My daughter will start college in 2020.
Currently I rent. I have $70k that I saved up in my account.
Should I buy a house? Let’s assume the cost of renting and owning will be the same.
Will my efc (I know fafsa doesnt look at residence but css does) be higher if i “own a house.”??? (Really i will like just own the equity of whatever the downpayment is).
My AGI was 150k, i still pay 20k per year for my graduate loans.
I have no other savings except for my employee 401k.
Your assets shouldn’t be any different for CSS (in a house rather than an account). Your FAFSA EFC will be lower because the house doesn’t count while the money in savings would.
You would just be converting one form of asset, reportable on FAFSA, into another form of asset, that is not reportable on FAFSA. But with an AGI of $150k, the change in FAFSA reportable assets probably won’t make any difference in your daughter’s eligibility for need-based aid that’s determined by the FAFSA EFC.
For most schools that use Profile, your reportable assets would change in form but not dollar amount. Different Profile schools would use that information in different ways, and some Profile schools do not consider primary home equity at all.
Bottom line: based on the information you present, my opinion is that buying a house will have very little, if any, effect on your daughter’s eligibility for need-based aid. Ground your decision on other factors.
Yikes, that’s a lot. Unfortunately, that debt doesn’t get a special consideration.
Really, EFC is mostly income driven, especially in your case.
You could either buy, or maybe pay off/pay down your student loans…or both.
Wouldn’t you be better off putting a minimum down payment on a home (maybe First Time Buyer FHA 2% down) and putting a chunk of your savings towards paying off your student debt???
Also, to tell you the truth, your income is going to drive a high EFC…does your spouse work?
If this is a single parent home, your EFC is probably going to be around $50k per year (at least).
If I were you, and I wanted to pay much less than $50k for year for my child’s college, I would tell my child what I will pay per year (how much is that?), and then tell my daughter that she needs to find schools that will give enough merit scholarship to get costs down to that targeted budget. And, if I was likely going to stay in the same city/county, I’d be looking to buy and pay down that debt.
How much can you spend per year on college?
What is the distribution of the money in that savings account? Is it just for the home purchase, or does it also include your 6 months of expenses emergency fund and a couple thousand more for life’s happenings (big car repair, emergency plane ticket, new set of tires, etc.)?
Do you have any savings specifically earmarked for your child’s education, or were you planning to pay cash out of income?
What are the parameters of your own debt repayment plan?
All of those factors (and more) enter in to your overall financial picture. it might be time to sit down with a professional, and look at all of your finances, not just your child’s college costs.
To get a general notion of what a college or university might expect you to pay, pick a couple of your stat Us and a couple other places you think your child might like, and run the Net Price Calculator at their websites.
Single parent home. My daughters mom lives overseas and has no contact and provides no support.
My savings are about $75k cash, $20k in a 529 plan. I have $150k in a 401k. My debts are $140k in grad loans at 4.5%, which I’m paying back at about $19k per year over the next 9 or so years.
My housing expenses are 35k per year as I live and work in an expensive area. I also pay 10k per year in state taxes. Property here is expensive and property taxes very high a 3 bedroom house might cost 6-10k+ in property taxes per year.
I’m not married but I support my gf and our preschool daughter too.
A state school would be best as I can pay 20k per year pretty easily.
My daughter has ambitions for a private college where my efc would be around 45k according to online calculators.
45k per year is doable but probably not wise it will definitely crimp my life a bit
60k per year is not doable without loans
You should really pay off your debt with some of your savings. Put on your own oxygen mask before you help the kids and GFs and GFs kids (doesn’t she contribute, the GF?). You have a very small retirement fund too, lets assume you are over 40. Do you pay every cent you can into your 401k ?
What state? What are your kid’s stats? Why not a state school? Ambitions are lovely, let her aim for merit money at appropriate schools.
And sure, of course you could by a home, but not the way you are describing. The real education you can give your kid is about not having the sort of debt that is hampering you. I cannot understand why you would be paying so little off the loans?
Get straight with yourself about what you can pay, and then tell your daughter so she can adjust her plans. If the state U is it, well then that is it.
Our EFC was unaffordable. Our kid’s options were the community college or a place she could make as cheap as that. She only applied to the CC and absolutely thrived there. For transfer, her options were the state Us or a place she could make as cheap as that. When she saw the financial aid package from the one private U she applied to, she tossed the admissions package in the trash and attended her state U with no regrets. She got a great education there, worked for a couple years, and now is attending her dream grad program with full funding.
