Hi eveyone, I’m a 19 year old international student from Israel, and I will be applying to undergraduate programs in top schools such as Stanford, Harvard, MIT, etc. around November- December. I know most of these schools are need based and that affects my admission, but I won’t be able to go to college at all without a lot of aid.
My parents are considered middle class here in Israel, and recently my grand mother died, and my mom received about 200,000 dollars from heritance. She is planning to invest in an apartment with that money, and buy it on my name to avoid paying extra tax (she will also need to take a 100,000 dollar loan in order to purchase the apartment).
Might having an apartment on my name affect my demonstrated need?
Can the loan my mom may take affect it?
If she can’t puchase the apartment on my name, she won’t buy it because it increases the amount of loan significantly. What happens if the money just stays in her account?
She won’t pay for my college with it. My parents will give minimum contribution, so even if they are technically able to pay for an amount of the tuition, they won’t.
Please, I need advice. What should I do? What would be best to ensure I receive as much aid as I can?
And one more thing- can applying early action to one of the schools increase the amount of aid and grants I’m given if I get in? Because supposedly the schools are not yet running low on grants and aid money…?
Thanks!
Schools won’t give students money because their parents won’t pay. If they did, everybody would say that.
I think owning an apartment in your name is going to make it difficult for you to get aid. If your parents rent it out, the income will be considered income. How much will your parents pay? Will they help you pay for a school in your home country?
They will pay up to 10,000 dollars a year for me. Same goes for my home country. My mom does plan to rant it out if she buys it, but the income won’t be very significant, less than $500 a month. But the fact that I have an aprtment worth 300,000 on my name, do the financial aid offices consider that a resource to pay for college? They might actually expect me to sell it in order to pay?
And what about the debt from the loan? Is that not a part f the consideration?
if you own a $300,000 house where you will be collecting rent (it does not matter how much, it is still income). it is considered an asset. Student are assessed at 20%. So between the value of your apartment and what your parents can afford to pay, you will need very little or any financial aid.
Why would colleges ignore a $300,000 investment property? They can’t afford to subsidize families so they can acquire rental homes. If the apartment costs $300k and you owe $100k on it, then its value is $200k. I think that level of assets will generate an expected contribution of at least $40k a year, maybe more, so I don’t think you’ll qualify for need based aid at all.
I don’t think they’ll expect you to sell it, but they’ll consider the income it generates and they might very well expect your family to borrow against its value to pay for your education. Families are first in line to pay for school. If your parents won’t give you the money you need, why should colleges pay for them?
Are there any affordable schools in your home country? Make sure you have a financial safety or two on your list.
Colleges do not provide need based aid so that families can afford to buy apartments.
Your mother wants to put the apartment in her name to avoid taxes? Well…an asset in your name will be assessed at a far higher rate than if it’s in parent name.
I don’t understand why your mom would need MORE Loan money to purchase this apartment if it’s in YOUR name. Either she needs the loan…or not…for this purchase.
But that’s secondary to your question.
You are an international student. You are applying to Harvard, MIT, Stanford you say…
Stanford is NOT need blind for admissions for international students…so ypur ability to pay will be considered when you apply for admissions.
All of these schools accept less than 5% of international students who apply. 95% get rejected. In the 95% who get rejected…most are very well qualified applicants.
All will look at your family income (for 2018-2019 it will be from 2016) and your assets as of the date of filing your financial aid form initially.
The $300,000 apartment in YOUR name with $200,000 in equity (because there is a $100,000 loan) will add at LEAST $40,000 a year to your family contribution for these colleges (at least 20% of that value of $200,000). If you have $500 in rental income…that would be $6000 a year in income…YOUR income…from this rental.
Some colleges will use the full equity in a secondary property like this…as they feel the family could sell it…and pay for college instead.
Oh…and if you are thinking of getting your own loans? Well…really? You will already have $100,000 in debt for this rental. You won’t get U.S. loans anyway.
The debt from the property loan won’t matter except that it reduces the equity in the rental property as noted above.
Your mom is trying to skirt the taxes in Israel (wouldn’t YOU also have to pay taxes on this transaction).
NOTE…the three schools in your original post guarantee to meet full need for all students. Applying early to them will NOT increase the aid you receive. Plus it sounds like you have some financial restrictions…so it would be better for you to have multiple financial aid offers and net costs to compare.
And lastly…if you decide to apply early action to MIT, Stanford. And Harvard…well…you can’t do so to all three. Both Stanford and Harvard have RESTRICTIVE Early Action which means you can only apply to their school early action…and no others (I believe they allow your instate public university…but that wouldn’t apply for you).
So tell us…what are your ACT or SAT scores, and GPA.
What is your parent annual income in U.S. dollars? THAT is very significant here…as need based aid is driven largely by parent income…and assets.
Yes…some colleges might expect this. How many students here do you think own $300,000 in real estate in their names?
This would be YOUR asset.
The schools don’t expect you to sell the apartment, the business, the assets - they don’t care what you do with your money. They will expect you to pay for college, and there are ways for you to do that. Unfortunately, you won’t be eligible for most loans in the US.
Some US families would borrow against their assets, including that new apartment. Most would pick different schools, schools they can afford. Even in the US where the streets are paved with gold, students have to pay for their own educations when they have the means to do so. When grandparents die and leave money to families, the schools feel they can pay.
I appreciate your answer. My gpa is 4.0 and I have 1600 on the sat. The 100,000 loan my mom will take for the apartment is unavoidable, because apartments in Israel are very expensive, and 300k is about the minimum price for an apartment here. And yes, she wants to avoid the tax, because it is very high here and we don’t really have a lot of money. It’s just this heritance that she received recently and she wants to do something with it, instead of leaving it laying around in her bank account and getting wasted. And I can’t ask her to spend that money on my college education, things work differently here.
