<p>My father is a doctor, so I usually don't even bother applying for scholarships or filling out financial aid forms. Is this a mistake? While he makes a lot of money on paper, we definitely don't lead a lavish lifestyle. A good deal of it goes to paying alimony and child support to my mom, plus paying the expenses related to their divorce. Any people out there have any similar problems/ luck?</p>
<p>It's not a mistake. If your family can cover your educational expenses, lead a comfortable (not lavish) lifestyle, support two households and pay for an expensive divorce, let others less fortunate get the financial aid. The pot is only so big you know.</p>
<p>Student still has to file FAFSA/profile for some scholarships for some colleges but it has to be verified with college. If you are interested you can find online EFC calculator and put your numbers in.</p>
<p>Remember, not all scholarships are need-based.</p>
<p>I hate the FAFSA! It is so rediculous - they had our expected family contribution at like $60,000 a year or something and we definately couldn't afford that even if there was a college out there that costed that much (thank god there isn't). It's not like my dad is a doctor or anything either - he makes just under 100,000 a year. And my mom doesn't even work!</p>
<p>they take more than just income into account. Also included are home equity, holdings, cash, etc.</p>
<p>I never thought my family lived much of a lavish lifestyle until I saw an EFC of 99999</p>
<p>Home equity is not included in the FAFSA calculations.</p>
<p>But DSMO's broader point is correct-- EFC is calculated considering parents income, parent's assets, student's income, and student's assets.</p>
<p>If your family income is just under 100K and you have an EFC as high as you indicate, a significant portion of the EFC is coming from assets (either parent's or student's). If you've got the assets, you're expected to use a portion of them to fund college education.</p>
<p>If the student's got assets, they are heavily weighted in the FAFSA formula, the thinking being that the student probably has few other financial obligations.</p>
<p>With some advance planning, most families making a bit under 100K can still be eligible for some financial aid.</p>
<p>Big thing is to not have any money under your name. I think that I probably got punished big-time for this one.</p>
<p>If I do go to a private school, I'll probably get money out of my name during the first year.</p>
<p>You need to apply to schols that give good merit aid. I have a complicated divorce situation and on paper we are quite well off as far as EFC. In reality, most of that money is not available to me. I had DS apply to schools where we thought he had good chance of merit scholarships. He has been awarded money by two schools. Also, look into schools that have lower costs. There are a lot of state schools where even OOS tuition is reasonable compared to some of the privates. ALso look into Canadian universites, they are a bargain.</p>
<p>Two things:</p>
<ol>
<li><p>Most important, have a frank conversation with your parents on how much they would be willing to contribute. </p></li>
<li><p>Read all the threads on merit aid. This is probably your only option for aid (other than small loans and work-study).</p></li>
</ol>
<p>sblake-</p>
<p>"With some advance planning, most families making a bit under 100K can still be eligible for some financial aid."</p>
<p>Would be able to elaborate on this? Thanks...</p>
<p>scuyler:</p>
<p>Yes. Suggest that any family that's on the road to college financial aid application get one of the good books on financial aid, "Paying for College without going broke" is one. Learn how the FAFSA formula works, and what you can do to decrease your EFC and thereby increase your potential aid package.</p>
<p>Also, it's very helpful to spend some time punching hypothetical numbers into the FinAid calculator, which will give you the EFC for each situation, and ALSO break down where the contribution to the EFC is coming from (parent's income, parent's assets, student income, and student assets), and ALSO tell you what the student and parent allowances are for each hypothetical (ie: how much savings and investments the parents can have before those assets are assessed.</p>
<p>OK-- for example. Take a family of 4 with an AGI of 90K, both parents working, older parent just over 50 years old. One child headed for college, eyeing a school that uses just FAFSA, with total school costs of 30K. Using the formula (from the books, or from the FinAid Calculator), we can learn that:</p>
<p>The parents can have up to $51,600 in assets and investments before the formula assesses a dime. The student can make up to $2550 before his income gets assessed a dime. So by staying under those limits, and assuming no student assets, the EFC will be $16,569.</p>
<p>Which translates to a potential aid package of about $13K, for a school that meets 100% of need (some do, some don't).</p>
<p>But we can quickly see that if instead of saving, say, 25K for college in the parent's name, the family had put it in the student's name, that EFC jumps to: $25,319. So the potential aid package drops to about $4K, about a quarter of what it was. Simply due to the way that a savings account was structured.</p>
