Naive to Process of Applying for Financial Aid, please help...

Chance Me / Match Me!
1

<p>Ok, when you apply for FA, you have to list all your assets right? The cost of your home, the amount of investments and so on.....</p>

<p>My question would be if one's parents both were retired and at face value looked poor with no present income flowing in. On top of that they live in a poverty stricken high violence neighberhood that has evolved since they moved there 30+ plus years ago. Even though they have the money to move, they are so stubborn and disgusted by the thought of changing homes because you grow attached to it..</p>

<p>i know personally alot of people who are in this situation who are worth in fact in the millions in total assets ranging from 1-3 million but maintain their happy living of frugalness like they dont have 2 cents to rub together.</p>

<p>So if there are parents who have alot of " Hidden money" in savings accounts, investments and so on but dont spend money on house, clothes, cars and so on and they have kids who want to go to college, can they not disclose all their hidden assets and when the the FA company examines their situation- 2 non working parents, live in bad neighberhood with a home of low value and so on would grant them FA assistance.</p>

<p>I know its illegal to withold info like this but im just asking. If you fail to mention all your "hidden" assets on the application, would the FA company have the ability to type your name in the computer network and gain access to view all your assets or does the FA company go by what you state as fact on the application?</p>

<p>Please clear this up for me?</p>

2

<p>There is no such thing as hidden money except for cash in a safety deposit box. All of their assets somehow end up on their tax return, and college financial aid officiers see that. On the other hand, you are probably in pretty good shape anyway. The basics of financial aid are....</p>

<p>The colleges calculate their COA (cost of attendance) which is the total of everything to attend their school. It includes tuition, room and board, fees, books, money for travel. </p>

<p>They then want to know the student's EFC (estimated family contribution). Go to <a href="http://www.collegeboard.com%5B/url%5D"&gt;www.collegeboard.com&lt;/a> to find a EFC calculator in order to estimate your EFC. When your actually apply for aid, your parents will fill out a federal government FAFSA form (free application for student assistance). This form can be filled out online. The federal government accepts all of your information about income and assets, calculates your EFC, and then sends it to any colleges that you request it to be sent to. Income is the thing that will raise the EFC the most. Only about 5% of your parents assets will be used in calculating the EFC while 35% of assets in your name will be used. The equity in the family home will not be used. The value of cars will not be used. The number of children currently attending college affects the EFC.</p>

<p>You may also have to go to <a href="http://www.collegeboard.com%5B/url%5D"&gt;www.collegeboard.com&lt;/a> and submit a PROFILE which contains basically the same information.</p>

<p>Once the financial aid officier has the COA and EFC, the EFC is subtracted from the COA and this is your need. They will try to meet your need with scholarships and grants (free money), loans, and work study. The bad thing about this process is that the EFC can be a stunner. Also, the colleges may not meet all of your need. In either case, you need to get more money from somewhere. The parents might get a home equity loan or you might get student loans not associated with the college. In your case, your parent's have little income and the assets shouldn't raise your EFC that much. I suggest that you use one of the EFC calculators that are available on the web such as at <a href="http://www.collegeboard.com%5B/url%5D"&gt;www.collegeboard.com&lt;/a&gt;.&lt;/p>

<p>My son was accepted to Emory which has a tuition of about $31K and he got a $24K grant. This is less money than in-state tuition at our state school. If you apply to an expensive school, your need is greater and you may get a bigger grant. The money is based on need and not merit.</p>

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<p>Thanks so much for your tremendous insite on the topic. I have a few other questions.......</p>

<p>1) is it true that any retirement funds like Roth IRA accounts do not influence the decision of whether to grant any FA to someone because i think many of father's assets are associated with retirement.</p>

<p>2) im ending my second year at Penn State University. I might have 3 years still to graduate( in a 5y program). My parents both dont work- my father retired about 2 years ago.</p>

