<p>We are having trouble understanding a financial aid offer from a college that required the Profile. We've made arrangements to talk with a financial aid administrator by phone tomorrow. In the meantime, can anyone shed light on this?</p>
<p>Our AGI is less than $31000 and our assets are $70000. Our son made $1000 working and $500 in interest and dividends. We sent the college copies of our tax returns and answered email questions. They asked about our son's investment income and his assets. I replied that he cashed bonds last year and spent the money, and that he had no assets except $11000 in a 529 plan (he's the beneficiary, not the owner). The college figured parent contribution is $8000 and student contribution is $13000. COA is $52500. They offered $19500 in scholarships, Pell grant of $5550, and also loans and work study. </p>
<p>The expected student contribution has us stumped. It looks like the 529 plan becomes his contribution. I was expecting it to be treated as parent assets, but I realize now that's FAFSA rules. I'm worried about what they will figure in future years, too. We'll know more after the telephone call. Has anyone else run into this?</p>
<p>I believe the amount of the bonds he cashed in would have been considered as INCOME. For students, their income is assessed at a high amount (I believe it is 50%) above a certain amount (I don’t know the number)…so it doesn’t matter if he spent the money and it’s all gone…the reality is that if the bond amount was substantial, a %age of it would have been expected to be used for college purposes this year.</p>
<p>Thumper is right. It is a cardinal rule not to cash in anything that critical year that is being used to calculate your financial need if there is any way to avoid it. People have been snagged by cashing in their retirement accounts, getting some insurance payout, getting a one time distribution of sorts. The colleges grab it as income and for the student it comes to a very hefty amount. </p>
<p>The face amount of the bonds would not be considered income unless it is for tax purposes; it would be realized gain that should be used. You can cash out an asset and spend it and it does not count as income. That can be a big difference if the school is counting as such.</p>
<p>I’ve also seen 529s counted as student assets by schools that just feel like doing it that way if the assets are so titled. That is the privilege of the school that is using its own methodology which is permissable through PROFILE. </p>
<p>When you talk to the rep, find out precisely how the student contribution is being calculated. Unfortunately if your student can have assets, income attributable to him, that is very heavily hit. IF this is truly a one time thing, it might be wise to take a gap year this year, and spend down the student assets so that they won’t be hit the same way next time around. I’ve known several families who decided to do this when they found out too late that some fixable thing in their asset/income structure penalized them on a one time basis in a crucial year. The following year, they made sure that the problem was fixed and the aid was more reflective of the family situation.</p>
<p>Thanks for the replies. Here’s an update after our phone call:
The financial aid office had overlooked my email reply and had used an imputed figure for our son’s assets. They are going to recalculate and send us a new offer.</p>
<p>Here’s what I learned that might be helpful to others:
- Pay attention to the Profile (which really doesn’t have any rules!). I was much too focused on the FAFSA rules. I knew that $500 in investment earnings wouldn’t affect our FAFSA EFC. But the Profile complicates situations. And you may unexpectedly have to complete a Profile.
- As has been said many, many times on CC, call the college if something doesn’t look right. And do it before you work yourself into knots!</p>