I started to read that thread… and wasn’t sure if this ONLY pertained to those who Use the 529 plans… or this also meant if you have savings **of any sort over **-what was it… $8,600 that it has to be reported and you will loose financial aid…???
Read this:
**Most financial experts recommend that a family keep 3 to 6 months of expenses saved in case of an emergency, in a liquid non-retirement account. This account is not only supposed to be used in case of of a layoff, but also could be needed in case of a major roof leak, major illness, car crash, etc. This new fed policy penalizes people who are able to achieve those savings.
Also, I believe this policy also severely penalizes people who have modest college accounts for more than one child.**
We are a larger family – 7 of us now - 2nd son in college, 3rd son will be graduating Spring 2016… so (2) Fafsa’s this Jan ! … . we are debt free… and we have savings - about $15,000 … We have always been VERY FRUGAL to the point some would think we are too tight…none of our kids have cell phones… one Tracfone in our family -period… emergencies only… we use EBAY … Our kids know if something isn’t on sale , ,food wise, pretty much it doesn’t get bought… I use coupons… shop at consignments for clothes… husband is main breadwinner at about $65,000 a year… we’ve done well… but thinking abotu College expenses can DRAIN you very quickly not to mention the rising cost of everything !
I remember some question on the Fafsa about… if you have more than …I forget the number now… but we had below that… ($30,000 maybe) in available Cash …(savings, checking, but not Ira’s, 401K’s)… that it would have to be reported… did this also change ??
What changes this year may affect a family like ours ??
Yeah, I think the asset protection amount will be dropped from ~$40k to ~$8k. I hope they will change the percentage as well to compensate that. Unfortunately, it seems we are expecting a couple thousand dollars higher EFC next year.
Update: It seems they have updated the number. Now the difference is not that big depending on the age of parents. Still, it is going to be over a thousand higher in EFC for us.
but I am still confused… I asked about that Part on the Fafsa … it was never as high as $40,000… I wish I could remember where that was… what line on the Fafsa I am talking about…
I found this online but the article was last year (Feb 2014)…
what is changing here… so if PARENTS have over $8,600 in available funds (to buy a junky used car when ours dies, to fix that roof, our well , etc) … you are penalized where it was UP TO $30,000 before… REALLY ??!@#$
We don’t apply to collegs who use that CSS profile at all. … only who use the FAFSa… … will they now be asking how much our house is worth too??
And how does one determine what anyone’s “ASSET PROTECTION ALLOWANCE” is ??
I never seen anything on the Fafsa to lay this out… is it different depending on Parental age, family size and income? … where is the chart on this … or how can I find it online ?? and the changes from year to year…
You are also mistaken about not having to report assets if the assets are below a certain amount. All non-retirement and non-main home equity assets are reported in full. The FAFSA formula then factors in the asset protection allowance.
^^So funny that our usernames are almost identical! But wanted to say that on our FAFSA, we reported what we had in our savings accounts, and we had way less than $33,000 there. I don’t know why it would be different from person to person…that is really weird.
What’s changed is the $40,000 or $30000 in the examples. The amount protected has dropped. At first for a married couple it dropped, on average, down to about $8000. Then the government decided to recalculate and now it is about $20k for the average aged, married parents of college students. You do not calculate the protection amount, the FAFSA formulas are built into the program which asks for the age(s) of the parents, for the assets (where OP would include that $15k in savings) and income and family size, etc to come up with the EFC.
OP, if your children who are currently students received Pell grants or other need based financial aid, and your savings and income are about the same, it is likely Child 3 will receive that or more. The $15k should all fall withing the income protection, even this year.
mommdc, you could put the money in a Roth IRA, but it might be added back in to income on the FAFSA for the year the money was contributed (2015) depending on other retirement contributions and tax deductions, and it wouldn’t be available for emergencies as OP described.
The OP also mentioned 529 accounts - it’s not clear if her children have 529 accounts but if they do, then adding the balance of each child’s 529 account to the $15k emergency savings account (since the 529s are likely parental assets) could put them over the asset protection allowance.