<p>it turns out my mom is making about 6k more this year than she estimated because she does so much overtime, and i'm nervous about applying for financial aid because all of the NPC estimates with the lower income were already a bit of a stretch. her actual income is actually 10k+ lower than her gross, so about 1/3 of her income gets taken out with each check, which is why we have a lot less money than it looks. i have no idea how this works, so sorry if this is a dumb question, but do colleges take this into account or does it just not matter?</p>
<p>outtofit - Calculations are based on gross income with adjustments due to various factors such as whether a sibling is in school. All of us have a lower “take home” pay than “gross” salary due to taxes, medical/dental insurance, disability… Yes, your mom’s overtime will count toward your financial aid package for next year.</p>
<p>Everyone brings home a whole lot less than gross salary, and 1/3 less is actually pretty good. I bring home about 55% of my income because taxes, insurances, 401k savings, retirement.</p>
<p>She makes what she makes, and you can’t exclude any income. Usually the NPCs ask for ‘adjusted gross’ which excludes some things like 401k, insurance payments, and retirement.</p>
<p>i feel so dumb because i know nothing about any of this, lol. thank you for clearing that up!!</p>
<p>Just apply, and be honest with your numbers. It is what it is.</p>
<p>As an FYI (regarding a post above)…the BALANCES in 401k accounts are not treated as assets BUT those 401 K contributions, or TSA contributions made in 2013 will be added back in as income. So even though they are excluded in the AGI, they WILL be counted as income for financial aid purposes.</p>
<p>I have a HS junior. Income is relatively modest compared to assets. Income next year should be 80-90k before deductions, including 30k in mortgage interest, property and other taxes, and 10k health insurance. Home equity about 400k, nothing I can do about that. I also have 400k in mutual funds. Would it make sense to liquidate some of those funds this year, and keep the cash under the mattress? Would that reduce my visible assets to increase aid in 2015?</p>
<p>Unless you want to commit fraud, you would need to report the value of anything kept under your mattress.</p>
<p>What if, instead of the mattress, he put some of that money into a life insurance policy? Would that work to legally “hide” it for financial aid purposes?</p>
<p>Even the money under your mattress, in a drawer, or at aunt Gertrude’s house MUST still be reported. You still HAVE the money. It doesn’t matter where it is.</p>
<p>If your kid is a junior right now…if you haven’t maxed your TSA contribution for 2013, you could move some money there. </p>
<p>That 400,000 will be treated as a 5.6% assessment for FAFSA purposes after the asset protection allowance…so figure about $22,500 added to your family contribution for FAFSA purposes…on top of anything from your income.</p>
<p>Even after spending some for college, you would still have $380,000 or so after the first college year…and that doesn’t include any interest the mutual fund account is earning.</p>
<p>Privacy hound…are you hoping to get need based aid so that your $400,000 in assets won’t be touched? This is not likely.</p>
<p>It probably doesn’t matter. You may think $80k is ‘modest’ but most schools don’t. You’ll probably be eligible for loans, and of course merit aid, but not for much pure financial ‘aide’. Maybe some, but not huge amounts.</p>
<p>I’ve played with the calculators a lot, putting in the money I have in non-retirement accounts, putting in half, leaving it out completely. Usually the only difference in the amounts I can expect are in loans. I could use the money in my savings to buy a car or a house or anything else and it wouldn’t be there to report, but in most cases the schools are still going to expect me to pay (or borrow to pay) that EFC based on my salary.</p>
<p>Agree twoinanddone, it probably won’t matter. Until you get down into Pell range roughly 25-30% of the income is going to give a thumbnail of what is expected…then start adding in the assets, etc. If there was a legal/ethical “secret” place we could put money so colleges wouldn’t know about it and the kids would qualify for need based institutional aid many, many of us would have done that through the years and it would be well known on this forum.</p>
<p>Outofit, what IS your mom’s gross income?</p>
<p>FAFSA and PROFILE are both heavily income based. FAFSA does not look at home equity at all for the primary home. Some PROFILE schools max out the home equity value at a multiple of gross income. </p>
<p>The income figure that is relevant is usually your AGI (as it shows up on the 1040) less federal and state income taxes, plus any deductions taken for qualified plans such as HSAs, 401Ks, IRAs. </p>
<p>Be aware that money in the kid’s name/ssn is hit a lot harder than for the parents, so a joint acct with the parent put down as primary is a good idea or having the kid spend down the account on expenss, reimburse the parents for expenses. On FAFSA, student assets are assessed at 20% with no allowances whereas parents’ are at 5.6% after an allowance based on the number of dependents and age. Remember also, that though income is as of 12/31 and as reported to the IRS (and there will likely be a verification between the tax returns and FAFSA), the assets are ON THE DAY YOU COMPLETE THE FORM. So don’t pick a day when you have a large sum dedicated for siding for the house or on payday. Your explanations aren’t going to go anywhere most likely because earmarking is not taken into account and would be a huge hassle. You are stuck with those numbers most of the time, once you report them unless they are in error. Can’t say, oops, the accounts would have a lot less a week or a month later.</p>
<p>OP, the forms will subtract out income taxes, so some of the things taken out of the check are taken into consideration. What schools are you considering and what do you estimate is your family gross income? Do some NPCs again with the new numbers. Do you have PROFILE schools in the mix? Do remember that most schools do NOT meet full need.</p>
<p>Generally FAFSA EFC seems to be 1/4 of BEFORE tax income under $100,000 & 1/3 of incomes over $100,000.
Lots of dependents, or if you are a business owner will skew that.
PROFILE may ( will) identify additional assets that can be tapped for expenses.</p>
<p>@thumper1: it’s about 66k so far this year. it’s usually about 60k, and her actual salary, i guess, is about 50k or a little more. for the longest, i was under the assumption that we were low-income. well, we really were, before her current job that started a few years ago. either way, it sure feels like nothing’s changed…almost like it got worse. It seems like pretty often we don’t have money for anything after bills. i mean, i have two siblings, but still. i don’t understand it. i’m worried that i won’t be able to afford anything, even if she makes some sacrifices. we have literally zero assets, though. no savings in the bank whatsoever, no house, nothing. we pretty much live paycheck to paycheck. what generally counts as assets?</p>
<p>@cptofthehouse: almost all of the schools i applied to (besides state) are 100% need. i really didn’t wanna waste my time applying to schools i like (like u miami, boston u, etc) and would have better chances at but would have absolutely no chance at affording 
i’ve done NPCs for all of them. i applied to others, but the full need ones are barnard, bryn mawr, holy cross, mount holyoke, rice, scripps, smith, wellesley, and yale. </p>
<p>i sat down with my mom and did the NPCs before, but it seems like she read numbers off to me wrong because i ended up putting a zero for basically everything besides income. i’m gonna do it again today with the new number.</p>
<p>What makes up the difference between her gross and net salary? Everyone has to pay for certain things, so if you are talking about rent, utilities, transportation costs, car payments, debt, health insurance, and living expenses,…no, they are not taken into specific consideration but built into the formulas. THe formulas do give credit for income taxes paid.</p>