Hello,
I was very lucky to have received an acceptance to an ivy this week. But there are some issues with the cost. I was expecting at least full tuition to be covered because of the fact that my family’s combined income falls well below (30k+ below) the amount that the college advertises is needed for families to receive grants covering full tuition, but that didn’t happen. The final cost ended up being around 30k per year. This is more than my family can afford. I know that the discrepancy was probably because of assets, but that’s my parent’s retirement money, so I don’t want to touch it, plus it’s not anything super crazy (definitely less than 500k). I guess my question is this: how should I go about approaching the admission office to see if there’s any way my efc can be lowered? This is any ivy with a pretty good reputation about financial aid, but the final offer ended up being around 8k less than what the FAFSA said my family could afford, and I thought the FAFSA was notorious for being inaccurate, so I’m surprised the final offer ended up being so close to what the FAFSA had said. So before I approach the financial aid office, I just want to check with the knowledgeable people here: Is there any button I should make sure I checked? A common mistake people make that would account for the high cost? A certain angle that could be used to lower the cost a little when talking to admissions officers? I don’t need a massive amount of money (if the cost can get between $20k and $25k my family might be able to swing it) but I was just wondering what I should say/do in order to cut the cost down by a couple of thousand dollars?
Thanks so incredibly much in advance!
First….the financial aid office handles need based financial aid, not the admissions office.
Are your parent retirement assets in a regular savings account, not a really retirement account like an IRA or TSA or something like that? If so, that money is considered an asset by the financial aid offices. At 5.6% of the asset, at $500,000 that would add $28,000 to your family contribution.
Plus, this is an Ivy…they use the CSS Profile. The data on that is what these colleges use to determine need based aid. Things included on the profile that aren’t on the fafsa…equity in your primary residence, for example.
You can appeal to the financial aid office. However, you cannot count on getting any significant change in financial aid.
We had a similar problem. In our case I mostly retired (I do some part time consulting) before my youngest started university, which means that money sitting in the bank looks like retirement money to me. However, universities do not seem to see it the same way. $500k sounds like a lot, but is not really all that much in terms of retirement funds.
In appealing, you need to stay calm and respectful at all times, regardless of how difficult this might be. I have heard that financial aid is pretty much the only thing that it is okay for the parent to contact the school about, on the basis that the parents are expected to be the ones paying. However, others might understand this better than I do.
Do you have an affordable alternative?
Was the actual financial aid offer similar to what the college’s net price calculator on its web site estimated for financial aid for you?
Thanks for the prompt replies!
@thumper1 It’s in “cash and investments” as entered in the car and investment section of the CSS profile. And I know I put “less than 500k” in the original post, and I don’t want to get too specific, but a more specific number would be that assets are between 250k-400k.
@DadTwoGirls Sounds good! My parents will definitely be the ones talking to the financial aid office. And yes, I’ve been accepted to Bama which is under $10k a year so I know I have at least one affordable option.
@ucbalumnus Using CSS profile numbers it’s coming in at around 27k vs 31k but I may be entering something wrong
I.e. the actual offer is about $4k worse than the NPC estimate?
Perhaps you and your parents may want to ask about that discrepency.
Just clarifying— is any of that money in a 401k, 457, IRA or Roth IRA? Is any of it the cash value of a defined-benefit retirement plan (ie a pension plan)?
If so, please confirm because then you have the possibility of appealing and having your financial aid recalculate.
Students can borrow a reasonable amount for undergraduate education (averages about $7,000 per year). Would this make attendance at the Ivy League school doable for you ?
This is a tough situation. Your parents probably weren’t aware that only money that is in a retirement plan (401k, 403b, IRA, pension etc) is exempt when calculating one’s EFC. Any future retirement savings should be placed in one of those types of accounts instead of in a regular investment or savings account (in addition to shielding the assets from being included in determining college EFC it also allows the investment returns to grow tax-free). I would not suggest that your parents or you take on extreme debt to afford the Ivy, but I think borrowing the federally funded amount (about $27k over 4 years) is a fair trade. Would that make it affordable? Can your parents increase their annual contribution a bit?
@raye08 Here’s an option. All of the Ivies except Dartmouth and Cornell have a no-loan package, meaning they don’t require you to take out student loans as part of the aid package; Dartmouth is no-loan for income under 100k, and Cornell is no-loan for income under 60k plus assets under 100k. So unless you are talking about Cornell (where your non-retirement assets would preclude you from this policy), your financial aid package should have not had a loan component.
However, being no-loan doesn’t prohibit you from taking out federal student loans. You posted that you were offered around 30k, but were hoping for between 20k and 25k. You personally can take out federal student loans of $5500 freshman year, $6500 sophomore and junior year, and $7500 senior year. You can also earn more in the summers than your financial aid package credits you with earning. That would likely make up the difference between what you were offered and what you are hoping for. It’s never a good idea to take on debt that you don’t have to, but many students do take on debt up to the federal student loan limits, so you would not be doing anything particularly unusual in doing that also.
