Help!...anyone! I've got 5 kids!

Paying for College
1

<p>I am new at this process and am a little overwhelmed. </p>

<p>Here is my financial picture</p>

<p>My net worth is over $2 million including my home. Mostly real estate..... $200 k in retirement and 75k in a 529 plan.</p>

<p>I make $50,000 from a family business and $50,000 net from the real estate for a total of $100,000 income per year</p>

<p>Of the 75k in the 529 plans
Child #1 Samantha has $35,000 in a 529 plan
Child #2 Michael has $40,000 in a 529 plan</p>

<p>Here is my family picture</p>

<p>I have 5 children. Their ages are 16,15,13,10,and 7.</p>

<p>My first child is in the top 16 in her class. She is a Junior in the honor society and should get some Merritt awards...I would think ...scored very well in psats</p>

<p>My second child is a sophomore in the top 30 in his class...about a 93 student</p>

<p>and for my younger ones its to early to tell but early indications are that they were not as blessed as my older two in school and are 85ish like students.</p>

<p>Question #1
What should my expectations be for financial aid? If any?What can I do to increase the chances of getting aid?</p>

<p>Question#2
I was told that if I transfer the 529 plans into my youngest child Francesca, It would help reduce the assets looked at for income vs Samantha. Is this the case ? and can you transfer 529 monies from a younger sibling to an older sibling? Will it even make sense with assets of 2 million?</p>

<p>Question #3
Would it make sense to put my real estate assets in a trust to not count against financial aid?</p>

<p>Question #4
I figure to pay for all my kids college tuition I will have to put away $20,000 a year to do so. Which I cant afford....what are my options....Selling the real estate is not an option.</p>

<p>Question #5
A little unrelated but curious....How do institutions look at home equity availability vs money in the bank?</p>

<p>I know this is a little helter skelter...these are the questions that kept me up last night....I would be much obliged to anyone with any suggestions</p>

<p>Thank you </p>

<p>Fatheroffive</p>

2

<p>For expectations, you can go to candidate colleges’ web sites and search for the “net price calculator”. You can run sample scenarios for the one, two, three students in college situations. But try several different colleges, since they vary all over the place in financial aid. collegeabacus.com may help you run multiple colleges together.</p>

<p>But be aware that if you have unusual or variable income (small business, real estate) or assets, net price calculators may not be as accurate as they would be for typical families with mainly wage and salary income that does not vary much. Also, divorces and remarriages can bring ex-spouses’ and new spouses’ finances into the picture.</p>

<p>At the top of this section, there are sticky threads for automatic and competitive large merit scholarships, in case affordability on need-based financial aid appears unlikely.</p>

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<p>

With such high assets, the likelihood of receiving aid is low. Unless the real estate is your primary home.</p>

<p>

529 accounts can be transferred to other siblings. But most 529 accounts are owned by the parent with the child as beneficiary. That being the case, they are reported as parent assets. It makes no difference which child is the beneficiary. They are parent assets.</p>

<p>

</p>

<p>No. For FAFSA, your primary home and your retirement savings (in IRAs, 401ks etc) are protected assets. Any other real estate and assets will add 5.6% of their value to your EFC. Putting the real estate in a trust will not protect it from the FA formulas. It must still be reported as an asset.</p>

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<p>Curious as to what constitutes the average income ceiling for most financial aid…</p>

<p>Say a family of four with average assets?</p>

<p>Or better yet a family of 7 like mine with average assets?</p>

<p>Thankyou Swimcatsmom and ucbalumnus for your responses</p>

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<p>I thought that 529s are looked at as Parent Assets, no matter which child’s name is on it…possibly to avoid what you suggested.</p>

<p>If your kids have high stats, then consider schools that give large merit for them.</p>

<p>Sounds like you won’t qualify for much/any aid. Not only will the real estate income count, but the value of those real estates will count as well. Many/most CSS schools consider home equity, and ALL will consider the value of real estate that is not your primary home. FAFSA only schools won’t consider home equity, but you won’t get any aid from them other than merit and loans</p>

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<p>Oh, and since your income is from a “family business” the CSS schools will not be favorable to you in many cases. They’ll add back in a number of your deductions as “income”. </p>

<p>And, the value of your business will get considered.</p>

<p>Also, any retirement contributions are added back in for that year.</p>

<p>The schools that give the best aid, use CSS Profile. They can count everything…</p>

<p>FAFSA only schools give the worst need-based aid.</p>

<p>BTW…you don’t have average assets.</p>

<p>FAFSA is for federal aid. To get “free money” from the feds, your income would have to be low…much lower than what yours is.</p>

<p>You need to determine how much you can spend each year per child. Then tell your kids. It’s up to them…get top stats and get merit.</p>

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<p>Are there any advantages of the kids being claimed independents for financial aid?</p>

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<p>What is the value of your rental properties? Those will be viewed as an asset for need based financial aid purposes. The income from rentals is income. Some of the deductions allowed for a business by the IRS are added back in as income for financial aid purposes. What is your gross income from the business and rentals? Some of the deductions for those will be added back in for financial aid purposes.</p>

<p>$2,000,000 in real estate assets is NOT average…it is well above average.</p>

<p>You can’t just “declare your kids independent for financial aid”. Sorry…not allowed. They have to be over age 24, a veteran, an orphan, a ward of the court, married, have a bachelors degree, or have a child who they support. Otherwise, they are dependent for financial aid purposes.</p>

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<p>To be independent for FA, your kids must be aged 24 or be able to answer yes to one of the other dependency questions (married, a veteran, have a dependent of their own they provide >50% support for etc).</p>

