<p>Hey,
I am applying to college this year to a lot of private schools, and I've just calculated my EFC. I was shocked.</p>
<p>My parents' income combined is $34,200 per year. They did not go to college, are non-English-speaking immigrants, and work in a factory.
My brother is going to a state college right now, paying around $200 max.
My parents have no medical insurance.
We have $15,000 in all of our banks combined, but no savings for my college education.
We have been living in the same house for six years (We bought it for $340,000 and so far, we owe only $60,000).</p>
<p>The EFC says my family should contribute almost $16,000 for college.
I think that is incredible high for my family that makes less than 35K.
Our high home equity accounts for the ridiculous 16k.
Now, my parents are freaking out and are trying to stop me from not applying to private schools(they're new to this whole college process, so it kind of sucks).
Can somebody help me/offer me advice?
I would appreciate any help.</p>
<p>Well, I think you should still apply to private colleges schools (I believe you would qualify for fee-waiver anyway) and if you got in, explain your situation to the FA offices and see what they say. You might also get more merit-aid which would make up the difference.</p>
<p>Your parents have $15,000 in savings and $280,000 in home equity. I don't know how they managed that with $34,200 yearly income. How could your parents pay off $280,000 of their house in 6 years with an income of $34,200 while also saving $15,000 in the bank? Are you sure you have the correct numbers?</p>
<p>I think my parents were lying to me or something.</p>
<p>I talked to them just now (we got into an argument..again).
We bought the house six years ago for $340,000.
My parents borrowed $100,000 from my wealthy aunt to pay for the down-payment.
And my dad signed a contract to pay the $240,000 within a 15-year period for $16,000/year.
So, 6 years X 16,000= 96,000 PAID
And we owe 240,000-96,000=144,000 PLUS 100,000 loan from my aunt....244,000 debt
340,000-244,000= 96,000....my EFC would be 3,000~ which definitely seems more correct.
My parents are mad at me because they are wary about the calculator asking for the home equity. They keep comparing the process private schools use to determine FA to that of public schools. I am getting pretty annoyed at their argument.</p>
<p>Do you think I should list everything I just laid down on my FA forms? Does it seem correct?</p>
<p>It still doesn't seem right to me. You haven't figured in the interest rate on the mortgage. When a person pays a mortgage payment to the bank every month, it doesn't all go to the principal of the loan. 6 yrs. X $16,000 = $96,000 paid but not all of that goes towards the principal. A large portion of it goes toward the interest.</p>
<p>You need to be accurate and use documents to back up your numbers. Find last year's tax return and check those numbers.</p>
<p>I think I'm going to have to fish through my parents' mortgage papers.
I have my family's 2007 income tax return form (1040A), and I guarantee you that the income is completely correct.
College financing is such a mess :/</p>
<p>Each monthly mortgage statement usually has the current remaining balance on the mortgage. Add that to the amount owed to your aunt, and then subtract that total debt from the current value of the house to get your parents' home equity.</p>
<p>Some private colleges cap home equity at a certain multiple of family income. For example, the maximum home equity they count might be 1.2 times family income, or 2.4, or 3.5 times family income. Also, some private colleges don't count home equity at all. You can talk to the financial aid offices at the colleges you're considering to find out how they treat home equity. The standard EFC calculators can't tell you that.</p>
<p>Don't worry about the private school calculators for now.... they can be way off. You need to apply to BOTH public schools and private schools, submit your paperwork, and see what happens at the end. Not all schools meet 100% of need in any case, so even if your EFC were, say, $5000, you could still be expected to pay more.</p>
<p>Apply to at least 1 (preferably 2) schools that are BOTH "financial safeties" and "admission safeties". That is, a college that you are sure you can get into and you are sure you can afford. That might be a nearby public college that is less selective than your would prefer --- but that's the point of a "safety". </p>
<p>But don't assume that the the number you got for EFC with institutional methodology is any where near correct. It might be -- but in my own case, the online calculators didn't bear much relation to my daughter's awards. </p>
<p>The FAFSA calculator is much more accurate. I think that the private colleges are inconsistent about how they handle home equity.</p>
<p>I also don't understand how your parents can be paying $16K on the mortgage on an income of $34K. If that mortgage payment includes the interest, that still doesn't leave them much to live on. And if it does, then you debt on the house is greater than you think because part of that is interest, not principle. </p>
<p>If it doesn't include interest, there's no way they are living on that.</p>
