<p>"...if the money was not put in a defined pension plan (IRA, 401(k), etc., nor spent, the cash net of taxes, would be an asset for next year's efc. Thus, at least 5.6% of it would be added to next year's efc."</p>
<p>Correct, as far is it goes. But because parents get an asset protection allowance, typically around 45K, for many parents the increase in reportable assets resulting from not funding an IRA/401K won't have any impact on their EFC-- as they remain below the allowance.</p>
<p>Northeastmom, I don't know specifically how your pension plan works, but in the situation where an EMPLOYER makes a contribution to your plan, it is not added back to your income. Only your EMPLOYEE contribution is added back to your income for the year that you reduced your pay making that contribution. It is an unfair situation, one of many in the financial aid infrastructure. </p>
<p>The reason that you still come out ahead if you make a contribution to a qualified pension plan even though the contribution is added back to your income for financial aid purposes, is that all income and gains that are earned on that money wll NOT count as income while it is in the plan, and the money would not be counted as an asset in subsequent years for most financial aid calculations since ASSETS in a qualified pension plan are excluded for FAFSA and most PROFILE colleges. </p>
<p>This is, of course, only possible if you can afford to park money somewhere. Basically, if you are going to save money, it is not counted if it is sitting in a pension plan, in terms of financial aid, whereas if you put it in a savings account or other non pension account, it is considered by colleges as available for costs.</p>
<p>For those under, or over certain dollar threshholds, it is not going to make a difference. But if a family is in a situation where he can go over the line, it is a wise thing to put the money in a pension if financially possible if sticking it in a non pension saving plan will put the family over the asset protection allowance. Also, if you have funds sitting around and you can pay down your home mortgage, it could be a very wise thing to do if you would still be below the dollar level that your house value is counted as an asset. These transactions do not work for every single situation, but if you fall in the financial area where it benefits you, it may be wise to consider such moves.</p>
<p>
Another point of demarcation: because I am a single parent, my asset protection allowance is only about $20K. (In general, the asset protection allowance of single parent is about 40% of asset protection for married couple)</p>
<p>That may be one additional reason why my math comes out a little different -- the threshold at which my assets are counted is about $25K lower than for many of the posters. So I am quite cognizant of the fact that the $$ I don't shelter this year through retirement contributions will be counted against my EFC the following year, unless I spend them all on college tuition. (For me, each year also involves a balancing act of deciding whether it is better to put $X into the retirement funds vs. potentially needing to borrow $X later from a PLUS loan. unfortunately I have to make the retirement funding decision well in advance of seeing the financial aid package).</p>
<p>cpt, thanks, but we do not have an employer contributing to our plan. We are self employed and contribute to our own plan.</p>
<p>Calmom, where do you learn these details on how EFC is figured? I want to understand this a little better, and aside from one college info session mentioning the different asset protection allowance for single parents, I've heard no other mention. I'm a single parent, and faced with changing circumstances in the next year. Am also shocked at the difference for single parents, as we have full households to support as well. Do they think we don't deserve the quality of life that a married couple is entitled to?</p>
<p>* thanks, but we do not have an employer contributing to our plan. We are self employed and contribute to our own plan.*</p>
<p>That is most of the "problem" from what I have read.
