Many CSS profile gripes and questions

Paying for College
1

<p>Well, I took my first look at the CSS profile today, and I am *****ED*:</p>

<p>*Item SR-160 "Enter the amount your parents think they will be able to pay for your 2008-2009 college expenses." * What sort of stupid question is that? The whole reason for filling out the profile is to guesstimate that amount. Is there any reason not to enter "0" on this line?</p>

<p>*item PD-170 and PD-270 "Enter the total current value of this parent's tax-deferred retirement, pension, annuity, and savings plans." * Does this question imply that they count retirement savings as something which should at least partially be contributed towards tuition? If yes, I am flabbergasted... Even divorce lawyers cannot touch that, but in effect this is in play for greedy colleges?</p>

<p>*item SQ-523 "Enter the estimated amount that will be withdrawn for the student for the 2008-2009 academic year from Section 529 prepaid tuition plans" * Does anyone know how this enters the calculation? Am I better off stating that we will withdraw the majority of the account during the first year, or just 25%. We will probably be paying full ride anyway, I just want to "stick it to the man" in any shape or form possible :-)</p>

<p>*item SQ-524 "Of the amounts reported in PROFILE Help Codes SA-100 and SA-110, approximately how much of the total cash, savings, and investments was provided by your parents?" * Same question as above - my D has a small UGMA investment account. How does this go in the calculation if funded by us vs. saved by her?</p>

<p>*Section PA "Parents' Assets" * This one really drives me nuts. For starters, savers are penalized over spenders. You are asked to enter the value of all savings/investments, but not other assets such as cars, expensive jewelry, ATVs, 100-inch plasma TVs, that $20k audio system, gizmos of all sorts, etc. So if you happen to drive a beater and have $50k in savings your EFC goes up, but if you drive a BMW and have $0 in savings your EFC goes down. Or if you are a total slacker, and are still paying off college loans when your own child is about to go to college you get a break. Or if you are one of the very few who can afford tuition for private secondary school (a completely discretionary expense) you also get to deduct that. Or if you have a home equity loan that you used for a Bahamas vacation but "forget" to mention that fact you get a break. Grrrr....</p>

<p>Living above your means is encouraged because your mortgage payment is "protected". To add insult to injury, the student is asked to report the value of their vehicle (item SQ-505), which is counted as available 100% for college contributions, despite the fact that in the vast majority of the cases this vehicle is paid for with parent resources. Worse yet, you are penalized in the calculation if the vehicle is paid off than if you owe money on it (item SQ-506). Double grrr...</p>

2

<p>When my older daughter was a senior- she didn't apply to any schools that required PROFILE :D most schools do not.</p>

<p>However- difficulty with the forms to qualify for need/merit based money isn't just a logistical problem, but I think it is also philosophical.
If you want their money, you fill out their forms.
You are really the one with the power.</p>

<p>This comes up over and over again-
this site is helpful as well as the experts on CC
<a href="http://www.finaid.org/%5B/url%5D"&gt;http://www.finaid.org/&lt;/a&gt;&lt;/p>

3

<p>
[quote]
If you want their money, you fill out their forms. You are really the one with the power.

[/quote]
</p>

<p>I have no problem with filling out the forms, or the need to follow the process, except for one peripheral issue - virtually all schools want you to submit the form to be considered for merit aid, even when there is next to zero chance for need-based aid (our case).</p>

<p>I also have no problem with paying full ride - we have been lucky enough to achieve financial comfort that many in this country do not have. However, we did this partially by living below our means and having the discipline to save rather than spend. Seeing politicians wax poetic about the low savings rate of Americans yet doing nothing to encourage a higher savings rate rubs me the wrong way. Seeing the same message reinforced in the financial aid process just adds more fuel to the fire.</p>

<p>Thanks for the link, I will peruse it carefully.</p>

<p>P.S. Saying "you need money but you are the one with the power, don't fill out their forms if you don't like it" is logically inconsistent</p>

4

<p>I wouldn't be so harsh on families who don't have savings.
We also bought a house smaller and older than was our maximum, in a light industrial neighborhood.
However- health issues, periods of unemployment, and as for many benefits whittled away over the years and increases in salary didn't keep up with COL. Makes it difficult to stay away from using credit cards for groceries let alone having to hit your savings.
We also like many others found that our retirement accounts,lost thousands of dollars after so many companies have folded- I guess the upside is, we don't have much to claim.</p>

