<p>I got totally screwed out of FAFSA money last year, my mom's retirement money (it's trapped in CD's so she can't put it in a retirement account) totally threw off the calculations, they expected my to be able to pay 22,000 (or something like that) which is about what my total bill came to. I had to take out loans and can't do that again. </p>
<p>I don't expect that I'll get any better results applying this year, but I was wondering (I can't believe I didn't think about this last year, idiot) can I appeal my EFC calculation? Can I just be like "look I can't pay anywhere even remotely close to 22 thousand and here's why... [retirement money in cd's]".
If I can appeal, what do you judge my chances to be?</p>
<p>You would make your appeal to the financial aid office at your college. I would suggest that your mother be involved in this since she’ll be better able to address the CDs and her retirement situation.</p>
<p>I have no idea what your chances of getting a lower EFC are, but don’t imagine they’re really high.</p>
<p>In any case, you’d have to get your EFC down to a very low level to be eligible for any federal aid that is not a loan. Even then, the federal grant aid that is available to very low-to-zero EFC students is a pretty small amount.</p>
<p>Your school probably has some funds of their own they distribute as aid. You’d have to talk to them about the criteria for awarding those funds and if you might be eligible for some of that.</p>
<p>The money that is already in the retirement account (if it is an IRA, 401, 403b, etc) are not calculated for financial aid purposes. Contributions made to the accounts in the tax year are added back as income.</p>
<p>Money in a ordinary CD and not an approved retirement account (even though your mom may say that she is using the money for retirement) are considered assets that can be used for college.</p>
<p>If the assets are in regular savings, I seriously doubt that ANY FAFSA only school is going to give you any special circumstances consideration regarding these funds. That is a choice your family made. If they allowed this, then ANY famiy with signficant assets would say “gee…these are REALLY for my retirement”. </p>
<p>Non-retirement assets are assessed at 5.6% of their value. NOT the whole amount. If your mom spent 5.6% of her non-retirement assets on your college education, she would still have about 75% of that money left after four year…and that assumes the accounts are bearing no interest. </p>
<p>How ARE you paying your college costs this year?</p>
<p>I would say your chances are around 0. To make a special circumstances adjustment the school must follow very strict guidelines. Adjustments can be made for things such as very high medial expenses, loss of income. Having savings in CDs that a parent does not want to spend on college expenses will not in any way qualify for a special circumstances adjustment. </p>
<p>The EFC is much more driven by the parent income than it is by assets. Only 5.6% of a parents unprotected assets go to the EFC. For the assets to be causing the high EFC there would have to be several hundred thousand dollars in assets. </p>
<p>To be eligible for federal grant money such as the Pell you must have a very low EFC (around 0 to 5,200 ish). Unless your mom is very low income with very high assets I doubt you would be eligible even without her savings.</p>
<p>I thought about this today. A goodly chunk of your EFC was determined by your mom’s income. The balance came from assets but your mom DOES have an asset protection of a certain amount. Only assets above that protected amount are included for EFC calculation purposes.</p>
<p>You are making it sound like your WHOLE EFC was based on your mom’s assets. If that were the case, she would have needed about $350,000 in her accounts to generate a $20,000 or so EFC (with no income). Obviously that isn’t the case, because if her income was below a certain amount, she would have qualified for the simplified needs test and her assets would not have counted at all.</p>
<p>My guess is your mom’s income is above $50,000 a year. That being the case, you would not qualify for any federally funded grants even IF her savings wasn’t counted. At a total cost of $22K per year, your school does not likely meet full need anyway. You might not have get a penny more aid even if your mom’s savings accounts aren’t counted. Schools that don’t meet full need often gap students, meaning that they provide the aid the federal government would provide but that’s it (e.g Pell grants). </p>
<p>You should have been offered a Stafford loan in the amount of $5500 as a freshman.</p>
<p>Swimcatsmom is correct … your chances of appealing your EFC are 0. Money that is not in retirement accounts is counted in the EFC formula, and professional judgment does not extend to changing the rules just because the family feels it can’t afford the EFC. I don’t mean to sound harsh, but I agree with others that there must be a LOT of money in CD’s (and the CD term is more than 12 months???), and/or your mom makes a pretty decent salary. </p>
<p>Many, many families find that the only aid available to them at a school costing $22k or so is the Stafford student loans and a parent PLUS loan. It’s a bitter pill to swallow, but you are not alone.</p>
<p>I’d also add that money is not “trapped” in CD’s. There is generally a penalty for early withdrawal but it can be relatively small – for example, a few years back I had about $10K in a CD and then saw that my bank was offering a much higher interest on new CD’s – I sat down at the bank and did the math – the net gain over a year in increased interest was about triple the amount of the “penalty” – so I cashed in the CD, paid the penalty, and put the money in the higher paying CD. </p>
<p>It sounds to me like your mom has a lot of money that is fairly liquid, but doesn’t want to use that money to pay for her college. That’s fine - it’s her decision how to spend her own money – but she’s giving you a load of b.s. by saying the money is “trapped” or calling it “retirement”.</p>
<p>In that respect, I’ll explain why it is that the financial aid system has more respect for money that actually is in sheltered retirement accounts (IRA, SEP-IRA, Keogh, Roth, etc.). There is a much BIGGER penalty for early withdrawal of money from retirement accounts than for a a CD, as well as possibly a big tax liability for some types of retirement accounts. The retirement accounts are the government’s way of saying – “we’ll give you a tax break and help you save, but you have to promise to keep the money there until you are age 59+”. CD penalties are merely the bank’s way of saying, “we’ll pay you higher interest than on regular accounts, but you have to promise to let us hang onto your money for a fixed period of time”. </p>
<p>If a person is not willing to make that deal with the government (not touching the money until age 59+) – then it isn’t “retirement” – it’s a nest egg, that the person might use for retirement, but also has the discretion to use for anything else (a vacation, a new home, their kid’s tuition, etc.).</p>
<p>P.S. You didn’t get “totally screwed” out of “FAFSA” money last year, at least not the government. If you are being messed up by someone, then it is your mom who is responsible. Maybe its simply poor planning on her part, but don’t blame others for the choices that have been made by your own family.</p>
<p>*I thought about this today. A goodly chunk of your EFC was determined by your mom’s income. The balance came from assets but your mom DOES have an asset protection of a certain amount. Only assets above that protected amount are included for EFC calculation purposes.</p>
<p>You are making it sound like your WHOLE EFC was based on your mom’s assets.*</p>
<p>I agree. I don’t think it’s the CDs that are causing the EFC. I think it’s mostly the family income.</p>