<p>Let me try again…EFC is a FAFSA term only and it is the expected family contribution per the FAFSA formula. It is the SAME for all schools.</p>
<p>Your FAMILY CONTRIBUTION as computed by the colleges could very well be thousands of dollars different…that is NOT EFC per FAFSA…that is the family contribution that the college computes using your financial data from the FAFSA, Profile, School form or a combo of them.</p>
<p>I’m sorry I seem to be confusing people. The schools disbursing their institutional funds can use ANY formula they please to compute what they think your family can pay…and yes…this can vary…because these formulas vary.</p>
<p>Let’s get off the argument about EFC. Thumper is right.<br>
And, the bottom line is: colleges offer aid as they wish. Even if they claim to be generous, it’s only for the portion of expenses THEY think are beyond your means. And, even that can be a factor of how much they want student x.</p>
<p>I advocate looking for “average grant” and “% of students receiving aid.” Other than schools that serve a very high proportion of low-income kids, these helped us compare potential generosity.<br>
Watch out for too much publicity/hype about “average package.” Until you know what the school typically doles out, you know nothing. Likewise, a school that offers to do “everything possible to help you finance your education” (big popular 2nd tier school in the northeast) is subtly referring to loans or payment plans, not gifts.</p>
<p>An “average package” may be inflated to sound strong. Eg: Grant- 20k, Stafford- $5500, work study- $2000: that can be called a “$27.5k package,” which sounds good. In fact, the school’s only offering 20k. </p>
<p>Yes, it helps to identify schools with high endowments- in theory, that can mean they give out more. But, each school has a % cap of that endowment, that they will draw from. In a bad set of years, they could conceivably lower that cap. Or, their mission could include attracting a particular pool of students and supporting them at a higher level than others.</p>
<p>“Grant- 20k, Stafford- $5.5k, work study- $2k: that can be called a “$27.5k package,” which sounds good. In fact, the school’s only offering 20k.”</p>
<p>^^ True, the school is offering “only” $20k in grant money, but applicant families have to get past thinking/expecting that “finaid” is synon with “grant.” With the exception of a handful of schools that promise to meet need with gift aid only, the schools rightfully expect the student to have some skin in the game via subsidized loans (federal max about $18K total for 4 years) and work study.</p>
<p>Okay here is another point I did not understand while applying. Part of the enticement was that the school claimed it would not allow a family with an income around $80,000 to take out more than $10,000.00 of loans. But when I called (before coming here) and stuttered and stammered, the FA lady suggested Plus Loans (which I was told were bad news) and other loans. So what gives?</p>
Expected family contribution, family contribution… it’s all the same thing. </p>
<p>While EFC originated with FAFSA, I don’t think there is anything wrong or confusing about using the “EFC” term when talking about private colleges. It’s convenient to have a TLA (three letter acronym) when talking about it, Federal or private, and it’s usually pretty obvious which one is being discussed.</p>
<p>In fact, I would argue that “EFC” is now in such common usage that the federal version of it should always be referred to as “FAFSA EFC” to remove any possibility of confusion.</p>
<p>Total…or $10K per YEAR. There is a difference. A student could get a Stafford loan and a Perkins loan totaling $10K for ONE year only. </p>
<p>Label…I hope you have clerified your husband’s retirement/employment situation with the finaid department. If your husband is REALLY retired, this could help you. Of course, that might be for the future since he apparently DID work in 2010. But worth asking. Remember too that your husband’s retirement income IS counted as income…added to your teaching income.</p>
<p>1) Was your income THIS YEAR (including the one-time BP income) around 80k? I was unable to find Rice’s loan-cap pledge on its website, but [Project</a> on Student Debt](<a href=“http://projectonstudentdebt.org/pc_institution.php"]Project”>http://projectonstudentdebt.org/pc_institution.php) states that in 09-10, Rice eliminates loans for family incomes under 80k (note that these caps are usually hard, so 81k would not qualify) and caps loans at 10k total for everyone.</p>
<p>2) Do you have unusual assets (even if not easily accessible or liquifiable)? What did Rice list on the FA package as the “parental” or “family” contribution?</p>
<p>Labelness - when talking loans - like many things in life - there is the good, the bad and the ugly. The good are subsidized student loans - like Perkins and subsidized Stafford. These are made to the student and have very low interest rates. Interest does not accrue while your student is in college. Payment is deferred until 6-9 months after graduation and you can defer again if your student goes straight to law school or other grad school.</p>
