<p>For anyone who knows anythng about this Finacial aid -Grants - loans process and how they come up with the E F C, I am seeking to understand & Learn & get some clue of what I would be expected to pay when my son goes to college, I would be soooo grateful...... We are a family of 7 (5 kids) who will be completely debt free when our oldest graduates in 3 years. My husband earns approx $52, 000 a year as a Railroad worker. We drive old cars, use coupons & are VERY frugal but you can not use coupons & deals to get to college, we have not saved as my Husband just recently got this good paying job & getting the house paid off was our 1st goal. I have heard so much conflicting talk about College Financial aid, I do not know what is the truth . Do they hold the asset value of your house & property against you? We own alot of land with our house & would like to know if they hold this against you in assets? Our cars are worth NOTHING but our Property is worth alot. Do you have to have a home/ property apprasal for filling out these finanical aid forms? If you are debt free, I imagine this is held against you also ? So if another family earned MORE than us -but was in debt, they would get more help ? This EFC they talk about, is that the $$ amount you are EXPECTED To pay -whether it be getting loans or paying cash (for ONE year only) or the whole length of the education (3 to 4 yrs)? Do you apply every year (again) for financial aid? Must you CHOOSE a college and then do this process, or can you apply for aid for a FEW colleges and then decide the one you want depending on what it will cost out of pocket?? My son has his heart set on a Christian college close to home (Geneva College) but it is REALLY expensive (or so I feeL) -otherwise, he will just go to the cheaper State college "Slippery Rock" in PA. Any books you could recommend to make sense of who is eligible to receive Financial aid, what all is held against you when applying for these grants etc. The idea of getting stuck with a bunch of loans reaching $20,000 or more, having to borrow agaisnt my house, well, I am feeling sick over it. Then I will have 4 more kids to think about after I get this one off. I am not looking forward to this process at all. Help!</p>
<p>Hi Overrun,</p>
<p>Welcome to CC.</p>
<p>Financial aid is calculated as follows:</p>
<p>Cost of Attendance -EFC (parents and students) = need</p>
<p>The parents EFC (expected family contribution is based on their income and assets.</p>
<p>Need can be met in the following manner:</p>
<p>Self Help aid consisting of
Subsidized (gov't pays the interest whild student is in college) loans, Perkins loans<br>
work study</p>
<p>Other Aid
Scholarships/grants (do not have to be repaid)
Other loans</p>
<p>Some schools meet 100% of your demonstrated need. This means that if your demonstrated need is 30,000 the total amount of grants/scholarships, loans and work study will equal the $30,000 of demonstrated need. Note that all financial aid is not created equally as a school can pretty much give you all loans and will have still met your demonstrated need.</p>
<p>A school that does not meet 100& of your demonstrated need is known to GAP</p>
<p>The students EFC is based on income, assets (35%) and summer earnings </p>
<p>
[quote]
. Do they hold the asset value of your house & property against you? We own alot of land with our house & would like to know if they hold this against you in assets?
[/quote]
</p>
<p>Yes</p>
<p>
[quote]
So if another family earned MORE than us -but was in debt, they would get more help ?
[/quote]
</p>
<p>No, debt other than debt of catrostrophic medical expenses not covered by insurance is not counted in the FA process. So if people rack up a ton of consumer debt it does not help their cause.</p>
<p>
[quote]
This EFC they talk about, is that the $$ amount you are EXPECTED To pay -whether it be getting loans or paying cash (for ONE year only) or the whole length of the education (3 to 4 yrs)?
[/quote]
</p>
<p>The EFC is basically set by the federal government guidelines. If you file the FAFSA only, a school using the federal methodology, it is a pretty straight forward calculation that looks at your income, assets and number of kids in college. If your school uses the CSS profile they do look more closely at your income, number of kids in college, private secondary school, based on your age they protect a portion of your income and they usually allocate 5% of your assets (home equity, etc )to be used toward meeting your EFC.</p>
<p>If your family cannot meet their EFC, they may have to borrow using the equity in their home or taking out a PLUS (parents) loan. Parents can borrow up to the full cost of their childs education. Plus loans are based on the parent's creditworthiness. If the parents are not eleigible for a PLUS loan than the student can borrow additional monies through an unsubsidized loan.</p>
<p>
[quote]
Do you apply every year (again) for financial aid?
