<p>This makes no sence. My parents are not rich. They make 40-45K combined. One is retired (which means he will still recieve the same 22K 20 years from now), and both are over 55. My parents have 100K saved up, mostly b/c of their age. Now when I entered my EFC, according to IM, it says that my parents are expected to pay 30,000? I mean, that's 3/4 of their pay! Yes, we have a house in NYC, but I mean come on! Like what do they expect? To sell it for College and slleep on the street? Are these EFC calculators really any good at determinning how much FA I will actuallyget from most private institutions?</p>
<p>What is your EFC when you choose "Federal Methodology"?</p>
<p>it's probably because of the 100k saved.</p>
<p>No, $100,000 in parental savings would not add that much to the EFC.</p>
<p>moz</p>
<p>Do YOU have a salary or savings? That could explain the high EFC</p>
<p>I have none. Zilch. Not a cent in my wallet. So yeah...</p>
<p>In FA, it's 9K, which is why I'm so perplexed.</p>
<p>Are you saying your parents are expected to pay 30k per year or do you mean 30k in total for the 4 years?</p>
<p>The 30k might make sense whereas the 30k a year would not</p>
<p>If your parents have that $100,000 in an accessible account (and not in a retirement account) then it is considered "available" for use to pay for college. If the house they own has equity in it of $400,000 - $500,000 (which is possible if they bought the house a long time ago, since housing values have increased so dramatically in some areas) then your parents are expected to borrow against the value of the house.</p>
<p>When I put the number in that way ($100,000 cash type assets and $500,000 house equity) I do indeed come back with an EFC of over $30,000. and that is per year.</p>
<p>You may not feel like you are rich -- but in comparison with someone whose parents make $45,000 and have no assets or house, you parents have resources that they can use to pay for you to go to college. That is what the EFC is all about -- what resources do your parent's have that they can use to pay.</p>
<p>I think we can stipulate, the parents here are not "rich" as the word is commonly used. It was my impression home equity was not factored into the calculation.</p>
<p>It depends. A school that only follows the federal methodology (FM) via FAFSA will ignore home equity.</p>
<p>If in addition to FAFSA, a school requires the CSS Profile, (institutional methodology (IM)), the school may include home equity into their financial calculation. Schools that require the Profile may ignore home equity all together, cap the amount of equity that they use in their calculation, or consider all home equity available. I could be wrong but I think most schools that use the Profile will treat home equity just like cash.</p>
<p>When you used an IM calculator, its probably assumed all home equity was available.</p>
<p>a couple things is the $40K before tax or after?
From doing FAFSA/PROFILE for 5 years and reading the boards- it seems that in many cases- the EFC is abouut 1/3 to 1/5 of before tax income
so $30K for an income of $40K seems that perhaps a mistake was made in entering data?</p>
<p>However- equity is assumed to be available, the fact that to tap the equity you either have to sell and move or to take out an equity loan which has to be paid back is overlooked.
Retirement accounts are protected- however cash in a savings account or other liquid account isn't considered to be for retirement-although only a small amount is expected to be available if it is in the parents name</p>
<p>( The exception would be- money that is put into the retirement account for the current year- would be counted as available money - its only after its already in the account that they don't consider it)</p>
<p>Parents who have investments that are earmarked to provide for their retirement but aren't "PROFILE" approved, like businesses or rental properties, are especially hit hard-</p>
<p>We did find that for us the calculator was pretty accurate- to our surprise.
It actually didn't change more than a $2,000 or so, between the FAFSA and PROFILE- or at least I am assuming so- since I didn't actually see a PROFILE EFC, just the FAFSA and the schools offer.</p>
<p>Some schools will tweak your EFC depending on merit- even if they are a need based mostly/only school.
BUt that isn't really cheating IMO, because I also don't think that the EFCs are really what most people can afford to pay without dramatically adjusting their income/COL, having another child for the deduction ;)</p>
<p>Schools- private schools anyway- can have their own forms, to either identify more need or more assets.</p>
<p>Which apparently can't be said too often
Dont apply ED if you need to compare aid packages
Apply to a range of schools including schools where you would be enough of an attraction to offer you merit aid
Build your skills so that you can earn $2,000 to $3,000 summers to contribute directly to your EFC
Dont be afraid of taking out reasonable amount of loans</p>
<p>I also don't know if being retired at the relatively early age of 55 would count against a parent.
Each parent gets a protection allowance for income earned
A couple earning where each is earning $30K, would be assumed to have less available, than a couple where one parent earns $60K and the other isn't earning anything. ( I think the allowance is about $9K)</p>
<p>You are actually ahead of the game by trying the calculators now- it might help when you decide what schools to apply to.
