Having 4 kids from 4 pregnancies is kind of extravagant to me. Having had a singleton followed by the BO,GOF package I know that many extra expenses come with more children. I understand the birth rate less than I do the EFCs, which is all about business.
*The point is that someone who has zero equity on their house because instead of paying 3K per month of mortgage for 20 years, they went on two 10K vacations each year and bought nice clothes etc. over those 20 years, is in better shape in terms of EFC than someone who used that 3K per month to pay off their house. *
If those families have identical incomes and homes, the one with the paid off house is still ahead because they don’t have the mortgage obligation.
The EFC is likely to be similar, with schools that use the PROFILE as OP is considering, because debt is not considered, unless you owe hundreds of thousands because your 9 yr old had a kidney transplant.
I would have to agree that 1/4 of before tax income can be onerous.
When my oldest attended college our income was roughly $60,000, before tax. Our EFC was $15,000. This was roughly COA of an instate school. We then were committed to living on $45,000, again * before* taxes.
We could have had her attend community college for a few years, and a couple of her schools, did offer merit aid, that brought the cost below EFC, but she opted to do a year of service and earned an educational award, which gave us a little more time to investigate other options. During that time we found a private lac that met 100% of her FAFSA EFC, and while that was roughly the same COA for us as the instate public lac, we felt that the private school was perhaps a better fit.
We could have paid off our house, but we took an equity loan to pay college expenses, since it was fairly difficult even 15 yrs ago to live in the Seattle area on less than $50,000.
If your FAFSA EFC is $70,000, consider that 1), no school costs that much, if you look around, you will find plenty of schools that are less than half that amount.
2), if you really want to lower EFC, there is a simple fix, lower your income.
3), or you can consider that paying your children’s educational expenses is perhaps worthwhile, and something that you are actually able to afford, even if you might want to spend the money on something more glamourous, like a big house.
I think the mistake is seeing it as a punishment. From the college’s perspective, why is it their responsibility to ‘reward’ you for paying off your debts? Why is it their responsibility to pay for your kid’s education so you don’t have to use any of your savings or your income?
(There’s also this misconception here that people who have lower income/assets and low EFCs get their college costs covered; in most cases that’s not true. Only the most selective schools even claim to meet EFC; the rest have no qualms about saying, 'Oh, your EFC is $5,000? Well, our cost of attendance is $60,000, but we’ll cut it down to $45,000 for you and recommend a $5,500 Staford loan. I hope that helps!" For most people who fritter away all of their money, their ‘punishment’ is having to go to a school they can afford out of current income or having to take out huge loans. Having college savings frees you from that, and it shouldn’t be seen as a punishment.)
@xiggi - yep, its been a learning experience; and we were late starting. i’ve been sharing this info with neighbors & parents of our younger kids’ class-mates and others. They look at me like its not true, and i’m worried over nothing. Our EFC is about a third of our take-home pay; it just seems high.
We are absolutely going through a learning curve right now. I’m very appreciative of CC and the knowledgeable posters and opinions shared.
To be clear, although I quoted your comment, my post was directed at your personally. It was a generic comment about the absolute need to learn about how it works because so much misinformation is floating around. My issue is about the surprise that hits families when they look at the outcome of their FAFSA and CSS filing. The antidote is to invest a bit of time and be realistic about what it all means.
Many do find a way to make it work. Every year there is a story about a family of 4, 6, 8, or even 12 that had all their kids going to college. Obviously, it was not 12x Harvard or Princeton, but they made it work. The cost at full pay of any education is prohibitive, and I understand why it worries many.
Best of luck on shortening that curve. I have feeling that you will be an expert before long!
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I guess i just dont understand why the EFCs are so high to begin with.
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What difference does it make? The fed formula could say that your EFC is $7000, but that doesn’t mean a school has to give you the rest. Do you realize that?
If you were to say, “super, my EFC is $7,000. I can easily pay that.” Well, how does that help you at most schools that are still only going to give you a loan or may give you a small grant, but still give you a $40k gap?
Changing the formulas to have lower EFCs does NOT cause schools to suddenly have more money to give away. Right ? You do understand that, right?
The fact remains that most American kids commute to their local publics. Why? Because that’s what’s affordable. We don’t have a wide system of universities that can fund everyone’s tuition, room and board.
@bgbg4us
There are colleges out there that exclude your home equity for FA purposes.
^^Yes, FAFSA-only schools - you can have middle class AGI and cash & 529s up to the asset protection amount plus a paid off home and 7 figure 401k and IRA balances and 2 kids in college receiving partial Pell grants.
And a limited number of Profile schools.
Thanks for all the comments.