[/quote]
</p>
<p>yes, you must reapply each year and the EFC changes based on your financial situation. Usually the student contribution and loan amounts will also increase each year in line with the borrowing guidelines.</p>
<p>For subsidized loans the borrowing rates are as follows:</p>
<p>Freshmen $2625
Sophmore $3500
Junior/senior (or until completion $5500)</p>
<p>
[quote]
Must you CHOOSE a college and then do this process, or can you apply for aid for a FEW colleges and then decide the one you want depending on what it will cost out of pocket??
[/quote]
</p>
<p>You need to file for Financial Aid for each school that your student is applying to. Almost every school requires the FAFSA for any kind of federal aid (stafford loans, pell grants, SEOG). Some schools may require you to file the FAFSA in order to get merit aid (academic or athletic scholarships).</p>
<p>Once the college acceptances come in, you and your child should review each package and then make a decision balancing what meets the students educational needs and the family's finacial need. Some parents are straight forward with their children regarding financial constraints in the cost of education and what they can and will realistically pay for this education. Personally I feel that this conversation needs to be had by all parents and applicants before they get their heart set on a school only to find out that it is financially out of reach.</p>
<p>As parents this is a personal decision because no one knows your situation as well as you. many parents are adverse to taking out large amounts of debt at a time where they may be looking to wrap up their work life (retirement) or because of a precarious economy.</p>
<p>It is most important for parents and students to read the financial aid policies of the schools which they are interested in. You can go to the library or bookstore and there are a bunch of books that talk about colleges and financial aid.</p>
<p>I think that parents should look at a wide variety of schools including their state schools. If you have a stellar student you should also seek out schools that give good merit aid where student may be at the top of the applicant pool. If you have a good student, don't be afraid to look at the elites and Ivies because they(harvard, Yale, Princeton) are now offering reduced EFC for families making under $60,000 per year . The other side of the coin is that they are a crapshoot for every one. At schools with large endowments yoru EFC could be lower than the fafsa EFC. these schools tend to meet 1005 of your demonstrated need giving large amounts of grant aid. However they tend to be very selective.</p>
<p>Hi Again,</p>
<p>One of the parents posted this link. I hope it helps:</p>
<p>There are also some great articles to help you through this process @ </p>
<p>WWW.admissionsadvice.com</p>
<p>Clarifying re: equity in your home--</p>
<p>Federal Methodology doesn't count your home equity 'against' you in determining the EFC. Institutional Methodology (usually) does.</p>
<p>How can I find out if Geneva college in PA will count our Home Equity against us? Which method do they use? The 50 acres came with our house, I would hate for this to be held against us for college educations for all my 5 kids. It is all stripped, has large cliffs on it, worthless land nobody would really want, but of coarse, the Tax office seems to think it is worth quite a bit, I would say by the time my son goes to college, our house & land could be worth as much as $200,000 even though my husband only makes about $50,000 a year. This is all so very confusing. Thank you for your replies, I need to read that other link . So how do the they determine what your house/property is worth---do you have to get an apprasal from somewhere & pay out of pocket, or do they just go by tax records??</p>
<p>Geneva requires the FAFSA, and not the Profile when applying for financial aid:</p>
<p>So they should be using the Federal Methodology, and the value of your home shouldn't hurt you.</p>
<p>But you can call the financial aid office and verify that before you get too far down the road.</p>
<p>Generally, the only ones that will count home equity are the ones who require the Profile. Some of them cap the value it so it doesn't factor in as much, though.</p>
<p>$200,00 in property will not kill aid for you. It's all of the Californians with shacks valued at over a million dollard who need to worry.</p>
<p>BTW-- I'd guess that with a large family, income around 50K annually, little in savings (and I presume few assets in the college-bound child's name), that your Expected Family Contribution will be very low, maybe a few thousand dollars. Use the FAFSA calculator (it's linked here somewhere) to get a better idea based on your specific circumstances.</p>
<p>Being debt free is a good thing, and won't be held against you.</p>
<p>You won't need to have your property appraised.</p>