<p>The bad - well - there are unsubsidized student loans and parent PLUS loans. Rates are not as good as subsidized loans - but if you have a gap of a few thousand - this might be the way to go. The rate is about 8% and there is a 4% loan origination fee - meaning if you borrow $10,000 - you actually get $9600 - but you owe $10,000. These loans are not deferred as they are made to the parent - not the student. You have to start making payments right away.</p>
<p>The ugly - private lender student loans. High rates - often adjustable rates loans. Avoid these unless you have no other options - and then think long and hard.</p>
<p>“Part of the enticement was that the school claimed it would not allow a family with an income around $80,000 to take out more than $10,000.00 of loans. But when I called (before coming here) and stuttered and stammered, the FA lady suggested Plus Loans (which I was told were bad news) and other loans. So what gives?”</p>
<p>“What gives” is that the so-called “limit” on loans applies only to the “loan” portion of your financial aid package - which does not include loans that you need to take out to meet what the school expects your family to contribute (even though you in the end will have to pay the loan).</p>
<p>We had a similar experience. Son received no financial aid from a top LAC that advertises itself as “no loan” and “meeting 100 per cent of demonstrated need.” I talked to a FA guy at the school about why it concluded we needed no aid when competitors assessed our need at over $20K. They FA guy said he’d get back to me about it, and ended up emailing me a proposal that still offered no FA but suggested we take out about $30K per year in PLUS loans to meet our family contribution of over $50K. This, again, from a so-called “no loan” college.</p>
<p>Just to clear up a point of confusion: ED always includes an exception for insufficient FA, whether or not the exception is stated. This is exactly how it is defined by the National Association of College Admissions Counselors:</p>
<p>Failure to abide by this means a school is in violation of NACAC policies. Reputable schools do not wish to do this and, if there is any pressure to the contrary, will back down when this is pointed out.</p>
<p>Far be it from me to say that parents should re-finance their home to pay for their student’s college costs - but we are in the middle of a refinance and are getting a rate of 3.5%. Yes, that’s THREE and a half percent. FIXED RATE. I can’t see any point in a Plus loan at 4 - 8% when we can lower our current mortgage rate AND finance the part of college that our 529 savings won’t cover for 3 1/2%.</p>
<p>“For a family whose income is above $80,000 and who demonstrates need eligibility, Rice will meet 100 percent of the student’s need, and the student’s loans will not exceed a total of $10,000 over four years at Rice.” 2008 press</p>
<p>This is in contrast to their Finaid FAQ which shows Staffords adding to a total over 17k. </p>
<p>OP, I’m still not sure what your income was for 2010- but: let’s assume 168k. In a QuickEFC on finaid.org, assuming home value 100k and no other assets, the EFC is $40,700. Seems Rice total cost is 47,800. The gap is $7100. And, they offered $4000 of that, plus whatever loan direction they suggested.</p>
<p>They don’t understand that you don’t have the EFC stashed away. This is a reality most of us lose sleep over. </p>
<p>Plus Loans are not bad news. Just read the fine print. Like all this FA stuff, it can be confusing.
ps our plus was around 5% or tad lower this year and I thought they elim the orig fee after the banking crisis-? I’d need to check.</p>
<p>Labelness,
This is a classic discussion and explains why Americans are in such a financial mess overall. Going into huge debt to pay for a child’s education at a private college when one could avoid going into large scale debt by attending a fine state university is some what like asking for a water in a restaurant. The waiter says, “would you like to pay several dollars for water in a fancy bottle with an exotic name, or would you like to have the water for free?” You choose the water in the bottle and pay for what you can get for free. What kind of sense does that make other than you are the victim of excellent marketing on the part of the water bottlers? Do not go into debt to finance your daughter’s undergraduate education if she can get accepted to a first rate state university. The education can be equivalent and you can use the money saved to send her to a first rate graduate school where it really does matter where you get your degree. Hell, my son attends the University of Texas at Austin. We prepared his tuition in 1994 at $2,000 a year. Room and board is around $10,000 a year. He has been offered an $8,000 internship in a business for the coming summer. He also got a couple of scholarships after he enrolled. We have our house paid off and money to spare. His friends from Yale can’t wait to visit him in Austin when they return for breaks. So, do the math! Be grown-ups and tell your daughter the economic facts of life.