Some students don't know, until their parents fill out FAFSA in March or April ( which is late- do it as soon as you can- you can always adjust if needed)
I am far from being an expert, but I read a lot, :) and there are many helpful sources- I like <a href="http://www.finaid.org%5B/url%5D">www.finaid.org</a> as well as the many folks and resources on the CC site</p>
<p>I am a parent with a child who entered college this fall and another who is applying for next fall. Our income is similar to Mozillameister's and when I follow the institutional methodology, they expect us to pay also about $30,000. It is due to the equity in our home which has tripled since we bought it. We cannot borrow money against it because our income is too low to make the monthly payments. The schools expect us to sell the house and use the equity on college, but since we are 56 and 58 years old, we need that equity for retirement. Also, we'd have to move far from the town where I grew up and where I work because there are no cheap homes here. The schools say that they include home equity even if income is too low to borrow against it to make a fair comparison with other families who have no home equity. But given the high cost of college, they're giving an advantage to people who put their money in retirement accounts, because the financial aid calculators don't count them. In our case, our retirement account is our home. </p>
<p>Now I have two questions about financial aid: </p>
<ol>
<li><p>How are we supposed to count the value of our home? The values given by on-line calculators are way too high at this time, given what equivalent homes are selling for in our neighbhorhood in this falling market. Should we get a real estate agent appraisal or just wing it? What method do financial aid people use to confirm the values?</p></li>
<li><p>Has anyone ranked colleges according to how they regard family owned businesses, bank accounts, and home equity? Last year, the schools that accepted my daughter ranged widely in what they expected us to pay. Some schools add your business expenses back into your gross income, even if those expenses are necessary to achieve that income. In other words, they decide whether they agree that your business expenses were necessary. Other schools just accepted the incomes stated on the income tax return, others simply have less money to give out. I need to know this because my son is getting an athletic advantage provided he applies ED. If we wait for him to apply RD so we can compare financial aid packages, he simply won't be able to get the advantage of a coach wanting him on a team because the coaches of the small LACs he's spoken to say that they get to choose three applicants who will get a boost in admissions, and they make those choices during ED. Applying ED, his reach schools become fits. Applying RD, those same schools are pretty much out of the question, or so it seems.</p></li>
</ol>
<p>I didn't think they put THAT much stock on the house you own. I mean, it's not like anyone who is half sane will sell their house just to pay for College. Okay, if it jumped say 6000 from the FA estimate, I'd agree....but it jumped over 20K! </p>
<p>So in other words, if you own a home you can't really get any significant financial aid. Isn't that a bit discrimitory to the middle-class who save and work their a$$es off for a home?</p>
<p>And shouldn't the fact that my dad is retired count for something? (no raise in money for inflation)
My parents can't afford 15,000...let alone 30,000.
Oh well, crappy NY State school it is. :(</p>
<p>Thanks for everyones replies. Really I appreciate it. :)</p>
<p>Oh, and my parents bought the house at 160K, which was urber cheap (it was easily worth 220K at the time.) They bought it 9 years ago. I guess it's worth around 450K now. (which is what I put down on the calculator, thought it's probably more than that)</p>
<p>I have a question
for those who have equity but don't want to tap it because they plan on using it for retirement-
I was just wondering if there was a way that I didn't know about to tap the equity without selling or taking out an equity loan?</p>
<p>I understand if you are planning on staying put until you actually retire and then sell- and move someplace cheaper ( that is what we are planning to do)
but we also did have to take out an equity loan to cover our EFC</p>
<p>I do have to say Mozilla- that many of us are never going to be able to retire- especially before we hit 67 or so.</p>
<p>Who wants to retire anyway? Lots of people do change careers late in life, but unless you are so disabled that you cant work, work keeps you young, especially once your kids are grown and out of the house! :)</p>
<p>Dont just blow off your dreams. Apply to a variety of schools (both of the reach and safety variety from both an academic and financial standpoint). Just be realistic. </p>
<p>As to financial aid being discriminatory against the middle class: maybe it is, there is nothing however illegal about discrimination in general. You just cant discriminate against the classes of people that the law protects (national origin, race, sex, etc). Middle class people are not considered a protected group.</p>
<p>As to your dads retiring: someone can correct me, but I dont think that its going to be a big factor that colleges considered.</p>
<p>As to the current value of your house, there is a way colleges can check to see if you are low balling them. Go to <a href="http://www.finaid.org/calculators/federalhousing.phtml%5B/url%5D">www.finaid.org/calculators/federalhousing.phtml</a></p>
