FAFSA Q: Unemployed. FinAid Says Don't Declare Savings That Will Be Gone Soon. OK?

Paying for College
1

<p>Hi,</p>

<p>My husband has been unemployed more than 7 months and, thus, our income for the year (including unemployment compensation) will be less than $47K. Our savings and that of our son will be gone soon to cover living expenses and to purchase medical insurance. I asked the FinAid department how to handle the FAFSA declaration of assets that will be gone almost immediately and not be available for our son's educational expenses. The FinAid officer told me not to declare them on the FAFSA. It makes sense to me, because those assets will be long gone by the time our son starts the 2010-2011 school year...yet, the FAFSA instructions seem to be looking for what we have right now. I'm afraid to declare the small amount we have now, fearing that we will lose even a small amount of financial aid (and without all COA being met, our son would not be able to complete his senior year), but I'm also afraid that if we don't declare what little we have, we'll get in trouble.</p>

<p>Help! I would appreciate any advice you have to offer.</p>

<p>Thanks!</p>

2

<p>No it would **not **be ok to not declare your savings on FAFSA, that is a very odd thing for a FA officer to tell you. FAFSA requires you to report assets as of the day you file FAFSA. ***But ***if your AGI on your tax return is below $50,000 for 2009 then you probably qualify for the simplified needs test where assets are ignored. These are the criteria for qualifying for the simplified needs test:</p>

<p>

</p>

<p>It sounds like you meet the income criteria and the dislocated worker criteria. If so then the simplified needs formula ignores all assets. Depending on your State of residence you may be given the option to not enter assets once FAFSA determines you are eligible for simplified needs. We don’t get that option where we live (no idea why as our very small State grant is based completely on the FAFSA EFC) but the assets are still not used in the formula.</p>

<p>If you do not qualify for simplified needs then there is parent asset protection in the EFC formula. It is based on the number of parents and the age of the older parent. For instance for a 2 parent family where the older parent is 45 at the end of 2010 the asset protection is $46,600. This means assets up to $46,600 are not considered by FAFSA. Any assets over that up to 5.6% of them go to the EFC. Students however do not have asset protection, so if you do not qualify for simplified needs then spend your sons assets on expenses before parent assets.</p>

3

<p>Thank you very much, Swimcat! The advice I received from the rep in the FinAid office seemed questionable to me too…that’s why I posted. :)</p>

<p>Yes, we should easily meet the test for simplified EFC. </p>

<p>Under Test #1: My husband and son both lost their jobs in 2009, so no income is coming in. My family is also eligible to file a 2009 IRS Form 1040A.</p>

<p>Under Test #2: Our household income for 2009 will be about $4K less than $50K.</p>

<p><em>Three Additional Questions</em>–></p>

<ol>
<li>Because I am permanently disabled (but not receiving disability benefits of any kind at this time), my elderly mother sent me some money to help my family pay for COBRA and medical expenses. Before touching her money, we used our savings. Now we have already consumed 25% of her money. And, because my husband is now transitioning from regular state-paid unemployment compensation to federally paid unemployment benefits (EUC), there will be about a two month period during which we receive no money at all (that’s how long it takes to process our claim extension). During that period, beginning later this month, we will consume all of the rest of the money she sent to us.</li>
</ol>

<p>Do we need to declare what we have left of that money on our “will file” FAFSA?? </p>

<ol>
<li><p>Since today I plan to only submit a “will file” FAFSA, am I allowed to go back in and update our asset estimates when I prepare the final FAFSA version? Or, will I be able to only modify income-tax related information??</p></li>
<li><p>Also, about 1/3 of the assets my son has are from financial aid overages that were direct deposited in his account by the financial aid office. My husband and I used our money to pay for his college needs (out of pride) and we had hoped he could retain that money to help pay back his student loans (Perkins and subsidized Stafford) after he graduates in 2011.</p></li>
</ol>

<p>–</p>

<p>Soon after my husband became unemployed (in mid-summer 2009), my son’s college offered him about 60% Pell grants and state grants and 40% subsidized Stafford loans. We were told that for 2010-2011, if my husband remained unemployed, he would receive much more grant aid.</p>

<p>I want to do the <em>right</em> thing, but I don’t want FAFSA or my son’s school to think these assets are available for college expenses. They are all we have to survive at this point.</p>

<p>Thanks for your help and any other advice you might be able to offer!</p>

4

<p>If you qualify for simplified need then the assets (including what your Mom sent you) won’t affect your EFC. That is the whole point of the simplified needs test - it ignores assets.

