<p>I recently filled out the FAFSA and I almost went into shock at what they calculated as my EFC: 39,401. Is this normal when my custodial parent makes about $150,000? It's definitely not because a large amount of assets. One of the questions asks if the parental assets are above a certain amount and we put no since ours was way under it. I honestly just find it shocking because we don't live a very lavish lifestyle and most of the money is gone as soon as it arrives towards debt, bills, mortgage, etc. It probably doesn't help that where we live has a very high cost of living but it's in a convenient area close to my school and where my dad works.</p>
<p>I know this won't be exactly what we'll have to pay as some of the top schools are more generous (which even depends if I get in but I've gotten into MIT early action so far) but I'd like to know if there's maybe a chance we did something wrong. Of course I have a lot of safeties, some of which I have a full ride but I won't give up on my dream school - MIT :) - yet until the final fin-aid decisions come in March.</p>
<p>Yes, that is plausible. (Note, I didn’t say “reasonable”). Many – maybe even most – families with similar incomes find their EFC to be far more than they can possibly afford. The federal methodology assumes that your family will use a huge percentage of their incomes, a chunk of savings (which may be mythical), and will also take on debt. </p>
<p>Do you know how much your family CAN contribute annually for your college? If not, you ought to have that discussion sooner rather than later. Whatever they can afford + a Stafford Loan ($5500) + whatever you can reasonably earn over the summer + parent PLUS loans (which many families are unable or unwilling to take on) is your limit for annual college expense. </p>
<p>MIT promises to meet “full need” – but what they determine your family’ “need” to be could be more or less than the EFC you calculated. They used to have an on-line financial aid calculator, but that seems to be gone this year. </p>
<p>Please be sure to file your Profile and the supporting paperwork with IDOC by MIT’s deadlines so that they can get back to you with a financial aid offer. </p>
<p>But if their offer doesn’t work for your family’s situation, do you have some other options?</p>
<p>My dad said that by the end of the year he’ll have about $18,000 saved up for me (which I know is not really a lot but my parents are from a country where college savings plans aren’t common at all and so they didn’t even know about it) but said that in the next 1-2 years all our major debt like credit cards, car, etc (besides of course the mortgage) will be paid off so he’ll be able to put much more towards my education in the future.</p>
<p>I’ve also won $21000 in outside scholarships ($6000 first year, $5000 for other three) and although that will only reduce the student portion at least that can be added along with what I can make during the school year and at summer jobs. I’m working on some other scholarships (big and small) too just to see what happens.</p>
<p>But yes I have some financial safety schools lined up that I can probably be happy at just in case things don’t come through. I mean, my parents see MIT as a worthy investment but I know there’s a limit to how much debt we’d be willing to put ourselves in.</p>
<p>Yes, that’s totally normal as is your family’s response. Most everyone can’t believe their EFC. Unfortunately, all but HYPS will likely expect you to contribute that.</p>
<p>MIT will expect a hefty family contribution. They don’t give HYPS-like aid. </p>
<p>Your parents need to figure out how they’ll likely pay for their expected family contribution…which sounds like it will be at least $40k per year ($160k). </p>
<p>While MIT is an excellent school, it if requires your parents to borrow a huge amount, that may seriously hurt their own futures.</p>
<p>You used the word “custodial parent.” Are your parents married to each other?</p>
<p>You talk about your custodial parent making $150K. All of the top schools, as far as I know, will also look at the non custodial parent. Is there additional income and assets there?</p>
<p>You may want to find out how your schools will apply these. Most schools view outside scholarships as reducing need so, up to the point where the need is 0, they will not actually reduce your EFC. Instead they normally replace loans, work study, and any grant aid that the school offers. Lots of students are surprised and unhappy to find out that the scholarships they worked so hard for serve to save the school money, but don’t reduce the family’s portion at all! If you have merit scholarships and outside scholarships that exceed your calculated financial need (COA-EFC), then they may serve to replace your EFC.</p>
<p>That sounds about right. As noted, schools like MIT will require income/asset information from your non-custodial parent (and spouse if they are remarried) as well.</p>
<p>This is all very interesting. My numbers are similar to what you have, income around $160k with a EFC of $39,674 which is split between 2 students and at $19800 each, we still do not get anything other than Stafford loans and scholarships based on SAT scores. </p>
