Auto-0 FAFSA, asset questions

Paying for College
1

<p>My son will be starting college in 2013. As I understand it, the 2012 fiscal year is what goes on the FAFSA, so anything I need to change must be done by the end of 2011. I have a couple of questions about assets, and possibly liquidating/utilizing them so they won't count against us. </p>

<p>Before I explain the assets though, I should point out that I am a single parent whose sole source of income is disability (Social Security - not SSI, and private long term disability). I am not required to file a tax return but I do anyhow, so I have a record of my income. My AGI for 2010 was $83. I get a 1099 form from SSI that is not required to be included in my tax return, and I get a W-2 from my LTD carrier which lists 0 in Box 1, all they pay me is listed in Box 12J as "sick pay." </p>

<p>I did the EFC calculator, long form, and it came up as an auto-0 EFC. Am I under no ethical obligation to disclose the amount of my LTD? The way I did the calculations and read the instructions, I do not have to. Please advise. We are on a fixed income, but not below the poverty line - between the two resources I bring in around $72K per year. I want everything we are eligible for, as despite the income we barely make ends meet due to medical obligations. We have no real estate, etc.</p>

<p>That being said, there are two assets I need advice about. This assumes of course that we have to disclose our assets, which we may not have to based on our status. The first is a Georgia 529 plan I started for my son as beneficiary. There's not much in it, about $6,000. I am still funding it at $100 a month. First, should I stop funding it, given our EFC of 0? Second, if I am permitted, should I liquidate it by the end of this year and use it to pay for a car for him? </p>

<p>The second is a stock "DRIP" that my mom started for him when he was young. It is under the Florida UTMA, again only about $8,000 but with an EFC of 0, I hate to see it taken for tuition when he could use it for something else. My mom, who is custodian, is happy to do whatever in order to preserve this money for him. She is custodian, he is beneficiary until he turns 18 in 2012.</p>

<p>So advice on what to do with these two assets by the end of this year would be appreciated. Even if I am auto-0 and these assets won't be tapped, should I liquidate them just in case? If it has to go toward his tuition, so be it. </p>

<p>Thanks!</p>

2

<p>Probably not going to find this helpful but “I hate to see it go to tuition”??? I am curious to know who, in your mind, should pay your son’s tuition?</p>

3

<p>If he qualifies for financial aid, I would prefer to use our meager savings towards his books, travel expenses, etc. Is this your attempt to turn my thread into a political statement? I will not take the bait. I worked very hard for many years, paid taxes, but became terminally ill and now I am just trying to send my son to college.</p>

4

<p>I’m amazed that someone with an income of about $72k per year qualifies for auto 0 EFC. If so, there is something crazy wrong with this system.</p>

<p>I realize that you are on disability and are ill, but it’s really quite unbelievable that someone who has an income of $72k per year will get an auto O while someone who earns - say $70k - would not even though, they too, have paid taxes for years and years and want to send their kids to college. </p>

<p>Just to give you an idea…typically a single parent with one child who earns $72k per year would have an EFC of about $11k per year.</p>

<p>Of course, if your child applies to any schools that use CSS Profile, your auto 0 won’t apply except for federal aid.</p>

5

<p>Nothing political about it. I have my opinions about things and am always interested to hear and try to understand points of view which differ from mine. I have even been known to change my mind after hearing the other side…</p>

6

<p>Perhaps I should not have posted such personal information. As I cannot delete it, I will at least explain that a very large portion of my income is paid to me for ADL (assistance with daily living). I cannot perform a lot of daily functions that people take for granted, including grooming and feeding, and have to have help with this. If I were able to care for myself, my income would be tremendously lower.</p>

<p>Now that I have provided far more personal information than I ever would care to, I will be deleting my account and slinking away in humiliation.</p>

<p>Thanks so much for the help.</p>

7

<p>Mastacos, I am so sorry about your illness. </p>

<p>I wonder if the answer about whether the answer regarding your private long term disability payments will depend upon whether the premiums were paid through an employer, or after tax dollars. I don’t know the answer, but I always thought premiums paid for this from pretax money meant an income tax to the beneficiary if one were to qualify for LTD, but I thought that the money was received tax free if premiums were paid with after tax money. I don’t know if and how this relates to financial aid. It is a very good question that for you makes a real difference in college planning.</p>

