<p>First time poster here so apologies in advance if this has been asked and answered.</p>
<p>From what I have read here, it is not advisable to apply ED if there is a financial need.
What if the college is known to have a strong financial aid program and meets 100% of the student's demonstrated financial need? Is it then safe to apply ED?</p>
<p>My DS is seriously considering on applying ED to this college but I'm just worried that if he is accepted, the financial aid might not be enough and we still might not be able to afford it. Should I strongly discourage him from applying ED?</p>
<p>Many here will say yes, discourage him. I will say, “it depends.” ;)</p>
<p>My kid applied ED to a school with excellent need-based aid that does not package loans in their aid awards. They made predicting the aid he would receive easy by means of their own online calculator. Our financial situation is predictable with no significant moving parts (investments, etc.) For us it was a very safe bet and turned out to be a very good idea with an excellent outcome.</p>
<p>However, even without that level of certainty, it still might be a workable idea – and of course you can get released from ED if the financial aid is not sufficient.</p>
<p>I think ED must also be only for a #1 choice school. The decision can’t be based on ‘where’s the best deal financially’, but only on ‘can we make this work if the aid is sufficient.’</p>
<p>The college will determine how much they think you can pay/borrow. They may well come up with a number higher than you feel capable of paying. If that’s the case, you have the ability to say ‘no thanks’, but be prepared to get those RD apps out right away.</p>
<p>Rent is so right. My D2 applied ED to a “school with excellent need-based aid” and her FA info came just a few days after her acceptance- it was great. Note that “need” is not always COA-EFC. But, it is workably close. Do you want to name the school here? Be sure you are looking at schools that are financially strong- there are many.</p>
<p>You mean if the aid is not enough, we can say “no thanks” even if it’s ED? But I thought it was binding? And if we do that, don’t we run the risk of being blacklisted or something? Don’t the financial aid officers compare notes? :-)</p>
<p>Lookingforward, it’s Swat.</p>
<p>BTW, I was quite calm about this whole college application process. But reading all the threads and posts on this board has made me more confused and anxious than I had ever been. My head is about ready to explode. My husband is no help at all. He does not even want to discuss college financing. All he tells our son is, “Just apply to our local public U. We can’t afford private.” <sigh></sigh></p>
<p>The problem with declining ED due to financial aid not being enough is that one a) doesn’t have anything with which to compare it and b) there is the possibility that an applicant may have missed the boat on other sources of scholarships or financial aid that may have deadlines earlier than the RD application (or prior to knowing if the ED school package is doable).
One could conceivable turn down an ED offer only find out later that it was the best on the table! </p>
<p>IF a school meets full need AND is fairly transparent with assessing family contribution, AND income/assets are fairly predictable, AND the school is far and away the first choice for academics and fit, then it MAY be worth the risk. It still would behoove you to have some non binding early actions or rolling admission applications in and all others ready to submit!</p>
<p>Have you run a FA calculator to get your EFC? You could also talk to the FA office at the school. The big bump hear is that your husband must be on board. The state U. is usually cheaper if your income and assets are high since you won’t get much FA. However, sometimes it works out that the private are as expensive becuase of the aid you recieve. The one thing to watch for is the amount of loans that they put in the aid package. I personally don’t think 20k in loans a year is “aiding” anyone except the school. I would not let my son take out more than the federal limit each year (5.5k+). If he/she has another 15k in private loans each year, that is way to much of a burden to pay off. IMHO</p>
<p>So he (sadly) just says thanks but no thanks, and applies RD to other schools.</p>
<p>“One could conceivable turn down an ED offer only find out later that it was the best on the table!”</p>
<p>The presumption here is that he applied ED to his dream school, so the only reason he turned it down was that it was unaffordable, so it’s moot if it was the best offer, and he may have no choice but to attend the local college.</p>
<p>If he doesn’t have that one dream school above all others, he should apply RD so he can compare FA offers.</p>
<p>Swat? Swarthmore? If so, I’d expect them to be quite fair. No, in my exp, FA folks don’t talk to each other-they are crazy busy, between planning budgets/allocations, to dealing with ED, RD, then FA apps for returning students, then all the loan interface for new kids and then for returning. Our school, is just now finishing for 2010-2011! Trust me, all of us had our heads explode with the first kid. Be sure to watch FA deadlines that go with ED. After 2010 taxes are submitted, you may need to send revised info to the school- but my exp (no idea if this is common) was that staff is so busy, only a huge change would affect your award. Btw, my girls are at the same coll, diff years. Both got virtually the same FA, tho #1 did RD and #2 did ED. Also, looking back at #1/RD, awards from all schools which accpted her were so close. (Again, my exp.) So, keep asking questions and those of us who survived will try to help. Breathe.</p>
<p>My guess would be since Swat gives excellent financial aid and you find their package to be financially out of reach, it just may be financially out of reach with a lot of their peer schools. Make sure that your son has some financial safeties lined up and schools were he stands a good chance of getting merit money.</p>
<p>Splat11, I did the Fafsa4caster and our EFC came out $18,000 which does not make sense because we are a one-income family and my hubby isn’t really making big bucks. We have some savings which we garnered because we’ve lived a frugal life through the years. No fancy vacations, or fancy cars, rarely eat out, etc. Heck, we don’t even have cable. </p>
<p>Am I understanding it right that EFC means that’s how much we need to pay from our own pocket? I was told that we also could end up paying a LOT more than the EFC. Is this true? We could probably swing $18,000 but any higher than that might mean subsisting on Ramen noodles on a daily basis. Son’s dream school is Swarthmore but is it really worth it?</p>
