big difference in EFC from SAR and calculators

Paying for College
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<p>I've run information through multiple calculators, including FinAid, college NPC, college board calculator and fafsa4caster. I also completed the worksheets from "Paying for College" and from IFAP, which apparently is the form used by FAA.</p>

<p>I always came up with about 7 to 8K for EFC online and paper worksheets. I understand that there could be some variation but I figured it to be 500 to 1500 max. I filed FAFSA and SAR came back with EFC of 15,400.</p>

<p>Why would there be such a big difference in EFC using the exact same data input?</p>

<p>AGI is negative 18K (-18) due to sale of rental real estate at a big loss (co-owned property with sister who had big financial emergency). Earned Income is 6300. Informal child support of 19K in 2013 from husband from whom I've been separated for 5 years and I'm custodial parent. No legal separation in our state so no court ordered support, just informal agreement. FAFSA filing status is divorced/separated. Tax filing status is HOH. All criteria met for each status. Savings of 200K, but I use it to live on and need to do so for next 10 years due to medical and family issues. Will not be able to substantially increase earned income and child support will probably lessen as 66 year old ex's job is in jeopardy. 529 with 125K. Daughter with income of 395 and savings of $700.</p>

<p>So I expect to pay a lot but I still can't figure out why there is such a big discrepancy between the methods. I've read something about "assumptions" but don't really know what that means and if that might be the reason for the big difference in SAR and worksheet EFC.</p>

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<p>Just a guess, but that 325k in assets is driving your EFC. The FAFSA form doesn’t care that you feel a need to have so much savings to live on. It really doesn’t care wh any of us have savings. You plug in the numbers and it calculates. In fact the negative AGI is probably why your EFC isn’t higher with that many assets. I assume the sale of the property is why you have a file a 1040 and are not, then, eligible for simplified means.</p>

<p>I don’t think anybody can tell you why there was such a discrepancy between your estimators and the real deal.</p>

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<p>Couldn’t follow what all the calculators and worksheets were but the only one that matters is this one:</p>

<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf&lt;/a&gt;&lt;/p&gt;

<p>But that’s right, if you don’t qualify for the auto 0 or simplified means test, those assets are driving the EFC. The formula guide says to enter 0 if the AGI is negative.</p>

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<p>If AGI is negative, you have to enter 0. Did you use a negative number when you worked through the formula yourself? The calculators should assume 0 even if you entered a negative number. The higher number seems right given what you posted.</p>

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<p>Your 200,000 in savings alone would generate $11,200 as part of your EFC. The $125,000 in the 529 would be an additional $6000 or so. (5.6% of each account).</p>

<p>That would be about $17,000 as an efc.</p>

<p>Your other thread also indicates $19,000 in money from your separated husband.</p>

<p>Re: the $200,000…it will be assessed at 5.6% of its value annually (unless next year you qualify for simplifies needs test). Over the course of four years, you will be expected to pay about $20,000 out of that towards college costs as part of your EFC. You will still have $180,000 and that does not include any interest earned. </p>

<p>Same for the 529. Except you really need to use that for college. $125,000 divided by 4 is about $30,000 a YEAR. Seems to me that you should be able to find a college within that price point…an. Instate public university within your state should be well within that amount.</p>

<p>Maybe I’m missing something…but it looks like your student has the money for college in that 529 without using any of your savings money.</p>

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<p>With an AGI of 0, do assets count? or am I confused?</p>

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<p>You still need free/reduced lunch or one of those kinds of things or be able to file a 1040EZ/1040A. Looks like the rental thing required a 1040.</p>

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<p>Oops…over the course of four years, you would be expected to pay $40,000 or so out of that $200,000…leaving a balance of $160,000 not including interest! </p>

<p>I did my math wrong upstream!</p>

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<p>I would guess it is the assets. If you claimed a loss for rental real estate sale, you probably could not file a 1040A or EZ. Did you correctly answer the questions about type of tax return on the forecasters? </p>

<p>You have to meet the income criteria and at least one of the other criteria to qualify for the simplified needs test or auto zero. Unless you meet one of the other criteria for simplified needs the assets will be counted.</p>