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<p>Not sure this would make sense at all but
Theorhetically If I put my assets in my youngest daughters name in a trust…would it make any any difference?</p>

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<p>^^^</p>

<p>I think the CSS schools (the ones that give great aid) also ask about younger siblings’ assets (if so, it would be for THAT reason).</p>

<p>Believe me, schools that give away their own money for need-based aid know that there are families out there (like yours) that have assets. So, they’re “on” to the ways that people try to hide money.</p>

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<p>I did not mean I had average assets</p>

<p>I was trying to figure what an income ceiling a family would have to make to be in contention for financial aid for a family of 7 “like mine” …sorry for confusion</p>

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<p>*Are there any advantages of the kids being claimed independents for financial aid?
*</p>

<p>think about it. Does that make any sense? Wouldn’t you think that EVERY parent would do that if it meant that their kids would get FA? lol</p>

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<p>thank you thumper and mom2collegekids…</p>

<p>Just a couple of quick questions…</p>

<p>Whats a CCS School?</p>

<p>Should I still fill out a financial aid application if I wont get any aid?</p>

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<p>You have to realize that most schools do NOT have much money to give away. Therefore, when they have need-based aid ot give away, they’re going to give you a full-scale “body cavity search” to make sure that you don’t have the money…because there are other people out there that truly do not have assets/funds/income that you have. With limited funds, they have to be careful.</p>

<p>So, the schools that give their own money for need-based aid tend ot use CSS Profile which is like a full-body investigation to uncover any sources of money.</p>

<p>CSS Profile schools are the schools that give the best aid to THOSE WHO QUALIFY.<br>
<a href=“CSS Profile – CSS Profile | College Board”>CSS Profile – CSS Profile | College Board;

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<p>You should probably fill out the FA paperwork just to be sure.</p>

<p>The Net Price Calculators will not work for you since those don’t work well for self-employed.</p>

<p>How much CAN you pay each year? (again, tell your kids how much you can pay)</p>

<p>The issue that I think is going to happen is that even if you qualify for “some aid” at the schools that give the best aid, they’re still going to expect you to pay more than you can. For instance, if a $60k+ per year school gives you $15k in aid, can you pay the other $45k per year? </p>

<p>What was your D’s PSAT last year?</p>

<p>You need to come up with a list of reaches, matches and financial safeties.</p>

<p>The matches can be schools with competitive merit and the safeties can be the schools that give huge merit. (merit gets applied to need first, so it won’t go first towards EFC.)</p>

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<p>Competitive merit schools may be reaches or matches – it depends on the difficulty of getting the large-enough merit scholarship (not just admission).</p>

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<p>I would reverse engineer…figure out how much you can afford per kid per year and then find the colleges. FAFSA only colleges are most of the publics and a bunch of the privates. On FAFSA your home equity won’t be included but your assets will be (assets are savings, mututal funds, value of rentals (market-mortgage if you had to sell it immediately). FAFSA schools do not include small family businesses but read here [FinAid</a> | Financial Aid Applications | Small Business Exclusion](<a href=“Your Guide for College Financial Aid - Finaid”>Small Business Exclusion - Finaid) for the details.</p>

<p>FAFSA schools don’t always meet your need but they often have merit scholarships that reduce costs if you are full pay. The universities in many states are the best bang for buck but some states the cost is high. Kids can also attend a junior college for 2 years and substantially reduced costs and then transfer to a 4-year for junior and senior year to trim the bill. </p>

<p>There are only several hundred colleges that use Profile. Profile will look at your financial situation much closer, may add depreciation back if the real estate is rentals and other detailed information. Some of the very tippy top colleges do not give merit aid, only need based aid. Profile colleges somewhat create their own EFC that they apply to you depending on your circumstances. They do use the FAFSA EFC for distribution of federal aid (in your case most likely only the loans.)</p>

<p>The bottom line is</p>

<p>You should know your EFC. Generally EFC is 25-30% of your income, but with the real estate etc. that will push your EFC up. Our real estate doubles my EFC right off the bat. </p>

<p>Use the calculators…the ones on college websites and the ones available on the internet. You can run all kinds of probable scenarios and get an idea of how the various monies and asset valuations impact price. Also look at college websites at unis/colleges that give merit for various GPAs and test scores as that can give you an idea what will come off the top. Merit will range from 1000 - $15,000+ but only you can decide how much value the “brand name” college has over a less nationally well known place. </p>

<p>Best of luck 5 kids of parent paid college is a huge crunch. We set a budget for our kids and helped them figure out where they could apply and they only applied to places we knew or thought we had a very good chance at affording. We managed their expectations to manage our retirement. Our real estate was not liquid and it hurt because we didn’t have the cash flow to support the asset numbers and the “full pay” to “almost full pay” status so we worked very hard to find a “place” for each kid and you can, also, but most importantly you have to crunch the numbers and come up with a realistsic amount you CAN pay before you start dealing with the kids.</p>

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<p>As a sophomore, She scored a 59 in Critical reading, 58 in Mathematics, and 58 in Writing skills for a total of 175</p>

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<p>Depending on your state, if she scored high enough on last month’s PSAT, she may make NMF and then have scholarship opportunites that way at certain schools.</p>

<p>What state are you in?</p>

<p>If her PSAT isn’t high enough, then high ACT or SAT scores can also mean large merit scholarships at some schools.</p>

<p>Either way, she’s going to need high scores. The schools that give the best aid (need-based or merit) usually are the hardest to get accepted to, so high scores are needed.</p>