<p>The costs of tuition/room and board is around 20,000 a year, i am a Pa resident. The reason my dad retired is because my relative left me money when he died and that is what is funding me right now to get through school. I currently have about 50,000 in a savings account, so if what i plan comes true and im there 3 more years, that would be around 60,000, that does not include if there are any more significant tuition hikes in the next few years. SO i would be 10,000 in debt upon graduation.</p>

<p>Since you said only 5% of your parents assets influence the EFC, could i transfer around 75% of of the $50,000 into my parents name, then i would have around 10,000 in my name, is it to late to do this, is this an option?</p>

<p>3) You did not directly answer this question though you said your parents assets are not that significant but still do you know the answer to this?</p>

<p>If you fail to mention all your parents "hidden" assets like stocks, mutual funds, IRA accounts on the application, would the FA company have the ability to type your name in the computer network and gain access to view all your assets or does the FA company go by what you state as fact on the application, i would be interested in the answer to this question.</p>

<p>4)my gpa for this semester might be 4.00 and this comes true then my cum gpa will be around 3.40( i did not do well 1st semester).</p>

<p>Is there any sort of combined need/academic scholarship i could obtain. Or could i get some sort academic scholarship based on 3.4cum gpa. Also, because there is no present income coming in because both of my parents, would that qualify me for financial aid just based on that or do they look heavily upon your savings/investments. I know my pop has alot of stocks, Ira accounts and such, so this might discourage them from offering me any sort of assistance.</p>

<p>5)Sure, i wont be in tremendous debt for sure and i may sound selfish when many people have no money to go to college and are on loans entirely.</p>

<p>THe thing i worry about is being able to obtain and own a house ASAP upon graduation. Sure i probably will live with my folks for the first 2-4 years after graduation, pay them a small amount of rent- just to show responsibility LOL! And with the rest, save it all to eventually put a down payment on a house.</p>

<p>I know too many people that get involved in the viscious cycle of renting apartments after graduation. Because they have a decent job, they have enough money from their job to rent a decent apartment but dont have enough $ to put any sort of down payment in ownership of a house because the money they had precluding college was completely depleted and gone to pay for tuition. Or to go a step further, they had no money for college at all and now are over $100,000 in loans now your in a big mess paying off your loans when you are a old person in a nursing home, its really sad.</p>

<p>Also renting just discourages and removes the prospects of ever owning a house because the money you could be saving to eventually use a down payment for house is being wasted and thrown away to pay for the rent, renting is the worst thing because you have no equity. I guess your other option is you could live with your parents until you got married or in your 30's but not's not real desirable either...</p>

<p>6) and last im glad you did mention it, the cost of attendence does have an effect, right?. If someone lets say has 100,000 savings for college, this will easily fund a student who decides to go to a state school at $10-20,000 a year but if they go to a private school which can total $40-50,000 a yr, 100,000 is only enough for about 2 years, so COA does have a significant effect?</p>

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<p>Is it the FASFA's objective or any other financial assistance comp. to meet your entire need so you dont have to be on any loans or find the remaining money somewhere else to pay for tuition?</p>

<p>Or is FASFA's mentality to pay X amount so the remaining debt is reasonable to pay off for the certain individual. Is it unrealistic to assume they will pay off your tution entirely? Instead of paying 100,000, you only have to pay 20,000. In other words, the job of FASFA is to lessen the debt of the student after finishing college not completely wipe it out.</p>

<p>ANother thing i was interested in is there certain obligations that you have to uphold when they grant you financial assistance- do you have to keep your GPA above a certain mark, do you have to have good academic progress and not be eratic and drop 3 out of your 4 classes within a semester, you can only get so many F's and so on. Also what happens if you dont graduate, do you have to pay the money back to the company? I know with a academic scholarship, you need your grades to be at a certain mark and if you are below that mark, they remove the scholarship. Is it similar with FASFA?</p>

