college that you will pay $10k each.

Looking for merit might be best in this situation.

Professional judgment and special circumstances considerations are done on a case by case basis. And some schools don’t do them at all. Just FYI.

RE having to kids in college at the same time…you might get additional aid for colleges that meet full need for all…but not from ones that don’t.

We had two kids in undergrad at the same time for a year. Neither receives ANY need based aid, although both received merit awards. My son’s EFC went from $44,000 a year (which was his full cost of attendance) to $28,000 a year. His college increased his merit award by $250…that’s it.

So don’t assume that you will net more aid when your second kiddo hits college. This will on,y happen at colleges that guarantee to meet full need.

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Based only on my self-employment salary which should range between $75K to $125K,
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That is scary. The CSS Profile schools could add in a bunch of expenses, put a value on the business, count the business assets, and so forth.

Don’t assume you’ll get more aid when the 2nd goes to college. Not only may that not happen, but CSS profile schools do not split 50/50. They split 60/60.

And, who knows if child #2 gets into a “full aid” school. What if his/her school doesn’t meet need?

I’m reminded of the Columbia mom who posted a few years ago. They were told that they were full pay when Child #1 went to Columbia University, which back then was about $55k per year. They then assumed that when Child #2 went to college (also got into Columbia), that they would pay 60% of $55k for each child. Nope, still full pay for both students. I don’t remember all that got counted, but probably home equity, savings, incomes, business deductions getting added back in, retirement contributions getting added back in, etc. Their income wasn’t obviously high enough for them to be full-pay for two kids.

Thank you all again for the input. I’m hoping the job situation works out somehow, because otherwise it seems like we probably have to exclude some schools for financial reasons. Seems like a shame given how hard our child worked and how well they did, but there are still some great choices for them in the state schools and a couple that maybe can offer an academic scholarship.

UW-Madison for non-Wisconsin residents has a COA of $48k and the NPC shows $0 automatic aid for an EFC of $14,001 and up.

So while this could be an academic safety (you didn’t mention your child’s stats), it may not be a financial safety.

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SDunham wrote:
Wisconsin, Purdue and Illinois are the financial and academic safety schools.
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Please clarify. Are you saying that you’re willing to pay $50k per year?

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we probably have to exclude some schools for financial reasons. Seems like a shame given how hard our child worked and how well they did


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You can still include some as “let’s see what happens,” and tell your child that if the numbers don’t work, then those schools will be off the table.

As far as “how hard” a student worked, and “how well they did,” that can be said about thousands of students who are/were top of their classes, high stats, high achievers…but still have/had financial limitations. We see that year after year after year. Some of us had to say, “no” to pricey schools for our high achieving kids. In the end, it’s what the students make of their opportunies while in college.
Don’t feel badly. It’s all part of life.

You have to deal with the situation at hand. Your husband worked hard as well, right? He would not be offered a 9 months severance if he was not a longtime and valuable employee.

You cannot count on things thst haven’t happened yet.

You know that you have two kids two years apart to put through college.

If they have high stats, there will be a number of very good schools that could offer them merit, consider that a reward for their hard work. If they and you can graduate with little or no debt that would be a great gift, would open up possibilities for them.

If they got full tuition somewhere, then the remaining costs would be about $10-15k.

You would be full price at UIUC, at most OOS publics (if no merit), and at a lot of privates because you would not qualify for much need based aid with your 2015 income and 2016 income.

Better to recraft a list with affordable options now, than for them to get into a school that you cannot afford to pay for.

Does your husband have any flexibility with regard to the severance? A lot of companies will pay it out monthly… so that if your H finds a job in a few months after being laid off, you don’t have the one time huge payment to skew your financial picture.

If the severance is paid in 2016…doesn’t matter if it’s a lump sum or a monthly payment. It will still be 2016 income. If you did a lump sum in 2016…your 2016 income would be 9 months larger…and I’m not sure that would help either.

It sounds like it will be paid in 2017…same…doesn’t matter if it’s lump sum or monthly. The total is what matters.

Thumper, at many companies which pay out monthly, if someone finds a job in March, they only get three months worth of severance, not the full 9 months. Therefore, from a financial aid perspective, the “skew” of the severance doesn’t hurt. Three months of severance, 9 months of employment income at the new organization.

That’s what I’m suggesting.