<p>Similarly, if the parent's are self employed, you can find all sort of opportunities to decrease EFC and increase potential aid packages. Business assets, for example, are assessed at a much lower rate than persaonal assets. Self employed people can sometimes deduct family medical insurance premiums from above the line income, and so on.</p>
<p>Too many families wait until the month that the FAFSA is due, and then plug in some numbers, and act as if their EFC was cast in stone. With some advance planning, the family finances (income and assets) can be structured in a way that legally and ethically decreases EFC and increases the potential aid packages.</p>
<p>Thanks sblake.</p>
<p>Appreciate the recommendations. My child is only a soph but I need to make refinancing decisions now that could possibly include some college costs.</p>
<p>OK-- #1 tip: Keep any college savings in your name, not your childs. If you already have assets in the child's name, work with the child to spend them down (legally) prior to the time you'll be filing FAFSA. Remember that you can convert assets from a form that's counted (savings, checking, CD's) to a form that's not counted (paying for a trip, or a laptop, or a car).</p>
<h1>2: If you're close to your asset protection limit ($51K in the above example, check yours with the FinAid Calculator) it might be better to get a home equity line of credit, rather than cash out for college savings, when you refinance. The equity line won't count as an asset, but will allow you to draw on it easily at college time.</h1>
<h1>3. Encourage your student to work as a Junior, or Senior, but keep income under about $2550.</h1>
<h1>4. If your liquid assets are above your asset protection allowance, consider paying down your mortgage or any other debt (cars, or credit cards) you may have to get your assets down to the level below which they won't be assessed.</h1>
<p>Good luck!</p>
<p>Scuyler:
You may also want to consider speaking with a financial planner who is experienced in college planning, particularly if you have younger children as well who will benefit more from long term planning. First, financial aid is often offered to those with much higher incomes than you might assume, depending on the rest of the financial picture, including liabilities, other assets, and family circumstances. </p>
<p>Further, contrary to the post above, there are good reasons to shift assets to a child's name, either to take advantage of tax free gains (special college savings plans) or the child's lower tax rate. For example, the income earned on money in your child's name will be taxed at a lower rate than income earned in an account in your own name, assuming you are in the highest tax bracket currently. There may be some logistical disadvantages to shifting money to your children, but these will be explained by your financial consultant. Assets in either of your names will be taken into consideration, so if you have substantial assets, any liklihood of aid will be reduced. (On the other hand, if you have significant assets, that's not a bad thing!)</p>
<p>I think talking to a college specialized certified financial planner (CFP) is a good idea. They know the tax law, financial aid formulas, and forms (which are as bad as doing your taxes yourself). I am not a CFP but I hired one and it was worth the minimal cost.</p>
<p>Merit aid for strong students and state school tuition are also good strategies to get your children an affordable education. CC has lots of info on colleges that are very generous with merit aid. I recommend including some of these on your child's wish list.</p>
<p>Checking with a financial planner who is up on college financial aid is always good advice. </p>
<p>If you have any hope of getting need-based aid, though, you'll want to keep assets out of the student's name. Putting assets in a child's name often makes sense from a tax perspective, but for families hoping/expecting to get need-based aid, the 35% hit on student assets each year will quickly outweigh the marginal tax benefit.</p>
<p>Families making well over 125K, on the other hand, won't likely be eligible for need-based aid anyway and have the most to benefit from placing assets in the student's name due to their marginal tax rate.</p>
<p>sblake and cosmopolitan,</p>
<p>Thanks for your thoughts about this. I agree we need to have an indepth discussion with a college specialized planner. </p>
<p>We had a really quick conversation with our accountant (a CFP) while he was preparing our taxes. That's what led to the refinancing discussion. I have a feeling this will all have to be put on hold until after April 15 (or later).
In the meantime, I'm going to pick up the book sblake suggested.</p>
<p>Thanks again!</p>
<p>I've been googling...</p>
<p><a href="http://www.niccp.com/%5B/url%5D">http://www.niccp.com/</a></p>
<p>national institute of certified college planners</p>
<p>You'll find it a quick read-- and it will cover all sorts of strategies for planning for college financial aid. Including the issues discussed in this thread re: tax savings vs. financial aid benefits of saving in parent's name vs. child's name.</p>
<p>I really don't understand what the deal is with the EFC on the FAFSA. It said that my family's EFC is $60,000 a year, but my parents don't even make that much from their work incomes!</p>