<p>I'm currently deciding on whether or not to attend University of Chicago (if I am not accepted to a school that offers better aid.) I absolutely love the school, but I would have considerable loans by graduation. My parents EFC is 36k, but they are only willing to contribute about 25k. Therefore, I need to make up the 11k difference in addition to 3.5k of subsidized loans. I plan on trying to make as much money as possible over the summer and also using some of my savings, but I'm still going to be looking at around 10k in loans. My parents have a pretty large savings account, and they offered to loan me the 10k I need to take out -- instead of going through the federal gov and other private loans. The theory is that if my parents have less money in their savings account NEXT year, then their EFC will be lower and we will get more aid than if the money was sitting in their account.</p>
<p>So I guess I have a couple questions (hopefully this all made sense.)</p>
<ol>
<li><p>If I take "loans" from my parents will my EFC be less next year than if I took out federal loans? Are there any negatives in taking out loans from your parents?</p></li>
<li><p>Does your EFC normally stay the same throughout your undergraduate years? Do you normally get more financial aid as you go through college? It seems to me if your parents are spending their savings on college then slowly your EFC would drop and your financial aid would increase. But do colleges consider this when they offer financial aid awards and adjust it so it stays pretty much the same throughout your four years? </p></li>
</ol>
<p>Thanks! I'm just sort of curious if I'll be looking at around 45k of loans if I attend University of Chicago or less...</p>
<ol>
<li>If I take “loans” from my parents will my EFC be less next year than if I took out federal loans? Are there any negatives in taking out loans from your parents?</li>
</ol>
<p>You should run some calculations using an EFC online calculator and the institutional methodology to see if $10,000 less in your parents’ savings will net you much difference in family contribution. My guess is it won’t be a lot. </p>
<p>The only downside would be…do you want to be in debt to your parents? What will happen if you cannot repay the loan for some reason? This could create a very uncomfortable situation.</p>
<ol>
<li>Does your EFC normally stay the same throughout your undergraduate years? Do you normally get more financial aid as you go through college? It seems to me if your parents are spending their savings on college then slowly your EFC would drop and your financial aid would increase. But do colleges consider this when they offer financial aid awards and adjust it so it stays pretty much the same throughout your four years? </li>
</ol>
<p>Your family contribution is LARGELY based on your parents’ incomes…their savings balances do contribute some towards your family contribution but not NEARLY as much as your parents’ incomes.</p>
<p>The other thing to consider…if your parents have an increase in income this would have far more of an affect on your family contribution than their savings account balance. In other words, an increase in your parents’ incomes would likely NOT be easily offset by a reduction in their savings.</p>
<p>Although I don’t know what UCh’s formula is for financial aid, if your FAFSA EFC is close to what Chicago says it is, they may use a similar formula. If that’s the case, the formula is heavier on income than it is in assets. So if you spend $10K down, that would amount to about $600 in aid, using the FAFSA formula and assuming that your parents have their savings buffer from FAFSA. If they don’t, then it would’t affect it at all. </p>
<p>You have to file for financial aid each year using the income and assets from the prior year to get the new determination of need. For this year’s package, your family income was from 2010, Next year will for 2011 income. The day you fill out your FAFSA and what is in those accounts determines your assets. It is entirely possible. if your parents get some payment that your EFC will go up, and your financial aid goes down. If one of them loses a job or has reduced income, the EFC will be adjusted accordingly. </p>
<p>It seems to me that you are going to need every bit of your subsidized loans AND borrow from you parents as well to meet the first year costs. Otherwise where are you going to be getting the $11K gap? You will probably be looking at more than $45K in loans since the way financial aid usually works is that the colleges expect the student to take a larger part of the payment each year. The loan maximums increase from the $5500 in STaffords the first year to $7500 by senior year.</p>
<p>High school seniors tend to overestimate how much they will make during the upcoming summers and school years. Jobs are hard to find and college life is very full. </p>
<p>UC sounds like it could really be expensive for you. Keep in mind that colleges mirror the economy. Unless the economy suddenly roars into life, it is unlikely that any college is going to hugely generous next year. In fact, many colleges put their best foot forward with freshmen and scale back from there in subsequent years (so it is important to ask the college “Can I expect the same amount of aid all four years?”). </p>
<p>I encourage your parents to talk directly to a financial aid officer themselves. Many parents don’t want to deal with the huge costs. They are staggering. In March of the senior year, there is still hope against hope that somehow a better deal is going to emerge. Having a talk directly, themselves, may make the picture clearer. They may decide to support you further – or they may say “this is just too much, we need you to look at another college.”</p>
<p>Your parents love you and want your dreams to come true. Being able to talk, frankly, about this is a huge step forward in being adults together. Don’t be the “child” with a “dream.” Be an adult searching for a workable path forward. There is a huge difference between the two. Right now, I am suspecting that you are seeing UC as a dream school and are hoping and praying that this will sort out – please be careful. You can live the dream for four college years and then spend a lifetime paying for that dream. Good luck. I hope this pans out.</p>