<p>Just spoke to a coworker with a couple kids in college and more on the way. He told me that justifiable revolving debt is actually a good thing as regards your financial aid chances. Apparently if you've accumulated debt (that can be justified), for example a new roof, and/or a new, but modest, vehicle, needed for work... things of that sort, then the payments for such things may be subtracted from your total income. This will thereby increase the amount of financial aid you may be eligible to to recieve. This coworker went on to say that he had two boys in hockey and the monthly payment for "ice time" was also subtracted from his income for finacial aid purposes.</p>
<p>This person's D is exceptionally bright 1400+ math/verbal. I'm wondering if this college (non-Ivy) reached out to her with the most favorable fin-aid package they could come up with. Can a particular college cherry pick and remove chunks of income, if that income is wrapped up in revolving debt, to enhance the aid package for a top applicant? Is this routinely done????</p>
<p>Colleges will re-write their charter for the right kid (although admittedly at some schools it would be less common). Preferential packaging can include several things</p>
<p>-ignoring income items
-ignoring Profile and going with Fafsa if favorable
-allowing depreciation
-finding less equity in a business (or none)
-ignoring home equity</p>
<p>I have seen each of those and many more. It would not surprise me that a college would take debt into consideration in setting aid for a particularly attractive candidate and manufacture need when none would ordinarily be found.</p>
<p>But I don't want to leave the wrong impression, revolving debt = bad idea for college planning.</p>
<p>Point taken. Last spring another coworker whose son had average scores was lamenting the fact that the colleges to which his son applied refused to reduce the EFC based on revolving payments, ie., cars loans, credit cards and so on. Yet another coworker whose daughter (great scores) had applied to a top women's college was told he and his wife needed to resubmit their financials. Once having done so they were told to expect a sizable decrease in the EFC. This seems to mean if your kid is tops in the applicant pool, you might expect a break in costs, even if it is not in the form of merit aid. This may open doors to schools not previously considered owed to low/no merit, but tending to be generous where "need" is concerned. Hmmmmm...merit in disguise...if you will.</p>
<p>By jove, I think you've got it!! That's preferential packaging, or as some like to call it merit within need, or as still others like to call it "cheating". </p>
<p>
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This seems to mean if your kid is tops in the applicant pool, you might expect a break in costs, even if it is not in the form of merit aid.
[/quote]
Heck, we played that card early and often. It was our best card with the FA folks.</p>
<p>Revolving debt, whether justified or not, normally has no place at all in calculating need. No one should count on it. The fudging that goes on only happens in the extremely rare situation of your kid walks on water and the college desperately needs somebody like that. Think of the academic equivalent of a Heisman trophy contender. That person gets a full ride whether they need it or not.</p>
<p>Most colleges don't give a FLIP about revolving debt - and don't take it into consideration at all. A good F.A. strategy that we followed: have NO debt other than mortgage when kid starts school. Spend assets to make sure everything in house works, roof is strong, AC/heating updated, cars are young enough/good enough quality to last through until end of last child's college education, all credit card debt or other debt is paid off. Do all this before filing FAFSA in spring of High School
senior's year. Then live frugally during kid's college years and try to pay all costs out-of-pocket. It worked so far, but we'll see how it works next year with 2 in college!!!!</p>
<p>I don't think it would be wise for anyone to deliberately take on this sort of debt simply in the hopes of reducing EFC. In the first place, most of the time it won't work -- you are more likely to run into a stingy financial aid office than a generous one. Secondly, no matter how a debt or expense can be applied to reduce EFC, it is almost never dollar-for-dollar --it is going to be subtracted out somewhere and the EFC is going to be reduced by some percentage that is less than the total amount. So financially, you are unlikely to come out as well as you would be if you hadn't spent the money in the first place. </p>