No. You are not supposed to adjust the asset numbers in FAFSA. They are supposed to be a snapshot of the day you file FAFSA. The assets are supposed to be accurate as of the day you file, not estimates. You are saying you “will file” taxes, not will file FAFSA. Only the income is supposed to be changed. As you seem to qualify for simplified needs the assets will not be used in the EFC formula anyway. And even if you did not I would imagine they would fall below the protected asset levels.</p>

<p>It is unlikely your full COA will be covered by financial aid. With an AGI of $47k your EFC will not be 0 (unless the school is willing to make some sort of adjustment to reflect loss of income - have they indicated they will do that?). The EFC is largely income driven and an AGI of $47k will probably give you an EFC in the 3-4,000 range. How and if your need (COA less EFC) will be met will depend on the school’s cost and it’s policies and whether it has institutional aid to offer. Your son’s 2009 income may also affect your EFC if it is over the student protected income allowance ($4500).</p>

5

<p>Swimcat…please read my revised post #3, which hit the board after your post #4. Thank you.</p>

6

<p>It sounds like your school is willing to make a special circumstances adjustment for you as regards loss of income seeing as they did so last year. That should be helpful. You were lucky they were willing to make an adjustment last year - some schools will not do so until the unemployment has been ongoing for some time. It sounds like they are very willing to work with you.</p>

7

<p>Swimcat,</p>

<ol>
<li><p>I thought that “the day you file FAFSA” really was the date your 1040 figures were firm and that both tax-related info and asset-related info are aligned by <em>that</em> date, not the “will file” date. But either way, we should be fine, because we should easily qualify for simplified EFC.</p></li>
<li><p>Then, per what you wrote in post #4, should we declare what my mom gave to us? I take it that you would say, yes.</p></li>
<li><p>My estimate of our 2010-2011 EFC is about $2900. In the 2009-2010 year, the school recalculated it from the original FAFSA down to an EFC of about $3,000. This year, the school will further consider loss of income to adjust that down from what I was told.</p></li>
<li><p>In 2009-2010, we received very generous financial aid. Since our son lives at home, thus minimizing expenses for room/board/transportation, and since the COA includes generous allotments for these, my son’s award nicely covered our out-of-pocket…which greatly reduced the stress factor for us all.</p></li>
</ol>

8

<p>Assets are always supposed to be reported accurately on the day you first file FAFSA. You have to correct the income because it is not accurate as of the day you filed FAFSA. If the assets are correct as of that day you cannot adjust them to reflect a later change in assets.

</p>

<p>So yes you should report what remains of the money your Mom gave you. But it should have no impact if you qualify for simplified needs.</p>

9

<p>Swimcat,</p>

<p>Finally…</p>

<p>Where would I find the figures for the protected incomes allowances for both parent and student?</p>

<p>Where would I find the figures for protected assets for both parent and student?</p>

<p>Thank you very much for all of your help.</p>

10

<p>A student has no protected asset allowances. The parent protected allowances can be found here:</p>

<p><a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf&lt;/a&gt;&lt;/p&gt;

<p>page 19.</p>

<p>But if you qualify for simplified needs then all assets are ignored.</p>

11

<p>Swimcatsmom is correct … asset information is reported AS OF THE DATE YOU SIGN THE FAFSA FOR THE FIRST TIME IN A GIVEN AID YEAR. It cannot be updated. Again, though, if you are qualified for simplified needs the assets are ignored.</p>

