Modest income for FA?

Paying for College
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<p>Maintain modest income for FA?
I have been reading this site for several months and find the information to be useful. Recently, a dilemma presented itself to me.</p>

<p>As a single parent (widowed), I have raised my daughter from my salary from a 60%-time job and SSA. The SSA will end when daughter graduates from
high school next year. Without the SSA, my annual income from my job is $16000 and I earn about $12000 in interest.</p>

<p>Running the financial aid calculators, our EFC is $2104 Institutional and $1100 Federal. I have savings of about $200,000 and a home paid for that is worth about $300000. We live modestly yet I do not feel we want for anything.</p>

<p>My dilemma is: I was recently offered the full time (much more demanding and stressful) version of my job. I have worked at this same job on a 60-70% basis for almost 20 years. The job would pay 40K a year and includes health insurance and retirement. I am 54 yrs old.</p>

<p>I put these numbers into the finaid.org calculators and my EFC increased to $29600. (For fun, I put in the numbers on a hypothetical marriage to my current boyfriend and with his income and my current income, the EFC is $61000.)</p>

<p>The dilemma is, by taking the fulltime position, I pretty much increase my income to about $52000 a year and have a larger EFC.</p>

<p>Am I wise to remain a part-timer with a lower EFC? (Marrying and getting a $61000 EFC is pretty much a no-brainer!)</p>

<p>Thanks to all. My daughter is a very good student and wiil be applying to Penn State; Syracuse U; and a local state U safety.
mom4college is invisible</p>

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<p>See my take under your first post. I happened to see it there & answered it.</p>

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<p>mom4college, yours is an unusual situation in that earning more money raises your EFC above and beyond the increase in salary. This must be because of the large amount in savings.</p>

<p>Having a modest income and the resulting low EFC can only be considered a good thing if your child is able to be accepted to a school that meets 100% of financial need, and even then, only if they meet the majority of that need through grants rather than loans.</p>

<p>Otherwise, there is nothing good about having a modest income, especially if an opportunity presents itself to earn more. That is, unless you value working part time and the lower stress that affords to the point that you would rather have that than more money.</p>

<p>I'm not that familiar with Syracuse or Penn State, but I'd hazard a guess that PSU and the local state U don't meet 100% of financial need.</p>

<p>If Syracuse doesn't either, then I don't see anything beneficial about maintaining a modest income with the costs of college that are facing you in a year.</p>

<p>For example, let's say the cost of attendance at PSU is $18,000.</p>

<p>With an EFC of $2000, your daughter may be eligible for a $3000 loan and a $3000 work study position. Add to that $3000 in the student's summer earnings, and you end up with total parent/student contributions of $11,000 and a $7,000 gap. Your daughter may be eligible for a modest pell grant, but even so, there will be a gap of several thousand dollars at PSU or state U that doesn't meet 100% of financial need. How would you pay that gap should your daughter not be accepted to a school that meets 100% of need? There would be a few of choices...pay for it out of your modest current income, pay for it out of your savings, take a student/parent/home equity loan, have your daughter earn more money, or have you earn more money.</p>

<p>Other considerations: what does your retirement situation look like? At 57, there are only so many years left to save.</p>

<p>Health care: you say the new job has health care benefits. This can be helpful.</p>

<p>These are very personal decisions. I think you need to assess the likelihood your daughter is willing and able to apply to and be accepted to school that meets 100% of need, how that school typically meets need in terms of grants or loans, your strategy to pay for a public or private U that doesn't need 100% of need, as well as the retirement and medical benefits issues.</p>

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<p>It made me really sad that EFC could stand in the way of a wedding :-(</p>

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<p>How do you have an EFC of $2104 with savings of $200K and $300K equity? There are plenty of people with modest incomes and no savings or home equity who have a much higher EFC than that. Seems pretty skewed.</p>

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<p>because the fafsa doesn't look at home equity at all and if your income is under a certain level it doesn't look at assets either. So that low EFC was based only on income (at least this is how I think it works)</p>

