<p>Maybe this has been mentioned and I missed it but equity in your homes is a question asked and with the downturn in the market, that makes a difference in your EFC as well. The big fancy house can help you if you have lost most or all of your equity due to market conditions.</p>
<p>Parent57–I don’t know that a person even needs to be “diligent” vs just meeting a 401K company match to have $500,000 in a retirement account after 20+ years of a working career at an average salary, whatever average is for your area. Someone making $100K should very well have $500K just by meeting a 5% company match and a little growth over 20 years and a 5% match was pretty standard up until the past couple years.</p>
<p>Good point SteveMa, but I was referring to non-retirement accounts. A 401K would not increase your EFC (I think). However, all other assets, including cash, stocks, bonds, CDs, etc would impact it in the manner delineated by Xiggi.</p>
<p>ONLY if you’re at a meets full needs school that relies on FAFSA numbers (as we don’t know how CSS assesses assets). At most schools, if you have that much in savings, you’re likely not going to be getting aid anyway. Therefore, while you MIGHT (I stress might) get more aid, the 400k family has an extra 200k to possibly give to their child’s education.</p>
<p>Fwiw, the EFC is a term that seemingly remains misunderstood and misused. The EFC is a term derived by your SAR/FAFSA form. Although some confuse it with the contributions determined by the “other method” that is a misnomer. The Profile does not give you the official EFC. </p>
<p>And, here is the rule: “The equity in a primary home is not included in the FAFSA form.”</p>
<p>“ONLY if you’re at a meets full needs school that relies on FAFSA numbers (as we don’t know how CSS assesses assets). At most schools, if you have that much in savings, you’re likely not going to be getting aid anyway. Therefore, while you MIGHT (I stress might) get more aid, the 400k family has an extra 200k to possibly give to their child’s education.”</p>
<p>I think non-retirement assets are treated similarly under the CSS/Profile financial aid formula. If you go back and look at the previous posts, you will see that it is not uncommon to receive substantial aid with 200K in savings. In the examples we are talking about, the only reason why the 400K family has the extra 200K to give to their child’s education is because that family saved their money instead of spending it on lifestyle enhancements.</p>
<p>Home equity is another area that can be manipulated unfairly under the CSS/Profile. If two families have the same income and assets, but one takes a portion of their savings and buys a bigger home in a nicer neighborhood, I believe their financial aid will be more generous than the other family because home equity is less weighted than other non-retirement assets.</p>
<p>The distortions and inequities in the process are really too numerous to mention, but here is one that I am personally familiar with. A person I know whose son was accepted to UC Davis received almost full aid even though the non-custodial parent is a doctor with considerable assets. They legally manipulated it so they wouldn’t have to pay anything, despite the fact that the parent who had the means to fully pay for college would have done it if this loophole wasn’t available to them.</p>
<p>But Davis is a public school. Public schools generally only look at Fafsa. Fafsa doesn’t look at NCP.<br>
Anyone who has a NCP with high assets can do the same thing. I wouldn’t call it manipulation.</p>
<p>“But Davis is a public school. Public schools generally only look at Fafsa. Fafsa doesn’t look at NCP.
Anyone who has a NCP with high assets can do the same thing. I wouldn’t call it manipulation.”</p>
<p>As a taxpayer, I am not too happy about it.</p>
<p>What is this thread even about anymore? It started out being a thread about a family who qualifies for Pell grants being concerned about an aid package. Now it’s home to anything-goes venting about how messed up the system is, with the “victims” including people who have savings of half a million dollars because they maxed out on contributions to their retirement savings accounts! On the advice of people on CC, I bought and read the book Paying for College Without Going Broke. There are techniques in that book that I probably never would have tried, even if I’d have been able to plan for them. But I don’t mind other people using whatever legal methods are available to them to control the cost of their kid’s college education. Not minding is way more workable than the alternative. I certain don’t want to be constantly wondering whether someone else got a better deal than I did. Or feeling guilty because someone who makes as much as I do who saved a lot more is going to have a higher EFC than mine. Or complaining about how outrageous my EFC is. (I don’t FEEL richer than XX percent of the families in the U.S.!) It’s so unproductive.</p>
<p>Most every single post in this thread hits one of the main points of the OP. That financial aid is complicated, hard to understand and capricious. It has been far more toned down and respectful than the vast majority of threads addressing this topic.</p>
<p>^Agreed on the “toned down and respectful.” I get the complicated and hard to understand parts, too. But is financial aid really that capricious?</p>
<p>Perhaps it seems capricious to me as it doesn’t always seem straightforward nor fair. So many schools with different policies and formulas. I’m sure for those people who are very knowledgeable about each specific school and have researched it well would not think so. </p>
<p>Then again, much of the entire college admissions process seems random and capricious to me also.</p>
<p>I think some people are confusing my concerns and dismay with some parts of the financial aid process with jealousy, envy or resentment. I have no desire to exchange my situation for someone else’s, and I am sure I would not even be thinking about this if I wasn’t paying for the cost of college currently. These thoughts have occurred to me over the last few years, and I guess I have expressed them in this thread. Some other posters seem interested in discussing them too. Although it is not exactly on topic, it is related to the broad subject of need-based aid.</p>
<p>The thing is, parent57, if you use words like “distortions,” “inequities” and “manipulation,” you do sound resentful. Sometimes you’re talking about the system, but other times you’re talking about other people who are simply doing their best to manage the cost of their kids’ educations. I do think it’s odd, for instance, that FAFSA-only schools don’t look at noncustodial parents’ information. And, like you (as a taxpayer), I don’t see how it makes sense for state schools not to count NCP income. I wouldn’t say, however, that people who use that policy to their advantage are manipulating anything.</p>
<p>Well, in the particular case I am familiar with, I don’t see how I could call it anything else but manipulation. The NCP was able to pay fully for the cost of college, but manipulated the process to avoid having to pay any money. Yes, it was legal (I think), but they took advantage (better word) of the process to saddle the taxpayer with the cost of sending their kid to college. Legally, she is a non-custodial parent, but in reality she was sharing in the custody of the child as much as the father.</p>
<p>Edit: Although I don’t really blame them because, as you said, they are using a very flawed system to their advantage.</p>
<p>I re-read your post and if you get the impression that I am condemning specific people, then I have done a poor job of conveying my thoughts. I am not blaming anyone in particular; however, I am upset with the system which is full of distortions and inequities.</p>
<p>parent57, I think you argued your points very well. Serious savers probably represent a small minority here on CC, just as they do for the country as a whole. For many folks here, people like you are “a myth.” Good job telling the other side of the story. SteveMA and busdriver - good contributions as well. </p>
<p>Also, special thanks to SteveMA for demonstrating that serious saving is very achievable for almost anybody who actually wants to. It’s not hard; it simply requires consistency, and the willingness to live a bit below your means. If you think of it as paying yourself, or purchasing your own freedom, saving can actually be more enjoyable than excess consumption. This is such an odd concept here in the USA, but it’s true.</p>
<p>(Just my opinion) Rather than denying that the possibility exists, parents should be teaching their kids how it’s done. Good habits start young.</p>