<p>The process goes like this: Your son selects a number of colleges to apply to. You fill out the FAFSA once, and indicate which colleges the son is applying to on the FAFSA. Your FAFSA numbers will be based on your actual '04 income, but you'll be estimating your '05 income, and you'll update it later after you're sure of the numbers for the year. (You may need to fill out the similar Profile form if he's applying to any of the schools that require that). Later, shortly after the acceptance/rejection letters come out, you'll receive a financial aid offer from each college to which he was accepted.</p>
<p>The offers will always be based on the EFC (Expected Family Contribution), which should be pretty low. But not all offers will be the same-- some will involve more grant money, some will involve more loans (student and/or Parent). All will likely include a work study component where your son works while in school to contribute to his education.</p>
<p>Then you pick a school that meets your needs, update the FAFSA with your actual '05 income numbers, and send him off to college! I think you'll be fine--</p>
<p>Spend the $15 and buy this book:</p>
<p>It can save you many times its cost in the long run, and it will answer all your financial aid questions.</p>
<p>Here's the EFC calculator:</p>
<p>Thank you so much for all your help! I am breathing a sigh of relief on that home equity thing. The area we live in , a $200,000 property with a $50,000 a year job is like Being Rich. People are lucky to find a job that pays $8.00 an hour in my VERY depressed area. I live in a place that had all the steel mills & factories shut down, almost all small businesses are closing, it is very sad and hopeless it seems. My children will have absolutely NO hope if they do not attend a college. When their is interviews in our area for a $18.00 an hour job, people camp out -it is such a big deal, they sleep in the lobby of the hotels that have the interviews. College didn't do much for my Husband , but he only went for a certificate in Computers, not a Big College for years. We are VERY fortunate he got a Railroad job.<br>
Another question ..... about scholarships, my oldest son is lousy at writing, I mean, I am just being realistic when I say this.. there is no way he will EVER get a scholorshp if it involves writing an essay. He is Fanatastic in math (wants to be an accountant) , and he is very involved in Track & starting Cross Country running. My question is... Do you have to be the TOP in your grade to get a scholorship for Athletic Track, or in the Top 3 or so--- What determines getting something for Track? I just have no clue. What kind of scholorships can you get for Math, what is out their that does not involve writing essays --I guess , is what I am asking?</p>
<p>Here is a link ot the exact formula for the federal EFC- if you are mathmatically inclined, you can run the numbers and see where slightly different behavior could change your net results.</p>
<p>Valuing your home is supposed to be the market value- sales price. If the 50 acres is considered part of your home, then it is all one value. if it is seperate property, then it would be an asset which is counted as a resource.</p>
<p>On schools which use FAFSA, not profile, you need to surf the website and check their financial verification forms to see which other thingds they may ask for....many FAFSA form schools do ask for more info via the verification forms.</p>
<p>I don't know if this would be considered separate or not, We bought the house with the 50 acres (50 acres is on the deed) , but the house is on 25 acres and a separate parcel for the other 25 that is connected to it, so therefore, I get 2 separate tax bills for the house & 25 acres , and the other 25 acres with no house. I wonder if the vacant land 25 acres will be considered as an asset? So do they go by the deed , or by how many tax bills you get ? Thanks for all the help!</p>
<p>Generally, if dealing with a college that only uses the federal methodology (FAFSA), the value of your home is not a part of your assets when it comes to determining your EFC. Under FAFSA, a home means your primary residence. If however, a college uses the institutional methodology (PROFILE, or a supplemental school aid form) and you are asked about the value of your home, then the value of your home will probably be considered in determining your EFC.</p>
<p>The usual way the schools check your information is called verification. Typically, its not a particularly invasive process. In my case, they asked for a copy of my wife and my 1040, my sons 1040, and all W-2s (wifes, mine, sons). The 1040 is for the tax year prior to which you are applying for aid (e.g., for school year 2005/2006, the school wanted 1040 from 2004). I suspect that if you itemized your deductions and you deduct the taxes on these two parcels separately, then the lot without the house may be treated as an asset and used when your EFC is determined. If you have deducted the taxes on these two parcels separately, you might ask your accountant if theres any problem with lumping the sums together on your tax return.</p>