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<p>I understand that for the Federal methodology; however, in the initial post, the OP says that the Institutional EFC is only about $2100. This strikes me as odd, since the Profile considers both savings and equity. But use of parental savings is capped at about 5%. Institutional EFC still seems low to me, though.</p>

<p>Another of the numbers doesn't make sense either. The OP says that she's been working at a job for 60% of full-time, making $16,000. The full time job (adding the extra 30%) pays $40,000 - not the approximately $20,000 that would come just from upping her pay by 30%. Additionally, at least in states with which I'm familiar, part time employees working over 20 hours per week are entitled at least to health benefits. Either the employer was getting a major bargain, or I'm misreading something terribly!</p>

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<p>maybe because someone in the home is collecting SSA, that impacts the effect of home equity?</p>

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<p>SSA only increases your EFC. My D's SSA ended in Oct 07 but it has still added a significant amount to our EFC.</p>

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<p>okay, I'm looking at the EFC papers and it referrs to SSI, supplemental Security Income. I guess I was thinking of that. What is the difference?</p>

<p>Darn govt and their acronyms.</p>

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<p>OK...voice of dissent here. I vote for taking the job. Yes, the EFC is higher, but this mom also has significant savings that doesn't sound like it's in retirement accounts (a vote also for doing something about that...). The mom would receive health insurance benefits, and some retirement benefit as well. I think there is a "self worth" piece that is missing in this question. This mom hasn't worked full time, but sounds like she would be a terrific full time worker (and her employer is giving her that opportunity). I personally think this family needs to look beyond the issues of college costs, but also at the issues of family support, etc. The SSA income will be gone soon and having a full time job will supplement that loss. I say...go for it, and good luck to you. It sounds like a wonderful opportunity for this mom.</p>

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<p>Any chance D will get merit scholarships? If she does, and they cover tuition - then go ahead and take the job.</p>

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<p>A few thoughts: </p>

<p>I think SSI is a program for low-income, needy social security recipients; my child has received the Social Security survivors' benefit for several years. When a child's parent dies, the child receives 70%-ish of their parents' SSA benefit until 18 or HS graduate. We do not receive any other funds save for her SSA.</p>

<p>Chevda is correct that my employer gets a bargain; as an adjunct professor at a local college, I am hired by the semester for a certain number of courses and paid by the sememster hour. A full-time professor teaches a minimum of five courses per semester and is expected to perform admin duties, such as student advising, committee work, and the like. As a part-timer, the health insurance I am entitled to consists of purchasing my policy at exactly the same cost that I would pay on my own (Blue Cross).</p>

<p>kelsmom brings up the "gap' issue in financial aid packages, but my concern is that my income and EFC will affect my child's admission decision. (Note: daughter applied to three private high schools and was wait-listed at two and accepted at one with an almost full scholarship; I believe she was wait-listed due to the need for financial aid.)</p>

<p>In any case, my thoughts are something like this: the local safety school is 13,000 (tuition, room, board); it is two hours' away, so transportation is minimum for home visits; my daughter does not have a car. Our state has a college grant for most students; so:
13000 less grant of 3000 less 1500 work-study less 1000 summer earnings = 7500; I can pay 7500 out of my income. </p>

<p>The fun part is, say that daughter is offered a larger grant from a private school that charges 35000 total: 35000 less average grant of 20000 less summer earnings 1000 equals 14000. It might be possible to use savings for the $6500 difference if the private school had a redeeming feature.</p>

<p>For more fun, as a single parent committed to getting this child through college with as little debt as possible, it would be irresponsible for me to marry someone who would bring the EFC up to $61K a year; this is more than I can earn in a year; it presumes that someone else will be largely responsible for my child's education costs; if something happens (illness, disability), the EFC is a stumbling block; if we divorced after two years, there would still be a year in which my income would be joint for FAFSA purposes and would reflect the higher income, mainly the income of my boyfriend (husband in this scenario). There is no benefit to me, with my 26K annual income, marrying a man with an income of $120K in this particular context. </p>

