I didn’t know colleges consider debt for need base aide. I thought it was mostly income.
Well, clearly you are sticking to your opinion, wrong as it is.
It is mostly income, and non-medical debt is not a consideration. That’s one reason that Marigrow’s conclusions are wrong. The “big spenders” Marigrow knows either have big incomes, which dramatically reduce their eligibility for need-based aid, or their big spending is being done through borrowing, which can’t go on forever and will come back to bite them.
@Marigrow, it really isn’t that I don’t understand what you’re saying. I do. And maybe if you’re in the camp that have sacrificed and saved, it’s hard not to feel some resentment toward those who haven’t and are, at least from your perspective, reaping the benefits from people like you who have. But maybe what you should consider is whether being in that other camp is, in fact, preferable. People who live beyond their means, are in debt, and aren’t able to help their children pay for college are generally not happy about it.
Debt is NOT factored into “need” (unless it’s related to illness/death). Big spenders - who have borrowed extravagantly and don’t save - are still expected the same thing as what others with the same income must. Their children are often “stuck”, because the parents haven’t saved what they were expected to, have a lifestyle or debt repayments that won’t support a $2,000 or $3,000 cut each month to go toward college, yet have an income that indicates that they should be able to pay X.
Not to mention that fewer than 5% colleges “meet need” for those who are considered “needy” - keeping in mind that elective debt (for cars, larger house, any kind of consumption, as well as helping family members…) is NOT used to determine need.
Always take what your neighbors say about scholarships with a grain of salt.
@Marigrow, The thing to keep in mind is that it is always better to have the money (savings or income) than not. Colleges don’t take more than 100% of your income or your savings and you do have to pay the bill somehow.
@intparent said:
We are in this position because I didn’t go back to work full time until S was in his first year of college. His need based aid has dropped every year since then and D16 probably won’t qualify for any at all. Do I wish I hadn’t gone back to work so we could keep the need based aid? No, because then our income wouldn’t have been high enough to pay the net COA. I’m also (relatively) fine with the fact that I didn’t work full time in order to save enough to pay for college. It’s a risky approach, but I think it saved us a lot of stress and taxes over the years. We’ll see if we are sorry later.
There are a lot of CC posters who would love to know which colleges take their high cost of living into account and disregard their hefty incomes. Please share your list.
Do you have kids in college? Go ahead and run the college’s NPC for your family’s situation. First time through use your real numbers. Second time, zero out your savings. Then tell us what you find. We’ll wait. 
Your kids aren’t in college yet? Go pick a couple of schools that you think they’ll be applying to and run the numbers for those.
US News lists 62 colleges and universities that say they meet full need. So families with need whose students go to any other college don’t necessarily get any grant at those schools. Doesn’t matter if they’re just above the poverty line or big spenders with no savings.
OK, so our big spenders tell their children to look at those “meet full need” schools. Good luck, because the vast majority of those schools are highly selective. Caltech and Georgetown and Grinnell and Pomona, not to mention the Ivy League.
Luck smiles on our big spender, and they’re admitted to Stanford and Princeton, two of the most generous need-based aid schools. A sample case using Princeton’s NPC: for a family of four with two working parents each earning $75k a year and absolutely no savings, P’ton will provide about $47k in grant aid. Same scenario with $100k in a college savings account cuts the grant size by a whopping $1k a year.
Another identical family’s student is admitted to UNC-Chapel Hill. With that $100k savings, an OOS family will receive just over $7k in grant aid. Without savings, they’ll receive just over $10k of grant aid, but the kid won’t be going to UNC because the net cost will be way too high. With savings, it might be possible.
And then there’s the big spender family whose kid was admitted to NYU and (OOS) UC San Diego. They receive…nothing. No grants whatsoever.
@albert69, you make my heart happy. I always use you as my example to my 12 y/o daughter of what is possible.
A smart frugal kid who will graduate without debt. What an awesome future you will have
Haha, thanks @VANURSEPRAC. Hopefully NMF and other great scholarships for good students will always be there.
colleges don’t consider debt unless it’s from an uncovered very large medical expense.
This is one of the better threads on CC lately…bravo posters who understand debt and income and savings as related to EFC.