8

<p>mastacos, I cross posted with you. I wish you would reconsider deleting your account. I am so sorry for your situation. There are many kind, helpful posters that might be able to offer a lot of guidance for you and your son. This board can be most helpful. I am so sorry that you did not receive the warmest welcome, but I would like to welcome you. I hope that other posters will be able to provide the information that you need. I am sorry that I can’t help you with your questions.</p>

9

<p>Thank you NE mom, I have posted previously and received helpful responses. FYI I paid for my premiums with after tax dollars, which is why they are not included in my AGI.</p>

10

<p>a very large portion of my income is paid to me for ADL (assistance with daily living).</p>

<p>that could be very important info aid-wise at some schools. </p>

<p>I realize that you didn’t want to put forth such personal info, but when limited info is put forth…income of $72k…auto 0…liquidating assets, etc, it can seem very odd that the family would have an auto 0, since most people with that income would be expected to have an EFC of several thousand dollars. </p>

<p>And again, we don’t know which schools your child is considering, but most schools that give good aid also require CSS Profile, and it doesn’t have an “auto 0” policy…everything is considered. That said, medical treatments are taken under consideration to a certain extent (not dollar for dollar). </p>

<p>Lastly, since aid can be unpredictable, it would be a good idea for your son to include a few “financial safety” schools. He may qualify for HOPE with your state, but he may also qualify for some good sized merit scholarships elsewhere…depending on his stats.</p>

<p>Keep in mind that most OOS publics do not give great need-based aid. UVA and UNC-CH are really the only ones. Schools like Berkeley do not. </p>

<p>I can’t remember, but UVA or UNC uses CSS Profile.</p>

11

<p>Since most colleges will package student loans in the financial aid, I’d keep the money in the 529, etc. It could pay for the fees, room and board and such that might have been paid for in loans. The less debt your kid has, the better.</p>

12

<p>In your circumstances if you are required to submit a CSS form you would also want to include in the notes section a detailed account of your ADL expense – all “unusual” forms of medical expenses can be the basis for recalculations or adjustments to the traditional rules/formula. In that way, if they required a gross AGI from SS and the private company, it would be offset by your ADL expenses, rendering a truer picture of things to the college in question. </p>

<p>With respect to your mother’s intent for your child – if that transfers to your child’s name and control at age 18 then it will be counted as an asset, and I believe the portion assessed toward the COA will be 25%. If it remains in your mother’s control, then I believe the assets are not considered available for your child’s use for college. If it was your mother’s intent for that to be a “post graduation gift” of sorts, then she should move it wholly into her name and gift it to your child on graduation from college. If she intended it to be a contribution/asset for college, then you would leave it as it is.
There are more experienced posters re: FA formulas who might chime in – I am not super confident that my understanding is correct as our case was slightly different, but that’s the way it was explained to me.</p>

<p>(In our case, my mother had education savings for my son which was in their names jointly but controlled by my mother, which we simply declared as available help, and which was calculated into the package as an asset. But her intent was for that $ to assist with college specifically, so we weren’t concerned about doing anything differently – although we had been advised that she could move it out or remove his name and give it as a gift after graduation instead, thereby avoiding having that asset as a portion of our EFC. Given her intent, it seemed more palatable to use the $ to reduce the direct out of pocket cost or borrowing need.)</p>

<p>Hope that helps a little. Best wishes in your search and kudos for planning ahead. Lots of parents (and students) are blindsided when they begin to investigate these kinds of things at the 11th hour.</p>

13

<p>Even if you qualify for aid and have a 0 EFC it does not mean you will not have to pay anything. The maximum Pell grant for the upcoming school year is $5550 which nowhere near covers the cost of even public schools. That is all you would be guaranteed for federal grant money. So I would definitely keep the 529 accounts funded as you are very likely to have to come up with a substantial amount of money, despite the 0 EFC. </p>

<p>My daughter has a 0 EFC and has a good merit scholarship - with the full Pell, her tuition scholarship, SMART and ACG grants [which no longer exist] and us paying all her books and also contributing what we could out of pocket and through some 529 account savings she will graduate with a little over $20,000 in debt from a state U. 0 EFC does not mean 0 cost.</p>

14

<p>There is typically a big difference between how a 529 and a UTMA is treated. The 529 is a parental asset, and roughly 6% is assumed to be available each year. A UTMA is a child asset, and around 25% is assumed to be available. So convert the UTMA funds into another asset class.</p>

15

<p>Also…</p>

<p>If the student applies to some of the privates that give the best aid, many will also require the student’s bio dad (non custodial parent) to fill out financial info. And, his income/assets will determine aid as well.</p>