<p>I was also wondering about people that are loans and have to pay back their debt once they graduate college. Its hard enough for a person to pay off their debt when they have a good job. Lets say a person goes to private school at around 40,000 a yr and goes for 3 years, thats 120,000 and then drops out and has minimal or no job at all. How is it possible or even realistic to even think the person will ever be able to pay off the debt, i know it would not be wise if someone did this but lets just say it did happen, what would happen?? Im taking Business Law class, right now and we learned the only contracts that are terminated are ones with personal service- where you need the person present to commit the service everything else like mortage given to the estate of the person when they die and now for example the children of the dead father are responsible for paying off his remaing mortage. WOuld the kid that dropped out with 120,000 in debt have to pay the debt off or are there circumstances like this where the debt would be canceled, do you have any incite on this.</p>

<p>Also my cousin got accepted to Villanova, she had 1380 SATS ,she is 5th in her class of about 500 kids and she only got a 4,000 a year scholarship.Villanova costs about $40,000 anually, so she will still have to pay around 36,000 a year. SHe choose to go there because even though she got into West Chester, Lehigh, Delaware, Aracadia- she felt she was too good for these schools. For starters, she could of went to West c, and Aracadia for basically free for 4 years. Delaware did not make sense since she is PA resident, so even though she got assistance there, Del residents were still going there for a less amount of money she was paying. SHe did not want to apply to IVYS because even though she is smart, she really worked hard to get into the position she was. She was not one of these kids, that were so smart that they really did not even try and study and still outperformed people by leaps and bounds, those are the type of people that go to IVYS, she thought she would be too overwhelmed and wouldnt be able to relate to anybody. ANyways i was shocked she only got 4000 a year, she lives in a nice fairly expensive township in suburban Philly with a very nice single home, her father is CPA and manager and makes good money, she comes from a very strong school district, which you would think make that 5th rank even more impressive. My question would be if a African American person with a single parent home, who has 8 siblings and is on food stamps lived and went to high school in a poverty stricken, high violence neighberhood like North Philly and graduated from Simon Gratz 5th in their respective class with a 1380 SATS wouldnt they get a full ride to Villanova or at least something much more significant than 4,000? Does where you come from have an influence on much scholarship they offer?</p>

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<p>ALso home quity does not influence whether they give you aid or not, then why do they ask it on the EFC application?</p>

<p>Please read through my 2 most recent messages and please get back to me</p>

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<p>Financial aid is like paying income tax. I wouldn't lie on the forms, but you can still try to get the best deal.</p>

<p>Money in your own name adds significantly more to your EFC than money in your parents' names. If you can move it, that would be good. Perhaps you can pay your parents back for something, but it is difficult to move money from a custodial account.</p>

<p>FA officiers are not big brothers with computer access to some global economic network. What they see is what you tell them on the FAFSA and what is on federal tax forms. The federal government audits FAFSA's at a pretty high rate. You supply the school with your tax returns from the previous year and your parents tax return from the previous year. This info is matched against what was entered on the FAFSA. Assets can not be hidden since they show up on the tax forms as interest, etc.</p>

<p>Retirement accounts are not counted as assets in calculating the EFC. Find an online EFC calculator and just play with it. Type in different numbers and watch how the result changes.</p>

<p>NEED = COA - EFC. The COA and EFC are calculated separately. If your EFC is $15K and you go to a school with a COA of $40K, your need is $25K. If you go to a school with a COA of $20K, then your need is $5K. The college will try to meet your need. </p>

<p>Different colleges have better FA packages than others. A prestigious school with a tuition of $32K will take the full price from the people who can pay it, and give deals to those who can't. Whether or not this is fair is a social question such as whether or not the rich should be taxed more so that we can increase welfare to the poor. Colleges publish the average freshman grant and the average indeptedness of a graduate. I would say that a $20K debt upon graduation is considered acceptable to them. Schools with big endowments will use loans to meet your need, and other schools will use loans. </p>

<p>Race is not a factor in calculating the EFC and location is only a factor as it relates to the cost of living in that area.</p>

