<p>My parents both retired this year (they are 60/61). Before they retired, my "estimated family income" before taxes was probably around $75,000.</p>
<p>Now, i'm planning to probably start college in another year or two. My parents now receive around $35,000/yr total between the two for retirement/SSI.</p>
<p>What would a college think of this situation? For instance, Harvard, the college which I believe now pays full tuition for anyone whose total family income is <$60,000.</p>
<p>Would they see my family as one that makes over $75k or a family than makes $35k? As in, would I be footing a hefty tuition bill at harvard, or would it be a free ride?</p>
<p>Okay, with the old data (while parents were working), EFC came out to $40,000 yearly (which seems much higher than it should be!) In complete contrast, the new data showed an EFC of $2,080 a year. Huh?</p>
<p>I tried both the extensive calculator (difficult, even parents had trouble with some of the fields) and also the quick EFC calculator. Both seem to ignore assets completely with my parents new retirement income being about 30k. In fact, I put 70million in assets just to test it, and I still had the same old $2,080 a year EFC. I'm thinking that's unlikely...</p>
<p>It would help enormously to know for sure what the colleges, most likely private, will consider in my situation. Will they pretty much give me the same EFC due to my parents assets as I would have had when they were still working, despite their fractured incomes now? Or will (hopefully) my EFC be significantly lower due to the fact that, despite their fairly high assets, their yearly incomes are significantly less due to retirement?</p>
<p>Is there anyone out there is or who has been in a similar situation to mine: applying for college with retired parents? Please respond, I could really use the help! This would be a big influence on my decision on where to attend.</p>
<p>I forgot to add, (and I might as well for clarity). My parents' investments probably come to somewhere around $400,000.</p>
<p>While that's definitely a considerable amount of money, they're very worried about it due to their low retirement incomes now. Going from $75k to $28k combined income annually is a huge decrease. At $50k a year less income, it's hard to imagine my parents being financially secure for the years to come if they have to pay my way through college too. That $400k would go up in smoke fast I think. My parents would gladly pay anything to see me through college, but I don't want them to be left with nothing and living shabbily and on food stamps when they get older.</p>
<p>So, any thoughts on what the colleges might consider my EFC to be given these circumstances? Will they really stick me in the $2,000's range for EFC, a median of around $20,000, or closer to the $40,000 EFC I was at before my parents retired? What do you think?</p>
<p>Your parents' assets might come into play if your school uses CSS profile to determine need, but the fact that they used to make $75k a year will not matter at all. Keep in mind that if your parents get income from their investments, that will add to the $35k.</p>
<p>A little more specifics: Most of the investments are in Roth IRAs and Deferred comp. Would both of those be considered as retirement accounts and not factored in at all in the EFC?</p>
<p>Also, when you mentioned the extra income from the investments, I assume the income is only factored into the EFC if they withdraw it from the accounts during the given year?</p>
<p>Any money that is in retirement accounts is not considered an asset on the FAFSA or Profile (typically this includes any 401K, 403 or IRA or TSA accounts..the Roth would be included in this). I'm not sure what you mean by "deferred comp". If this is pay that they have deferred until their retirement, that will be considered income. The Profile (which most private schools require to determine need based aid) also takes into consideration home equity. So, if your parents have paid for their home in full, and the home has a value of $300,000 (for example), the private schools would expect the family to borrow something using the home as equity. However, there is a reduction on the FAFSA EFC calculation for parents who are retired, I'm not exactly sure how that is computed. Here is what you are facing...your EFC for your freshman year in college will be based on your parents income and assets from the year prior to your enrollment in college (if you are starting college Sept 2007, income from the 2006 tax year would be on your finaid forms). The finaid folks do not look into many years past, although some schools will require you to send in two previous years of tax returns (in the case of a student enrolling in Sept 2007, that would be tax years 2006 and 2005. They do not go further back than that. Even so, the calculations are based on your income from that previous year and the assets you report on your initial filing of the forms. This part can be confusing. Some schools have very early deadlines for the FAFSA (for example), and sometimes taxes are not yet complete. So the FAFSA is filed as "will file" meaning you are estimating the income and will file your taxes. However, you are supposed to report your assets (savings, investments etc) as of the day you file that FAFSA. When you file your taxes and go to amend the FAFSA, you can change your income information but not your assets. You say you might start college in a year or two...are you currently a high school sophomore or junior? It's good you are considering the finances of this now. That is important. One more thing...and I know you didn't ask for this advice....Keep in mind that schools like Harvard accept only 9% or so of their applicants. That means they reject 91% or so of the students who apply. Make sure when you create your college list that you have a well balanced list of schools that will not only meet your financial requirements, but also will give you a chance of acceptance. It's all well and good to want to attend a school that meets 100% of financial need, but the first hurdle is getting accepted!!</p>
<p>Also , at least with some FAFSA only colleges , when you meet the Simplified Needs Test on the FAFSA ( income below $50,000 ) , your EFC will be low but when the college ask for your parents and yourself to send in the income tax forms for verification, they will then see the asset, dividends , interest and have the power to change that EFC !</p>
<p>Thanks a lot thumper1, your explanations have been a huge help in clarifying things.</p>
<p>I talked to my parents and they say that a good 1/3rd of the 400k is in the deferred comp. According to them, the 'deferred comp' is about what you described: untaxed money (now invested) which was deferred straight from salary while they were working in order to pay a lower tax on it after they have retired (since they would theoretically be in a lower tax bracket due to reduced income).</p>
<p>I've got one foggy point though on what you said. You said that the deferred comp would be considered income, but would it be counted as an asset in the FAFSA/Profile calculations? Or would it fall into the same category as the retirement accounts and be ignored?</p>
<p>Another thing: i'm guessing the deferred comp will only be counted as income during the tax year that it is withdrawn in? If so, would the deferred comp then be considered a retirement account for all intents and purposes to the FAFSA/Profile as long as it is not withdrawn?</p>
<p>Appreciate the advice also, by the way. The acceptance is another issue due to some special circumstances i'm in. Harvard would be a consideration, but I was mostly just using it as an example. I'm currently waiting on ACT scores before making any firm decisions on which colleges to apply for.</p>
<p>my grandparents adopted me-the adoption was finalized in may-iwould like to know if my grandfathers pension should be listed as income from wages etc-he didnt get a w-2--also what other information is neccesary-i just got accepted and am late filing here so any help here would be appreciated-</p>