To answer the most frequent question, the EFC was from the Profile, not from the FAFSA.
I went back and forth a few times with the financial aid guy at the college. The bottom line was, they insisted on stripping us of our life savings and putting us $50,000 in the hole, all because of the way their formula works. I don’t care how their formula works. It’s wrong. Apparently they thought I was going to take a second mortgage on my paid-off house or something. Nope, not gonna do it.
I was polite, but in so many words, told him that his formula was wrong, both on a small scale, and on a large scale On a small scale, I don’t care what his models tell him, I’m not going to take on $50,000 of debt. On a large scale, setting the price so high, and forcing so much debt from so many people, is systematically accelerating the division of our society into a wealthy plutocracy and a debt-ridden labor class. I’m not playing that game.
Kid is going to State U. this fall. He will graduate with no debt, and money left in the bank for grad school.
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Valedictorian son has a modest trust account bequeathed to him by a late uncle.
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that is likely the issue. Student savings is hit hard by the calculations. Parents’ assets are not. If the student’s assets were drained right away (rather than just 20%), then likely aid would occur during the later years…unless you have a LOT of assets.
Your response is confusing.
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The bottom line was, they insisted on stripping us of our life savings and putting us $50,000 in the hole,
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Unless this school does NOT promise to meet need, then if your “life savings” (non retirement savings) was going to be stripped plus leave you $50k in the hole, then you only have about $150k in savings. of course you also have your 401k which is not being stripped, and the home equity of your paid off home.
Again, I think the child’s trust account is hurting the numbers.
Your son will be fine at a state school.
The Profile form doesn’t give an EFC. I think what you mean to say is that the EFC was from the school formula, based in part on information provided on Profile, but please correct me if I’m wrong.
Right- that’s where some of the confusion in trying to understand the OP came from - EFC is a FAFSA term.
As the OP considers college costs, it is also helpful to remember that it is likely that some substantial living expenses currently absorbed in the family budget will go away for the 30 weeks a year the student is living in the dorms. Groceries and household supplies are a non-trivial savings if you’re only buying 2/3 of what you used to buy. Even students attending public school have lots of associated expenses. Those who play sports have even more. And, students can work part-time and during summers. This can all add up to a substantial chunk that can help you meet college costs above and beyond what you’ve saved. And, if you’re eligible, the American Opportunity Tax Credit can yield another $2,500/year.
It may not make the $60K/year college affordable, but this can go a long way towards helping to make an in-state option workable.
And the Profile schools would count the trust (if in the student name at 20% of its value per year), and add in an assessment for home equity,but this often capped at %age of parent income…but not always. And any savings you have in non-retirement accounts regardless of what you have them earmarked for. AND remember that any contributions to pretax retirement accounts for the last tax year are added back as income on both the fafsa and Profile school formulas.
–> The “expected family contribution” from the NPCs and based on the elements that school considers. It may be based on the increased detail from the Profile, but different schools can view different details differently.
If two “families have identical incomes and homes, the one with the paid off house” - the ifap includes some accounting for where you live, state taxes and age of the older parent, but yes, in the end, the paid off family will be seen by some schools as having more “tappable” assets. To some extent they’re looking at discretionary choices. They can see these choices as funds which could go (or could have gone) toward college expenses.
Somewhere in the Profile instructions/description it says “qualified retirement” assets are asked about only to gauge the overall financial stability. It’s the loose funds not in qualified plans that can hurt. Same for mutual funds, which will be officially either Q or non-Q, whether or not you consider them for retirement.
Xiggi: a grand HahaYes, to you. When cost is important, many of us pored over the formulas. Some years, I reran the Ifap several times, with different speculative amounts, since during those years, my annual income changed.
In this case, we don’t know OP’s income nor his or the kid’s assets.
Sorry for being confusing. The “EFC” was given to us by the school on their financial aid form. They called it “EFC” Who knows where it came from.
Midkid86 above wrote, “The Profile form doesn’t give an EFC. I think what you mean to say is that the EFC was from the school formula, based in part on information provided on Profile, but please correct me if I’m wrong.”
That sounds right to me.
What was your FAFSA EFC?
My daughter attended a school that met full need, additionally, they used the FAFSA EFC. However, they are not obligated to use FAFSA EFC, ( they also required PROFILE) and we know other accepted students who found that the aid package was not enough for their family. She did not apply to any other private schools, so I don’t know if they would have had different numbers.
Did other schools come up with similar results?
Private schools seem to use preferential packaging, for students they really want.
Even a school that meets 100% of need can say that self- help, like student loans and work study, are going to meet need. Some schools even try and include parent Plus loans as meeting need, but they are fooling themselves.