Several of my S19’s reach schools are part of the 568 Presidents Group (MIT, Yale, Cornell). Is there anywhere I can find out the details of the Consensus Methodology they use?
We’re a middle class family with relatively low assets compared to our income level. (And unfortunately for financial aid purposes, a 2017 income that was anomalously high for us, so we will likely need to request professional judgment.)
Based on EFC calculators I believe we will be eligible for at least a little aid from these very generous schools. I’m looking for information on how we might ensure that we qualify for as much as possible, in particular with respect to distribution of assets between cash, home equity and retirement savings. If I understand things correctly, the 568 schools do not distinguish between parental assets and the child’s assets, but in any case, most of the college savings are in our names.
If it makes a difference in advising us, shortly after our S starts college, we are likely to be selling our home (for less than we purchased it for – we bought near the top of the market) and purchasing a more expensive home to move my parents in with us. I don’t believe my parents will be dependents for tax purposes, but we expect to have expenses related to their care.
He already has a financial safety – our state flagship has already offered our son a full tuition scholarship (assuming they see fit to admit him, but there is no reason why they would not). And if he doesn’t get into MIT, there’s a good chance he’ll go to school in Canada, which he can do at Canadian citizen prices. So we have options, we’re just hoping to be able to help him make a dream school a reality if he gets in.
Is there some reason why you can’t use the net price calculators for the schools? Are you self employed? Divorced? Own rental property or other real estate in addition to your home?
If not…use the net price calculators.
I’m not sure you are accurate that these schools view student and parent assets the same. All require the FAFSA which assesses parent assets at about 5.6% of value and student assets at 20%…when computing the FAFSA EFC.
I don’t believe you will find “the school specific” formulas…but you can use the net price calculators.
Sometimes, a school’s formula can be reverse-engineered by doing various “what if?” runs on the net price calculator.
My husband is self-employed, which makes the NPCs a bit iffy. We won’t qualify for any federal aid other than unsubsidized loans, so how they treat assets is more or less irrelevant. I thought that I understood the point of the “consensus methodology” to be a common treatment of assets, but perhaps I misunderstood.
When I said “based on EFC calculators” above, I really meant the NPCs. And yes, I can play the “what if” game by moving things around in the NPCs. I was just wondering if a description of how these schools compute parental and student contributions was available somewhere (such as one can find for FAFSA) but it sounds like the answer is “no”.
This Forbes article has descriptions of some methods, but it was written a while ago. Some details may have changed (max pell is slightly more now and the FAFSA formula a little different) and of course each school does their own thing which seems to vary year to year anyway.
https://www.forbes.com/sites/troyonink/2017/01/08/2017-guide-to-college-financial-aid-the-fafsa-and-css-profile/#621b2ff64cd4
I had based my understanding that the consensus methodology treated parent and student assets the same on a statement from that Forbes article that @BuckeyeMWDSG cited, which says “…the Consensus Methodology which treats both student and parent assets at 5%…”
I guess I misunderstood the point of the consensus methodology. I thought that the point was that there was a common methodology/formula for those schools, but I guess not. Thanks.
@mathmomvt
If there was a common formula for all of these colleges that meet full need…then wouldn’t all of the financial aid awards be about the same…and the net costs about the same? After all…if they are all using the same formula, the family contribution should calculate to the same amount.
BUT…we all know that isn’t the case. Even entering identical financial family data, these awards can vary by $20,000 or more from college to college.
@sybbie719 IIRC you explained this well at one point.
@mathmomvt your issue is not that your husband is self employed. Your issues is trying to figure out which colleges add business deductions allowed by the IRS for tax purposes back in as income for financial aid purposes. This varies quite a lot from college to college.
The colleges also have varying ways to deal with home equity in your primary residence. another source of difference.
Most colleges will not consider the “expenses” you have in terms of the grandparents . They just don’t.
Will you have more equity in the new house than in your current residence?
Indeed, what I really need to know is how the colleges on my son’s list treat business deductions, home equity, and retirement assets. It sounds like many of the 568 schools cap home equity at a multiple of income, but that doesn’t help us as our home equity is way less than our income. (As mentioned, our home has lost a significant amount of value since we purchased it.)
I expect equity in the new house will be the same as the current residence (whatever we get out of this house will be our down payment on the next one), but expenses will be more. (I know colleges won’t consider that.)
Is there a good book on this topic these days. When my oldest started in 2011 we found Kalman Chany’s book on the topic to be quite helpful, but his current edition has absolutely horrible reviews.
Thanks!
What retirement assets are you talking about? Balances IN qualified retirement accounts are not considered assets. Some schools ask for those retirement account balances…but the thought is that they only look to see if the retirement balances are way in excess of what might be expected given income. For example…if your income is $30,000 a year and you have millions in your retirement accounts…someone might ask…how.
All colleges do count the contributions you make to tax deferred retirement accounts in the year for the fafsa. So if you are completing a 2019-2020 FAFSA, you would be using 2017 income tax year. Any retirement contributions to tax deferred accounts made in 2017 WILL be added back in as income for the 2017 year.
Yes, I’m talking about assets in qualified retirement accounts. I’m pretty sure I remember being asked for these balances on the CSS Profile (or maybe school-specific forms?) when I filled out forms for my older kids.
When you say contributions to tax deferred retirement accounts are added back into income, does that mean that contributions to Roth IRAs (not tax deferred) are not added back? And is a Roth still considered a qualified retirement account?
A Roth is a qualified retirement account.
Yes…you may have been asked for the balances in your tax deferred retirement accounts. But that does not mean that money is used in the financial aid equation.
Read my post 8 response again…I explained why that is probably asked.
A Roth Does not reduce your income like a tax deferred retirement account does.