<p>We're a couple years away from applying to college and we have a kind of unusual financial situation I think. By the time our son is applying we may have virtually no income. My husband is getting a lump sum package and may not be able to get another job. We do not own a home and will not be getting a pension. Currently, interest rates are about zero so it is very hard to live on "money". Most of our money isn't in a 401K. Should we buy a house? Just not even bother asking for financial aid?</p>
<p>I know that just having some money may seem enviable but we will have no health care coverage either and other people have houses and pensions which are worth just as much as our "cash" but I don't think these things are considered.</p>
<p>Why would you buy a house if you don’t have a job and/or health care coverage? Are you considering locking up your entire savings in real estate? Would you still have enough cash for emergencies? Everyone’s situation is different, but it seems like buying a house would be fairly low priority if the rest of your financial picture is uncertain.</p>
<p>Financial aid calculations generally weight income much higher than assets in determining family contribution.</p>
<p>Don’t do anything until you understand how financial aid really works. Here’s a good place to start: [FinAid</a>! Financial Aid, College Scholarships and Student Loans](<a href=“http://www.finaid.org%5DFinAid”>http://www.finaid.org).</p>
<p>By the time our son is applying we may have virtually no income. My husband is getting a lump sum package and may not be able to get another job. We do not own a home and will not be getting a pension. Currently, interest rates are about zero so it is very hard to live on “money”. Most of our money isn’t in a 401K.</p>
<p>Even if college weren’t on the horizon, what would your plans be? If the money isn’t enough to live on through your old age what is your plan?</p>
<p>You say that your H may not get another job, but what does that really mean? Does that mean that he may not get another job in his field? or won’t get a job AT ALL…even if the lump sum payment is not enough to cover you into your “old age.”</p>
<p>What about you? Can you work? How old are you and your H?</p>
<p>These questions may see odd, but it seems that even if college weren’t on the horizon, there may be some money issues- unless the lump sum is a very huge amount.</p>
<p>Anyway… Most schools don’t have much aid to give and therefore don’t meet need, so tying up your money may not be a good idea if your son’s future college doesn’t give much anyway.</p>
<p>The terms financial aid iand EFC are often misleading. They suggest that colleges charge some kind of sliding scale and give away lots of money based on EFC. </p>
<p>What is your child’s GPA and has he taken any SAT/ACT or PSAT exams?</p>
<p>What kind of schools would your child be applying to?</p>
<p>Well thanks guys for being concerned. At some point, everyone who doesn’t have a defined benefit pension is going to have to live off their savings and social security. I was just, I guess, trying to see what the difference would be in having cash vs. having a pension and home equity. Looking at the website that the first responder gave me, it seems like if you have any sizeable savings at all you’re not eligible for aid. I guess you get penalized for having kids late enough to be close to retirement when they go to college or for having a 401K and savings instead of a pension. If you have a pension, try to calculate how much money you’d have to have in savings to match the pension payout for 30 years or so. It would seem like a lot of money. For example, if you have a pension of 50,000 per year, with zero interest rates, you’d need 1.5 million dollars in savings to last 30 years. If you have 1.5 million dollars, I don’t think you can get financial aid even with zero income. These are hypothetical numbers.</p>
<p>It’s just that you’re in an unusual situation.</p>
<p>Most people don’t get a big lump sum payout without any other type of pension, etc. </p>
<p>If the amount is huge, then perhaps purchasing a home might be a good idea. Paying out rent each month is sometimes not very cost effective if you expect to live another 30+ years.</p>
<p>Is the money in a 401K? If so, then it doesn’t get counted. </p>
<p>Anyway… what kind of schools do you think your child will be applying to?</p>
<p>Do you think it’s unusual? My father-in-law took his pension in the form of a lump sum over 20 years ago. I think think the percentage of people who have a pension is about 20% now. Most people are being converted away from them. Also, most people don’t work for the same employer for their whole career anymore.</p>
<p>We don’t want to buy a house now because we don’t know where we want to live. Spouse could get a job somewhere else. I also don’t think it’s a good time to buy. I think of its depreciation ;). Depends on how you think the housing market is going to go.
I’ll check out that link.</p>
<p>There are various situations in which someone could get a lump sum.</p>
<p>I also don’t think it’s a good time to buy.</p>
<p>???</p>
<p>It’s actually a buyer’s market right now…so don’t know what you mean by that. </p>
<p>If you were to buy a reduced-price home that was a distressed sale and low for the neighborhood, it’s unlikely the house’s value would go down any further. </p>
<p>Do you think it’s unusual? My father-in-law took his pension in the form of a lump sum over 20 years ago.</p>
<p>I would say it’s probably not the norm. Most of the people that I know get their pensions paid to them in monthly payments. And, since many companies don’t even offer pensions anymore…it may be even more unusual.</p>
<p>We don’t want to buy a house now because we don’t know where we want to live. Spouse could get a job somewhere else.</p>
<p>Oh good…so your H isn’t certain that he won’t be working again. </p>
<p>Well, unless the money has been rolled over into some kind of protected retirement acct, it looks like you may have a high EFC. </p>
<p>So…if that’s the case, your child may have to look for opportunities for merit scholarships from the colleges that give them.</p>
<p>Buyers market or not, conventional wisdom is real estate in most American markets is not a way to realize capital gains now and may not be for some time. If I were not invested in real estate I would stay that way in most US markets now.</p>
<p>[FinAid</a> | Calculators | QuickEFC](<a href=“Your Guide for College Financial Aid - Finaid”>Quick EFC - Finaid)
Back to Finaid.org! Scour its info. The QuickEFC calculator gives a teeny view of where you might stand. Then, off to the FafsaForecaster, for a better view.<br>
If income is below $50k, under certain circumstances, $ assets “may” be excluded. Please research this before deciding what to do with the lump sum.</p>
<p>Mom2 - just for curiousity, do you know approximately how much they get per month as their pensions? Are they government workers - teachers? or corporate? </p>
<p>In the other thread, people were saying that people who had scrimped and saved to get $1 million shouldn’t get financial aid. But like I said above, to have the equivalent of a $30,000 a year pension for 30 years in 0 interest and 0 inflation times you would need $1 million. No one is saying that someone with an expected pension of $30,000 a year shouldn’t ask for financial aid. I think the government is actually trying to get us to 0 interest, with 2 - 5% inflation just as a heads up to anyone else who doesn’t have a fixed-pension.</p>
<p>I am not clear. Is your income going to be under $50,000? If so, and if you are eligible to file the 1040 A or 1040 EZ, the QuickEFC tells me this, (assumed 3 in family, 1 in coll.)
