I am a current student at a top university, but tuition is going up and I don’t think that I will be able to pay for it. I’m thinking of places to transfer. My family makes a relatively moderate income (~80,000/year) but has relatively high savings (~800,000$.) Are there any schools that take income into account but consider assets much less?
Thanks.
I think that you need to give us more information. What can you afford? Where do you live and where are you in-state? What is your likely major? What sort of school are you looking for and what geographic area are you willing to consider?
We were in a similar situation. With an income under $100k it takes a long time to save up $800,000, and I would expect your parents to be reluctant to use up a large part of this in just a few years of university.
We did find substantially more affordable options, compared to the $60,000+ price tags at many US universities.
I think assets are treated differently too. If savings is 401k or IRA vs cash or stocks/bonds.
Here are some questions:
FYI, you wouldn’t be expected to spend ALL of the assets.
With an $80,000 a year or so income…every school will consider your assets in the financial aid calculation…if the assets are ones they count.
Where IS the $800,000 in assets? In a regular savings account? In a qualified retirement plan like an IRA or TSA? In home equity?
What ARE those assets?
And actually I believe most colleges use a smaller %age in the asset count than they do in income. The family contribution for need based aid is driven by income.
BUT you have a large amount of assets.
If these assets are in regular savings, or certificates of deposit…not qualified retirement accounts…for FAFSA purposes $800,000 in regular savings would add $44,800 to your family contribution on top of what that $80,000 in income would generate.
There is NO college that will ignore your assets so you can get more need based aid. Colleges do not award need based aid so families can keep their savings…that’s not going to happen.
If this is a regular savings…and you have three more years…and you could commute to a four year public college from your home, it would probably cost you $25,000 a year max for each year…and your parents would still have $700,000 in their accounts plus interest.
How much can your parents pay for you to attend college each year?
How did you pay for THIS current academic year?
I believe that liquid assets (not including principal residence) are assessed at roughly 6% by FAFSA. So if they have 800K in the bank or in stocks, they would be expected to pay around 48K, plus whatever is calculated based on their income.
If it’s a CSS Profile school, the calculations may take real estate and retirement savings into account.
Rental property or self-owned business further complicates the outlook. If you have siblings who are attending college at the same time, that will also affect how your aid is calculated.
@mamaedefamilia I don’t believe you are correct.
Retirement savings IS a question on the Profile, but the balance in those accounts is not used to compute institutional need based aid. However, a school could question that retirement savings balance if the amount in retirement savings is significantly higher than what income might suggest it should be.
In terms of real estate. There are SOME Profile schools that use SOME %age of home equity in their calculations for institutional need based aid.
Both the FAFSA and Profile take real estate equity other than your primary residence into consideration.
Absolutely…self employed or business owners…and rental property owners…have more complicated situations.
ETA…FAFSA assesses assets at 5.6% of their value.
For real estate that is the primary home: usually, but not at all Profile schools. For qualified retirement savings: it’s very unlikely that a Profile school would calculate a need-based financial award using these assets.
@thumper1 I stand corrected! One year out from the college search and the details are a bit hazy. Thanks for clarifying.
Ok post…wrong thread. Sry
I believe there is a certain amount of asset protection. So the 5.64% wouldn’t apply to the entire $800k.
The question on the CSS about balances in retirement accounts … I think that’s to see if, say, the parents are 60 years old with two in college, and they only have $50k in retirement funds, they might use professional judgment to increase the aid if it’s a meets-full-need school. On the other side of the coin, if the family has a $50k income and $5M in a 401k, that would raise red flags.
The asset protection allowance is under $50,000…that’s not going to help much.
Where did you hear this? Unfortunately many families underfund retirement. It doesn’t get them more need based aid…even at THE most generous colleges.