@blossom. I see what you mean.
But wouldn’t it be good to take the severance lump sum…and then find a job? The severance money could be used for college costs.
It sounds like a lump sum makes sense either way.
Either:
They take the lump sum and no job is found. (No difference than taking monthly)
They take the lump sum, find a job, and now they have extra income that can be used for college and other expenses. Sure it might hurt FA, but it is only a percentage of the extra income. They still have extra income for college and other expenses.
I agree…it’s the timing. If they take it in 2016…it will only show up on the 2018-2019 FAFSA.
But it will show up as an asset it’s placed in a savings account, CD or the like.
But the oarent is assuming the kids will BOTH get accepted to schools that are very generous and meet full need for all. This simply might not be the case.
There is also the wild card of the OP’s income. Since it’s not salary, and we don’t know how many of the deductions will get added back, the family’s income even with only one wage earner may just be too high except for the mega generous schools if her predictions at the higher end are at all accurate.
OP- would it make sense to take the lump sum severance and use some of it to pay off your mortgage or otherwise reduce your cash flow needs during the college years?
Just remember…some colleges do factor in primary home equity as an asset…there is a cap usually…but better to check. Otherwise, you may find you are transferring one form of asset to another.
You can look up ABET accredited schools for Bioengineering. From what I’ve heard BioE requires a graduate degree as well. Most state flagships have very good engineering schools. Some give merit.
We haven’t assumed anything at all about acceptance or aid at the private schools. I am pretty certain of acceptance and zero need based aid at the state schools. That’s exactly why I posted my question here of course! Hoping would be a better word, especially with the news of the layoff which has been a little shocking.
We don’t know for certain the exact date the severance will be paid at the end of the year or early 2017, but were told lump sum. We believe it will be Dec. 31st 2016. That would make 2016 income very high, and 2017 relatively low.
As for my business, most of my deductions are for contractors, but advertising makes up a modest amount, too.
I know everything will work out with a good school, I was just looking for some advice from anyone in a similar job loss situation but I do appreciate that our situation is still good enough that there just may not be any possibility of aid to allow us to seriously consider the most expensive schools. We’ll just have to make a tough choice about these schools at some point and then wait and see about the rest. Who knows we could be surprised by an academic scholarship at one of the state schools as well.
im sure you have said…but when is your kiddo starting college?
Financial aid for fall 2017 is based on your 2015 income. You have already run the numbers and found out that you will not be eligible for need based aid
financial aid for fall 2018 will be based on your 2016 income where your husband will work until the end of the year. Again, you have found that it is unlikely that you will get need based aid
Financial aid for 2019 junior year (you will have 2 kids in school; a junior and a freshman). If your husband gets his severance in 2017 in 2017, it will be approximately 75 % (9 months of his 2016 salary). Since you are self employed, by this time you will have an idea to what extend some of your business expenses are added back in and the effect it will have on your EFC. While you may get some relief, but it will still be painful to pay the EFC for 2 kid (lets say for kicks and giggles, your husband’s severance is 75k and you made $75k. That is $150k. You will be eligible for some need based aid if your kids go to some really, really generous schools in year 3.
Year 4 you will still have 2 kids in school
What will happen in year 5 and year 6 after son graduates and you only have 2nd child in school?
you have a lot of variables and unknowns. As others have stated, you really need to make sure that you have some financial safeties and schools where your children can get some guaranteed merit (as you need to look at college as a 6 year plan)