D's fin aid awards don't seem to acknowledge that EFC applies to two in college.

Paying for College
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<p>My son is a rising college senior, FT. We pay approx. $30K/year for his tution. We file FAFSA for him every year (as his school required to maintain his merit award), but our EFC has never made us eligible for fin aid.</p>

<p>My D will be a full-time freshman next year. We completed the FAFSA (and CSS) for both kids, and the EFC came out to roughly $38K/year, give or take a few hundred for each child. Given that we are expecting to shell out approx. $20-25K next year for her (which reflects merit awards and savings), that puts us at about $55K next year in tuition for both kids -- which is a good bit more than our EFC.</p>

<p>Yet my D's financial aid awards (at least those we're already received) say that she is only eligible for an unsubsidized Stafford Loan. </p>

<p>I haven't heard anything from son's school, but I don't expect to before end of May or so since he's a continuing student.</p>

<p>Any thoughts on how this process works? How does each school expect the other to reflect the EFC in determining financial aid? We were clear on our FAFSA and CSS that we'll have two college students next year, and gave exact tuition info for son in the "Special Consideration" sections for both.</p>

<p>Thanks.</p>

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<p>Depends on the schools. Do they claim to meet 100% of need or not? In not, they may be gapping you...</p>

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<p>
[quote]
How does each school expect the other to reflect the EFC in determining financial aid?

[/quote]
They don't. As the FAFSA EFC already takes into account that there are 2 in college the other student is already being taken into account. If the schools COA is over the EFC then there is no 'need' so unsub loans is all they would offer. If the COA is over the EFC then it sounds like the school is not one that promises to meet full need without loans (the majority of schools).</p>

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<p>Assuming that your income/assets have not changed significantly year-over-year, was your Son's fafsa efc last year in the $70+k range? If so the new number is probably correct, i.e., $76k divided by two kids to $38k each.</p>

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<p>What was your EFC for your one child last year?</p>

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<p>Our FAFSA last year was in the high-40s, not the 70s, but it covered son's COA. In 2008, my husband transitioned from his full-time job (ie., he was laid off) into full-time consulting (with no benefits, no 401K, etc.). That new data moved the 2009-10 EFC down to $38k.</p>

<p>Am I wrong in assuming the $38K EFC is per family, not per child? Meaning that the $38K EFC is the maximum family contribution and would be split (or however proportionally divided) when calculating aid for both kids? Because they can't possibly expect us to be able to pay pay $76K in tution for one year!! Well, I guess they could but that is ridiculous and it ain't gonna happen. :) </p>

<p>No, none of the schools promises to meet 100% of need; then again, that wasn't our expectation. Applied individually, the $38K EFC would cover the COA for one child's tuition -- we're paying approx. $30K next year for my son's final year, and approx. $25K-$30K for daughter's freshman year -- but certainly not the combined tution, which will be $55K to $60K.</p>

<p>Anxious Mom, you suggested they might be "gapping' us. What does that mean?</p>

<p>We submitted Requests for Special Consideration to all of Ds schools. I submitted iDOC packets to the schools that requested them, and updated the FAFSA and CSS profiles with our actual tax data at the end of Feb. Is there anything more we can do in the way of an appeal? I realize that we are very fortunate to be able to pay the $38k EFC, and I'm not complaining about that! It's a stretch, to be sure, as we aren't wealthy (and now have to pay expensive COBRA premiums for our health care, among other expenses that used to be subsidized by my husband's employer) but we've saved enough in pre-paid tuition plans that will pay a good chunk of that. Still, $55K is $17K more than the $38K EFC and we were hoping that each of the schools would split the difference with a financial aid grant. Even unsubsidized Stafford Loans assumed by each child would would still leave us with a gap.</p>

<p>I thought I was on top of the financial aid aspect of the college process but, clearly, I don't know enough.</p>

<p>Thanks for the replies!</p>

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<p>
[quote]
Am I wrong in assuming the $38K EFC is per family, not per child? Meaning that the $38K EFC is the maximum family contribution and would be split (or however proportionally divided) when calculating aid for both kids? Because they can't possibly expect us to be able to pay pay $76K in tution for one year!!