<p>410Ks are not considered, except in the year that you put money in, as that money will also be assumed to be available for tuition.
Item SR-160 "Enter the amount your parents think they will be able to pay for your 2008-2009 college expenses." What sort of stupid question is that? The whole reason for filling out the profile is to guesstimate that amount. Is there any reason not to enter "0" on this line?</p>

<p>The calculators that are available guesstimate a fairly accurate EFC, at least it has been my experience.
If you guess that you will be paying full tuition to a school which requires PROFILE, which generally are private schools with tuition upwards of $20,000, you will look unprepared if you say that you haven't planned for their college education- and since you apparently have 529 plans- that is a contradiction to your financial info.</p>

<p>Living above your means is encouraged because your mortgage payment is "protected". To add insult to injury, the student is asked to report the value of their vehicle (item SQ-505), which is counted as available 100% for college contributions, despite the fact that in the vast majority of the cases this vehicle is paid for with parent resources. Worse yet, you are penalized in the calculation if the vehicle is paid off than if you owe money on it (item SQ-506). Double grrr...</p>

<p>This is a fallacy- people who say earn $50,000 and spend $40,000 are much
better off than people who earn $50,000 and spend $60,000.
When we filled out the PROFILE for one school after my daughter took a year off, they did originally ask for our vehicles and for the price paid. ( 34 yr old pickup & 10 year old van)- This wasn't asked in subsequent years.
D didn't have a car ( she still doesn't- it is a huge expense she just can't afford)
I would also expect that if someone stated that they had a 2008 Hummer, the school would feel they didn't quite have their priorities in order, if they had that to spend on a vehicle, but not on college.
They really don't need a vehicle in college-very few of my Ds friends did.I admit it played a part in school choice, because the city where it is located has good public transportation- but if maximizing your available money for tuition and not for vehicle maintenance is a priority, then your choices reflect that.</p>

<p>It isn't illogical to say that we have power- because we are the ones who are making the decisions which college to apply to ( or our children are)- We are the ones who decide if we want to make that financial committment or not.
Colleges provide a service-just as with other services or products , we have the option not to buy it.
My daughters first choice school for years was about $12,000 for the whole ball of wax.If that had been too much, we would have encouraged her to attend community college- or find another way to pay for school, like working for her fathers employer Boeing, who pays employees to attend school.
She earned $3,000 summers that went toward tuition, she took a year off to earn an education award that helps to pay down her loans, and she worked during the school year to pay for books and personal expenses.
There is a lot that can be down to reduce costs upfront, by choosing another path, and there are ways to reduce costs after you make the committment.</p>

<p>That is why I say we have the power.</p>

5

<p>Anyone interested in why CB asks the questions they do on the Profile should read this book:
<a href="http://www.collegeboard.com/prod_downloads/highered/fa/Economics-Primer-2004.pdf%5B/url%5D"&gt;http://www.collegeboard.com/prod_downloads/highered/fa/Economics-Primer-2004.pdf&lt;/a&gt;&lt;/p>

<p>Example, on page 79 it explains why pension assets are considered.</p>

6

<p>I had the same reaction as you Groovy Greek and I found question SR 165-A "Enter the amounts you expect to receive from your relatives....." rather presumptious.</p>

7

<p>I expect they are just trying to cover the bases
If a school has $500K for need based aid- is it the best use of it to knock off the price for students who would attend anyway because they will have tuition paid for by parents or grandparents or is it more to their mission to find the students who really don't have any other way to attend?</p>

8

<p>Yeah, I don't get the affrontedness. If you don't like how they divvy up the (not endless) funds, then, like EK says, don't play along.</p>

9

<p>Having read through the document, it seems like the FA thinktank (for a lack of a better name) has continually thought of ways to measure (and tax) more and more of the financial sources of parents. And they even recognize that people make financial decisions (where to store money and even how much to work) based upon these taxes.</p>

<p>It seems that they choose to engage in a continual game of squeezing the balloon to see where the money bulges out next.</p>

<p>Dragging 1980's economics (I'm sure to get flamed here) into it, we see the old Laffer curve may need to be applied here. The higher the tax rate, the less income (and assets) you see. Or more of the income moves out of the market (in this case the option to go to CC's and State U's where FA is not an issue for the higher earners who are subject to the largest tax).</p>