<p>The problem with this utopia where your need is meet is as follows: Some people have a very high EFC. If both parents work and the family income is over $100K, then the EFC will be high. Your friend at Villanova may have parents making a "high" income and the NEED = COA - EFC = $4K. Most people can't afford their EFC very well. This is where home equity loans and outside student loans come into the picture.</p>

<p>You do need to take a certain number of credits each semester and maintain a minimum gpa to keep your aid. Details must differ, but I don't think this is normally a big problem.</p>

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<p>The value of the family home is not used in calculating the EFC. Also, only the number of children currently in college is used. The total number of siblings doesn't matter. Only the number currently in college.</p>

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<p>Also, the value of cars are not calculated in the EFC.</p>

<p>One more detail, there are two ways of calculating the EFC: the FAFSA way and the Institutional way. The FAFSA does not consider home equity, but individual colleges may use a percentage of the equity in the home as an asset. </p>

<p>However, the two big things that will raise your EFC are income (parents or self), and assets in the student's name.</p>

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<p>I figured you did not have to pay back FA if like i said if you go for 3 years to a private insitution for 40k a yr and then dropped out, you would be 120,000 debt without a degree. FA is not borrowing money, there is no obligation to pay back, its "free money" right?</p>

<p>How about student loans, that is borrowing money right, you have the obligation to start paying back the money back once you are on your feet and have a job. What if the circumstance i posed earlier occurs, you attend a school for 3 yrs at 40k a yr, then going into senior year, you decide to drop out. The person is in $120,000 in debt and has no degree accompanied by a minimal job if that, how in the hell could someone in this situation ever pay that debt in full, would the person not be obligated to pay the remaining and money and the contract would be terminated.</p>

<p>Now that's an extreme case, say a kid goes to a school for 2 yrs at 20k a year, then drops out, he has no degree and 40k debt. this is more realistic, would this person be obligated to pay off the loans.</p>

<p>Generally are there ways around this, could you somehow find a way to get out of this?</p>

10

<p>Financial Aid from a college is a combination of three things: grants/scholarships, loans, and part-time jobs. When you apply for financial aid, the school will build a package for you composed of different proportions of these three components.</p>

<p>Grants/scholarships are "free money" and are really just tuition discounts. A loan is a something that you owe and have to pay back. The part-time jobs, if offered, won't be more than 20 hours per week and studies have shown that working less than 20 hours per week will not adversely affect students.</p>

<p>Since the calculated EFC is normally more than people can afford to pay anyway, parents may have to take out home equity loans or the student may have to take out student loans.</p>

<p>If you quit early without a degree, you will not owe the grants/scholarships that you were given. You do owe back the money that you borrowed. The only way out of paying money back is to file bankruptcy and that is unpleasant and complicated. The example of a student borrowing $40K a year and having a debt of $120K after three years is not realistic since nobody is ever going to loan that much money to a student.</p>

<p>You should try one of the EFC calculators on the web and see where you stand. There is one at <a href="http://www.collegeboard.com%5B/url%5D"&gt;www.collegeboard.com&lt;/a>. You type in your income, your parents income, your assets, your parent's investments, the value of your parent's home and how much is still owed on it. The calculator will then tell you your approximate EFC. The main thing that will raise your EFC is your income and assets. You said that your parents have very little income. The percentage of their assets (not counting the home or retirement accounts) the will be used in calculating the EFC is 5.6%. </p>

<p>After you get that, talk to the FA department at your school. You will have to file a FAFSA and perhaps some other info. I would do this soon. They are giving out the FA for fall 2005 now.</p>

<p>Filing a FAFSA takes a few days since the federal government has to process it. You can "sign" the application online by using a PIN number. Apply for the PIN number early because it takes a couple of days to process, too. Both the parent and the student need to have a PIN, so apply for both before completing the FAFSA.</p>

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<p>I will do what you said and calculate on the EFC.</p>

<p>But my one concern is does the info you insert to get the calculations registered or programmed into the website and the FASFA will have access to the info you provided here or is this just a tester and nothing is released as official?</p>