[/quote]
Assuming you answered 2 in college to the question in FAFSA then the 38k is that students EFC. The FAFSA formula has already split the parent part of the EFC between the number in college but any part of the EFC caused by the students own income/assets is not split. If each EFC is $38k then they are saying the family EFC is $76k.</p>

<p>Is your income lower than last year? If so you need to double check that you have not entered any figures incorrectly.</p>

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<p>The FAFSA gives you an EFC when it is processed. The PROFILE does not. Schools using Profile use the information on it to compute your need and such in anyway they choose.</p>

<p>When you did the FAFSA and Profile, did you indicate that you had two students in college? Do either of your kids have any assets in their names? These do not have asset protection.</p>

<p>Is this "EFC" what is on the financial aid award for your daughter? If so, you need to understand that her MERIT aid reduces her financial need by whatever amount the merit aid is.</p>

<p>Still...check your financial aid application forms. Make sure you indicated the correct number of family members (is it four?) and that two of those four will be enrolled full time as college students.</p>

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<p>Ok, Swimcatsmom, I think I get what you're saying. If D weren't going to college next year, the EFC for our son would have been approx. $76K, correct? To which all I can say is HA HA HA. :) I'm not sure why the jump from the $46K EFC for him the year before, but our returns were complicated and our income appeared "artificially" (for lack of a better word) higher when the balance on a 401K loan we had taken out -- and were paying on -- had to be reported as a dispersal by his former employer when he was laid off and the lender would not allow us to continue making payments on the loan (why not, I still have no idea). We explained that this was a one-time increase in income -- with facts and figures -- in the Requests for Special Consideration we submitted, but I guess it didn't do us much good.</p>

<p>Neither child has any assets, other than the pre-paid tuition plans we've been paying into since they were in second grade. Those funds are distributed by our state directly to each school every semester, not in a lump sum. The pre-paid 529s would have paid four years of tuition in a state school. My kids are going OOS, so they instead get about $7K/year from the 529 -- an amount based on the average tuition for all of the state's colleges and universities that varies each year.</p>

<p>And, yes, Thumper, I was sure to indicate that we will have 2 students enrolled FT in college next year. I do realize that the merit awards do reduce financial need. And now I realize that the merit awards, in combination with the unsubsidized Stafford loans will bring her COA in under what I now understand to be HER EFC. None of the award letters referenced my daughter's EFC. BTW...we have five family members. I made sure all this information was correct on the FAFSA and Profile.</p>

<p>I guess a call to each school's financial aid office couldn't hurt.</p>

<p>Thanks again!!</p>

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<p>It sounds like 2 things are going on here.</p>

<p>First, even if what you experienced was a one time increase in income, colleges will base this year's EFC on last year's income and consider that money available to pay for college.</p>

<p>Second, if neither of these schools are schools that meet 100% of need, chances of them giving you what you need are slim. Gaping means your EFC says you need $20K and they just give you $10K, or nothing for that matter. If they don't promise to meet need it's usually because they don't meet most kid's need.</p>

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<p>There is a BIG difference between EFC (which is a FAFSA thing) and what the colleges might be expecting you to pay (which is another thing entirely). The EFC (per FAFSA) is the minimum you would be paying....not the maximum.</p>

<p>As an example...If DD goes to a school where the Cost of Attendance (COA) is $50K, your EFC (per FAFSA) might only be $25K. BUT if the school doesn't meet full need, you might be paying out of pocket $35K (add to that a $15K scholarship which would bring the total to $50K for the year). Your OUT OF POCKET is $35K despite your EFC per FAFSA because the school did not meet your full need.</p>

<p>If son goes to a school where the costs are $45K per year, you might be paying OUT OF POCKET $35K despite an EFC of $25K. Add to that that a Stafford Loan of $5K and a scholarship of $5K to total $45K. Again...school doesn't meet full need.</p>

<p>Your OUT OF POCKET expenses were $70k because you were paying $35K to each of two schools. That is NOT your EFC...it is your out of pocket expense.</p>

<p>Remember that the EFC is a FAFSA thing...not a PROFILE thing. For schools using the Profile, the information is used however they choose to disperse THAT SCHOOL's money.</p>

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<p>
[quote]
Neither child has any assets, other than the pre-paid tuition plans we've been paying into since they were in second grade.

