<p>Hi,
I need help with this situation. My dad died when I was 11. Because of this, my mom got some $200 K in life insurance money. She did what was smart and invested it through a brokerage firm. My mom's only source of income is social security, from which she gets around $1500 a month from. Because this is hardly enough to support our family and pay the bills, she usually subsidizes equally with earnings from the invested life insurance money.</p>
<p>We applied for the FAFSA expecting to get substantial aid due to the fact that my mom has virually no income outside of social security. Instead we get slapped in the face with the expectation that my mom will pay $28,000 a year, just for me. That doesn't include my brother and sister.</p>
<p>To make things worse, she has NO retirement fund. The reason she hasn't put the life insurance money into long term savings or retirement funds is that she needs to subsidize her income to pay the bills.</p>
<p>My mom offered to pay for one year of my college. That year is almost done. I don't know what to do. Any advice?</p>
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Because of this, my mom got some $200 K in life insurance money. She did what was smart and invested it through a brokerage firm.
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<p>AS you may have guessed, this money is used to factor your EFC so the government and colleges do expect her to use some of this moeny to pay for your education. </p>
<p>Your EFC will change once your bother and sister attend eith college or private high school.</p>
<p>Are you eligible for any type of merit money at your school?</p>
<p>Well I'm not surprised they expect that some of it should go to our education, but all of it!?</p>
<p>I am getting some merit scholarship money now that puts me at in-state tuition, but I am wanting to transfer, so I don't know what is going to happen...</p>
<p>The bottom line is that if this money could have been put into a retirement fund, annuity, or remained as life insurance, it wouldn't have messed things up, but now that it is being invested, I am screwed.</p>
<p>so she isn't working- is she retired? on disabilty?
I cringe whenever I hear someone spending principal- you should always do whatever it takes to avoid that-</p>
<p>Transfer to the least expensive school you can find for one year. Ask your mother to move her investment to a low-fee annuity such as Vanguard's:</p>
<p>(Note: If her accounts are not tax sheltered, this will be an excellent financial move for her.)</p>
<p>After one-year at the low-cost school, you should have a more reasonable EFC that will allow you to transfer for your junior and senior years to whatever college you wish to attend.</p>
<p>Wow, I'm in a nearly identical situation, except my inheritance from the life insurance policy is only at about 100 grand this year, but it's in my name under the Uniform Gifts to Minors Act, and my mom makes like 13 grand a year and gets SS, but our EFC is 47 grand.</p>
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<p>are you sure that the 27,000 wasn't the EFC on the Fafsa? The EFC is just a formula number, and with that number you'll get alot of aid!!!>></p>
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<p>How do you figure that this person will get a LOT of aid? Their EFC is $27,000...meaning their family will be expected to pay that amount annually. If they are attending an instate university, the cost of attendance would be way less...and they would get NO need based aid. If they go to the most expensive private at $42,000 per year, they would only get $15000 in need based aid and that is assuming the school meets full need. In addition, part of that $15000 could easily be loans.</p>
<p>The U.S. Department of Education uses a need analysis formula set by Congress, along with the information reported on your application to calculate your Expected Family Contribution (EFC). The EFC measures your family's financial strength to pay for college, and is used by schools to determine your eligibility for federal student aid during one school year.</p>
<p>Your EFC is not the amount that your family will have to pay for college nor is it the amount of federal student aid that you will receive. It is a number used by the school to calculate the amount that your family will be expected to pay for college and the amount of federal student aid you are eligible to receive.</p>
<p>^That is from the fafsa website. What I was trying to tell the OP was that, if that was his formula number from Fafsa, he could get more aid than he thinks. That number IS NOT the amount of money he must pay per year.</p>
<p>The "amount your family is expected to pay" IS your EFC. Unless there are dire family financial circumstances, this IS the amount your family will be expected to pay. Yes, it is a based on a formula, and yes it is used to determine eligibility for aid. BUT unless you have extenuating circumstances, it is unlikely that a school will award you need based aid that would eliminate your obligation to pay this EFC. The colleges take the Cost of Attendance (room, board, fees, books, personal expense allowance) and subtract the EFC. The balance is what is used to award NEED based aid using the federal methodology. In other words, for an expensive private school...the COA- that EFC...could be 42K-27K= 15K. 15K would be the MOST that the college would likely award you in need based aid...and some or even most could be in loans. If the school uses the Profile, additional assets such as home equity, and sometimes (some colleges have supplemental Profile questions) even retirement account values (because in most cases your family IS allowed to borrow against these) are added in.</p>
<p>I'm not certain if armo is just describing the opposite side of a table or if you are comparing apples and oaranges.</p>
<p>COA - EFC = FN</p>
<p>COA is the cost of attendance... the sticker price of the school. It includes tuition, room & board, books, fees, transportation, etc. (some schools include some items others don't)</p>
<p>EFC is the expected family contribution. This is the amount of money that the federal government believes a family can afford to pay for one year of college based upon an arbitrary formula in the FAFSA.</p>
<p>FN is family need. This is the amount of money you are looking for from the government and the college to go to your college costs. Depending upon how a college treats the family need will determine what your real out of pocket costs are for college.</p>
<p>If a school has a track record of meeting 100% of the family need, then you can reasonably expect that your out of pocket costs will be the EFC. If the school doesn't meet 100% of the family need. You can expect your costs will be higher than the family need.</p>
<p>If you have an exceptional student, schools can come up with financial packages that go beyond 100% of family need.</p>
<p>remember, too, COA is based on the schools official number- so if the housing allowance is $xxx, but you got into a more expensive dorm, etc, that housign allowance does not change...and, in my experience, it does seem to be based on the lowest coast alternative, whether that is made available to you or not.</p>
<p>Ok this is our situation and I hope someone can help. Im already in college, when we were filling out the FAFSA and CSS last year we were waiting to see if the life insurance policy on my dad was going to be paid. It was and at the time we (5 of us) were living on was Social security benefits.