Self employed parents, seems to be looked at, like all their business assets are just sitting there waiting to be used for college aid.</p>
<p>Not really sure why that is so- perhaps they need to change the way they view retirement plans- so that all your savings are considered- to recognize that some people don't have 401Ks for instance and instead have real estate intended to pay for retirement- or other accounts.</p>
<p>Ek, I was trying to learn whether full time teachers have money taken out for their pensions. I don't think so, but I am not sure. I have been told that in NJ they get 50% of the average that they earned in their last 5 years of employment as a pension throughout retirement. That would mean that they do not need to save, and know that they will be taken care of financially. We need to bank that money, yet it does not lower our efc, even though it is not available to the schools. That money is added back as AGI. Yep, we don't have employer contributions either.</p>
<p>Also, I agree with the plight of the single parent, and the blended family where step parent income is taken into account. It is not my personal issue, but I do not see it as fair either.</p>
<p>glm:</p>
<p>I recommend "Paying for College Without Going Broke" by Princeton Review. </p>
<p>About $12 on Amazon, you can have it in a few days. It will save you $$-- explains the ins and outs of the aid formulas, and dozens of strategies for legally and ethically maximizing your potential for financial aid.</p>
<p>I've read it a few times-- and use it as a reference each year as I prepare to complete the aid forms again.</p>
<p>Ek, I was trying to learn whether full time teachers have money taken out for their pensions.</p>
<p>I know that I think in our state- teachers have a state sponsored retirement plan ( which takes about 5% of their salary & pays out 80% according to the union contract), they also can put money into a 403b)
They don't have money taken out for social security I don't think- but I wouldn't count on that anyway.</p>
<p>gl-mom:</p>
<p>Fafsa APA and IPA can be found on the fafsa website:</p>
<p><a href="http://www.fafsa.com/fmtables.htm%5B/url%5D">http://www.fafsa.com/fmtables.htm</a></p>
<p>about finaid philosophy starts on page 49:</p>
<p>Pension maynot be counted because as we all heard, they can be taken away easily, company declare bankruptcy, or underfunded, etc... How do FAFSA know whether or not you are reporting correctly, I think they cross check with your IRS, any savings you have in non-IRA you will be given a interest form or dividend form. So basically start with last year tax.
I got all this information I checked out from the library, I forgot the name of it.</p>
<p>Great Lakes Mom -- you can download the 07-08 EFC Formula guide here:
<a href="http://www.ifap.ed.gov/efcinformation/attachments/0708EFCFormulaGuide1120.pdf%5B/url%5D">http://www.ifap.ed.gov/efcinformation/attachments/0708EFCFormulaGuide1120.pdf</a></p>
<p>It has all the formulas, worksheets, and tables. </p>
<p>I found this simply by Googling "EFC Formula" </p>
<p>Keep in mind that this gives you only the FAFSA numbers -- CSS Profile numbers can be very different, and are usually harder on single parents and self-employed (I am both).</p>
<p>Thanks so much! The above posts have given me a wealth of information to work with. Will order the book. So far I've only had time to glance at the financial aid philosophy from the college board site. And the EFC formula guide. I was glad to see this addressed in print, rather than just in my head. </p>
<p>There was a question on a few schools' supplimentary forms "how much do you expect to (or are you able to) pay for your child's education next year?" That question seemed quite unfair, as my return question is, what is a reasonable level of sacrifice for someone at my place in life, with my resources, given expectations in this culture? I know how to live on rice and beans, and shop at thrift stores, and if pressed, would do this for my kid's education. However, is this equitable, as I know most of the middle class perhaps doesn't have that sort of tolerance for a spartan lifestyle. At this point, I may not be so tolerant either. So what is fair or right? I wrote a letter to one college, asking some of these questions in response. Hope that isn't the reason my D was wait listed...</p>
<p>Luckily my Ds are not attending profile schools, tho I filled out the profile for both and suppliments galore in the application process. My son just graduated from a state university, so am not new to the FAFSA. But perhaps now can look at what I'm doing a little more analytically.</p>
<p>*how much do you expect to (or are you able to) pay for your child's education next year?" *</p>
<p>I also thought it was an awkward question- my D attended a PROFILE school, and we had to fill out all the &^%$ forms every year.
