I am a hopeful transfer student for UW-Madison, my instate flagship. I’m transferring from OSU due to cost.
My FAFSA EFC for next year is $21,000. Now you’re going to say, that’s not needy, but there’s a story behind it.
My mother took out 60k from her 401k to pay off credit card debt. That 60k counts as income. So according to the IRS and thus, FAFSA, my mother made $103,000 this year. She made $40,000. The 60k went directly to the debt, so it is not available for use in paying tuition. My mother still has outstanding debt to the tune of $140,000 which she will never pay off. She has no savings. She is in the process of declaring bankruptcy for the third time since I have been alive, but that will only wipe away the $9,000 remaining credit card debt she has, since the rest of her debt is student loans.
UW-Madison is willing to give me $4,000 in loans according to the NPC, but I would prefer to have some grant aid. I know that if the 60k didn’t happen, I could have received a ~$3,000 grant (according to the NPC) in addition to loans. Over spring break I went to speak to financial aid about my situation, and they said I could write an appeal letter. This appeal letter would be my only shot at getting any sort of additional aid.
I need to know how to write the best possible appeal letter and what I should include in it. Does minority status help? Does legacy status help? I would imagine hearing that someone is declaring bankruptcy for the third time in twenty years might, but I don’t know.
I need advice. No one I know has done something like this before. I didn’t even know you could write an appeal letter.
My initial reaction is that I would want to know what kind of credit card charges the $60k from the 401(k) is paying off. Was it mostly for non-essentials that were wants rather than needs, such that your mother was unnecessarily living above her means? Scholarship and grant money shouldn’t be used to subsidize that kind of reckless spending. Or, were the credit card charges mostly for non-discretionary items, like medical bills and basic living expenses?
What has caused your mother to declare BK three times in your lifetime? Does she suck at financial management and/or is she a reckless spender? Or have there been unavoidable expenses that exceed her income over that long period of time? An annual income of $40,000 certainly isn’t a lot, but plenty of families survive on that without racking up huge credit card debt and without making multiple trips to BK court.
All her credit card debt came from living above her means. My mother has no concept of saving. She was in debt long before I was born, chose to attend a private college with no financial aid when she had the option of UWM/UW-Madison, has a masters in computer science but chooses to work as a librarian etc. I’m sure at one point she had 10+ store credit cards. She constantly goes out and buys new clothes, shoes, accessories, and sent me to Catholic school K-12 even though it was no where near affordable. She always has to have the newest/best thing. She constantly complains about money but then wants to go out shopping for whatever the newest trend is.
The bankruptcy has all been related to credit card debt, I believe, though the ridiculous amount of student loans are a factor too. Those don’t go away, of course. I’m not supposed to know about the bankruptcies though, so my information may be a little spotty.
$40,000 is enough to live on where I am. My best friend’s family lives on ~ that amount and her mother bought a new car this year. It’s just that my mother refuses and has refused since she got her first job to make financially sound decisions. Now I have to pay for it.
EDIT: I should say that I have 2 jobs lined up this summer to help pay, so I’m not being lazy and demanding UW-Madison pay everything.
Well it was a big mistake to withdraw money from the 401k and then declare bankruptcy anyway, but there is nothing you can do about it.
You can appeal the financial aid stating that the income was based on a one time event and that the W2 income is $40k. If your mother does file for bankruptcy, it’s likely she’d be turned down for a Plus loan and therefore you’d get an extra $4000 in loans.
^ I agree. Emphasize that next year’s income (which will be used to pay UWM) is forecasted to be in the $40K range.
Would any of the other UW campuses be less expensive?
It looks to me like you need to take a year off while your mom’s financial situation settles itself out.
If you have been admitted, and there is the expectation that you would have a better aid package next year, then accept the admission, and defer enrollment. If you aren’t allowed to defer, take the year off and reapply.
So sorry to learn about your mom. Clearly she suffers from some psychological issues that cause her to behave this way. Get help for yourself because it is likely that she will be a financial burden on you in the future, and you will need to be able to draw and hold the line when the time comes.
@twoinanddone @Erin’sDad would I need to submit at the time of the letter the W2’s?
Also Erin’s Dad, I have long since missed the transfer deadlines for any other UW school. This need for transferring was sprung upon me absolutely last minute…I had a week to complete my UW-Madison application. I also study a language that isn’t available at any of the smaller UW schools, and I really don’t want to miss out on a semester of language skills. Especially if I went to a place like Whitewater or Oshkosh, where I wouldn’t be able to find a tutor in that language.