<p>The tax rates they put on top of Federal/State/FICA on income would seriously make me pass up overtime.</p>

<p>And those who manage their presence in the FA market the best, always come out on top. Welcome to the game of FA.</p>

10

<p>I am shocked, simply shocked by your reaction. Be glad that you have saved and invested. Things could be a lot worse, like being accepted but have no way, no how, no when, the ability to pay. </p>

<p>Of course I advocate no student loans, aptitude, and recommendation admission. We got ours.</p>

11

<p>Nothing is "fair"
Look at natural selection :rolleyes:
A student whose family has been able to provide a home in an area with good schools, who have been able to put a little away for their future, has a good start to adult life.
While some may have believed that higher education was going to be subsidized not only by the taxpayers for instate institutions, but by private institutions, some of us also believed in Santa until we were 12 and that mom became pregnant by playing leapfrog.</p>

<p>We can get loans for education, just as we can get loans for autos and for our homes. Some of us even get loans for vacations, and my brother borrows money to invest.</p>

<p>But if we think about it- wouldn't a college need a pretty good reason to lower the price for certain students?
If they can get students banging at the door eager to pay a higher price, isn't that the American Way?</p>

<p>Students who have aptitude and intelligence but zero dollars find competitive colleges to be pretty * competitive*
Yes some schools will cover 100% of need based aid.
My daughters school did.
However- much of that package is "self help".
It includes student Stafford and Perkins loans, as well as work study.
EFC is also higher than what we could afford without taking out our own loan, and we have fairly low expenses for our area.
Some students may get 100 % of expenses met. Those are pretty unusual students and the colleges are predicting they will make the most of their time there- given that they had the disadvantage of coming from a very low income family, but still did very well.
That student will make the most of the financial aid dollars.</p>

12

<p>Thanks to everyone for the responses. Let me clarify my statements a bit:</p>

<p>1) I will gladly pay every last cent of my D tuition to ensure that she graduates debt-free (and someday marries a schmuck with $50k of debts, some of which will be Hummer loans :-).</p>

<p>2) I realize very well how lucky we are to have what we have. Over the past 20 years our family's income has varied from $6k/year to quite comfortable existence. We have lived on food stamps and still vividly remember the time it was an effort to spend $5 on a junk toy for our toddler. We know first hand what it means living from paycheck to paycheck, yet even then we had zero debt.</p>

<p>3) Children from families with low means deserve every break they get. Kids like mine have every advantage in life, and should work harder to get to the same place</p>

<p>4) My rant is not against people of limited means who get FA, it is against the Jones'es down the street, with three Beamers parked in the driveway valued higher than the house they live in. They live in the same neighborhood, have a job paying roughly what mine pays, yet their EFC will be lower. A properly constructed EFC formula should be based on income, not on savings or assets. Ask people to turn in 5 years worth of tax returns, then calculate EFC based on cumulative AGI less certain deductions.... case closed.</p>

<p>5) People who tell me that "I have a choice of using the product" need to carefully rethink their position. I have a choice about my daughter going to college about as much as I have a choice of working for a living. Sure, I could choose not to, but does anyone really think this is a viable choice?</p>

13

<p>By "product", I myself, anyway, mean the FA process (since you have said you can afford it without it.) And I think also choice is possible in which "product" you choose as concerns colleges--many people who choose not to meet or don't feel they can meet their EFC, especially if it is full pay, choose instead lower cost colleges.</p>

<p>We could be your family, in some ways. low income when our kids were young, got comfortable as it went along, but the only way we could pay was to live drastically below our means, which we did happily.</p>

<p>So what if the family down the street have three Beamers? chances are they have huge assets in that big house that goes with them, not to mention the stresses that come with living a debtfilled life. The spector of the rich family "hiding" their assets and getting FA is, almost all the time, a spector. FA is far more driven by income than assets.</p>

<p>And what have i always had that many people living a high-flying lifestyle don't have? Peace of mind.</p>

<p>And that is priceless.</p>

14

<p>Profile and FAFSA are compromises between complexity and accuracy in assessment. </p>

<p>A family's ability to pay for college could be accurately determined if a team of auditors spent a day looking through all the family financial records followed by an interview with the family members. Many would find this too intrusive. The expense would have to be paid by someone.</p>