Also, note that financial aid gets recalculated each year. So, once your parents pay this year’s tuition, and if they can shift some of their retirement assets into recognized retirement accounts (401k, 457, IRA, Roth IRA) then that will also lower assets for future years. Depending on their income and other retirement plans/financial situation, they can each contribute 6k to an IRA or Roth IRA each calendar year (7k each if they are over age 50). So they could move 12k now and another 12k next year (actually, they have until April 15 to contribute for 2021). This won’t save a huge amount, but over the course of 4 years it will help a little.
But please double-check to make sure that you reported their assets correctly on the CSS profile. If their retirement money is already in an IRA, Roth IRA, 401k, 457, etc plan, then it is NOT supposed to be reported as an asset on the FAFSA or CSS Profile and if you did report it as such, then you can contact the financial aid office and ask them about re-calculating your package due to your misunderstanding.
And I’m so glad you are in at 'Bama. I’ve heard that lots of students are very happy there, so it’s great that you have an affordable option.
pinging @BelknapPoint to make sure I have the information re: IRA contributions correct
We were in a similar situation a year ago. Not Ivy but a top LAC. There was one difference though: a decent amount in the 529 college fund. For about the previous 10 years, we had split our savings between the retirement funds, and the college fund. The stock market did us a favor, and the absurd cost became more bearable, once the sticker shock subsided.
Please do not think I am trying to be judgmental here because I am very far from it but perhaps if they didn’t set up anything for you, maybe they can reach into their retirement savings just a little? Of course if they are healthy, have time to rebuild the nest egg, etc., the details you have not shared.
Please please don’t ask your parents to dip into their retirement money, regardless of where it is placed. Please.
Congrats on the acceptance!
First off, I’d make sure the assets aren’t in a retirement account. As others have mentioned, that’s a common mistake and very consequential.
Second, I’d focus on the NPC results. Make sure you’ve filled it out correctly (do it with your parents). Any discrepancy there is a good jumping off point for a discussion with FA office.
Third, if anything has changed that would affect your ability to pay, note that. Drops in income due to Covid, etc.
Fourth, as others mention, consider what years 2-4 will look like. If the assets are driving some of this, moving those assets into retirement accounts and/or home equity (at a school that doesn’t consider home equity) will help in the last three years.
Fifth, look at the cost of attendance estimate and consider how much fluff is in there. Typically at ivies, a few thousand can be shaved from personal expenses (which are generally too generous).
Finally, if the assets are not in retirement accounts it is likely that your parents have maxed out retirement contributions and have a healthy amount saved for retirement. If that is the case, and they’re intending these assets as a combination of college and retirement fund, I wouldn’t worry too much about using some of it for college. The fact that you seem to be saying you could manage 25k/year without eating into their savings suggests the FA office might not be far off in their estimate.
Finally, the loans are a reasonable option to bridge the gap, and asking about loans during the FA conversation might help the FA office understand this is not an easy lift for your family.
Good luck!
Excellent point about the “fluff”. And although colleges require health insurance (and will charge you for it) you should be able to waive it if your parents plan meets the college’s minimum coverage requirements. And Brown, for instance, will pay for the health insurance if you receive financial aid and if your parent’s plan does not meet their minimum requirements.
Note that this is different from the health clinic fee, which is separate and required regardless of insurance.
Or the parents put their money in a regular account which THEY intend to use for retirement. They might not have a dime elsewhere. This is something that happens…and it’s not all that uncommon.
OP—do you have younger siblings who will be in college at the same time you are over the next few years? If so, the CSS profile schools might continue to take that into account for the overlapping years and provide additional financial aid. That has been what they have done in the past. The FAFSA-only schools will stop doing that, but it is unclear about the CSS profile schools.
If that is relevant, I would definitely ask the financial aid office about that possibility to help make future years more affordable.
First of all, thanks everybody for the responses, this is really helpful!
@MMRose They reported what was in the bank as well as investments (including mutual funds and money markets; do those count as retirement?)
I’m a little scared about taking on student loans because I’ve heard so many horror stories, but I plan to major in some type of engineering/computer science/math so I think (?) I can get a job after graduation that would allow me to pay off <30k in student loans, but my parents are pretty adamant against me taking out loans so I’m not counting on being able to take out loans
Not retirement accounts unless they are authorized retirement accounts. Regular mutual funds and money market…no.
But check especially the mutual funds as sometimes those are in real retirement accounts.
@Thorsmom66 Thanks for the specific examples of what counts as “retirement money”! Do you know if there’s a website or source that lists all of the places my parents could move money to that would be considered “retirement” (and thus exempt from the NPC)?