Another Nail in the "Need-Blind" Coffin

Parents Forum
161

<p>You're not screwing up your chances, but you are increasing your EFC by several thousand. Obviously with numbers like that the kid would still qualify for a lot of financial aid, but you may be turning a $1500 EFC into a $6500 EFC. </p>

<ul>
<li>Don't try to do the math - I ball parked it in my example and I'm not sure that all colleges use the formula my son's college did, but the bottom line is that they all assume that a much higher percentage of student income than parental income will go toward college, and if savings are accumulated in the same year that the money is earned, then the same $$ do end up being assessed twice.</li>
</ul>

162

<p>I was afraid the EFC goes up.</p>

163

<p>yes, but so did your means, dstark. You are still "ahead" 5K, because even if your EFC is up by 5K, you earned 10K.</p>

164

<p>No, SBMom... you aren't necessarily ahead, because some of the earnings go to pay necessary expenses If DStark makes $10K, spends $6K on necessary expenses (room & board, commute expenses), saves $4K... and EFC goes up by $5K - its a loss.</p>

165

<p>:eek: I see...</p>

166

<p>"Calmom, If I understand your post, If my parents make $35,000 a year, and I as a kid make $10,000, I am screwing up my chances at some financial aid. Is this true?"</p>

<p>It could be a lot worse than that:</p>

<ol>
<li><p>The 35,000 income, assuming an income tax bite of 3599 or 10%, would have exclusions for about 28,000. This would leave about 7,000 of AAI and an EFC of 1538 dollars. </p></li>
<li><p>If the kid works, earns 10,000, and saves it for college the impact could be quite drastic</p></li>
</ol>

<ul>
<li>payment of 765 dollars in SS security</li>
<li>after deductions, the AI is 6,185 and 50% of that amount needs to be contributed as EFC</li>
<li>if student saved his $9,235 for college expenses, there would be an additional contribution of $3,232, bringing the total to 6324 of additional EFC. </li>
</ul>

<p>Please note that this situation would be rather unfortunate. Also, the tax situation is unclear as the student dependency status could also trigger some income taxes on his return, which would reduce his EFC. Also, it is probable that the cash earned by be spent down. </p>

<p>BTW, Calmom, have your kid pay the application fees with the $110, and you'll save yourself 28 to 38 in EFC on the final CSS or FAFSA,</p>

167

<p>Sounds like the EFC determinations are as screwed up as the federal tax codes.</p>

168

<p>LOL, Xiggi.... but she is supposed to use the $110 to buy her own lunch and gas up the car. Until she runs out and I give her another $100 to keep her going.</p>

169

<p>I'm not really talking about me. :) The kid is not saving the money for college. At least not now. :)</p>

170

<p>Hehe - just do not give her the gas and lunch money the day you file the final CSS or Fafsa. :)</p>

171

<p>LOL... well I just filed the CSS Profile already, but I think it would look really suspicious if she had -0- money... so I guess we'll have to just pay that extra $30.... I'll take it out of her allowance and then at least I will break even.</p>

172

<p><a href="http://www.theatlantic.com/doc/prem/200511/financial-aid-leveraging%5B/url%5D"&gt;http://www.theatlantic.com/doc/prem/200511/financial-aid-leveraging&lt;/a&gt;&lt;/p>

<p>Interesting comments on Enrollment management:</p>

<p>"That students are rejected on the basis of income is one of the most closely held secrets in admissions; enrollment managers say the practice is far more prevalent than most schools let on."</p>

<p>"College Board don't just sell hundreds of thousands of student profiles to schools; they also offer software and consulting services that can be used to set crude wealth and test-score cutoffs, to target or eliminate students before they apply."</p>

173

<p>they both have the same expenses of mortgage, SStax income tax, sales tax, ins, medicare etc.</p>

<p>Just a quick aside on the expenses of those who make above $160,000: the expenses actually increase because as income rises, </p>

<p>a) deductibles decrease - you only get to deduct a decreasing percentage, for either standardized or itemized deductions - and same with exemptions.</p>

<p>b) the ATM (alternative minimum tax) kicks in BIG TIME, to the tune of thousands of extra dollars</p>

<p>c) For the self-employed, the insurance costs are astronomical: we pay over $35,000 a year in house, medical, car, business, life, disability, and liability insurance.</p>

<p>d) The self-employed do not pay the same social security, they pay double, because there is no employer to pay the other half.</p>

<p>e) in our state, state taxes are much higher. While most people don't pay any tax on the first X thousands of dollars, that is eliminated for people making more. All exemptions are phased out so our rate is 400% higher than people like my sister's.</p>

<p>f) for those of us not in the multimillionaire bracket, able to hide money all over the place, our effective tax rate is very high. My sister pays out a grand total of something like 6% of her income in taxes, with a 15% rate on each additional dollar earned; we pay (with state taxes) over 40% on each additional dollar. (and that is AFTER we've paid all our social security - before that, add another 15%!)</p>

<p>g) even regular expenses are often far more. We are charged more by everyone who comes to the house, whether electricians, plumbers, lawn services, etc. ad infinitum, because they look around and assume we have money. It is really galling but there is nothing we can do. Even if we ask around for a reasonably priced worker, they quote us a different hourly rate than our recommender pays.</p>

<p>I am not complaining, and am very grateful for the life I have and the ability to let my kids choose colleges without applying for aid (other than the merit scholarships they have gotten on their own from outside sources). </p>

<p>But things are not so cut and dried. I might add that we hire many people by creating work for them that they cannot create themselves: we do all the marketing, travel, creative work, grunt work to get the contracts, take 100% of the risk, pay all the massive insurance, and then our workers waltz in (sorry!), do the job (not that hard) and go home with a check, which they use to run the economy: that is, pay THEIR taxes, mortages, buy consumer goods, etc. Maybe we should be thanked!</p>

174

<p>nedad,</p>

<p>When you look at how much business you do compared with how much you take home, you can really see how you support the economy!</p>

175

<p>nedad, that sound you hear is me standing on my chair and clapping. Well said.</p>

176

<p>*I am not complaining, and am very grateful for the life I have and the ability to let my kids choose colleges without applying for aid (other than the merit scholarships they have gotten on their own from outside sources). *</p>

<p>so I guess to bring it back to the thread topic- for the families who don't have need, their children have quite an advantage in admissions when schools are need aware.
It only makes sense that if you have blank available to hand out for aid, that admissions takes a hard look at who they accept and who is likely to come.
Are students given less attractive aid packages when schools feel forced to admit them, but really want to save the money for someone with better scores?
I know I have heard from several students who were given bait and switch finaid packages. A great package freshman year, and then in subsequent years, a package which necessitated switching schools or going into much more debt than was wise.
Families that do have need are often more limited in what schools they can consider.
We limited our choices to schools that were instate and offered small amount of merit award ( their need based package was loans only),schools out of state that offered a little larger merit award ( still pretty expensive out of state), and a school that offered 100% of need.
We were lucky that we found a school that met 100% of need- our EFC was met, roughly the same amount as what expenses at instate school would have been.
But other schools, out of state schools without merit aid , and private schools that don't meet 100% of need, would have been too expensive even to look at.</p>

177

<p>*I know I have heard from several students who were given bait and switch finaid packages. A great package freshman year, and then in subsequent years, a package which necessitated switching schools or going into much more debt than was wise.
*</p>

<p>This is an extremely important point, often overlooked in the glow of a big first-year award. It may not quite be bait and switch ---because it really is up to the students and parents to understand that the awards are not guaranteed year after year --- but it sure does a good imitation of it!</p>