EFC Went Up $50K for College Senior!

DD is a rising senior at a T5 100% meets need school with no loans. The past few years, we’ve been able to meet our EFC of $35k/year. Yesterday, we got a letter from her school’s financial aid office saying that we are “outside of the range of families eligible for financial aid for the 2022-2023 school year” and that we would have to pay the full $80k/year out of pocket.

We are going to appeal to the financial aid office, but we are so so so worried and frustrated. I have been crying all night because of this. DH said that this could be because our income went up the past few years, but our income only went up a little bit (around $20k/year), which should still make us eligible for financial aid.

I really hope this appeal works, since it’s way too late for DD to transfer since she is a rising senior. And if the appeal doesn’t work, we will be heartbroken and distraught…. since she won’t be able to finish college at all!

What a terrible shock!!
I hope your appeal works.

Besides income, has equity in your home gone up, too? Does your uni. expect you to take home equity loan? Are they offering loans instead of grants?

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Wow, that’s quite a difference. Do you have another child who just finished college and that’s why they think you have more money? Or perhaps there has been a mistake.

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DD is an only child. Praying it’s a mistake!

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Home equity has gone up a little, but I don’t know if that matters since this is a 100% meets needs school that doesn’t expect us to take out loans.

That is so upsetting.

I recommend running the colleges’s Net Price Calculator to see if it generates an award closer to what you were expecting. If it does, that’s good info to have when you appeal.

Edited to add that you should use the one on the college’s website, not a third party calculator.

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While I sincerely hope this is a mistake or that your appeal works, I wouldn’t jump to the conclusion of her not being able to finish college.

You said this is a meets need school that doesn’t use loans, which means she doesn’t have any loans yet, right? While parent plus loans, generally aren’t a good idea, I think in this situation having her borrow as much as she can through FAFSA, and then you borrowing the rest would be the best way through the situation. If she’s at a top school she should be able to make enough to pay off $50k in loans after graduation.

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What does the college’s net price calculator say using financials from each year (that is used for financial aid calculations, so prior prior year)?

The other question is, is the income something other than W-2 income? Small business, self employment, rental, etc. income may have aspects that may introduce more variables in the college’s financial aid methodology.

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That may be the case if she is aiming for a well paid career path. But not all students at those colleges are aiming for such career paths. If she takes the debt route, but her current intended career path is not a highly paid one, she may have to change her career path, at least for the short to medium term, in order to pay off the debt.

Of course, economic and industry cycles do matter in terms of what the hiring outlook will be when she applies for post-graduation jobs.

Other option is to check local state universities to see if they admit senior-level transfers and/or which are low enough cost that enrolling up to two years there before graduation does not break the budget.

This is what I suggested if the appeal doesn’t work. DD currently has $8k of debt (all subsidized FAFSA loans since we can’t meet our $35k EFC)

But guess what DD told me today!!! That she would rather drop out of her T5 college entirely than graduate with $50k in loans!!! We are so disappointed she told us this, and DH and I are NOT okay with her saying that she’s rather drop out of school than take out a measly $50k in loans.

The school’s NPC says our EFC should be similar to last year’s. We have some rental income, which might complicate things.

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Did the underlying financials of the rental income change significantly, even if the bottom line number did not change much? For example, did both the revenue and deductions increase by similar amounts, resulting in similar net income, but the deductions are these which the college financial aid office disallows and adds back?

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Another option (beside transferring to a local state university as mentioned above) could be to find out if her current college’s financial aid would consider her an independent student later (e.g. when she turns 24 or some such). Colleges could use different rules from the FAFSA rules (so check the specific college), but if taking gap years and working until age 24 would allow her to complete college without debt as an independent student, that could be another option.

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Similarly taking a gap year so that you use 2021 income instead of 2020 income might help.

Did you get unemployment income in 2020?

Is the rental income new?

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She won’t be able to take out that much. She will be limited to the federal limit of 7,500 for her senior year. The rest of the loans will need to be ones that you co-sign for (or take out on her behalf). So perhaps your willingness (if true) to do that may help her make the decision you want.

But hopefully your appeal will be successful.

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That sounds like an emotional response. After calming down, she should be able to understand that a college degree from a top school with $50k of debt beats no college degree at all. What is she planning to do for employment if she doesn’t finish college? I understand being upset by the situation, but borrowing the money seems like an easy decision in this situation.

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I sent you a DM

It’s very possible the rental income coupled with the increases in income have put you over their threshold for need based aid.

BUT it’s equally possible there is some error. Did you check all of your financial aid forms submitted for this year?

Also….any chance you did a rollover of a tax deferred retirement account in 2020?

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Nope