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<p>The estimators are just that and leave out some things, which is why they are such a short version of the real thing which truly go into just about “Every Friggin’ Cent”. IF you then file PROFILE, that form starts picking in the crevices, including your ex’s finances most of the time. </p>

<p>The huge differences come when you see aid packages since not a single school I know meets full need for most students as defined by EFC. They tend to gap, and it will come down to how much they will gap your DD, in particular that will count. </p>

<p>Bottom line, you are not PELL eligible which means you don’t get the $5600 a year guaranteed by that grant. So all your DD is guaranteed is the Direct loans. The rest comes out of the colleges’ coffers, and will depend on how they allocate that money. Run the numbers through their NPCs and see what comes of it. But with your real estate loss and other factors, those numbers can vary too. That EFC is the lowest you will be asked to pay, and I really doubt that aid packages will touch that. Are you taking that full $18K loss this year on your tax forms or are you carrying it forward? If you are carrying it forward, you only get to take off income, the amount you are directly taking off AGI this year, I believe. And as you mentioned in your other thread, you may not be able to file short form if you claim that carry forward loss in future years, something you may want to check. Because other wise you may be able to to use the simplified needs in future years . </p>

<p>My suggestion is to look at Albright College, if not too latte as it does meet need acc to FAFSA EFC excluding only discretionary expenses. Merit awards come off of need first, so it is not going to increase your total awards in most cases. And schools don’t care that you need those assets to last the rest of your life. Everyone feels that way. The lines get drawn and if you have assets over that amount, the formula will use them. The only possible exception is for a direct medical condition that will take a pretty set financial toll, and you get desginated funds for that. Under professional judgement that might be taken into consideration.</p>

<p>But, I emphasize, none of this may matter anyways because schools gap so often. They don’t care if your EFC is whatever number, as they have their formulas and gap most kids at most FAFSA only schools.</p>

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<p>They don’t care if your EFC is whatever number, as they have their formulas and gap most kids at most FAFSA only schools.</p>

<p>This is very true. FAFSA EFC is just a federal number for federal aid. Your EFC (either way) is too high for fed grants. </p>

<p>A school doesn’t have to do anything with EFC except to see if you qualify for fed aid. So, even if you have an EFC of $7000 and the FAFSA-only school costs $30k, you might ONLY get a $5500 student loan. And be expected to pay the other $25k.</p>

<p>this can be shocking for first time college parents. The feds can’t order schools to give students the difference in money. Schools don’t have the money in most cases.</p>

<p>I hope that your D has some schools on her list that you know FOR SURE are affordable (that all costs are covered). </p>

<p>If any of those FAFSA only schools are OOS publics, then expect little to no aid…unless your D qualifies for merit.</p>

<p>AGI is negative 18K (-18)</p>

<p>FAFSA doesn’t use negative numbers I don’t think. I think that goes as a 0</p>

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<p>To the OP…please explain why you aren’t considering mostly schools that can be fully funded by your 529…schools with $30,000 a year price tags, or less. If you do this, you will be able to use your $200,000 account for anything you choose.</p>

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<p>I am curious as to what sort of schools are on your DD’s list, OP. Because there is Dad in the picture, for an PROFILE schools, his assets and income would also have to be disclosed. FOr PROFILE, one loses the primary home exemptions that FAFSA provides, and with your DH living in an inherited house, that’s times two. Plus, PROFILE generally is a lot more stringent than FAFSA and most folks end up with a higher expected contribution when going the institutional route… </p>

<p>Those schools that are FAFSA only do not meet full need most of the time. So whatever that EFC is, it’s not likely to be all you are going to be expected to pay. However, I can tell you that with a $35K a year budget, my son was able to find some great choices, and since your DD will be able to take out a Direct loan, with that $30K a year that the 529 can provide, there are a number of schools out there that are affordable. That would cover most all instate schools, and a number of OOS as well, and some low sticker price privates. A little sugar in the form of merit scholarships can make some privates work too. </p>

<p>With your capital loss being carried forward unless you had gains to offset them all, you can’t take that off income. But that you don’t pay less taxes also means your AGI doesn’t get reduced that way too. How the estimates take all of that into consideration, I don’t know. They are estimates only and it doesn’t matter because you have the real SAR at this point which is your bottom line, to the bone cost, unless your DD gets substantial merit, or the school costs less. When you have the real numbers, the estimates are of no value or use. </p>

