<p>Well, we're in the base income year for my junior son who will be applying to schools in the fall. Our 2007 AGI is LOW - like under $30k low - like we were planning to apply to colleges through Questbridge low, and our EFC is/was $1800. Money has been tight, business bad, and home equity has fallen dramatically. I just learned that I will be inheriting somewhere in the $700k range when the estate settles within the next few months (within 2008). While this will offer incredible peace of mind, I figured between financial safety state university and high endowment LACs for high stats son, that I was done thinking about how we would go about college. Now, I'm at ground zero again.</p>
<p>Start reading the posts. There's lots of advice in this section. You may take a hit for a year when you get the money, but you can decide where it goes that will best fit into your OVERALL financial picture INCLUDING college. You need to find a financial advisor who is familiar with all aspects of your financial goals including college aid. </p>
<p>I'm happy for you for the windfall. Managing it is not easy, however.</p>
<p>IF you use it all to purchase a home with no mortgage you protect the asset ;) for Fafsa schools only.</p>
<p>You can also invest in a business you own 51% or more of and not have that count as an asset on FAFSA. </p>
<p>I do not know if inheritance is income in the year recieved or only an asset. If it is income, you might consider a gap year!!</p>
<p>Carefully read the FAFSA and see what is protected and what is not- pay off cars, pay off house, pay into retirement, pay off medical bills, invest in your business, there is a lot you could do that wouled not cound against you.</p>
<p>That is a wonderful windfall. Would you consider using some of it to pay for college for your child? </p>
<p>If I inherited this amount of money, I would seek professional advice regarding how to invest it to maximize my financial use of the money...and with a child in college, this would be included in my list of questions.</p>
<p>Yes, I could spend $200k on college and have $500k left, but not for long - son wants to be linguistic anthropologist, so there's grad school. Daughter wants art school, so between the two, it could disappear as quickly as it arrived. </p>
<p>We do have a family farm and a mortgage that we could put much of the money into, but I don't think any of the schools son is considering are FAFSA only schools, so I guess it's time to do some serious research on his top choices, but as they're schools like HYPS/Swarthmore/Vassar/Rice etc, I suspect not. </p>
<p>The question of whether inheritance is income or asset in the first year is a critical one that I need to find an answer to as well. I guess if it's income, there's no hope for the first year. Unfortunately, I read that once they get an idea of what you can afford the first year, it's very hard to change their impression of you in subsequent years.</p>
<p>I picked up my copy of How to Pay for College Without Going Broke and am reading carefully. There are colleges that use Profile, but only count equity as 2.4 times income. Does anyone know which these are?</p>
<p>I have gotten name of financial advisor and will pursue on Monday. He comes with a stellar recommendation, so I am relieved on that front. He also apparently has college-aged kids, so that should help.</p>
<p>Chedva, I didn't pose this question in order to start a moral debate on whether financial planning is inherently evil. I'm just trying to get through life, and hopefully retirement without having to live in my car...</p>
<p>MattsMomFL...you should be able to plan for your future AND perhaps make some sort of college contribution to both of your kiddos with some guidance. I'm glad to hear that you'll be speaking to someone re: this inheritance money and how to protect YOUR future, and figure out the college thing as well.</p>
<p>I'm not sure why you posted the link for Profile schools. But it is good that you have that for your own reference. One thing to understand about the Profile schools is that they use the information they collect on the Profile in many different ways. If you have read on this forum, you will see that asset protection, home equity, retirement info, non-custodial parent income/assets seem to weigh in differently at each of these schools. Folks have kids who have applied to multiple profile schools, and have provided the SAME info to each of those schools with need based financial aid awards varying by thousands of dollars (my own daughter had one award that was $9000 more at one school than at another). Add to that, not all Profile schools meet full need anyway (my kid's didn't). </p>
<p>But I think you're on the right track...speak to someone about using some of this money to protect your future. I will tell you, there are folks here who WISH they had that amount to invest in retirement accounts and college expenses too. </p>
<p>When you talk to the finance person, you might also want to inquire re: the type of tax return you will be required to file with the interest income you will have on that amount.</p>
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If you have read on this forum, you will see that asset protection, home equity, retirement info, non-custodial parent income/assets seem to weigh in differently at each of these schools. Folks have kids who have applied to multiple profile schools, and have provided the SAME info to each of those schools with need based financial aid awards varying by thousands of dollars (my own daughter had one award that was $9000 more at one school than at another). Add to that, not all Profile schools meet full need anyway (my kid's didn't).
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<p>I posted the link as I was kind of thinking of using it to decide which schools to stay away from. Perhaps, the most financially feasible schools for us may be those that don't look at Profile (assuming windfall is not taken as income and I can squirrel it away as an asset in mortgage, etc.). I may be wrong in this assumption, but it seems as though out-of-state state schools, fall into this category, like UC Berkeley, UVA and our instate public, UF.</p>
<p>I realize this is a VERY good problem to have, and that it's much better place than where we were. I just don't want to blow the opportunity to secure retirement by foolishly spending all the money on college.</p>
<p>It may be that son's only option now may be the instate publics (we even have prepaid and he's more than eligible for Bright Futures), but I don't want to drop this on him until I have explored any options he might have outside of this one. This has presented a major shift in thinking, and I don't want to land him in a pool of confusion about his future until I have fully sorted it out.</p>
<p>but I don't think any of the schools son is considering are FAFSA only schools</p>
<p>Why not?</p>
<p>Most schools are FAFSA only schools- there are lots to choose from.</p>
<p>Students on CC are advised to include financial good fits/safeties in their choices. That should apply to all students.
