<p>My family is in an unusual financial situation. Our income easily qualifies us for finanacial aid but our assets and savings drastically increase our EFC. I was told by one financial aid officer to speak with a financial expert to see about restructuring our accounts to make it possible to decrease our EFC in future years. (This year is a lock). We have never sought finanacial advice (perhaps the reason we are in this situation in the first place). Do any of you have any ideas about what sort of credential we should look for in this advisor and also how we find this person?</p>
<p>Find out who in your area gives financial aid seminars for highschool families. They would know the rules. Start with your high school and also look at some good neighboring districts and find out who they have used.</p>
<p>However, once you get such advice, it is wise to get the whole picture financially too. I have seen families make financial moves to maximize possible college funds that were overall not the best moves for them. It has to be integrated into the entire situation, not just for colleges. Be aware that college planning is really going for a moving target as it is not possible to predict what possibilities will be there when the student chooses his schools. There is only so much you can plan, and sometimes optimal yield there can be the less optimal for other financial goals.</p>
<p>You can certainly do things like not have a lot in the students name and put more in formal retirement savings accounts, but if you have a lot of real estate, a big portfolio or a valuable business, there is not a lot you can do.</p>
<p>If you are at a FAFSA only school and your income is below $50k then you may qualify for the simplified needs test in which assets are completely ignored by the EFC formula. The first test for this is the income (<$50k), then you must either 1. be eligible to file a 1040a or 1040ez tax return (it may be worth not itemizing deductions if you otherwise are eligible, though there are other things that may make you ineligible to file a 1040a or 1040ez) or someone in the household qualified for means tested benefits or one of the parents was a dislocated worker.</p>
<p>This just applies to the FAFSA EFC. Schools that use their own forms will still take assets into account for institutional aid.</p>
<p>Without going into specific detail our portfolio seems larger than what we can actually afford. A deficit of $10,000/year is separating our son from the private he would choose to attend and the great state school that we can afford but will provide a very different college experience. We are trying to figure out if there is a way to resolve this deficit while leaving our own future and the college fund for our second child in tact.</p>
<p>“our portfolio seems larger than what we can actually afford.” I sincerely wish you good luck, as your situation is like many people I fear as many have a portfolio with or without a 401K in lieu of a defined benefit pension these days. Especially if one structured their savings in a balanced type portfolio. A situation that is viewed as “tappable” income by colleges as opposed to retirement savings and one that is sometimes difficult to restructure in a way that makes sense over the long term. This is not an unusual situation. If a Stafford is not included prior to the $10,000 difference between the state and the private then you can narrow the gap considerably by having your kid(s) take out the maximum Stafford if the child wishes the private school.</p>
<p>“Do any of you have any ideas about what sort of credential we should look for in this advisor and also how we find this person?”</p>
<p>Ask your accountant for a referral, or if you don’t have an accountant, ask trusted associates for the name of one and then ask that person for a referral. You need someone who has thorough knowledge of college planning and the ins and outs of FAFSA (and PROFILE if the school uses it). </p>
<p>We had a bad experience with a Certified College Financial Planner. He turned out to be an insurance salesman. We paid him a large one-time fee to help us figure this all out, and his solution turned out to be refinancing the house to buy a whole-life policy. We declined, and now he will not even return my calls. </p>
<p>Based on that, I’d look for someone who charges an hourly fee. Verify that he/she does not sell anything except their expertise. Quiz him/her based on what you do know about the process, which at this point is quite a lot. Use buzzwords like “FAFSA simplified needs test” and “institutional methodology.” If he/she seems the slightest bit befuddled by them, keep looking.</p>
<p>At the public library, you should be able to pick up a copy of “Personal Finance for Dummies”. The author discusses many different financial situations, some related to college and some not. He also has good advice on locating a paid financial consultant.</p>
<p>FAFSA doesn’t look at money that is in retirement accounts, which means that if there is a way to transfer some of the excess in your current portfolio into an IRA, 401(k), a retirement annuity, or the like this year, that money won’t be visible next year. CSS Profile handles retirement accounts differently. If the school you like uses CSS Profile, you will need to find out from the school what factors they consider.</p>
<p>Good luck!</p>
<p>First off, it is difficult to find people in this field. Most tax accountants know nothing about financial aid.</p>
<p>Think about it, if you are advising people how to structure their finances, one would assume the person is hoping to obtain aid, which probably means the person is low enough income that they may not want to pay for advice ;)</p>
<p>First off, are you looking at a profile or a fafsa school?</p>
<p>For instance, if you have $500,000 in cash from an old income source and you use that money to pay off a home mortgage (in say NY/NJ/CA) on a modest home, you would not have to count any of that in FAFSA</p>
<p>LasMa’s advisor was correct, you could ‘dump’ cash into a whole life policy and it would not be counted, but unless you have owned that policy for 10+ years, there would be a surrender fee, so you could not reaccess those funds for a decade or more. There are also limits as to how much money you can put into a life insurance policy without affecting the tax treatment of the policy long term</p>
<p>The school takes the FAFSA and the CSS althought the financial aid rep told me that retirement and home equity do not count towards the EFC calculations. I was specifically told that if we transferred funds into retirement they would be protected. There are however other ramifications beyond college of making that transfer and that is why we need some counciling.</p>
<p>Sorry, I cannot answer as to assets in Profile, esp as many schools have their own formula in which the numbers are utilised.</p>
<p>Can you ask that school which assets do and don’t count. Do they have a school questionnaire they use?</p>
<p>For example, do retirement assets count as income in the year in which they were transferred?</p>