<p>We had some local schools to which my son could commute, some small private schools that gave some merit, as well as state schools in and out. It turned out quite well within budget for him, and it could for you too if you pick the right schools. Even with a zero EFC, it doesn’t mean schools are going to be jumping all over themselves to pick up the full tab for the student, believe me. Just means you are guaranteed the PELL and that’s just $5600 a year.</p>

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<p>My real question was why IFAP worksheet EFC and FAFSA EFC were so dramatically different; i knew EFC wouldn’t be low because of my assets. Data, tax return statuses were all correct. I used the IFAP worksheet from the link above. However, I overlooked the very first instruction,which was to enter zero if AGI is negative. I used the negative number–duh. I haven’t run it again yet, but that has to be the reason for the difference with -18K AGI. thanks for pointing that out as it answers my entire question. I wish I’d found IFAP worksheet when I first started estimating and planning how to handle finances for college years. That is the ONLY place that says that negative AGI is treated as zero. No FAFSA instructions or explanations on any websites or in various books say that, and with the consistency of the results of all the many other types of calculators, and in light of the instructions that said that some numbers might end up being negative, I just assumed FAFSA would use IRS numbers as is. Unfortunately, I made my plans based on what they indicated. I might have made different decisions, even knowing that I would be gapped.</p>

<p>My real estate loss is much more than that. My half of total loss on property was 118K. CPA says I’ll have losses for 7 or 8 years. dont totally understand passive loss rules, but that’s why I hire a professional.</p>

<p>I always knew I would not qualify for simplified needs or automatic zero EFC this year. You don’t need free lunch, etc to qualify for 1040A eligibility but free lunch,etc comes into play for simplified needs or auto zero EFC in combo with income. I knew Pell was income driven but didn’t realize that assets also came into play; that makes sense of course. I also know that PELL isn’t all that much in the overall scheme of things.</p>

<p>Daughter applied to 5 FAFSA only schools and was accepted to all. Only 1 is OOS and we’ve always known it would probably be too expensive with OOS tuition. App fee was waived so for curiosity, we went for it just to see. No Profile schools–she didn’t want to go far away and wasn’t interested in either campus of local Profile University. Gets state merit aid of about $4K at 4 state schools; two are private and two are public. Got 10K merit at 42K COA school, plus in running for leadership scholarship there for 18K. Even without scholarship, should be do-able. Got 18K merit at 47K COA school. May get small departmental scholarship there. Probably do-able. Two state U-will be do-able.</p>

<p>I know that EFC is never all one pays, but is just the starting point. I recognize that 160K seems like a lot of money, but if I earn 7K a year, that works out to be $25K per year for me to live on for 10 years. Mortgage, taxes, insurance, utilities are $29K per year. That leaves me nothing for food, etc. . .guess I could stand to lose a few pounds!!!</p>

<p>Anyway, thanks for resolving my question and bringing up other points that weren’t really my issues. Your discussion may help someone else who didn’t already know some of those things.</p>

<p>.</p>

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<p>I am glad that your DD chose affordable choices. With the 529, she’s set. Yes, every bit helps and if you were able to be PELL eligible, it would have made your DD’s costs a bit lower, but then you don’t get the tax advantages which come out to be more.</p>

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<p>And remember, your daughter CAN take a Direct loan to add to her $30,000 per year from that 529.</p>

<p>You shouldn’t need to use YOUR $200,000 account for college expenses at all.</p>

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<p>I may be confused.</p>

<p>Do you have $200k in savings for yourself…PLUS $120k in a 529 for your D?</p>

<p>is your goal to avoid spending the $30k per year from the 529 towards college?</p>

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<p>Not trying to avoid spending 529. But we know she will need grad school and I was hoping that we might have some 529 money left for that. I was blessed to have parents who grew up really poor but saved all their lives. Sent me to Emory and Wash U for grad school and paid every penny without discomfort. Refused to even consider financial aid apps as their heritage considered it as charity. Can’t say I’m in as good a position but hope that daughter can start her professional life without being strangled by debt. Thanks again for your insights.</p>

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<p>What is your D’s career goal? There are some grad programs that are FUNDED, so your contributions won’t be needed.</p>