My father retired early this year (around February) and my mother has not had a job since she got married since we moved around so much, and I definitely can’t afford any college I’m looking at currently. I plan to go into the arts as well, which is considerably more expensive. But because of stocks, etc, I still don’t qualify for financial aid because our “income” is still considered too high. I’m not sure what to do at all!! One of my teachers suggested becoming independent but I’m not sure of all the pros and cons of that either…
Many people in retirement draw big ‘salaries’ from their retirement savings. The IRS and colleges consider it income. The income that will be evaluated is 2016, and if your father is going to take a much lower amount from retirement accounts, you might ask schools for reconsideration (called professional judgment). They will look at your situation as it is now, but they aren’t going to ignore assets like stocks.
Even if you qualify for full federal aid, that’s $6000 as a Pell grant and another $5500 you can borrow. That probably won’t be enough to pay for a private art school.
Your teacher is wrong. You cannot become independent for financial aid unless you are married, have a child you support, or join the military.
There are a lot of wealthy retired people.
When I retire, I expect to have enough income from my savings that I could still enjoy the life style I have now.
Fine out what your parents can afford, then make a new list that fits your budget. What kind of “arts” are you headed into?
Happykid is a lighting designer. She got an associate’s degree in Theater Tech at our local community college, and finished her bachelor’s degree at an inexpensive in-state public U. She’s never had to work one day at a non-theater job. You might have some equally cheap options available.
If you can’t afford any of the schools you’re looking at, then you need to look at different schools.
How about starting at community college, living at home, and working to save money to transfer after you get your Associates?
Yeah, you shouldn’t really put “income” in quotes, because it IS income.
What is your parents’ annual budget for college?
What are your stats?
What state do you live in?
What is your parents’ retirement income?
What in “art” are you interested in?
If you don’t have much of a budget beside federal aid (Pell and Stafford), try to pursue your degree at your state universities or at meet-need LACs outside your region and known for art.
(Many national LACs want students from all states so applying to a LAC that’s not within 300 miles helps, and 400+ Niles may help with preferential packaging).
Art schools have very little financial aid and aren’t viable unless your family is high income.
Why did your dad retire right before you were about to start college?
Not sure how it is someone else’s job to pay for your college if your parents have significant assets, whether they work or not.
Unless your dad’s company made him retire I think colleges will view his retirement, especially just before you start college, as a choice. It’s also a choice for your mom not to work, so I wouldn’t depend on a professional judgment request to reduce your EFC.
You need to know how much your parents can pay. You can only borrow ~$5500/year, and if you work summers you can probably earn ~$2k/year, so add that to what your parents can pay and that’s your budget.
Start your list by finding schools that are safeties (schools you can get accepted to, that you’d be happy to attend, and that are affordable). Your safeties may be a local university you can commute to or a community college. Then look for colleges that offer merit aid. If you tell us your stats, your EFC, and how much your parents can actually pay we may be able to offer some suggestions.
I don’t know of any colleges that impute income to non-working parents. he only professional judgment would be that in 2016 they made $XX, and now they make $X because of retirement. The school can consider that or not, but next year they are not going to look at 2017 income and determine the father could have made more if he hadn’t retired, or that the mother should be working.
I have had a very low income the last few years. The schools don’t ask me to provide information on how I live or pay my bills, or suggest I should be making more. It is what it is. I fill out FAFSA, they calculate the FA.
@twoinanddone Are you dealing with a FASFA only school? I don’t know if a Profile school would change the end result on retirement status but it a much more involved FA form.
In some jobs there is a limit regarding how long a person can work. I have seen 69 year old doctors who were still very good. 69 year old computer engineers seem quite rare. Also, sometimes nature and health issues make retirement necessary. Some of us are very lucky just to still be here.
I also retired just before a daughter headed off to university. However, we knew this would happen when my youngest was born, more than 18 years ago, and have mostly planned for it. Hopefully your parents similarly have at least something put away to pay for your university. You need to find out what you can afford.
It is very likely that financial issues will limit where you can go to university. MOST students have this same constraint. You don’t want to take on much debt if you are going to be majoring in art, or in any subject that doesn’t immediately lead to a lucrative and reliable income.
Do any of your local in-state public universities offer an appropriate art program? Where do you live? Do you know what you can afford?
also, 59 year old firefighers, 55 year old jackhammer operators, not to mention “retirement buyouts” or people with illnesses… Retirement often is a necessity, only the lucky see it as a choice. (I hope to be so lucky and plan to work long, but I also know it is likely out of my hands.)
Yes, I only deal with FAFSA schools, but I don’t know of any schools that adjust income to what it ‘should’ be. CSS schools don’t look at a person making $100k and decide “well, he’s a doctor, he should be making $200k”.
If you ask for professional judgment to ignore prior income (in this case, the 2016 income that has changed because of retirement in 2017), yes, the FA office is going to ask why they should ignore it (loss of job, retirement) but I’ve never heard of a school considering that the family should have made more, a non-working parent should work, or in any way say the parent should not have retired. They may not award any extra aid if the income was actually there, but they aren’t going to question life decisions not to make more or stay working. My sister once made $300k as a lawyer. She decided to teach school and now makes about $45k. Her son’s FA is based off that $45k, not what she could be making.
@bean sprout child I don’t quite understand the financial situation. Income from stocks/mutual funds is too high? Looking at the S&P 500 index fund, the dividend payout is about 2% a year. If a parent has $1,000,000 in such assets, that is only 20K a year, so income is not the issue. But a college would expect the parent to 5.6% of that million, or 56K, so assets would be the factor here. Add that to the 25% or so of the 20K in income, that’s 61K for EFC. (Except for CSS schools, other factors come into play, such as siblings in college or private schools).
But the overriding question is, if parents’ assets/income is large enough to wipe out fin aid, why is fin aid needed?
@“bean sprout child”
Is the issue your parent assets or your parent income.
Any chance your parent AGI is below $49,999?
Do you qualify for any means tested benefits like free/reduced lunch or SNAP?
“If a parent has $1,000,000 in such assets, that is only 20K a year, so income is not the issue. But a college would expect the parent to 5.6% of that million, or 56K, so assets would be the factor here. Add that to the 25% or so of the 20K in income, that’s 61K for EFC.”
But if the student has a sibling, and if both go on to get a master’s degree (or if there are two siblings and all 3 get a bachelors), that is 12 years of university. 12 years of university times 61k is over $700,000. If a parent has $1,000,000 to retire on, spending two thirds of it on educating two or three children is not likely to work out very well in the end.
My understanding is that money in IRAs and 401k’s doesn’t count towards the FAFSA. However, for a variety of reasons people who hit retirement age are going to vary in terms of how much of their retirement savings is actually in official “retirement” accounts. There is also of course a wide variation in terms of whether retired people are going to get pensions, although my understanding is that today most don’t.
Of course retired parents also can’t (or at least shouldn’t) take out loans for education since they won’t have any income to pay it back.
To me this just means that students with parents that are at or near retirement age need to be careful with how much they spend for their education (sort of like almost everyone else).
I agree with DadTwoGirls. Even with a million in assets, it doesn’t follow that parents will want to spend half of what is not protected in ‘official’ retirement accounts. But CSS schools will consider the other children, and there may be merit, and there are state schools with lower tuition, so it is unlikely (though possible) it would take 250K to put every child, any child, through college.
I think we need a lot more info from OP about the specifics. I would hope that OP’s parents, as well as any of us, are putting as much as we can into IRAs and 401ks. And I agree, as a rule, that money should not be used for tuition.
The OP hasn’t yet answered any questions. Hard to help without information.