<p>OP, as to part of the equation, I suspect you need to have a serious heart to heart with the folks about the "home equity" number. I think I may know what is going on and why they insist on Fafsa-only schools. Sometimes things things look one way on paper and another in real life. It may be that the "equity" number is how it looks on paper, which when transferred to Profile creates the extra EFC (while it is excluded under Fafsa). Beyond that, I'll let your folks explain. Good luck.</p>
<p>Apply to some "Meet-full-need" private colleges, along with some public Universities. With an income that low, you may very well find that the private colleges end up being much cheaper (virtually free) than the public school. You need to tell your parents that; apply, then choose your college once all acceptances and financial aid packages are in. Can you have some knowledgeable person help your parents fill in the financial aid paperwork? If they misinterpret some of the information requested you may not get an accurate financial aid package. (And if they mistake "equity" for "current value of house" -you may end up with a very different financial aid package! :eek:)</p>
<p>It really is time to have a sit down discussion with your parents. I ran the numbers on a few mortgage calculators and amoritization calculators to get a true picture of how much might have been paid down. Something is not right with your figures. Unless they have a NO interest loan, there is no way they would be paying only $16,000/year on a $240,000 loan. 16,000/year equates to a payment of roughly 1335/month. Even if someone charged only 1/10th of a percent interest (HIGHLY UNLIKELY) the payment on $240,000 over 15 years is larger. Something's not right here. I also assume they must pay the aunt back.</p>
<blockquote>
<p>They keep comparing the process private schools use to determine FA to that of public schools. >></p>
</blockquote>
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<p>As they should!! Some of these private schools DO use home equity as part of the finaid calculation. The public universities do not as they only require the FAFSA which does not use the equity in your primary residence in the calculation. AND those publics cost far less money to attend. Perhaps your parents are telling you that the family having a roof over their head is a priority...and college costs are going to be difficult to meet.</p>
<p>Now...I agree with everyone else. Something is NOT right about these calculations you are providing. One thing I will add...if someone else is making payments on your behalf (like paying your mortgage or living expenses) you MUST list those on the FAFSA as well. That will be considered income too.</p>
<p>I would suggest you post your query on the financial aid section of this forum. There are some very knowledgeable folks on that forum including a couple of financial aid folks.</p>
<p>Just wondering if this is a case of being paid part of their income on the books and part of their income off the books. They show that they only earn $34,200/yr when the reality is that they earn more. I don't know if this is the case but it could be. In other words, hiding money from the government so they pay less taxes and qualify for services as a low income household.</p>
<blockquote>
<p>being paid part of their income on the books and part of their income off the books>></p>
</blockquote>
<br>
<p>Well...whether it's ON or OFF the books, it still has to be reported on the FAFSA. Of course if it's off the books and doesn't line up with the tax return...well...that's another issue for another thread.</p>
<p>I just can't see how this family is paying these bills without assistance on an income in the $35K per year range. Something is NOT right. Sounds like they are receiving some extensive help from others. This is supposed to be reported as "bills paid by someone else on your behalf".</p>
<p>FAFSA doesn't account for home equity; CSS/PROFILE does. However, some private colleges cap home equity at a certain value; e.g., $125k. That could make a big difference in your EFC. Also, some private colleges (e.g., Cornell) have no-loan/grant-only policies for students with family incomes below a certain threshold; while that doesn't change your EFC, it could make your overall aid package more attractive.</p>
<p>If I were you, I'd get the most accurate information possible, then apply and see what happens. Of course, your parents are the source -- and if they have a reason to hide this information from you and others, you may be better off targeting FAFSA-only colleges.</p>
<p>If they were paying mortgage debt on a $240,000 mortgage, it also seems they would have filed a Form 1040 with Schedule A for itemized deductions, not a Form 1040A. Although depending on the number of exemptions and the state of residence, the tax might have already been $0, so itemized deductions wouldn't make any difference.</p>
<p>I live in the sort of wealthy neighborhood and I paid full tuition for all my four children
without financial help it added up more than half million and my home equity loan balance ballooned to the limit. To make the matters worse, I got laid off six months ago.</p>
<p>And then one of my son's friend who lives in the same neighborhood received
very generous financial aids from the university even though she got private music lessons, sat preparation courses, tennis lesson, etc, etc,</p>