<p>Good luck.</p>
<p>emeraldkity:LOL. My dad retired at 52...i know. Really early. Still, he is currently not working and has no plans to work in the near future. (oddly enough)</p>
<p>Jugulator:And that site won't count the fact that wooden boards are holding up the 3rd floor. (whoch would decrease the value drastically) </p>
<p>I'm still appling, but the fact that my chances of getting decent financla aid are slim to nonexistent, I probably wouldn't attend.</p>
<p>Mothermay:</p>
<p>Real estate agents, comps of real estate values would be very helpful as a starting point. </p>
<p>Financial aid applications want the market value of your home if you had to sell it on the day you file. Do not inflate the value of your home. This may feed your ego, but it is very bad for college aid. I believe the CSS Profiles instructions state that the parents should use the price they could reasonably expect to receive for their home if it were sold today (meaning on the day you file the aid form).</p>
<p>Whether something is reasonable is a question of fact. The fact of the matter is that you incur costs in selling your home. So the amount that a parent should reasonably expect to receive" has to take into account the costs of selling your home (commissions, reasonable repairs (e.g., painting). Do not go crazy and just make up costs, but the reasonable costs of selling it should be considered by a family when you file an aid form.</p>
<p>I also think the Profile asks for a home's value "if it were sold today." It's reasonable to say that an owner that had to sell his house today would probably get less than an owner who could wait for a while. Again, you can't go crazy and lowball your home's value, but you can certainly take into account what you'd receive from a quick sale of your home v. being in a position to wait for a buyer to offer your asking price.</p>
<p>In short, I would use what other comps in your area are selling for as a starting point, subtract any reasonable costs involved in selling the house and subtract what, if any, allowance should be made for selling it quickly. What is left would be the number I would put on an aid application. Good luck.</p>
<p>Anyone care to respond to my calculation?</p>
<p>Jugulator -- you explanation sounds reasonable and that is how I would go about setting a value to a house. I think it would be fine if you had to explain it to a financial aid office, also.</p>
<p>Mozilla -- it was your dad's decision to retire at age 52 -- he is certainly capable of going back to work and earning some money to pay for you to go to school. Your parents also have the option of borrowing against the equity of their house.</p>
<p>Consider looking at schools that consider the FAFSA and talk to your parents -- do they understand how the system works?</p>
<p>mozilla,</p>
<p>as the others have stated the colleges are not going to "consider" your father retiring at age 52 (a life choice he chooses to make), when retirement age is now 67 unless he is retiring due to disability, even then it would be refected in your source of income. You state that your parents have owned the home for 9 years, if your home is totally paid off, then the college will operate from the mindset that they are essentially sitting on top of $450,000(the equity in their home = assessed value of the home - the mortgage owed) which they can borrow for your education.</p>
<p>
[quote]
In FA, it's 9K, which is why I'm so perplexed.
[/quote]
If by that you mean that the Federal Methodology [FM] EFC is $9K, whereas the Institutional Methodology [IM] is $30K -- then it is probably home equity that is distorting the figures... in which case my experience is that the online calculator may be inaccurate.</p>
<p>I have a similar financial profile to your parents, and I had a FM EFC of around $10K, and IM EFC of $33K. All of the private colleges which accepted my daughter wanted a significantly larger family contribution than the FAFSA number, but none wanted anything like the IM number calculated by FM. </p>
<p>The bad news is that some colleges did want well above $20K annually.... but the college my daughter now attends wanted about $16K. </p>
<p>So what you need to do in your situation is have a strategy that combines applications to financial safeties (SUNY/CUNY?) - with applications to colleges likely to give you strong merit aid -- AND applications to colleges that are need-only and using the CSS/Profile. Among the latter group, the more that you apply to and get into, the better -- because that will improve the ability to compare awards. </p>
<p>Here's where I think the online calculator goes wrong: most colleges that consider home equity also cap the amount, both in terms with how they determine your home value, and in relation to the family income. So for example, some colleges limit the equity to 2.5 times family income -- meaning that the maximum equity they would consider for your parents is $112,500 -- so if, for example, you entered $400,000 in the form, you are way off.</p>
<p>There is something more you can do: you can contact financial aid departments for each school before you apply and ASK them how they would handle the home equity. Ask them (1) how do they determine home valuation for high-cost areas like NYC, and (2) do they have any caps or limitations as to how much home equity will be considered for families with moderate incomes? If they are willing to give you that info, you will be able to recalculate more accurately.</p>