<p>My son is only freshmen in HS, but I stumbled across this site..and wow, what a source of info. Ok, the rising costs of colleges has got me very concerned and the EFC calculation didn't help at all.</p>
<p>Our net worth is high because of a piece of land given to us by my mother a while back, it's valued at about $600k, empty lot with water view. Our combined income is $90k, our home is valued at about $500k, only owe about $100k. We have about $80 total in a 529(2 kids). This has taken a huge hit with the stock market collapsing. $130k in retirement funds. A few years ago, I thought the 529 would be worth easily over $100 per child at college time, but that will no longer be the case. </p>
<p>Anyway, our EFC came out to be $48k for FM and $58k for IM using the calculator on this site...which I assume basically means no help at all. I'm not sure I have a question..but it seems that people who are land rich, but modest income don't get much help. Is that correct? Taken out the $600k lot brings the EFC down to $20K(FM). I'm almost thinking it might be wise to quit claim the property to a trusted family member until college is through and then have it quit claimed back...is that I crazy idea?</p>
<p>The problem is that there isn't enough financial aid available to cover all the deserving kids with $0 EFC. Those of us like you with substantial assets are expected to use those assets (sell or mortgage) to help finance our kids' educations; the $0 EFC families don't have that option.</p>
<p>FYI, the value of your main home is not part of the federal calculation. The value of the empty lot is. 529s are counted as parents assets. The amount you have in the retirement fund is not counted in fafsa either. But any tax deferred money you put into it (the year prior to filing the fafsa) is added back as income</p>
<p>I'm sure this might ruffle some feathers...but how about this hypothetical...Let's assume 2 sets of people making roughly the same income.. </p>
<p>Group A has additional property by making wise decisions in their youth, working their butts off to buy additional property(which since has increased substantially). They sacrificed, lived within their means, and made smart decisions with their money. </p>
<p>Group B blew their paychecks on new cars every couple years, were foolish with their money, bad investments, out to eat every night, ect.</p>
<p>Now, because the first group has a greater net worth, they do not qualify for financial aid and Group B does...even though they have the same income? That just doesn't seem right at all. I believe income should be the main factor.</p>
<p>So Group A families that have diligently saved for their kids' educations should be protected from spending it on such, and be given just as much aid as the not-at-fault child of Group B families?</p>
<p>BTW, there are FAFSA-only schools and FAFSA-PROFILE schools, so each group has a chance.</p>
<p>Income is the main factor for most people. Only 5.6% of unprotected assets go to the EFC compared to @ 47% of income once it is over a certain (not that high) amount.</p>
<p>"So Group A families that have diligently saved for their kids' educations should be protected from spending it on such, and be given just as much aid as the not-at-fault child of Group B families?"</p>
<p>what if Group A didn't save for kids' college, but rather saved and bought other property, the value of which excluded them from any financial aid?</p>
<p>I'm not saying those well off should expect FA...but it seems that those that made..let's say, not so smart financial decisions along the way...are the ones that do expect aid...even though the course of not having savings or other assets is their own doing.</p>
<p>My main point is that a person's income should be much more of a factor...Some save, some don't...why should those that choose not to save be rewarded with FA? </p>
<p>Just saying.."because they don't have the money"...doesn't quite sit well with me.</p>
<p>To some extent, an asset is an asset, whether saved for college or otherwise. Consider how easy it shouldn't be for wealthy families to hide assets by easily transforming them.</p>
<p>There is some allowance made for the not-at-fault child of possibly irresponsibly parents. As far as I can tell, colleges don't dig deeply into why a family doesn't have money or assets. </p>
<p>It won't always be fair because of differing views of what is fair. Fair to whom? The parents, the child, all other families, the colleges? Who can say what's really right.</p>
<p>good post..I would just reiterate that I believe current income should be the main factor. I wouldn't say the ones who saved are being "punished" by not getting the FA..but the non savers seem to be making out, or "rewarded" for not being as wise with their money.</p>
<p>Current income is the main factor. Once your unprotected income goes over @ $27,000 (after taxes and allowances) 47% of it is considered available for the EFC. Unprotected assets - 5.6%. Much more emphasis on income for most people.</p>
<p>true..but the 5.7% sure adds up fast on 2nd properties or assets that have built up over a long period of saving.</p>
<p>It's hard to get around the fact that someone can save for years thus having a greater net worth than someone who had the same income but instead chose to live the "high life" with minimal savings....yet they will get FA...a hand out, a reward for not saving. </p>
<p>LOL..this should sure could get political in a hurry..and touches on the differences between how are 2 parties think.</p>
<p>...yet the argument of "why should the kid suffer" because of the parents is hard to counter.</p>
<p>um, that asset of yours, the 600K piece of land cost you NOTHING if it was a gift. What's the problem with using some of it's value to pay for college?</p>
<p>Maybe you would like to donate that asset so you no longer own. would that make you happier?</p>
<p>my hypothetical wasn't about my personal situation....but to answer your question, yes, I will probably have to take out a mortgage. ...that would mean I am still paying 100% of my kids college....I have no problem with that...and really wasn't my argument.</p>
<p>I would like your response to my hypothetical...2 parents SAME INCOME..one saves, 1 doesn't...1 gets FA, 1 doesn't...fair?</p>
<p>But they can't pay; they didn't save and don't have enough income. For the parents nothing changes; the child gets the "reward."</p>
<p>Yes, such "irresponsible" parents could waste their modest income and take a chance that their child gets funding elsewhere. The "responsible" parents with the same income are at least trying.</p>
<p>Yes, given two families with the same incomes, if one saved a lot of money and the other did not, if both incomes are such that they do not go above financial aid cut offs, and if the assets saved go over the allowances for financial aid, the family who saved will not get aid that the other family will.</p>
<p>Bear in mind that when you are talking about FAFSA, the maximum amount of aid that is guaranteed is not quite $5k in Pell grant money, and subsidization of Stafford loans. In order to qualify for the Pell, the income has to be pretty danged low. I don't think you are going to get too many families who would qualify for the PELL on an income basis, get disqualified for having too much in assets. The more common situation I see that is so unfair with the PELL is that someone with a well to do non custodial parent can get that money if the custodial parent qualifies. Even then, it takes some finnagling most of the time to get the maximum benefit. </p>
<p>Anyone who wants to be in the situation to qualify for the PELL and other financial aid can do so with a couple of years of planning. Just get rid of those assets. Then you will be line to get those big PELL bucks. If you don't have the assets, you can't join the other camp, since getting the money is much more difficult than getting rid of it. You get more flexibility and choices from saving the money. If the Pell money is more advantageous, you can qualify your family for it.</p>