<p>In any event, I have a friend whose original EFC was $17,000. They’re basically in the same situation as me – one income but with some savings. What they did was they paid out their mortgage which left them with very little savings. (They still have considerable money in their IRA and 401K.) Their EFC was then reduced to $6000 and their son ended up getting a large amount of financial assistance from his top choice college.</p>
<p>I am thinking of doing the same and paying out a large chunk of our mortgage to reduce our savings and thus reduce our EFC. Good or bad idea?</p>
<p>If you’re in an area where home prices are still declining, it would be a bad idea to throw more money into your house. If you don’t have a good cushion for emergencies, it would be a really bad idea to tie up your funds in a relatively illiquid investment (home equity loans are very difficult to get).</p>
<p>Your savings are “assessed” at a rate of 5.6% in the FAFSA EFC calculation. If you have $150,000 in savings, subtract about $50K for your asset protection allowance, multiply the remaining $100K by 5.6%, and that’s its impact on your EFC; a total of $5600. Is it worth tying up $100K in exchange for a reduction of your EFC from $18K to $12,400? Have your son work a summer job and part-time during the school year; there’s another couple of thousand with much less risk than tying up that cash in your house where it can’t be accessed.</p>
<p>Please look at Finaid.org for tips. Please see their advice and try FHFA.gov for an assessment of your home (value calculator)- it shows an average $ growth for the years since purchase, based on original purch price- much lower than the supposed "market "rates available thru other sources. I used it and said so in the CSS comments section.<br>
Our cost after the FA is within hundreds of the EFC. After the pain of the FAFSA and CSS forms and so much worrying, it turned out fine. No, I do not know how subsequent years will go, but we took out a Plus loan and the kids each took Staffords each year. We pay something now on the Plus.</p>
<p>lookingforward, I went to FHFA.gov but the assessed value they gave for my house is actually several thousand more than what it is worth. The figure is true for the average home in my neighborhood but my neighbors have done several improvements and renovations while I haven’t. I will probably use the estimate given by zillow as it is much lower.</p>
<p>Thanks for the tip though. I am currently going through that same pain with FAFSA.</p>
<p>When someone has financial need, but will have an unknown, but sizable “expected contribution” from the school, it’s not a good idea to apply ED because sometimes a CSS school can expect a lot more than what FAFSA EFC is…</p>
<p>**there is the possibility that an applicant may have missed the boat on other sources of scholarships or financial aid that may have deadlines earlier than the RD application (or prior to knowing if the ED school package is doable).
**</p>
<p>This happened a LOT last year. Kids with unaffordable ED aid packages then learned that they missed Nov/Dec scholarship deadlines at other schools. </p>
<p>*I did the Fafsa4caster and our EFC came out $18,000 which does not make sense because we are a one-income family and my hubby isn’t really making big bucks. We have some savings which we garnered because we’ve lived a frugal life through the years. No fancy vacations, or fancy cars, rarely eat out, etc. Heck, we don’t even have cable. *</p>
<p>It doesn’t take a very high income for a one-income family to have an EFC of $18k when only one child is going to college. </p>
<p>Between income and savings, a family can easily have that size EFC or even higher.</p>
<p>As for paying down the mortgage. Does Swat look at home equity…some schools do. Some schools do (maybe because they know people can pay down mortgages with savings.)</p>
<p>If your child insists on applying ED and you’re concerned about costs, then perhaps you should make an agreement that he also apply to a couple of rolling admissions schools this fall that award big scholarships for stats. That way, if the ED offer is not good, then he will know that at a minimum, he’ll have those big offers.</p>
<p>Cham,your post about FHFA surprised me. I played with it and see what you mean- in my case, a 200% growth over 15 years is under market. So, go with your lowest. My standard is always: if I were questioned, was my choice/my answer fairly made and “defensible.”</p>
<p>As m2ck advises, please check to see if your school considers home equity. If they ask for the CSS/Profile in addition to the FAFSA they very likely DO consider home equity. You might go through the process of paying off your mortgage and tying up those funds only to find it does not make much of a difference.</p>
<p>If your child is applying to any FAFSA-only schools, paying off the mortgage might make sense to reduce the EFC, but be SURE it is a FAFSA-only school before you make that assumption.</p>
<p>There are only so many spots to be had at schools which meet full need without loans. ED at Swarthmore could be the very best choice for your son. They may have a Swarthmore specific financial aid calculator on their website which could give you a clearer picture of how they view your specific financials. Run your numbers carefully, don’t skip over things you’re not sure about (email or call the FA office for clarification), paying particular attention to things like self-employment income and real estate investments if those apply. This can work out favorably, just make sure you have a clear understanding of how your finances will be interpreted.</p>
<p>alamemom, what is asset strength? Is there a formula to arrive at this figure? Sorry for the rather dumb question but I’m clueless when it comes to these things. </p>
<p>Thank you so much to everyone for all the help and advice. How do other parents with college bound kids go through this? I feel like I’m in over my head. </p>
<p>Before College Confidential, where did parents turn for help? I’m sure there are other sources out there but here you get honest answers from people who have gone through the same thing. Has anyone gone to those college financial seminars? Do they even help or is it just another scam to get your money?</p>
<p>Asset strength generally refers to the value of the assets after the debts held against those assets are subtracted. Consumer debt, such as credit cards, cannot be subtracted from assets, only direct debts against them. So for home equity, it would be the home value - mortgage = equity, or asset. Some universities “cap” the amount of home equity they consider available for college funding - you might want to call Swarthmore and ask if they do.</p>
<p>Please note in the quote above, the 25% refers to the student’s assets, not parent assets. In general, school assess about 5.6% of parental assets. I JUST noticed that the quote had the 25% figure - that would be a frightening amount! It was our experience that schools that require the CSS/Profile generally expect more than your FAFSA EFC, and our only additional asset on the CSS/Profile was our home equity.</p>