Not exactly debt, but some schools do want to know how much equity there is in your home (maybe just the CSS schools?). I have an income that definitely would get some aid at most private schools, but substantial non-retirement assets from my late husband’s life insurance (part of which also paid off the house). I’ve run the NPC at a couple of the generous private universities with my actual numbers and (out of curiosity) with a greatly reduced asset profile, but that still included no mortgage, and there was no difference in EFC and no money even though the estimated costs were half of my income (including my retirement savings; actually about 60% of pretax income after retirement deductions). So, in my unusual case, it really is assets and equity over income. I can’t say this is unfair, because I’m happy to be mortgage-free and I can afford to pay for him to go where he wants so I shouldn’t be entitled to anything.
I’m relieved we took the advice of CCers and ran the NPC not just thinking about freshman year, but looking ahead at sophomore, junior, and senior years. I plucked my oldest out of college in the calculator. I also fussed around with a possible increase in income. It made a big difference, for our financial situation, and squashed any optimistic thinking that had crept in when I was running the calculators at 2014 income and with 2 in college.
I’m not complaining, not by a long shot. Better to have our eyes wide open and realize how those numbers can shift if you have a jump in income (and/or the # of kids in college changes).
@Marigrow wrote
I think this is more perception than reality.
I have seen the reality in action, though-there are people in our neighborhood who did not pay their property taxes, flimflammed left and right on the house because he’s a tax attorney, and regularly posted on FB about Jimmy Choo shoes, expensive vacations to South Africa, yadda yadda yadda. Eventually it catches up with these people. They moved out minutes short of the sheriff showing up to evict them-stripping everything they could get from the house and leaving it nearly destroyed. They’re still posting about their fancy vacations, though (I shake my head in wonderment).
The McMansion people with the big mortgage-the FAFSA, (if I understand it correctly) only looks at the value of your home, not the mortgage(s) out on it. A lot of people I see living flashy lives have humongous mortgages and HELOCs out on their property to fund it.
Some people get big time gifts of homes, etc. from their relatives. I don’t think that affects their income, though. It might mean they can live in a house much nicer than their income would suggest.
The new cars every few years are probably leases. None of it is cheap, and I don’t think the financial aid people at the colleges are stupid and giving money to people living like this.
Short of outright fraud (and I’m sure there’s a lot of that going on, to various degrees of success), “Others” really aren’t in any better boat than you are-and I bet they don’t want you to know just how many holes their boats are sporting right now, either.
Some people are a lot more comfortable with massive amounts of debt, and they hide it well. And if they’re lucky, they manage to dig themselves out of their holes before making new ones.
FAFSA looks at nothing regarding the primary home - not value, not equity, not mortgage balance (if any). Nada.
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I’m relieved we took the advice of CCers and ran the NPC not just thinking about freshman year, but looking ahead at sophomore, junior, and senior years. I plucked my oldest out of college in the calculator. I also fussed around with a possible increase in income. It made a big difference, for our financial situation, and squashed any optimistic thinking that had crept in when I was running the calculators at 2014 income and with 2 in college.
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^^ This.
I just had this discussion with my youngest brother whose 3rd child wants Stanford. He ran the NPC with 3 in school and saw aid. However, the oldest would be in grad school then, so maybe S won’t count that child…and the older two would be out of college after 2 years …and that last 2 years he’d be full freight at S…which is not acceptable to him.
I also don’t know if these "full need " schools consider how much is being spend on siblings’ education. Brother’s oldest 2 kids commute to the local CC, so costs are VERY low…less than $8k per kid.
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The McMansion people with the big mortgage-the FAFSA, (if I understand it correctly) only looks at the value of your home, not the mortgage(s) out on it. A lot of people I see living flashy lives have humongous mortgages and HELOCs out on their property to fund it.
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FAFSA doesn’t consider one’s primary home at all…doesn’t matter if it’s worth $10 million…it doesnt’ count on FAFSA.
CSS schools want to know equity in the home (not value). So if the home is $600k, but you owe $500k, then a CSS school might consider the $100k
My experience with full need schools is that if a sibling is a current undergraduate, a one page form is filled out and submitted with the FA paperwork, with details regarding the sibling’s school expenses. Thus, need-based financial aid is tailored to each individual situation.
CSS Profile by default asks about primary home market value, amount owed on the home, year of purchase, and purchase price. Some Profile schools ignore this information and do not use home equity in their need-based aid calculation.