<p>My husband makes around $175K (base) without bonuses or Stock Options/ESPP etc. I've worked as an elementary school teacher till last fall making around $36K out of which I've been contributing to 401k $15K or the max limit. I took a break for a year because of our child junior year and want to go back. But my husband is telling me to wait till next January.
His idea is that if he doesn't sell any stocks and move his bonuses to next January and I don't work then with his 401K contribution of $15K or so will bring our AGI to less than $160K.
In his opinion having an AGI of $160K will provide much more FA than having AGI > $200K.
But his own concept fired back at him when he refused to sell his options in Jan and the company stock lost almost 50% since then. But he is still adamant on not making any stock sale this year.</p>
<p>So, couple of questions?
1. Does it really make a huge difference in FA with AGI < $160K to AGI > $200K?
2. What is meant by Assets; Does it include cash in bank only or cash and stock or the equity in home too?
3. Will it make sense to actually convert cash to gold for couple of months to reduce liquid cash assets?
4. Will it make sense to spend the cash for a second home to reduce the liquid assets? </p>
<p>Not an expert here, but I'd run your different scenerios through the financial aid calculators and see what happens. The financial aid forum will tell you which calcualtors come closest in predicting the EFC.</p>
<p>Assets include cash and stock and stock options and (for Profile schools) home equity, and gold. Anything of value. Liquidity of the asset is irrelevant.</p>
<p>A few colleges publish how much aid their students get by family income. Notice how McDaniel would expect you to pay full freight with an income of $150K, while Princeton would still give you $15K of grants on average. Your individual circumstances may vary though.</p>
<p>Also keep in mind that you have to reapply for aid every single year. If you postpone a significant part of your income for a year, chances are you will lose whatever fin aid you get the year afterwards.</p>
<p>Let me be brutally honest - with a yearly income in the 170K-200K range and typical savings/investments in that income bracket, you probably won't qualify for need-based aid at most colleges.</p>
<p>^^^: We won't mind paying if we have to but my husband thinks that if it is possible to get FA then why not. Becuase we found that a lot of folks in this range do get FA.</p>
<p>If the aid is going to be in the form of loan we are not going to take it anyway.</p>
<p>
[quote]
with his 401K contribution of $15K or so will bring our AGI to less than $160K.
[/quote]
I don't know about profile but for FAFSA the 401k contributions do *not **reduce your AGI for financial aid purposes. The AGI is entered from the tax return then any contributions to a 401k or IRA are added back to the AGI so the income used in the financial aid calculations would be the 160k plus the $15k contribution = $175k. The balance *in the 401k is not considered as an asset by FAFSA but the contributions for the current year do not reduce the current year income.</p>
<p>
[quote]
2. What is meant by Assets; Does it include cash in bank only or cash and stock or the equity in home too?
[/quote]
All assets are assets. Cash is an asset. Stocks are an asset. For FAFSA the primary home is not considered an asset and investments in 401ks and IRAs are protected. Profile schools ask for information about the primary home and retirement accounts. They each have there own way of using this information - some will use part of the home equity for financial aid.</p>
<p>
[quote]
3. Will it make sense to actually convert cash to gold for couple of months to reduce liquid cash assets?
[/quote]
No. It is still an asset.</p>
<p>
[quote]
4. Will it make sense to spend the cash for a second home to reduce the liquid assets?
[/quote]
No. A second home is an asset for both FAFSA and CSS/profile.</p>
<p>To be honest with an AGI of $175K you probably will not qualify for much in the way of need based financial aid anyway. Need is calculated by taking the family EFC (Estimated Family Contribution) away from the schools COA (Cost Of Attendance).</p>
<p>For federal aid the FAFSA EFC is used and with that income you will not qualify for federal aid. Many schools use FAFSA for their own need based aid also. Other schools use CSS/profile or their own forms which ask for a lot more information than FAFSA.</p>
<p>Finaid.org has an accurate EFC calculator here FinAid</a> | Calculators | Expected Family Contribution (EFC) and Financial Aid
Enter your financial information and it will give you an idea of your FAFSA EFC. Based on just the $175 income with no assets at all your EFC will be around 47,000. If you have other assets it will be higher.</p>
<p>As Chedva said - the liquidity of an investment is irrelevant. Money in trust accounts, Government bonds, gold, stock - they are all assets for financial aid purposes.</p>
<p>Please, define 'a lot'...
Which schools (besides Harvard, Yale, Stanford) offer any FA in this range that is not in the form of loans?
Share the details...inquiring minds want to know</p>
<p>
[quote]
Liquid assets are documented while gold or the non liquid assets are not documented. These has to be different.