No income- period. So when the life insurance came we moved from renting (we couldn't afford the rent anymore) and used the money to buy a home. This year we noticed the FAFSA doesn't care about home equity (which is the 100K life insurance policy) but the CSS is another story. So how will the aid be affected this year. Can't get student loans because my credit is new and we were turned down for a home equity loan because my mom has been unemployed (for like 25 years and is disabled) and her credit is very poor.</p>
<p>Wow thanks for the quick response ( :She isn't on "disability". She at one time was committed and has bipolar and she is like over 350 pounds and can't find a job although she has tried since my dads death. She even went to the displaced homemakers program through the Community College and they said she would have to retrain since she has been out of the work so long. All the jobs she has applied for entail standing long periods etc and she can't even get a min wage job. Sometimes I'm sending home my work study money to help out ) :
I think I already have those loans but they are only a couple thousand. Basically my first year has been a combination of grants, loans you mentioned, work study etc. to cover almost 42K. Nothing is merit based.
The only "income" is social security which only my mom and siblings receive. Mine was stopped when I graduated high school. So I basically support myself (or the school does) and I use my work study money to buy books and other living expenses. I heard you have to be like 25 though to be considered an independent. But do you think in this case the school would look at me as an independent?
If my mom isn't making any work income and my institution uses that formula of the 2.4% of the income applied to home equity wouldn't that mean the home equity wouldn't be factored? Or will the count the social security as earned income? I would like to know things generally before I make an appt with my financial aid office. BTW FAFSA has been updated for this year and the EFC again was 0.</p>
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<p>But do you think in this case the school would look at me as an independent? >></p>
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<p>Goodtimes...Very unlikely that the school would consider you independent. The criteria for being an independent student are quite stringent and for good reasons. Your EFC can't get any lower than zero. This means that your school will assess your need and give what THEY feel is an amount to help you with your school expenses. If you don't go to a college that meets full need, you could end up having a gap between the cost of attendance and the money they award you in finaid. AND of course some of that money may be loans. I'm not sure what you hope to gain by becoming independent...an EFC of zero is the lowest it can get. Becoming independent isn't going to make it lower than zero.</p>
<p>If your mom is collecting SS they probaly consider that income which means your FAFSA efc is probably not going to change.</p>
<p>However, I would suggest looking up the financial aid policy at your school to see what documentation you must complete. IF your school uses the institutional methodology your EFC may change depending on the amount of equity in the home.</p>
<p>Assessed value of home- remaining mortgage = equity.</p>
<p>I think home equity is assessed at 5% (maybe aascot or some one will jump in here).</p>
<p>Your mom's income would be the SS benefits.</p>
<p>At my D's school you file the css profile once (for freshman year) then you submit information on your school's form through the CB.</p>
<p>I want to be independent because I really am. The FAFSA says zero but the CSS will have the home equity (which we can't access). My school is part of the group of schools that access home equity at the 2.4% formula. So is this 2.4% of only the amount my mom gets on social security or will it take into account my siblings portion too?</p>
<p>I just wanted to add that if she had left it in life insurance it wouldn't have been counted? At least from what I have read.
We have entered the social security into the FAFSA and it's zero EFC for this year just like it was last year - that's not the issue with the independent verses dependent.</p>