<p>I would note that the CSS Profile does ask about expenses for private school tuition for siblings, and that this amount is often considered to reduce EFC under institutional methodology. Back when my son was in college, his younger sister was in public school, but attending a pre-professional ballet school after school, and my studio fees were running about $4000 a year. I entered that amount in the CSS Profile under the section for private tuition, indicating the name of the dance studio -- my rationale was simply that it was a "school" (i.e., "school of dance") -- and I paid for it, therefore it was a form of private tuition even though it was not for the academic day school. So I can see how the co-worker may have also been able to get some consideration for the fees he paid for ice time for his hockey players. I could see justification for expenses for summer programs like CTY under the same rationale. I think that as long as the parent is honest in describing the expenses, there certainly is no harm in listing those items under the appropriate category on the CSS Profile. </p>
<p>The rationale on the college's end for allowing those expenses is that they want future applicants who are the beneficiaries of that level of education and training. In other words, private colleges like to see applicants who come from quality private schools; they like to see applicants who have years of musical training; they like to see applicants who are strong athletes. So it makes sense for them to allow financially needy families to make those kind of expenses geared to the development of future college applicants. </p>
<p>But again -- you can't count on gettting any of this written off. All you can do is provide the numbers. I have no evidence that my son's college actually considered that expense -- they probably didn't -- all I did was opt to list it and let them make the decision as to whether to consider it.</p>
<p>Clearly how you have financed you debt can make a difference in your EFCC. If you take out an unsecured credit line to fix your house, it's going to take a pretty big disaster like Hurricane Katrina for colleges to give much weight to what you had to do. But if you take out a home equity loan and do the same thing, or even blow the money on something unnecessary and not house related, that transaction can lower the value of your house since there is now a lien against it, lowering your asset values.</p>
<p>Curmudgeon- Where must your child be in the applicant pool, (percentage wise) to be in the "preferential packaging category" ? It seems you've had success targeting schools which were willing to "work" with your family to make a particular school more affordable. Other posters seem skeptical that the financial aid types opt to reclassify debt or expenditures at all. Have some people targeted the wrong schools and found themselves disappointed or are the candidates the fin. aid officers willing to do this for one in a thousand? My coworkers D had 1400 math/verbal and only decent EC's but he claimed he got what you termed "preferential packaging" at what I'm guessing are second tier schools ie., Providence College and Assumption here in the Northeast.</p>
<p>Nightingale, there are different levels of preferential, but academically, the higher in the applicant pool the better. Some colleges give good packages only to a very small percentage -- for example, I think NYU offers full tuition scholarships to the top 5% of the applicant pool, but while students may be offered merit aid with far less, NYU is notorious for its weak packages for the bulk of the student body. Some colleges are more generous with aid, of course... but generally I think you would want to be in the top 20% of the applicant pool if you expect a substantial offer ... if the offer is based on academics alone. So basically, it's not 1 in 1000 -- more like 1 in 20 getting the full-tuition/full ride offers, and possibly as many as half at some schools getting at least some merit aid or improved packaging. </p>
<p>Of course many colleges also use merit aid and preferential packaging to attract students who they want to recruit for other reasons, so if they want to increase diversity, they may offer very generous aid to URM's and students from underrepresented states; if gender balance is a problem, boys may get good packages at some LACs and girls may get better packages at engineering schools; and colleges that are unable to give direct athletic scholarships (like D3 schools) may nonetheless give preferential financial aid to recruited athletes. </p>
<p>I read today that one reason that Randolph Macon Woman's College has opted to go co-ed is that they have been giving financial aid to more than 90% of their students, and they simply can't afford to give that much money away any more.... though I'll bet that males who apply this year can expect good packages, since they are essential to help the school make the transition to co-ed. </p>
<p>The average SAT at Providence College is 1203, and the average at Assumption is 1077, so your co-worker's son's scores definitely put him at the top of the pool for both college, especially for Assumption which was likely a rock-bottom safety for him (assuming his grades were also strong).</p>
<p>Wouldn't it be equally effective to give any and all savings to me? I would be glad to assist anyone wanting to improve their chances for financial aid in this fashion.</p>
<blockquote>
<p>Apparently if you've accumulated debt (that can be justified), for example a new roof, and/or a new, but modest, vehicle, needed for work... things of that sort, then the payments for such things may be subtracted from your total income.>>></p>