Both my daughters picked very affordable colleges.</p>
<p>Of course you want to shelter what you can and be prudent in how you spend the money. And of course you include financial planning for college in the mix. You are heading the right way. Yes, the windfall will be included as income that one year, and then, thereafter assets. And yes, that first year can be critical in terms of financial aid. You seem savvier than most in the fin aid situation. Depending on the list of schools that your child is considering, a gap year may be the way to go. Some work, some community service, some self study, can all be a marvelous way to spend the year. Then your financial situation will have stabilized, and you'll be able to plan better.</p>
<p>A good friend of mine did this exact thing. Her husband got a large payout one year, but needed every cent and more to start up a business which was going to have to be their livelihood. No way they would get aid with that whomper on the income statement, and it was not demonstrative of their financial situation ever before, or afterwards. By skipping that year, they were able to give colleges a more realistic view of their finances. However, I think some PROFILE schools do want to see prior year incomes. Don't know which ones.</p>
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When you talk to the finance person, you might also want to inquire re: the type of tax return you will be required to file with the interest income you will have on that amount.
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<p>The way the $700k is presently invested produces mostly dividend income that was mostly distributed before the death. The remaining income on it for the rest of the year would probably still leave our income under $40k. I read somewhere that there are mutual funds that are invested to produce minimal income - I'm hoping the advisor knows more about these. If not for the farm, I believe we would be able to qualify for $0 EFC under the Simple Needs Test, because we could get by with just filing a 1040A or 1040EZ. Considering the farm lost money in 2007 and it looks to be a worse year for 2008, I don't know if it's something I am required to report regardless, as it is falling into a dicey hobby farm category. Because the overall income is so low, the mortgage interest I am claiming is pretty worthless too. Gosh, this is all SO complicated..</p>
<p>Well, since I just read cpt say that the inheritance would be included as income the first year, it sounds like state school or gap year may be the only options, and fafsa vs profile won't matter till 2009. Maybe if we delayed probate? (Mother is executor).</p>
<p>UVA doesn't use the Profile, but the DO use their own financial aid application which contains much of the same information. They also require submission of tax returns. I don't think they can be considered a "FAFSA only" school.</p>
<p>I do not have first hand experience with this...but my understanding is that the UC's (and Berkeley is one of those) are not generous with financial aid for out of state students. The impression I'm getting is that the aid they provide might be what you would get as an instate student (under the best circumstances) but you would have to pay the difference between the instate costs and out of state tuitions costs...a HUGE difference in cost.</p>
<p>I do have a question to the OP...it sounds like you were doing some good planning for your son's college future (and the other kiddo too?) having prepaid and also the eligibility for Bright Futures. Since that was the plan...why not stick to it, and perhaps feel good that you can help these kids with grad school, and some other college expenses that you would otherwise not have been able to do. </p>
<p>Honestly...I wish our state had something like Bright Futures. It doesn't.</p>
<p>Does anyone know why equity from a second house used as rental property must be reported as investment asset and equity from a store or farm business can be reported as business asset? Both rental properties and stores/farm businesses are used to generate income, why the equities are treated differently for EFC calculation? Thanks.</p>
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I do have a question to the OP...it sounds like you were doing some good planning for your son's college future (and the other kiddo too?) having prepaid and also the eligibility for Bright Futures. Since that was the plan...why not stick to it, and perhaps feel good that you can help these kids with grad school, and some other college expenses that you would otherwise not have been able to do.
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<p>Exactly, and that may very well be the plan. I'm just trying to sort it out before I present it as a fait accompli. He's been mentallly preparing to go the low income and questbridge route and has carefully chosen a list of schools which have excellent anthropology programs, meet full need and have no loans offered as part of package. It's a heady list, and we've all been thrilled that any of these were in the realm of financial possibility. I just have to bring him back to the ground carefully. Btw, UF has an excellent anthropology program so no issue there.</p>
<p>Daughter, otoh, is a different challenge, as she wants to study photography and graphic design, in which she has shown passion and talent. She may not qualify for Bright Futures as she struggles academically. Her PSATs were a 1260 - all 3 subjects vs. her brother's 2340... If cash needs to be coughed up for undergrad, it will have to be for her. I have prepaid for her as well, but the in-state schools she can be admitted into don't offer the strength of program that she is ready for. The prior plan was that her grandmother was going to pay for an art college, but now wouldn't as she'll know that I can cover it.</p>
<p>Here's another thought...could the OP's son go to UF his freshman year (using Bright Futures and prepaid money), get terrific grades, and transfer to a different school his sophomore year when any remaining money not spent or invested in retirement from the inheritance would be viewed as an asset only. Of course he would have to look at schools that give institutional need based aid to transfer students...but it's a thought.</p>
<p>Some schools that do not use the Profile are not "FAFSA only"; they often require their own applications as well as FAFSA.</p>
<p>Out of state public schools may be FAFSA only; however, remember that these schools do not promise to meet full need. They often have little to offer by way of financial aid for out of state students. You may not be any better off than you would be with a Profile school.</p>