On the overall financial planning side, consider the merits of paying down your grad loan debt faster, but keep that in the context of your overall financial reality. For your current household situation (3 dependents, one income, big grad debts, high expense part of the country) a combined $70k in emergency, life happens, and current expense funds, could be reasonable. If you were to lose your job, you would need to keep your whole boat afloat until you pin down a new one. My husband lost his job when our kid was halfway through her junior year of college. It took him 13 months to get a job offer, and then 3 1/2 more before he could start as it was federal and there were extra hoops to jump through. Yes, we did have 12 months of expenses sitting in the bank when the lay off hit, and I was able to pick up more work, so we never did hit zero. It just was very, very scary. Lastly, do run the numbers on marriage. Would that improve your tax situation or reduce any other expenses?
Buy a house if you want to buy a house, but don’t do it for FA reasons.
At one point your kid was looking at colleges like Princeton, right? If your student has these kids of stats, perhaps she should also be looking at schools with great merit aid.
You don’t want to have your daughter in the same situation as you…still paying off college loans when her own kids are ready to go to college.
I think you need to crunch the numbers on buying a house a little better. You say this is an expensive area in which to reside…and you have $70,000 as a down payment. Can you really afford the monthly costs of owning a house? Add the property taxes, mortgage, insurance, and some savings for maintenance if needed. These costs could easily exceed what you are currently paying for housing.
Any chance your girlfriend could get a job? That would help with your cash flow.
As noted… buy a house if you want to…but don’t factor in financial aid at all.
Imo, consider putting at least some of that savings into a Roth IRA.
I think a loan amortization table would be more useful than a Roth at this point.
I don’t know how old you are, but you have a net worth of about $100k. I would start worrying about your retirement.
“Single parent home. My daughters mom lives overseas and has no contact and provides no support.”
I think other CCers may have better info, but afaik you’ll have to prove she’s out of the picture when applying for financial aid. Might want to look into that now as well.
Does your daughter realize that top schools will want her mom’s financial info even if she’s out of the country?
Does your GF have a job? If not, maybe this is a good time for her to start working. Wouldn’t she at least need health insurance?
When your GF gets out of school, will she be helping support your daughter’s college costs? If not, then rethink helping support her and her child. Your own daughter comes first. Show her that at least one of her parents puts her first.
If your child is looking at schools like Princeton and you can’t afford schools like that, then be honest right now. Believe me, she’ll do fine in life without going to a pricey undergrad.
If she has the stats for schools like P, then she has the stats for large merit elsewhere.
Again, I suggest that you buy a home in YOUR name only (don’t put the GF’s name on it!!!), put minimum down payment (first time buyer FHA something like 2% down) and put about $20k directly to reduce student loans (how much do you OWE??), then refinance the rest of your student loans to get a lower payment.
This is such a no-brainer unless you’d be moving out of the area sometime soon. Have no clue why such people rent when they could be purchasing a home. My older son was uneasy about the idea of a mortgage, but after writing rent checks for about a year, he quickly realized that he’d rather see that money going to something he owned rather than helping the owner of his apt.
How many children are there? You seem to have 2. Does your girlfriend also have 2 or is the child you referred to in another thread the one she has with you?
Send your daughter to the school you can afford. If the max you can pay is $20k and she doesn’t get grants to cover the rest than I don’t see how she can go. You have another child’s tuition to pay and a retirement to plan for, so you need to do some long range financial planning.
Read this thread.
http://talk.qa.collegeconfidential.com/discussion/comment/22050265#Comment_22050265
It used to be that folks could count on real estate values holding their value or increasing in value. It used to be easy to sell a house.
In addition to the costs of the house, you also need to factor in maintenance and how you plan to handle that…lawn care, snow removal (if that applies), etc.
Don’t just look at your mortgage cost. Add in insurance and property taxes which won’t be free.
@mom2collegekids for some people, owning makes more sense financially. For others, it just doesn’t. This poster needs to figure out what will work for him. Since he is underfunded for retirement, he needs to consider bumping that up too.
He might also want to go to a lending agency and see what kind of amount he would qualify for in terms of a mortgage…seeing as he already has some significant debt.