<p>So what we have instead are 2-3 page forms that can be filled out online. They are a pain to deal with, but manageable. Their simplicity opens up opportunitities (to some, a downside) to legitimately skew the assessment of need of those who take time to learn the rules and have flexibility in how their financial affairs are organized.</p>

15

<p>"People who tell me that "I have a choice of using the product" need to carefully rethink their position. I have a choice about my daughter going to college about as much as I have a choice of working for a living. Sure, I could choose not to, but does anyone really think this is a viable choice?"</p>

<p>The choice isn't going or not going to college; the choice is going to a FAFSA and CSS Profile school or a FAFSA only school. Only the most selective private colleges and universities require the CSS Profile. The vast majority of first tier colleges and universities, and pretty much all of the schools in other tiers, only require the FAFSA. Since you can choose from a wide variety of good schools, including top tier schools, and avoid the CSS Profile you do, in fact, have plenty of not only viable but terrific choices.</p>

16

<p>On this particular question:
'Item SR-160 "Enter the amount your parents think they will be able to pay for your 2008-2009 college expenses." What sort of stupid question is that? The whole reason for filling out the profile is to guesstimate that amount. Is there any reason not to enter "0" on this line?'</p>

<p>Would you enter zero if you plan to use all your child's UTMA/UGMA for the first year of college expenses? After all, these assets do not belong to the parents. (Yes, I do realize the folly of having UTMAs/UGMAs but we were pretty much ill advised 17 years ago.)</p>

17

<p>Putting "0" will red flag you as a liar. Everybody can pay something. That's a good reason not to answer "0".</p>

18

<p>Groovy: I have not read the entire thread, and i agree with you on the intrusiveness of some of the questions. One thing I will say, in most cases, income is sufficient that if the person does spend that $50k on a BMW, they will still have plenty of EFC $ they need to come up with so they really hurt themselves.</p>

<p>Very few people, in my experience, have low enough income to get enough aid that it is worth spending all your money to lower your assets.</p>

<p>Although, many people with a low income have high home equity, because they bought a home 20-25 years ago for $100k or so and now it is worth 7-10 times that and somehow that equity should be available for college, even though the person would have to move to afford that, as they do not have the income to support a larger payment.</p>

19

<p>
[quote]
A properly constructed EFC formula should be based on income, not on savings or assets.

[/quote]
</p>

<p>So Warren Buffett's kids, one of the wealthiest men in the world, should be able to attend college on finaid? [His salary is only $100k per year, and his company Berkshire Hathaway does not pay dividends.]</p>

20

<p>
[quote]
So Warren Buffett's kids, one of the wealthiest men in the world, should be able to attend college on finaid? [His salary is only $100k per year, and his company Berkshire Hathaway does not pay dividends.]

[/quote]
</p>

<p>Uh, I think he cashes in a couple of shares a year to supplement that $100K income, although he is actually known as a bit of a tightwad in the circles of the rich and shameless.</p>

<p>And GOING OFF-TOPIC...</p>

<p>Personally, I'd rather see FA (and the Income tax for that matter) based upon CONSUMED income - that is income that is not saved and invested in a particular year. I see contributing to the capital base of the country (or the world for that matter) as a positive thing. Somebody has to provide the tools to create the jobs and wealth of the society!</p>

<p>And if income is reinvested in the society, obviously it isn't being spent on that BMW that isn't a part of FAFSA or Profile.</p>

<p>No, we have it backwards in this country. We deduct interest on homes from our taxes instead of debt reducing (and capital freeing) principal payments. What this does is ties up money building McMansions (that don't provide 1 job once they are finished) for the tax deduction instead of building research and development facilities that bring us the technology to improve our lives.</p>

<p>If a family owns and operates a farm, why should this society expect them to put their livelyhood at risk (a few years of drought can kill many family farms) taking out a 2nd mortgage because they have had a couple of good weather years leading up to Johnny's HS graduation? So he can't afford to go to ag-school and learn better land management techniques to keep America's farming competitive when he takes over the farm?</p>

<p>The problem goes far beyond the FA system to our basic philosophies on taxation which have trained the average American to spend and let someone else take care of capital formation. Econ 101 says when you tax something you get less of it and when you subsidize it you get more. So why are we taxing the ownership of capital? Do we want someone else to have all the control over our lives?</p>

<p>Sorry about the rant.</p>