<p>Next: can someone recommend colleges with liberal grants and aid for a solid 3.4/1950 SATs; child has taken very difficult courses since 9th grade.
Thanks.</p>

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<p>At least you have the local financial safety. I would look for some private schools that meet as close to 100% of financial need as possible (very few will meet 100% of need, but some like Beloit might work for your D. There will be more that will meet 90-92% of need). You can find these by subscribing to USNews. They also give you the average grant/loans/ws breakdown. She has nice stats, so there are many choices. I would look for schools where you would not have to purchase a car for her and pay auto insurance, but that is me, and other people feel differently. Also, if you are worried about her being denied because of the level of financial need, let her just apply to more schools (maybe 14-15 with common app., rather than the average 7).</p>

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<p>According to USNEWs, Penn State typically covers 59% of need (and that includes loans - their average gift aid is about $5000). With an EFC of about $1000 you would end up having to find about $17000 to cover the difference.(assuming OOS???)
Syracuse has better stats, covering 82% of need, but they also use the CSS profile which would include the assets in your home.</p>

<p>The problem with the EFC caluculator is that even when they calculate for institutional method they eliminate the value of the home and assetts based on the simplified needs test. The CSS does not do that, so at Syracuse the value of your home and assets may very well be considered in coming up with a financial aid package. If I were you, I would call Syracuse financial aid office and ask if they cap the value of homes and assets for low income applicants. I'm guessing that they don't. Once you find out this info, you will be better informed as to wether or not you take the job.
I agree with the previous poster about finding schools that give better financial aid. These are typically private schools that require the CSS. Unfortunately with your assets you fall into the same category as many middle income families who don't make a lot of money but have equity in their home that would be difficult to borrow against because of the lack of income to pay it back. CSS doesn't take that into consideration.
I did see some posts that gave a list of schools that capped home equity. Search on this forum for 568 schools (most of them are elite however), and consider moving some of your liquid assetts into a retirement account this year. It won't eliminate much, but it may help. Plus if you do it now, you can contribute for 2007 and 2008 reducing your assets by about 10000if you open a roth.</p>

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<p>northeast: what do you mean by subscribe to US News?</p>

<p>jjcddg: am I only permitted to deposit $5K per year to a retirement account? Can I open a roth and a traditional IRA?</p>

<p>For me: I think it saves a lot of money in general unanticipated daily costs to be closer to home; for example, if a student needs a bookcase, just drive home on a weekend and raid the garage for old stuff as opposed to being 1000 miles away and having to buy one. That sort of stuff.</p>

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<p>Go to their website. They offer a premium online edition for college information for about $15. I believe that the information (ie: tuition) might be from 2 years ago. They tell you average need met, average merit aid, ratio of loans to grants. It has other info like percentage of each religion, how many students have cars,admissions info like midrange SAT scores and gpa, % of students living on campus, graduation and retention rates, etc. PM me if you have further questions. I don't want to do a commercial for them. The college board also has some of the same information free of charge, but I do like USNEWS. The National Center for Educational Statistics also offers much of the same information at no cost on their website.</p>

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<p>I'm not 100% of the tax laws for Roth and traditional IRA's, so I won't comment on that. I think you could probably just do a google search. </p>

<p>I only came back to this thread because I realized something. With your current income you probably qualify for a Pell grant - look at the EFC calculator to figure out how much. With the new job you will probably not qualify. ALso, what state are you from?? If you are from NY, and attending a NY school you would also qualify for the tuition assistance program, but since this is calculated based on net income after all deductions you would probably still qualify. Between Pell and Tap (if from ny) you would probably qualify for several thousand.</p>

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<p>it seems to me that much of FA is based on income; and I see that when a school caps home equity, it is a percentage of the income or it is the income multiplied by 2 or 3. With my modest income, I can choose to fill the gap in need from savings; with a full time salary, my EFC is almost 60% of my annual income before taxes. As it is now, yes, we qualify for a Pell grant and a state grant (actually, maybe two). </p>

<p>I have scrimped and saved to get to this point of financial stability, and, frankly, my part-time workload suits me fine.</p>