[/quote]
</p>

<p>Did you list the 529 pre-paid tuition plans as student assets? If so, are they really student assets, or are they parent assets. In our state (WA) generally those 529 pre-paid tuition plans (GET Plan) are owned by the parents (with the students named as beneficiaries) not the student. I believe FAFSA will assess student assets at 20%, but parent assets at 5.6% maximum, so make sure you are clear who is the "owner" and have reported those assets correctly.</p>

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<p>For dependent students 529 accounts are reported as parent assets on the 2009-2010 FAFSA regardless of whether the parent or student owns them.</p>

<p>OP - it sounds as if your major problem may be the balance of your 401k loan having to be treated as a dispersal is probably the culprit when it comes to your high EFC. I believe that is one of of the disadvantages of 401k loans. It might be worth contacting the financial aid officers and asking if it is something that can be treated as a special circumstance. I am not sure if it is but it doesn't hurt to ask.</p>

<p>Hopefully next year your EFC will more accurately reflect your real financial situation.</p>

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<p>Oh...right... 529 reporting changed for FAFSA for 2009-2010. But I believe Profile doesn't do it the same way...or maybe that was the school's own form...anyway it's worth a check to verify that the assets are reported according to whatever instructions apply.</p>

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<p>SwimcatsMom wrote:
"OP - it sounds as if your major problem may be the balance of your 401k loan having to be treated as a dispersal is probably the culprit when it comes to your high EFC. I believe that is one of of the disadvantages of 401k loans. It might be worth contacting the financial aid officers and asking if it is something that can be treated as a special circumstance. I am not sure if it is but it doesn't hurt to ask."</p>

<p>Yes, SwimCat, I think that is exactly what happened. We moved heaven and stars trying to convince the 401K lender to allow us to continue paying on the loan, and very often we'd get one person telling us we could and another telling us we couldn't until we got the definitive answer: No. So it was dispersed and reported to the IRS as income in 2009.</p>

<p>We will take all your thoughtful suggestions and contact the financial aid offices for the D's schools. We've already explained this in writing, but a conversation couldn't hurt. Thanks so much or the help! I'll let you know what happens.</p>

<p>Oh...and FAFSA gives clear instructions, and 529 savings are considered parent assets.</p>

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<p>PM, I think you have come to the source of your high EFC. Yes, 401 K disbursement are considered income. I know a number of cases where folks have appealed this, to no avail. The only time I know that it has been reversed is if the amount is rolled into another tax deferred plan like an IRA within 60 days. We have done exactly that as a gap plan. But once that 60 day period is up, it becomes income. You probably have to pay taxes on the money as well. FAFSA is government just as the IRS is. </p>

<p>However, your EFC is well beyond what PELL grant threshholds are, so I don't see much if any in grants that even a reduced EFC (unless it is drastically reduced) is going to give you other than subsidization of the STafford loans. That pretty much dashes government money. So it is the college money that you need to pursue, and talking directly to the financial aid officers is what you need to do for any chance to get anything.</p>

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<p>Thanks, cpt. We most certainly would have rolled the 401 K disbursement into an IRA, if we still had that money. :) If my husband had transitioned to full-time employment with a company that offered a 401K, we might have been able to roll the loan into that -- continuing payments on it -- but he's working as a consultant -- meaning no 401K. Believe me, we looked into every possibility. We paid taxes on it, but not the early-withdrawal penalty because the purpose of the loan excused the penalty. All would have been well if D hadn't been laid off by his employer, as we would have continued paying the balance (and ourselves, as payments (P & I) went back to our 401K. We thought it was a good move at the time, and it would have been had D's company not crashed when the economy tanked. </p>

<p>All we can do is ask and explain, and see what happens.</p>

<p>Thanks again!</p>

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<p>I'm confused. My husband left a job. He was able to leave his 401K contributions IN his plan. When he recently decided to deal with this 401K money...he opened an IRA and rolled the money from the plan into it. We didn't take a loan at all because we knew it would be considered income. It was rolled over into another retirement account.</p>

<p>Are you saying you didn't have that option...or are you saying you needed the loan for other purposes?</p>

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<p>thumper:
We were able to leave the remainder of our investment in the 401K. The loan was not considered income because we were paying it back. We took out a loan only against a portion of our 401K, and the loan payments went directly back into it. It didn't become income until my husband left his employer -- the fund that held the 401K told us they were required to disperse the loan at that point, and reported loan to the IRS as income. I'm not even sure if the fund would have let us pay off the loan in one lump sum -- probably not, but we weren't in a position to do that anyway. We took out the loan for a purpose that the IRS considers a legitimate reason (medical expenses and tuition are two such allowable reasons), therefore we didn't have to pay a 10% penalty for early withdrawal, but we did have to pay taxes.</p>

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<p>You mention medical expenses. If you had unusually high medical expenses, you may wish to gather documentation of all expenses and submit those for special consideration.</p>