the way I answered it was EFC minus a third. We still ended up paying EFC, but I think the aid office knew that it wasn't easy.</p>
<p>just so you know…i’m middle class, and we may have more money than others, but we are using all that money to pay off my brother’s college debt. I can’t even count him as a student anymore b/c he’s graduating may of this year, but he’s still got 150k+ debt from grad school and undergrad… he still couldn’t get any federal aid, even with all that debt. not even a scholarship(and he’s extremely smart) how will my middle class parents afford my loans and my brother’s if they get no aid. I can’t just get up adn leave home so i can be counted as an independent. I had imagined to pay by myself and become a <em>poor student</em> but there’s no way even that’s possible with the cost of college, even if i cut all my expenses and work.</p>
<p>i hate to sound like a whiner, but i do think there’s something skewed about this.</p>
<p>as for poor kids, i do understand. I stopped applying in the middle to some scholarships b/c i couldn’t stand to feel like i was applying when other people had more need. however, that doesn’t erase the fact that I too need some financial help.</p>
<p>"A couple of anecdotal evidence examples:</p>
<p>I have actually seen the finaid packages of some of my kids friends who attend UCs and have had $0-$500 EFC. With various UCs having a COA of $20-$24k, the packages I saw consisted of about $10-$14k grants/scholarships and the remainder loans & work study. I do not recall any gapping, but it was still a large chunk of loans. Some people on this board have said UCs gave them packages with only $5-$6k loans and perhaps they shrank their actual COA by minimizing things like travel, books, personal, and living expenses?? But it was a decent package, manageable for many, but one would need to be truly committed, as there would loans owing later!"</p>
<p>Quoted from somemom</p>
<p>My EFC is zero for the 2008-2009. I attend UC Santa Barbara with a cost of attendance of $26453. I received $20453 in grants and scholarships and $1900 in work study and $4150 in loans. I was able to reduce my actual cost of attendance by minimizing costs of books, travel, personal living expenses. I always buy books from upperclassmen and order books online whenever possible. I only go home on breaks. I never eat out.</p>
<p>“Who really suffers are the low income students. An often repeated fallacy on CC is that somehow it’s easy for poor kids to afford college. That’s not true at all.”</p>
<p>Quoted from Northstarmom</p>
<p>I’m going to have to agree with Northstarmom too. Being in lower income family is much harder than being in the middle class in terms of affording college even if I get >$20000 in grants and scholarships a year. </p>
<p>I sure hope the UC Blue and Gold Opportunity Plan will help my financial situation.</p>
<p>I think starting a thread where people with 0 EFC post their financial aid packages and the college they attend would be helpful in helping future college students who have low income decide where they want to go to be financially safe.</p>
<p>I already know there is a thread for colleges that meet full need, but a thread where low income students post their financial aid packages from colleges would be helpful too.</p>
<p>The reason you so often hear the complain that it is the middle income families’ kids who get the raw deal from college financial aid process is because of the very small category that exists of kids who come from low income homes that are accepted to colleges that meet 100% of need generously. In a case like that, the student can accept the college acceptance and aid and go to college without involving his parents income. The middle income (and upper income kids) have to deal with their parents working out the budget, loans, etc to pay for the college, and if the parents do not want to do this, or feel that it isn’t worth the financial sacrifice to pay what the process says they should pay, the kid has little recourse or means to be able to go to an expensive college.</p>
<p>We need to bear in mind that this is indeed a very small piece of the college picture. We see/hear more of it than is proportionate to the college going population because 1) It is news due to the scarcity of the event 2)CC has a disproportionate number of such kids and circumstance posting.</p>
<p>Most kids with a zero EFC have a difficult time going to college. Most colleges do not meet full need, so these kids are often restricted to those schools that can be afforded on PELL and Stafford monies or join the financial lottery for a merit or financial aid scholarship.</p>
<p>The family income limit for the plan is $ 60,000. Is that irrespective of how many children attend college?</p>
<p>Regarding the Blue and Gold Opportunity Plan, does anybody know if the complete financial aid package includes loans or is it just grants and scholarships only?</p>
<p>The initial item I read about this seemed to mention ONLY tuition being covered…wouldn’t that tuition be covered by a Cal Grant…or is it for that small subet of people who make less than $60k yet don’t qualify for a CalGrant?</p>