<p>One main thing i would like to ask you is you said your parents assets are assessed at 5% - far less than the students assets at 35%. Even though, you said parents assets are of little influence, is there a total value of assets from your parents that you can not exceed or you will be completely ineligeable? $250,000, $500,000 $1,000,000?? THis of course not including funds involved with retiring.</p>

<p>ps i just browsed through the sheet and did not see anything about COA( cost of attendence) is it there and where the finances part?</p>

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<p>I wouldn't worry about the secretcy concerning typing info into an EFC estimator. Actually, you can just play with it and try different hypothetical scenarios. What would happen if my parents were making $100000 per year instead of only $70000? (The EFC goes up about $4K for every $10000K that you make in income.)</p>

<p>The COA is Cost of Attendance at a specific school. It includes tuition, room and board, fees, books, and a minimum of personal expenses. The COA varies from school to school. You could see what the official COA is for Penn, but it doesn't affect the EFC.</p>

13

<p>Every $100,000 that your parents have in assets (checking accounts, saving accounts, CD's, stocks, bonds, real estate other than the family home, ... ) adds $5600 to your EFC. This has much less effect than income or assets in the student's name. If your parents have a million dollars, your EFC will exceed your COA and you have no need (NEED = COA - EFC).</p>

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<p>yeah, the only thing i was worried about was for instance would be if you put completely accurate info on this EFC calculator and it states you have no need and because of this you alter the numbers a bit in your favorite on the FASFA form, then FASFA takes a look at the numbers you put on the EFC calculator and asks why are the numbers, this for instance is what im interested in, could this happen? Also i was talking to my dad about this, and he was wondering if you have to put any sort of private info like Social security anything that someone could take advantage of you?</p>

<p>In conclusion let me make sure i have this correct, EFC means the amount of $ that you contribute, right? When you said real estate- other than your family home- that would include for example a secondary place like a shore condo, right? Also the value of your home has no effect on your EFC, whether the person's primary home is 100,000 or 500,000 it has no effect, is that what you are saying? Also does how much equity you own for the home, meaning the percentage that you payed off towards the mortage because 2 people can have a house at 500,000 dollars one could have a remaining mortage of 400,000 and the other could have only $100,000 mortage left, how is this effect the EFC?</p>

<p>How does FASFA include room and board, i understand tuition because that's very technical and clear. WIth room, what if someone lives in dorms with 4-8 people in a big room and shared bath for the floor for a really cheap price Vs. someone who rents an expensive apartment for lets say $500-600 a month off campus, how does that work? Does FASFA make you live in absolute cheapest living conditions if they are going to offer you aid, since i would think people would abuse FASFA and stay in a luxarious apartment with all the bells and whistles and if FASFA is going to pay a percentage, please clear this up for me?</p>

<p>So by your info you provided every 100,000 your parents assets adds 5600 to the EFC. So lets say your parents had 300,000 in assets, you take the 5600 *3 =16800 and that's your EFC, which would mean if tuition/roomboard is 20,000, you take 20,000-16,800=3200, 3200 is the amount you would be eligable for, is this correct?</p>

<p>WHat i dont understand is you said every 10k in income adds 4k to EFC, is this your parents income or the students income because quite frankly if you mean parents income, then i dont understand how this could be true. If 10k is the total gross income for the household this is unbelievable low! You have to pay car and home insurance, everyday expenses like telephone, water, electricity, then food and beverages, mortage payments and so on. How can that be equivalent to 4k of tuition you should pay, that means they expect you to live on 6k a yr?? Im confused, is this the students income or parents income?</p>

<p>Also you gave me scenarios for assets of parents , do you know what the EFC would equate to for students assets, like for every 10k in assets the student has, that means the EFC goes up this much? Can you do this with income also, students income of course.</p>

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<p>hey, i had a few important questions posted in my previous message, can you answer them for me, so then i can move forward with FA process. I want to go into this process having some knowledge of the process and the last message concerns that, so when you have the chance please get back to me...</p>

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<p>when you get the chance please answer the questions i posed to you in the most recent message, thanks</p>