<p>Even if the lot without a house is considered an asset, there may be a way to get it out of the picture when your EFC is determined. Its called the simple needs test. Your familys EFC (expected family contribution) is derived from four factors: parents income, students income, parents assets, students assets. Look for the line on any 1040 form: Adjusted Gross Income (AGI). Under the federal methodology, if the parents income (AGI) is beneath $50000 and the parents file a short form (1040A or 1040EZ), then two of the above factors (parents assets and student assets) will be excluded when your EFC is determined. Since your husbands income is close to the $50000, by contributing to retirement plans and reducing your AGI below $50000 and if you file a short tax form which would mean not deducting property taxes, all family assets would be excluded when your EFC was determined.. Again you should talk to your accountant (and maybe a financial aid planner) to assess the pros/cons of this. Good luck.</p>
<p>How can that be true. So if you have millions in assets, but AGI is under $50K you can get aid?</p>
<p>yes, this information can be found on several websites. try:</p>
<p><a href="http://www.finaid.org/educators/needs.phtml%5B/url%5D">http://www.finaid.org/educators/needs.phtml</a></p>
<p>We do use the 1040A, we have never itemized any deductions at all, we always use the 5 children deduction and can not use house taxes, Church givings, etc. We also do not use an Accountant, or ever had anyone do our taxes (again to save the $$) , another reason I am on here, I want to do this myself when the time comes and not hire someone to do it for me -cost out of pocket. I seen on the net how you can hire professionals to fill out your college financial aid Forms & walk you thru this whole process & THEY claim they can get you the most aid. I imagine others have used this service, but I want to do it myself to save $$. I know what you mean, it really does not seem fair if you can live in a $200,000 house (accually my house & property only appraised at $120,000 - house being $58,000) and receive the same aid as someone who maybe only owns a $40,000 house. (I put a higher figure on it because in about 4 yrs it will probably be worth more) All I can say is.... Me & my husband have been SOOO frugal & cheap throughout our lives to get this old country house with land, we have scraped & skimped, not taken vacations, driven cars almost 15 - 20 yrs old plus always fixed them ourselves, only buy food with coupons, never go to movies, only rent, never buy new clothes, but go garage saling or Goodwill, eating out for us is a Luxury, we even put in a wood/coal furnace at our last house to avoid paying High gas prices. Plan to install an Outdoor furnace at this house to avoid these Rediculous Oil prices. ANd I Ebay for all the games my kids want- sometimes that cuts the prices in half compared to store prices. I mean, the families who have the same incomes but lesser priced houses probably live like everyone else.... eat out at the drop of a hat, financing newer cars, basically blow their money when they get it, so in that respect, I really don't want them to hold my house & land against me. I know alot of poeple who make more $$ than our family & have less kids who have ALOT less to show for it. We have been prepared for almost everything financially --but not this college thing --- We choose to start a 401K a few years back - before college savings.</p>
<p>Ive read books, magazines, websites, basically anything I could get my hands on to learn about how college aid works. Generally, the information is rather useless as its outdated or is not specific enough. The link above that sblake7 provides to amazon.com is to the book by the Princeton Review Paying for College Without Going Broke. Sblake7 is right in that the book can save you many times its cost in the long run, and it will answer most if not all of your financial aid questions. The author of the book updates it every year. Good luck.</p>
<p>You also might try the following link, its straight from the horses mouth (department of education)</p>
<p>Overrun:</p>
<p>Your finances don't sound that complicated, and you should end up with a low EFC and therefore some generous financial aid offers from the colleges. You CAN do it yourself.</p>
<ol>
<li>Get the book</li>
<li>Get out your last year's tax return</li>
<li>Try the financial aid calculator</li>
<li>Start applying to colleges with your son</li>
<li>Apply lessons learned from the book to your situation going forward</li>
<li>Fill out the FAFSA by the due date (you can do it in several sessions online).</li>
</ol>
<p>It will take some time, but you CAN do it. And you WILL be able to pay for your son's college, with some financial aid.</p>