@happymomof1 I could PROBABLY afford to attend UW-Madison with that financial aid package since I wouldn’t be living on campus. However, I am already so much in debt that I would like to minimise my cost and I’m scared that my mother won’t be able to come up with half of tuition at the beginning of each semester. Madison doesn’t do payment plans. I’m really trying to get the cost down for her.
@thumper1 He pays half of my tuition currently and would continue to do so. However, my parents aren’t married, and since I live with my mom she files the FAFSA. He cannot contribute more than he is for OSU.
Withdrawing should be a last resort if you don’t have any other options. I agree with the suggestion that the only thing you can really do in the appeal is to emphasize that the $60K withdrawal from 401(k) is a one-time event and not because your mother’s income is now permanently higher. Legacy and minority status aren’t really factors for need-based aid so I don’t think it’s worth mentioning. For what it’s worth I don’t think that you should mention that your mother has filed for bankruptcy 3 times in the past since that in and of itself doesn’t prove financial need now; financial aid is usually a year-by-year thing so simply demonstrating that your family has had financial difficulties in years or decades past wouldn’t necessarily be seen as relevant.
I realize that you already have summer job, but would you be able to work part-time during the semester to help defray expenses? I’m not sure how much aid you need to go towards the direct tuition; it sounds like, as of now, you’re getting half of the tuition from each parent. Is the $4K intended to reduce how much your mother has to pay or would you still need that money for costs on top of tuition?
The reason I ask is that if your mother has cash flow problems but is able to pay the tuition anyway you might be able to set up a “pseudo” payment plan where you borrow the $4000 now for the tuition and, instead of paying it all up front, she can pay the loan off for you in installments each month. That’s something that some families have done in the past where the parent has the ability to pay some of the tuition but not necessarily right away at the beginning of the semester.
Another option that may help is that your father might be eligible to take the American Opportunity Tax Credit, which is a special tax credit for people who pay for certain educational expenses for a college student, if his adjusted gross income is low enough. The credit is 40% refundable which means that he could get up to $1,000 back in his tax refund.
I agree. Withdrawing will be the absolute last thing I do. I’ll take random classes at CC before I withdraw.
But I think that if my mother is declaring bankruptcy right now, and will still be going through the process when I get financial aid, that it might count/help? It’s saying “Right now, at this moment, there is no money to pay for anything”.
Yes. Part-time work is non negotiable. I have been working part time at OSU, but this semester I got a job on a city council campaign that was supposed to pay me but then kicked me off the campaign halfway through the semester.
The money would be for reducing my mothers expenses. My father is much better at handling money and would be able to pay what is due, but she would not. I have to cover for her and make it as low as possible for her. She paid $800 for the first 3 months of the semester these last two years and this year alone has been late for 4/6 of them.
If the loan would require being in her name there’s no way. Her credit is probably as low as you can get. But if it doesn’t, that’s something I can look into.
My father makes ~$100,000 so there’s no way he’d qualify for a tax credit.
The income limits are $90,000 modified adjusted gross income for single filers and $180,000 for joint filers.
I was actually talking about her making payments on your federal Stafford loan. If she can’t pay her half up front, you could take out a Stafford loan for the amount that she can’t pay and she could make payments towards that loan on your behalf every month or so. It probably won’t work though since the maximum you could borrow is $7500 if you were a junior or senior and that might be less than what you need.
The OP indicated that her parents weren’t married so he would have to use the single filers’ threshold. If his AGI was more than $90,000 then it wouldn’t work. The mom might be able to try it next year though since it sounds like her income is low enough without the 401(k) withdrawal.
Right, not married to each other, but I’m not assuming that the father hasn’t remarried.
Ask the FA office if they have a form for an appeal. If so, it probably has a list of documents they want, like a copy of the taxes or the tax transcript, the W2, any 1099 (which would show the 401k distribution) - anything they can use to support the professional judgement override for a Pell grant. The form might be on the web.
Yeah, my dad is married, and he and his wife are well off. I’m sure their income exceeds $180,000.
I will call the office and see what they want. THis seems to be a kind of hush-hush deal regarding appeal letters so I don’t know what they will be able/willing to tell me.