I’m likely going to be attending a private school with a 60,000 + cost of attendance. My EFC right now is around 30,000 (according to the calculators) and that’s taking my savings account into effect. Is is there a way to get around having to count my savings account towards the EFC? From what I understand it’s too late to just take the money out. If I spend all of it on a new car or something will I still be on the hook?
You can donate the money to charity and then submit revised financial aid information without it.
As noble as it sounds, I can’t donate my entire life savings on charity. If there is no way to keep the money, I want to at least spend it on an asset. My question is if I spend the majority of it on a new car or something along those lines will they be able to see what my account previously held and will having an expensive car affect the EFC. By the way, I haven’t submitted any information yet. I just don’t want to get in trouble for financial aid fraud or something like that.
Is your savings account that large that it would have a significant effect on your efc? If so, maybe the real question is why should you be attempting to get around the 20% in the first place?
If you put the money into a 529 plan account, assuming you are a dependent, then for FAFSA purposes it is assessed at the 5.6% parent rate.
Yes, it increases my EFC 10,000 a year.
And I wouldn’t be trying to get around it if my family was actually going to contribute to my EFC, but they’re probably not. I need to have as much money and assets as possible and I need my EFC to be as low as possible. I don’t want to be tens of thousands in debt after college and still have to pay for grad school in the future.
So you have $50k saved and you want to blow it all on a car?
You could put it into a 529 account.
So are you saying that this $60k private school you want to attend only uses FAFSA to determine and meet your need?
“So you have $50k saved and you want to blow it all on a car?”
No but if it’s going to increase the amount I have to spend on college by 40,000 if I don’t get rid of it, I would want to spend it on a useful asset that will retain some sort of value.
“You could put it into a 529 account.”
I will look into this. Is it too late to do this, though? Somebody told me your savings account has to be cleared two years before the financial aid process. Is that not true or does it not matter if you transfer it to a 529?
“So are you saying that this $60k private school you want to attend only uses FAFSA to determine and meet your need?”
I’m not too well versed on this financial aid stuff yet. I’m going off what the online calculators and stuff I have read online has said. Are you saying that if I make it clear to them that my family isn’t going to help me out I can get more aid?
Oh please. Why can’t you consider yourself fortunate that you have some money to contribute to your college costs. As noted above, if you don’t want it to be assessed at 20%, put it into a 529.
It sounds like you just want to have all of your money and not contribute to college costs at all. Sorry, but you luckily have that savings…and you do have the 529 option.
Sure, you could buy a BMW with it…but before you do…make sure your college actually meets ful need for all excepted students, or you may find that you just don’t have enough money to attend anyway.
My opinion…unless you need a car…or anything else…you should do the 529 route. You are not going to reduce your EFC to below $5000, so you aren’t going to get additional federal grant money…and depending on your school, you might not get additional school finds.
In addition…keep in mind that most schools in the $60,000 a year range require a student contribution as well…and this can be several thousand dollars.
Honestly, you are being penny wise and pound foolish.
And an education is not a useful asset that will retain value? Keep digging.
No you will not get more aid if you say your parents won’t pay anything. The question is do they use the CSS Profile as well.
You’re taking a big chance.
Your EFC may be $30k according to the NPCs, but these are only estimates. Consider these not-far-fetched-at-all scenarios after buying a car or similar, cashing out your assets.
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You’re accepted, but your actual financial aid award is less than expected. The school would be affordable if you’d kept your savings account, but isn’t affordable now.
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You’re accepted, get a great financial aid award, attend. Sophomore year, your FA award drops. Your net price might be affordable with your savings account, but is now out of reach. You end up having to transfer.
It might all work out–you’ll end up with a Davidson degree AND a great car. Or it could all NOT work out–you’ll have to pass up attending a school because you can’t afford it because you blew your savings. As Clint Eastwood said, are you feeling lucky?
Remember, you’ll be on the hook for 20% or so of your assets for the current year. That means that for sophomore year you’ll be on the hook for 20% of what is now 80% of your original sum, and so on.
Run the Net Price Calculators at the colleges and universities on your list. Then have a chat with your family about how much they will chip in each year. If indeed they aren’t going to chip in much at all, but the calculators indicate that they will be expected to, then you are going to have to find yourself a place that will give you significant merit-based aid, or that you can afford on your own without help from your family.
So don’t go doing anything crazy with your money just yet. You might find that you absolutely do need to have it on hand to help pay for your education.
So that we can help you, and fill you in on some of the financial aid “stuff”, please tell us
- are you a dependent student, graduating hs sr living with married parents? if not please say how old you are, what your circumstances are.
- If you are a dependent student, under 24, not a foster kid etc., what is approximate parent income?
- Do you, the student, only have 'savings' or do you have income too?
You use the value of your assets as of the day you fill out the FAFSA or institutional financial aid forms. So, no, you don’t clear out your assets 2 years in advance.
Put the money in a 529
So…if you have $50,000, the first year, you will be assessed $10,000 towards your EFC.
That leaves $40,000…so the second year, you would be assessed $8000.
That would leave $30,000…so the third year you would be assessed $6000.
That would leave $24,000. Your last year, you would be assessed $4800…leaving you with $19,000 or so when you are done.
And if you put the money in a 529, it will only be 6% or so a year.
I’m not sure I understand your issue…except you don’t want to spend any of this money on your education.
Remember too…this 20% and 5.6% are for FAFSA EFC calculation purposes. Many $60,000 a year schools use the Profile…so YMMV regarding how much they tap of your savings.
You should run the net price calculators with the money in your accounts, and with the money in your parent accounts…see what the difference is…if any…on your net cost.
You really need to know how much of that EFC is determined because of your parents’ income and assets. If your parents have income of $75000 or more, it’s unlikely that your reducing your income is going to make a lot of difference at most schools, and will make little difference to federal aid (Pell or subsidized loans). At a school that gives a lot of its own need based grants, it might make a little difference and you’d be better off putting your money in the 529 account.
You also might do better to pick a school with merit awards.
@twoinanddone I think this student doesn’t want to spend his $50,000 savings. It’s not about his current income.
Why bleed yourself financially on such an expensive school?
Are there any cheaper public university options that would serve your needs just as well?
^But that wouldn’t fulfill the desire to have cake and eat it too.