I understand that this will be my asset, and that makes colleges consider me able to pay. Are you saying that if it’s on my mother’s name, they will not demand as much contribution as if it were on my name?
And what if it were on my brother’s name?
Thanks
you are going to have a bit of a dilemna. There are only 5 schools in the U.S. that are both need blind and meet 100% demonstrated need. The admit rate for these schools hover around 5% and the numbers are lower for international students.
At the majority of colleges in the U.S. your ability to pay is going to be a factor in admissions? They are going to look at your family’s income and assets. How much can your parents realistically afford to pay?
Your parents are making a choice not to use the money to pay for your education. The line to pay for college starts at your house. Remember, your need based aid is provided by the generosity of other people’s parents who give to these schools. Many families who are paying for their kids to attend these schools, do not have the luxury of trying to figure out ways to move money in order to not pay their fair share or are looking at purchasing property as an investment.
You may have to pick your poison; if you need a lot of $$ it is going to affect your ability to get admitted. If your parents present their true financial picture (the money in the bank gets assessed at a lower rate for the parent, even if it is sitting in the bank). You may need to look into places where you can get significant merit money and have your parents pay the balance.
If my mom didn’t have that 200k, she and my dad (they’re divorced) could realistically afford to pay $15,000 without taking a loan for it. I know it’s their choice not to use that money for me, and that the colleges don’t care about that. I know that most people have to work really hard to pay for college and the fact that I ask for aid affects my admission, but I don’t have another option, so I’m going to at least try. I might come off as a bad or greedy person trying to figure out how to get the most aid when my parents have so much money, but this is really important to me and if I don’t figure it out I won’t be able to go at all if I do get in.
I really appreciate your answers, you guys help me a lot.
One more thing though,if the asset is on my brother’s name, does that make any difference?
I think you’re letting this inheritance cloud your real issue. Your parents will only pay $10k/year and that’s not enough to attend college in the US. They’re going to have to report the money if it’s in the bank, or ownership of the apartment and the income if they buy property. You won’t qualify for need based aid at most schools and the admission rate at colleges that might meet need is in the single digits. I wouldn’t waste time trying to figure out how to hide assets. Your time would be better spent looking for guaranteed merit or choosing affordable schools in your home country.
You now have just added a new dimension- your parents are divorced. The most generous need based schools will ask for the income and the assets of both of them.
@austinmshauri brings up a good point. Even with full tuition, $15k is not going to be enough to cover fees, room& board, health insurance, travel, books and misc expenses. You will not be able to work in the U.S, so how do you anticipate paying for these things.
That’s right. The schools will assess a much higher rate when calculating assets in the student name than in the parent.
Also, you seem to be missing this point…MOST students do not an apartment with $200,000 in equity in it in their name. The colleges will most definitely view this as an asset that can be sold, or a loan taken out using that $100,000 in equity…to pay for your college costs.
TBH…in addition to wanting to save taxes, your mom is also thinking this will somehow be to your advantage for need based aid here. It won’t be…quite the opposite.
How much will she be saving in taxes? I’m going to be frank…if I were you, I would not want the liability of having a real estate property in my name as an 18-22 year old college student. That’s not a wise thing to do here.
My advice.
- Find a less costly college to attend in Israel.
- Find a college here where you will get merit aid which won't be affected by your income and assets. Start with University of Alabama. If your SAT is really perfect, and so is your GPA, you will have the potential to get a full ride there. Potential...it's not guaranteed.
- You can afford to be picky about colleges IF your parents are not willing to pay for it in this country....and you want a FULL ride.
- Even those very very generous colleges that do award need based aid to international students...ALL expect a student contribution. Will you be able to pay that?
- As noted...many of these generous schools will REQUIRE the income and assets of both of your parents, as well as your income and assets. What is your mom's income in US $ and what is your dad's?
- How old is your brother? Why would you want to stick him with this property? Just so you can come here for college?
I think your plan is very flawed.
For clarification, I believe that sybbie means for international students, since OP here is an international student. The number of schools that are need blind and meet 100% of demonstrated need for U.S. students is significantly higher.
Thanks @BelknapPoint . Exactly, there are only 5 schools in the U.S. that are both need blind and meet 100% demonstrated need for international students.
OP- why do you say studying in the US (which you cannot afford to do) is your only option? The Technion is a world class university. Hebrew U, Tel Aviv, Ben Gurion all very solid.
Even with aid, your travel costs alone will chew up a portion of your family contribution.
Rethink your plan.
If it’s in your brother’s name, it won’t be in yours and thus won’t be assessed at 20% or not at all.
The $500/mo rent however will be assessed as income that should be used to college above any cost (and really that’s what the money should be for).
You should not be aiming for need-based aid since odds are you won’t be able to pay what they estimate you should, but aiming for merit-based aid; if you indeed have a 4.0/1600, lots of universities have excellent programs, such as UAlabama Honors (look into the STEM MBA program too), Temple, UNew Mexico, UTennessee, UMN Twin Cities, UOklahoma, UT Dallas…
Note that merit aid applications typically mean applying to the university and its Honors College by October, in order to have the possible scholarship application completed by Nov 30.
And remember…you are an international student…so check EACH school’s policies on awarding aid to international students. YMMV.
Schools will ask for certified copies of your parents bank statements.
Why do you think a red flag will not go up when they see that $200k has come out of your mother’s account? they will want to know what happened to the $$> Your mom cannot say she used the money for brother to purchase a house (especially if your brother is a minor) at the expense of paying for your college. This is not a good plan!!