: )</p>
<p>Lafalum has made an interesting suggestion of refinancing your home to pay for college - let me bring up a few points to consider. What she has described is a “cash-out” refinance - where you are pulling equity out of your home - in addition to hopefully improving the rate. The questions are can you and should you consider this as an option.</p>
<p>Can you? Well - only if you have equity in your home. I know many people are “upside-down” right now - meaning they owe more on the mortgage than the home is worth. So, they cannot do this obviously. Then there are those that have some equity - but most lenders want you to retain a 25% equity cushion in your home. So - if your home appraises for $400,000 and you only owe $250,000 - you conceivably could refi for $300,000 and use the $50,000 you pull out for college expenses. If you do not have at least 25% equity in your home, this may not be available to you.</p>
<p>Should you? It really depends. Refinancing can cost several thousand dollars and can be a time-consuming experience - lots of paperwork - definitely more of a hassle than it was 2-3 years ago. Your home is your residence - it is your family’s shelter - should you put it at further risk by piling more debt on it? One of the lessons of the past decade was how people made bad decisions using their houses like piggy banks and refinancing multiple times to buy cars, fund lavish improvements and take vacations. Now, paying for college is not frivolous - but I would think long and hard before increasing the debt on my home.</p>
<p>I’m sure this is a viable option for some folks - but it deserves very careful research and consideration. Your home is most likely your biggest asset - so I would hesitate to encourage amassing more debt against it.</p>
<p>In our case it makes sense because we’re refinancing for a short time period - only a few years longer than what is left on our current mortgage. We’re also paying down the balance on a home equity loan, which was a floating rate currently at 4.5%. Our new mortgage balance will still be less than 50% of the current value of the house. It works for us because we’ve lived in the same house for 17 years and this is the first time we’re taking “cash out.” Most of our college costs are being paid by savings (what we didn’t have saved was paid out of the home equity loan).</p>
<p>I mentioned it only because if someone is looking at $15 - $20k in PLUS loans at 8%, the alternative of adding $20k to a mortgage, only adding a few years to your term, and potentially lowering your rate on your existing mortgage balance could leave you paying a lot less in interest payments in the long run. But as Rockvillemom points out, this option is clearly not a wise choice for everyone.</p>
<p>I just want to say I think this is a fascinating conversation and a very important one. The fact that there are several threads going right now on not only HOW to pay for college but the WISDOM of paying for a pricey private school or whether families should go into debt shows how much the thinking on this topic has changed in the past 2-3 years.</p>
<p>I would say that a few years ago - this conversation would not be taking place. We were all led to believe that you give your kids the best education possible, period. That it was fine to incur tens of thousands of dollars of debt - because high-paying jobs awaited them. What a paradigm shift!</p>
<p>I certainly do not have all the answers - but I know my thinking has changed greatly and I am reluctant to incur debt for S2 the way we have for S1. I am more willing to consider in-state options. I don’t want to still be struggling financially ten years from now under the burden of debts incurred to pay for my kid’s college educations. I still am a strong believer in a 4-year college education and the value of going away to college - but - for most families - there have to be some reasonable limits. Stressing your family to the brink financially is not reasonable. Losing sleep at night over your debt is not reasonable. Not being able to retire is not reasonable. </p>
<p>This may be too fine a point to bring up here, but a lot of colleges do not finance their financial aid through their endowments. This is true of both of my kids’ schools. It is often financed through alumni giving, so alumni giving rates may be more relevant than endowment.</p>
<p>Most schools kept their FA steady, even through the worst of 08 - 09, and again through 09 - 10. Other items in the budget were slashed (capital building projects, filling empty faculty seats, etc) before FA was touched. Schools committed to economic diversity actually had to dedicate more alumni funds to FA during those years because they knew more folks would be needing funds, or larger awards, to attend.</p>
<p>For anyone who is considering taking on debt to finance their kid’s college education - or who is paying for college at the expense of saving for retirement - this is worth a read:</p>