income 30k, assets 800,000 EFC $625.00
income 49,999k, assets 800,000 EFC $4013
income 50000, assets 400,000 EFC $21655</p>
<p>On the other thread, see Sk8rmom’s post showing the qualifications for the Simp Means Test. The detailed info is on Finaid. Are you saying there’s something that makes you NOT eligible for this?<br>
In that other thread, it’s not about how we feel that some kid’s parents have $1mil. It’s about the loophole (that’s what everyone calls it, not just us) for low-income families. </p>
<p>How you invest the lump sum is important. How much interest it generates is a factor (if it throws you over $50k.)</p>
<p>Interest rates in anything “safe” are under 2% a year. Probably headed down from there. </p>
<p>I was just trying to get people to have a change in their way of thinking to be more in line with present-day realities. Some people have very good pensions and not a lot of savings. They are not necessarily more virtuous than people with savings and no pensions. That’s what the “ownership” society was trying to drive us all to. Municipalities are going to go bankrupt trying to pay all of the teachers and government workers who retire in their 50’s at full salary + health care (my friend is doing this right now) when other people just have their “money” to live on. A million dollars may sound like a lot but it’s really not if you don’t have a pension.</p>
<p>It’s going to be hard to estimate “family contribution” because the schools that “meet need” almost always use CSS Profile or their own forms and use a different formula.</p>
<p>I doubt that a CSS school would give huge aid to a family that has huge savings sitting in CDs or savings accts. </p>
<p>And…it really looks like the husband (and/or wife) will likely be getting a job even after retirement - even just for health care benefits and some income. So, if that happens, then their income won’t be “0”. </p>
<p>Is the money in savings? 401k? (then protected) CDs? Stocks? What?</p>
<p>*Buyers market or not, conventional wisdom is real estate in most American markets is not a way to realize capital gains now and may not be for some time. *</p>
<p>Nobody was talking about capital gains - especially quick capital gains. We were talking about homes losing value. Purchasing a home that is a distressed sale at a price that is well below current market value will not likely lose more value. However, since capital gains has been mentioned, buying such a property could mean a quick increase in capital value since the home’s value would be compared against the higher valued neighborhood. </p>
<p>Anyway…if this couple is in their 50s/early 60s, then they would be in for the long haul ONCE they knew where they would be settling. They don’t need to buy today…H could find a job, and then they could find an excellent value home to purchase.</p>
<p>If their health is good, then they could easily live another 30+ years. If so, the home would surely be worth more at that point. Unless rent is cheap where they live, they are throwing away thousands every year on rent. </p>
<p>Move to northern Alabama…housing is cheap, taxes are LOW, jobs are plenty and health care is excellent. Huntsville has been named the #1 city by many of those who do those city rankings. Many retirees are here because of the low cost of living.</p>
<p>*I am not clear. Is your income going to be under $50,000? If so, and if you are eligible to file the 1040 A or 1040 EZ, the QuickEFC tells me this, (assumed 3 in family, 1 in coll.)
income 30k, assets 800,000 EFC $625.00
income 49,999k, assets 800,000 EFC $4013
income 50000, assets 400,000 EFC $21655</p>
<p>On the other thread, see Sk8rmom’s post showing the qualifications for the Simp Means Test.*</p>
<p>EFC calculators assume that low income/high assets families qualify for simplified means, but that isn’t always the case.</p>
<p>“Purchasing a home that is a distressed sale at a price that is well below current market value will not likely lose more value.”
Yup. But, it depends on the bargain you get versus maintenance and utilities, property tax (assessed value, not purchase price, and affected by neighbors’ home values,) then the roof leaks or the furnace goes out.<br>
“EFC calculators assume that low income/high assets families qualify for simplified means, but that isn’t always the case.”
OP has not yet revealed whether ththey qualify. Or, whether she tried the FafsaForecaster, etc.</p>
<p>I know you’re all trying to help but I just wanted to know if anyone knows about financial aid for people with savings. I have a call into a University of interest and I’m going to ask them. I don’t know what the formula is with regards to assets so I don’t know if I qualify.</p>
<p>FAFSA doesn’t take money that is in formal retirement investments into account. Any money in an IRA, 401(k), or retirement annuity is “invisible” to FAFSA. If some of the payout can be channeled into those kinds of vehicles, the amount that you have appearing as available for college expenses will be reduced. </p>
<p>You may be one of the two or three people in the country for whom an “instant annuity” would make sense. This would tie up the bulk of your capital in a retirement fund category that is invisible to the FAFSA, but it could be set up to deliver a monthly income for your family. Annuities are extremely tricky investments and definitely aren’t for everyone, so you need to do some research before committing to one.</p>