<p>I am posting this for the benefit of those who may NOT be qualified for simplified needs. Any one of us might need our assets tomorrow to live on … or we may lose a bundle in the stock market in a couple months … but we cannot change the figures on the FAFSA to reflect those changes. If you feel you have a special circumstance in this regard, contact your school’s financial aid office to find out how to file a special circumstances appeal. And do understand that there is no guarantee your appeal will be accepted or that acceptance will necessarily result in increased aid.</p>

12

<p>*In 2009-2010, we received very generous financial aid. Since our son lives at home, thus minimizing expenses for room/board/transportation, and since the COA includes generous allotments for these, my son’s award nicely covered our out-of-pocket…which greatly reduced the stress factor for us all. *</p>

<p>Swimcat or Kelsmom…</p>

<p>When a student lives at home, does the school usually include room and board costs in COA? That seems odd. I can’t imagine schools wanting to pay for kids to live at home. As noted above, by getting aid based on the total COA, EFC was covered by aid. </p>

<p>If that’s typical, then why wouldn’t more students commute and have awards that cover EFC?</p>

<p>For example… if a local school (that meets need) had a COA of $25k and my EFC was $5k, but my child was living at home (saving $10k on room and board), would my kid get $20k? or $15k? (assuming that tuition/books/travel is $15k and $10k is room and board)</p>

13

<p>Kelsmom - </p>

<p>For FAFSA year 2010-2011, we qualify for simplified needs, so assets will not be considered. This is the first time this has been the case for us. I am very familiar with the appeals process, because we utilized it for 2009-2010 to obtain financial aid for our son when my husband first became unemployed. Our son’s school met 100% of his need. They treated our family with great sensitivity and respect, which was appreciated.</p>

<p>Mom2CollegeKids -</p>

<p>The schools that I am familiar with have two tiers of COA…one for students living on campus, one for students who do not. The amounts, of course, are different. As you might imagine, the cost of attending any college includes expenses for room/board and transportation no matter where you reside. These two categories of expenses do not disappear simply because a student does not live on campus. The COA that was used to calculate our son’s finaid pkg was based on the lower COA figure. No unfair advantage here. Our son lives at home because we live less than 3 miles from campus and because he has certain university-recognized disabilities that do better in a home environment. Also, our son’s university, with total enrollment at approx. 30,000…undergrad pushing 20,000…has only about 5-7,000 residential slots on campus. So, the overwhelming majority of undergrads live off campus/at home…and in this area the cost of living is extremely expensive.</p>

<p>The reason his last finaid pkg appeared to cover the EFC is that the university’s assessment of our special circumstances recognized that with “zero” income coming in, our limited parental assets all “protected,” etc., our effective EFC for the period dropped to 0.</p>

14

<p>Ahh…thanks for the explanation about 2 levels of COA…that makes sense. I knew that either situation would definitely need some travel costs, but it sounded like there was a generous allotment for the room & board part, which is why I wondered if the COA is the same.</p>

<p>It makes sense that there are 2 levels of COA…thanks! :)</p>

15

<p>Mom2CollegeKids -</p>

<p>Glad to clarify the information I posted.</p>

<p>Thank you, Mom2, Swimcat, and Kelsmom for all the prompt and helpful advice! It’s always nice to know there are terrific people on this board who are willing to jump in to help those of us who are less experienced with the various facets of the finaid process! :)</p>

16

<p>My daughters school has identical COAs for students living on or off campus. My son’s has different COAs for student’s living on or off campus (I think his off campus COA is slightly higher than on campus which is probably unusual - maybe because their dorms are pretty cheap - unlike my daughter’s which are pretty high compared to living off campus). I believe some schools have a 3 tiered COA, On campus, off campus but not with parent, off campus with parents (much less).</p>

17

<p>We have a 3 tiered COA, with the lowest COA being living at home with parent (more than $4000 less than the other two). The highest is off campus-not living with parent. On campus is a bit lower, since there is no transportation allowance. The with parent budget is higher than you might think it should be, but it includes allowances for transportation (usually necessary to commute to the college) and allowances for the student’s room/board costs. We always encourage students not to borrow money they don’t need, so we hope a student won’t accept a loan just because it is offered. The truth is, though, that our need based gift aid will only cover tuition/fees at most. Many students will still borrow for books, transportation, etc.</p>