This is assuming that I get into a generous private school. I’m just curious what you guys think. My dad used the FinAid calculator and our EFC was pretty high for a family of our income because we saved so much and had a lot of assets. That might not seem too bad, but my dad is the only working parent, and he’s at retirement age, and I don’t want my college to suck the money that was supposed to be used for my parents’ retirement when I don’t know how long my dad can continue working.
In addition to your plentiful assets and money saved, your dad will very likely have a retirement income as well. What will that be…because that counts too.
Any generous private school will consider all income sources, plus your assets and savings. If that means you won’t be able to afford to attend a $60,000 per year college, then you will need to look for less expensive options.
Did you think that your parent would have to pay less for you to attend college simply because they are close to retirement age…because that is not the case.
Have you discussed college fund go with your family? How much can they contribute annually towards your college costs? Any chance you have SAT/ACT scores and a GPA whereby you would get significant merit aid someplace?
Also, any money your parents have in an IRA or TSA or any other real retirement account is not listed as an account asset on the financial aid forms. If, however, they have all of their retirement savings in a regular savings account, that is another issue.
ETA…how old is your dad? Is he choosing to retire early, or is he approaching age 66?
Unfortunately, schools aren’t going to care that your dad is “at retirement age”. Some parents keep working to help pay for college. Retirement “age” is a often a choice.
Schools that are generous with aid are going to look at your family’s assets and income and make their determination.
Can your mom get a part-time job to help pay for your college expenses? That’s what many moms do.
You need to ask your dad how much he WILL pay each year. What is he SAYING?
You’re smart not to want to drain your parents retirement. That wouldn’t be a good idea.
Many families are in a similar situation. They’ve saved and invested for retirement, but they don’t have “college savings.” So, the families decide how much they CAN pay, and their children work with that…either by going to cheaper schools or going to schools where they can get large merit scholarships.
what are your stats? What is your major?
I see that you’re applying to Yale and Midd.
What was the result of the Yale NPC? Yale (and HPSW) will be the most generous of all your schools.
If you’re not getting affordable numbers from the Yale NPC, then you’re likely not going to be able to afford to go to any “need-based” school.
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What about state school? We all face the same situation. My husband and I will be retiring while we still have one kid in college. But our kid made the decision regardless of our plan, I mean there was no constraint, and she ended up at a UC.
Income has the biggest effect on the EFC.
^^^
Yes, usually…but the student indicates that there are large savings and large assets. Those two money sources can create a high EFC all by themselves if they’re high enough.
Not to mention whatever earnings those savings/assets have each year.
Well…if the income is VERY low…the student might qualify for the simplified needs test…but I believe the income would need to be below $50,000 a year…and in addition to the low income, the student would need one of the following:
- Being able to file a 1040a or 1040 ez tax form.
- Being eligible for a means tested benefit like free lunch or snap.
- Parent being a dislocated worker.
Sorry, wrong thread.
Yes, but there would be fewer cases where someone with enough assets to generate a high EFC (but has a modest income), and still be able to file 1040A or EZ.
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In certain circumstances the Federal Need Analysis Methodology uses a simplified needs test to calculate the Expected Family Contribution (EFC). This simplified formula ignores assets, thereby increasing eligibility for financial aid.
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An applicant qualifies for the simplified needs test if the parents have an adjusted gross income of less than $50,000 ** and ** every family member was eligible to file an IRS Form 1040A or 1040EZ (or wasn’t required to file a Federal income tax return).
Since 1999-2000, taxpayers who itemize deductions on Schedule A of Form 1040 are now considered to be required to file a 1040 and hence ineligible for the Simplified Needs Test.
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It is very difficult for someone with a LOT of assets to file 1040A or 1040EZ
Someone with enough assets to generate a high EFC would likely have income, losses, or deductions from those assets
The 1040A or EZ is only one of three options. For all we know, the income is low enough for this student to qualify for reduced lunch…or maybe the parent earned less tha $50,000 and got laid off from his job. Either ONE of those would satisfy the simplified needs second criteria.
It does NOT have to be the 1040A or 1040 EZ tax form…any of the three items in post 8 plus an income less than $50,000 would make you eligible for simplified needs test.
He said large asset. For some even income is zero they would qualify for little.
I think the first thing to find out is when your Dad may retire. Since he is not retired, his income will count quite a bit. Is he going to retire before you complete college? Ask.
There is a little consideration for age in the formula.
But as thumper points out, if he’s that close to retirement, be sure you didn’t add in (as assets) any money actually in qualified retirement funds.
- Have good enough credentials to get merit aid.
- Go to a cheap state school.
- Take out lots of loans.
- Just don’t go to college…
And as mentioned, most financial aid calculators don’t care about the parents’ age, the local cost of living, and not so much even the number of family members (unless they are also in college).
Focus on schools that award merit aid. Unlike financial aid, merit aid is independent of family income/assets.
I used the Princeton calculator once and put zero income but I didn’t put in all of our assets and we still pay a good chunk. I think age matters a little if I remember something like after 55, but retirement assets should not be counted and some colleges cap home equity up to 2.8 for salary. I believe that was Stanford. So if income is zero, home equity might not count.
<<< retirement assets should not be counted >>>
That is only if they’re in a protected retirement account. many people have investments/savings that are earmarked “for retirement” but they’re not in a 401k or similarly protected acct.
Right, so they should be called savings for this purpose. It’s a not so smart thing to do, retirement savings in non retirement account. It avoids the problem If the parents think ahead.