</blockquote>
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<p>I have a bridge I can sell you in Brooklyn. The above information is just plain garbage.</p>
<p>Youse guys are SO funny. ;) But seriously; more financial aid advice from the frugal and downright middle-income family here. Don't give your kid a car. Insurance, taxes, repair, gas, maintenance....save you a BUNDLE !!! (And just f.w.i.w. - not to push this company in particular, but to let you know that some insurance companies do this.... Geico does not charge ANYTHING for your student if enrolled at college more than 150 miles from home with no vehicle in his/her possession. Student is covered for free over the summer, holidays, etc. Pretty cool, huh? This is a change in their policy as of about 3 years ago..... ) No car plus no insurance should save you several thousand dollars a year! ;)</p>
<p>anxiousmom, That is the same advice that would give, and we have lived that advice. My college freshman never had, and does not have a car. I am saving $1500 in insurance bills this year (b/c he is away at school and does not have a car/not allowed to have one freshman year anyway).</p>
<p>BTW, my parents and DH's parents also did not supply us with cars in college, or high school. We survived, and we felt that our children could survive too.</p>
<p>
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Geico does not charge ANYTHING for your student if enrolled at college more than 150 miles from home with no vehicle in his/her possession. Student is covered for free over the summer, holidays, etc. Pretty cool, huh?
[/quote]
</p>
<p>Does this apply in NJ, car insurance cost capitol of the world???? My neighbor's kid had to pay almost $5K in auto insurance each year, & dad is an insurance agent so he knows the ropes.</p>
<p>It applies in NJ. I am not sure about the 150 mile rule, but we do meet that criteria. We were able to reduce our insurance bill now that our son is at college, and he is still allowed to drive summers/holidays. If I am not mistaken he is listed as an occasional driver (not sure about that nomenclature though-lol).</p>
<p>BTW, like many parents in our state we needed to shop for auto insurance. We were with one company and the new bill, once our son got licensed was insane! We used that company for over 20 years (I used that company for 25 years). We have very good driving records and no moving violations. They sent mail telling us what a bargain they were-yeah right! It was just so unaffordable ($6,000+ for three licensed drivers).</p>
<p>StickerShock, I don't have Geico but I checked out anxiousmom's claim today by filling out an online quote. I listed my d. as a 10% driver on the car; I disclosed her fender-bender accident; and on the question where it asked if she was away at school and how far, I put 2900 miles. The quote that was returned was extremely low, about $50 less than I now pay with Farmers with my daughter completely removed from the policy -- so it could only have been calculated with d. removed from the equation. </p>
<p>There is no compelling reason for me to change right now, as my d. is not driving -- Farmers always let me add & remove the kids as they came and went -- and I didn't take the time to compare coverages, so that $50 differential might simply mean that I chose a different option for coverage amount (such as higher deductible) when I was filling out the form. But definitely I am going to look at Geico before my daughter returns home for winter break. </p>
<p>Insurance rates and offerings do vary from one state to the next, so I would suggest that you go to the Geico site and get an online quote -- and if you have questions, call their 800 number to talk with someone knowledgeable. But so far, from what I can see, anxiousmom's advice is correct -- I just wish I could see it specified somewhere in writing.</p>
<p>thumper1- It is not "garbage" if it is true and I have no reason to believe otherwise. The gentleman who told me about this put four kids through college. He spoke personally with the financial aid officer at the school and these expenses WERE IN FACT deducted ....as well as his two son's monthly hockey payments. I did not encourage anyone to go into debt for strategic purposes. I think most posters are aware that, depending on the strength of the candidate, some schools will move mountains which would include dismissing some debt. Is debt a good idea, no. Is it ever, no. But.. Curmudgeon, a well respected senior member, who received over a million dollars in institutional aid for his D, verifies that some schools will do this depending on the candidate, so obviously it is not totally "garbage" I think it was rude of you to dismiss my post as "garbage" as you don't know the circumstances, the school, or the candidate. I also think it was rude of other posters to hijack the post with a discussion about car insurance rates. I appreciate all the constructive responses and I am now aware of just how rarely something like this "preferential packaging" is done.</p>