[/quote]
You are still legally required to report it. If you take $100k out of the bank and hide it under the mattress it is still an asset and is still reportable. And if you have income from investments (such as interest) but no assets then big red flags go up on your financial aid application and they want to know how you have the income with no asset.</p>
<p>And as another poster mentioned while I was slowly typing - financial ais is recalculated every single year.</p>
Which schools (besides Harvard, Yale, Stanford) offer any FA in this range that is not in the form of loans?
[/quote]
Only Princeton gives FA in the form of Grant (you don't need repay) for all income range, as long as you qualify.</p>
<p>All the other schools, which has modified their FA policy just this season, apply their 'no loan' policy only to certain income range.</p>
<p>So if you are a 'low income' family, below the minimum 'no loan' line, your FA probably weren't be much difference between most top schools as long as they are 100% meet (be it HYPSPCM Columbia, Dartmouth, Brown, etc.) But as family income increase the FA package would show difference from these colleges. At the upper end, some college might give you just loan. </p>
<p>So as far as quality of FA goes, Princeton is the best as long as you qualify for any. Their upper cut off line may be lower than HY though.</p>
<p>And different college (even the top ones) use different formular to calculate the EFC (your assets, etc.). Not that we qualify for any, but gathered all infomation from the media, CC, info session, etc. That's what I understand.</p>
<p>hi ArpMom. Even with the big difference in the EFC between 160K and 200K, the EFC is still very high, that you will be hard-pressed to find need-based aid such as grants. Loans, yes . I really don't think a lot of folks in this range get need-based FA. I didn't, and our EFC is even lower.</p>
<p>Thanks everyone for the reply. I'll gladly go back to work as I love to work with kids and will let my husband know to stop losing money on his options.
I got it that there is no way to get any aid at these levels hence it will make more sense to maimize the return on the assets.</p>
<p>ArpMom2009 - Curmudgeon is the resident expert on FA. But here are a few things I learned during my FA 101 experience:
[1] Most schools that cost a lot use the Profile computation
[2] Most schools that charge (comparatively) lower amounts use the FAFSA
[3] The Profile asks for a wider range of assets than does the FAFSA
[4] Your calculation of EFC may be a lot lower than the school's calculation
[5] Schools classify loans as FA -- I classify them as "deferred EFC payments"
[6] Your EFC is the same, whether you have quintuplets in college, or just twins.</p>
<p>On a personal note, I'd like to suggest that finding a college match for your student(s) is WAY more important that how you pay for college. JMHO, YMMV.</p>
<p>Agree with just about everything mentioned above except to clarify that ROTH IRA/401K contributions are not added back into AGI because they are not subtracted from AGI to begin with. </p>
<p>One thing not addressed here is your work status. Not that you will qualify for FA (you situation doesn't look good) but if you were at the fringes, your marginal income of $36K per year may not help you overall. With a high federal marginal tax rate - you are looking at about 40% here, plus 7.65 FICA and if you live in a high income tax state you could lose up to 10% to the state as well. Add in another 22% EFC "tax" on that income and you end up working for about 21% of that $36K per year or about $7300. Factor in the cost of commuting and other expenses and the value of your time starts looking like minimum wage. </p>
<p>This is probably a moot thing though as with the income listed you will probably not qualify for any need-based FA, so go ahead and go back to work because you will probably need the money.</p>
<p>^^^:True; my husband always told me that. He says your getting only 40 cents of every dollar you will earn because of me so why you want to work.</p>
<p>But I work for 2 reasons
1. I love kids and would like to make a difference in their life.
2. I love to talk to people. I've been fad up being at home doing nothing.</p>
<p>I know I'm not getting anything financially but I've a pact with my husband and he pays for all additional taxes and I save my pay check 100% after maximizing to my 401K. It provide me a big sense of security.</p>
<p>You might want to borrow "Paying for College without Going Broke" from your local library and give it a read. Numerous people recommended it to me since I arrived on these boards, and I have found it very useful. I think you will, too.</p>
<p>
[quote]
But I work for 2 reasons
1. I love kids and would like to make a difference in their life.
2. I love to talk to people. I've been fad up being at home doing nothing.
[/quote]
Then go back to work! Even if you only keep 10 cents on the dollar. It's worth it!</p>
<p>Remember the old saying, "When mamma ain't happy, ain't nobody happy!" Make yourself happy!</p>
<p>If you only have one child in college, you are very unlikely to receive any aid based on that income. If you will have more than 1 in college, you may qualify during the years that they're both in. </p>
<p>But one other thing to note: When colleges award fa (all colleges as far as I know), they require the student to work in the summer and during the year. The experience I have with loan-free colleges is that they actually estimate loan and student contribution a little higher. So, at all schools that I know of, the first $4- $5K of need would be from your child. You would not even be looked at for additional aid unless you had more than $4-$5K of need. If you had more than $4-$5K of need, most colleges would award loans and some would give grant $ but you will have a hard time qualifying for aid with those numbers. (There are exceptions of course-- perhaps if you had huge medical bills or 14 children, you would qualify.)</p>