Financial aid for high income families? Loans?

Paying for College
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<p>Hey,
My family is fairly high income (>200K/yr w/o ~46% tax(?)) but I have two other brothers that will be going to colleges (not cheap ones either (!)). It looks like for college, my parents will haveto take out a loan so they dont get too low (make alot/spend alot on education). I want to do my best to pay for as much as I can. Should I bother applying for financial aid or just essentially take a loan from my parents. If so, how much should I reasonably be paying them back without struggling for too long? BTW its likely I'll be doing grad school, but I'm told that ussually pays for itself with the research you do.</p>

<p>Thanks, chris</p>

2

<p>You should always apply for financial aid. My parents are also fairly higher income >100K/yr and I'm the only child. But they've got car payments and a mortage so I ended up getting around 20 thousand in financial aid.</p>

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<p>Car payments and mortgages don't figure into need based aid. Siblings in college does factor in to need so even high income families should apply for aid. Have your parents run the financial aid calculators available online and see what your EFC is likely to be.</p>

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<p>Mortgage interest paid can figure into need based aid-- to the extent that deducting mortgage interest reduces your parent's AGI. Car payments and other debt generally isn't considered (unless, of course, you're paying for your car with a home equity loan).</p>

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<p>edited....</p>

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<p>I've been told that the income is roughly divided by the # in your family attending college so your income would be around 60-70k in determining the EFC, making you sufficiently "poor" to get some amount of aid. But you might want to check that, because it might be completely wrong. Also does anyone know if your location figures into determining the EFC? I live in SF and the cost of living is extremely high.</p>

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<p>Every student should apply for finaid, in my opinion.</p>

<p>Actually, I'm not sure it's income that is divided by the number of students in college...but the EFC is. If the EFC is $30,000 for one student, then if there are two in college EACH student's EFC would be $15000 (or so), and if there were three in college EACH student's EFC would be $10,000 or so. </p>

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<p>That is interesting. Mortgage information is only taken into consideration for schools using the PROFILE. The amount of the mortgage payment is, in most cases, offset by the equity/value of the home. In no case are other consumer debts taken into consideration (car loans, credit card, etc).</p>

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<p>"The amount of the mortgage payment is, in most cases, offset by the equity/value of the home."</p>

<p>So would the mortgage or house market value be considered? Also is the market value or the price you bought the house for counted as an asset?</p>

<p>I just looked through the financial forum and I'm stunned by how little I know about the aid process....</p>

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<p>Profile schools will ask you for the amount of equity you have in your home. Equtity is the CURRENT value, less the mortgage(s). So if you have a home you purchased for $100K, which is now worth $600K, and you have a $200K mortgage on it, your current equity is $600K - $200K = $400K.</p>

<p>BUT-- as has been discussed here several times before, many of the top Profile schools cap home equity in their calculations. These 28 colleges have adopted the 2.4X income cap to determine home value, and then deduct mortgage debt to determine equity that can be assessed toward EFC. So in the case above, if the parent's AGI was 80K (for example), 2.4 X $80K = $200K. Subtract the mortgage from that, and you end up with $0 equity that gets calculated into the formula-- a pretty good deal for those who are equity rich and cash poor.</p>

<p>These 28 colleges are collectively called the 568 Group. Details from a September '06 GAO report are here:</p>

<p><a href="http://www.gao.gov/new.items/d06963.pdf%5B/url%5D"&gt;http://www.gao.gov/new.items/d06963.pdf&lt;/a&gt;&lt;/p>

<p>This report includes the different treatment these schools apply to the Profile in determining the EFC, and also lists the schools currently participating.</p>

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<p>Wow using that cap my equity counted is less than 1/4 of the original! =)</p>

<p>So how is mortgage, equity, house value counted in the FAFSA? Please don't tell me it counts as assets...</p>

<p>Another question: My parents own a couple other houses, one already paid in full and one as investment that is currently being rented. Does this count against me?</p>

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<p>Congratulations. You have the ability to pay and let some other less fortunate student attend college.</p>

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<p>FAFSA doesn't consider mortgage, or equity in the primary residence. The equity in the other homes would be considered an asset, and would be assessed along with other reportable assets. Different rules if the homes are part of a business, in which case the equity would be considered a business asset, and assessed less severely.</p>

<p>But as itstoomuch said, if the folks own 3 homes and one is free and clear, you're probably not a good candidate for need-based aid. Your parent's taxes will help subsidize college for more needy students, not the other way around. The exception might be if their AGI was under 50K, and you were going to a FAFSA-only school.</p>

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<p>=( Would it matter if the paid off house was not paid off by my parents but simply handed down from Grandpa?</p>

<p>itstoomuch - I'm very far from rich and I need either merit aid or financial aid unless I go to a >10k school. Well, I guess I could pay for those 30-40k a year schools, but not without taking out serious loans. But then again so could most people. </p>

<p>Thanks sblake and thumper for clearing up a lot of my mortgage/equity/asset questions =)</p>

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<p>here I come with my $20000 income :D</p>