<p>The reason I went looking today is a co-worker of mine has their 1st child going to school next year and she is working on her FAFSa form. Now she is in a higher position than I and her spouse works in an industry similar to my spouse so they might make similar incomes. She told me her number is $24,000 and she claims she knows loopholes to get the number under $20,000. I just do not understand the whole system, how can this be?</p>
<p>Maybe they put a lot more into the 401K than I do? They are both older than I by 5 or so years, I read on these boards that that might matter. I thought her number was going to be close to mine but it is half of mine, just does not make sense.</p>
<p>There aren’t too many loopholes as far as income goes to reduce FAFSA EFC. The calculation is based on adjusted gross income from line 37 of your 1040, minus allowances for FICA, federal and state taxes. Anything that can legally be done to reduce line 37 will of course reduce EFC. That year’s contribution to an IRA or 401k will be added back in to the AGI for FAFSA purposes.</p>
<p>The only advantage that older parents have is a higher asset protection allowance.</p>
<p>*The reason I went looking today is a co-worker of mine has their 1st child going to school next year and she is working on her FAFSa form. Now she is in a higher position than I and her spouse works in an industry similar to my spouse so they might make similar incomes. She told me her number is $24,000 and she claims she knows loopholes to get the number under $20,000. I just do not understand the whole system, how can this be?</p>
<p>Maybe they put a lot more into the 401K than I do? *</p>
<p>She may not realize that she has to “add back in” their annual 401k contributions. </p>
<p>Who knows what else they’re doing…do they pay child support to anyone? </p>
<p>do they have several children? </p>
<p>They may be wrongly using “net income” instead of AGI.</p>
<p>Anyway…if their income is as high as you think it is, they may be in for a shock when their numbers are determined to be wrong.</p>
<p>Thanks, I always thought my numbers were OK, just higher than I wanted them to be but isn’t everyones. The 2 families are extremely similar, 3 kids each etc. The only real difference is they are older than us and their kids are younger than mine. </p>
<p>She claims she found a website listing all the loopholes etc and has been meeting with a finacial aid friend from a local college. Who knows, I will just sleep tonight knowing that my numbers are my numbers.</p>
<p>Yes, my parents are divorced but my mom will have a very little if any contribution due to her income bracket so i will most likely be looking at a bill of $160,000. She will give me all she can though beyond what the colleges expect but of course I still need a lot if I want to go to MIT :/</p>
<p>So I guess I’ll just see what happens over these next few months.
Thank you everyone for your help :)</p>
<p>I’m not sure that makes sense. I don’t think they will look at her income bracket and decide she doesn’t contribute. I think they add then incomes together to comenup with your number. So if dad makes $150k and mom makes $40K, that’s a pool of $190k to base the EFC on.</p>
<p>Also, typically the lower paid spouse got some assets/cash in the divorce settlement. Maybe a home with equity. All of that will count.</p>
<p>Justafan, finaid.org has a lot of info on legal ways to minimize your EFC. It’s possible your coworker is following some of the strategies they list, such as taking capital losses, moving funds to tax-exempt investment vehicles, etc. that can reduce your AGI. There’s nothing unethical or dishonest about working within the system to produce the best result for your family. Here’s the link:</p>
<p>*So if dad makes $150k and mom makes $40K, that’s a pool of $190k to base the EFC on.</p>
<p>*</p>
<p>I don’t think they do that with divorced families because there are 2 separate households. Certainly, a family who only earns $40k needs most of that to live on. </p>
<p>To simply add that $40k on top of a big income is essentially telling the larger income family that they have to pay even more (their share and the other person’s share). </p>
<p>Instead, I think they do the formula twice…once with each income/assets…and then maybe add the numbers. </p>
<p>However, if the low income mom has assets from the divorce, that may be a problem. (However, it’s amazing how many divorcing couples end up with not that much in assets.)</p>
<p>^ Yeah, that’s how I thought it went. It wouldn’t be fair to consider it all as one income when there are two households both with their own bills and expenses. Coincidentally that is about my mom’s income ($40,000) which is why I assumed she would not have a very large contribution. She decided not to accept many assets (because she did not need them if my dad was the main financial provider for my brother and I) so I’m sure her EFC won’t be affected by it. </p>
<p>I’m currently filling out scholarship apps like mad person right now lol :)</p>