<p>My husband received a one-time bonus last year that was basically equal to his annual salary, thus doubling our income for 2011. That was an unusual circumstance that will never happen again, so our 2012 income will be half of 2011's. Will FA officers take that into consideration, and just look at his annual salary? I was planning to write a letter to the FA offices explaining the situation, but I'm not sure how to word it. And should we send W2s from the past few years, to show that this was a one-time bonus?</p>
<p>I think you should do both those things, but start by just putting that on the comment section of the CSS profile… or / and write to financial aid office about it. The pror year W2’s would be your evidence.</p>
<p>I don’t think schools are going to just ignore this lump sum bonus. It’s there, you got the money, and they’re going to think a portion can be used for college costs. </p>
<p>Your FA situation gets evaluated each year, so the following year’s FA pkg will reflect your normal income.</p>
<p>Are you concerned that your child’s FA packages for all four years will be based on this one year? Or do you want them to just ignore the bonus and provide aid based on regular income amounts? I doubt that they’re going to ignore the bonus. It’s like a one-time inheritance or some other lump sum distribution. </p>
<p>Certainly, you can include mentions of the one-time bonus and include proof of past years’ income, but I doubt that’s going to change the fact that they’re going to think that a part of that bonus can be used for college…perhaps as much as 25%.</p>
<p>Do these schools meet need? If not, then it may not make too much difference.</p>
<p>I think the vast majority of schools will “charge” you based on 2011 income because that’s what they’ll do for everyone. Many have fluctuating income. For those that meet need, they will reevaluate each year.</p>
<p>I’m just hoping they’ll consider the fact that our 2012 income will be half of what it was in 2011. And yes, I wondered if they might think, “Use the bonus money for tuition”, but unfortunately, it was used to repay loans/debt, and it’s gone! :(</p>
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But it could have been used towards tuition. That was your choice, and your child shouldn’t be awarded more financial aid because you chose to pay debts rather than put it toward college costs. </p>
<p>It’s only fair that they consider that money for 2012. Next year when you file the FAFSA they will consider the lower 2012 income.</p>
<p>Your child may have to take a gap year so that next year’s FA application won’t show that money.</p>
<p>Since you say the money is “gone” to pay debts, I wouldn’t think it’s a good idea to just borrow again to pay a high one-time EFC. That just puts you back where you were.</p>
<p>If you get a high EFC, and schools won’t alter that, then a gap year may be the best option. During that time, your D shouldn’t take ANY classes anywhere…she won’t want to lose her incoming frosh status.</p>
<p>Your D may be upset to take a gap year, but in the big scheme of things, look how it will all work out…your debts have been paid off, your own financial situation has improved, and if just means delaying college for ONE year, then it’s all been worth it. Perhaps since a good part of your income is no longer going towards debt payments, you now can afford to do pay for some interesting gap year experience for your D.</p>
<p>What would your EFC be without the bonus?</p>
<p>My concern will be that federal money will be adjusted, but not so much institutional aid.</p>
<p>Since aid is calculated assuming a certain percentage of current income, past income, and future income, this bonus shouldn’t be weighed as heavily as it isn’t income continuing into the future. It’s more like assets. But I don’t think you have any options regarding the federal aid. You might be able to get consideration for your institutional aid since you won’t be receiving that amount of income in the future, and therefore, their calculations that consider future income will not be correct.</p>
<p>We were in the same situation last year, but with non-qualified stock options. They too are counted as income so our income appeared higher for one year. (It wasn’t twice our income, though!) But we commented on the profile that our income would drop at least 10% the next year. The college financial aid office requested additional documentation and our financial aid was increased. It wasn’t increased to the amount we would have received had we not received the additional money. And that makes sense to me because it was additional assets - but our income would not continue at that level.</p>
<p>This particular college re-evaluates financial aid for any expected drop in income - a parent who lost a job that year, a one time bonus, a significant expense for health, etc. Hopefully, your college does the same. </p>
<p>Edited to add: BTW, the following year, our college will request documentation to see if the income drop did occur. If not, you would be liable for whatever increase was given to you.</p>
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<li><p>The schools MIGHT consider this…but more than likely they will wonder why some of this money was not set aside for college costs for the upcoming year. Your consumer debt, and choices to repay…or not…are considered choices. Debt or not…is not considered in the financial aid calculations.</p></li>
<li><p>You might want to run a financial aid calculator. If your husband received a bonus that doubled his salary for 2011, it is very possible that his earnings in a REGULAR year would put you way out of the running for any federally funded grant money. You would need to have a very low income to qualify for the Pell Grant (which is the federally funded grant provided by completing the FAFSA). </p></li>
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<p>Regardless of your income, your child will be eligible for the Stafford loan.</p>
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<li><p>If this is a FAFSA only school (doesn’t require the Profile or a school financial aid form), it is HIGHLY probable that the school doesn’t meet full need of all accepted students anyway. You may be fretting over nothing.</p></li>
<li><p>I would run an online financial aid calculator using the figures with and without your husband’s bonus. You may find that your family contribution is high enough that you would not qualify form much aid anyway.</p></li>
<li><p>I could be wrong, but I don’t know any full time, minimum wage level jobs that would give a person a bonus that is equal to their salary. I know MANY highly paid professional jobs where this could be the case. If your income is high to begin with…making it higher isn’t going to matter a whole lot when it comes to the awarding of need based aid, particularly federally funded need based aid.</p></li>
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<p>Have you filed your taxes for this year yet? If so, will you be getting a good-sized return? If so, set that aside for college costs.</p>
<p>The reason I’m asking is this…My H twice got a bonus equal to half his salary. The amount that was withheld for taxes was quite high, so we did get a nice tax return the following years. If that’s the case with your situation, you may have a similar experience.</p>
<p>As Thumper mentions, typically it’s not low-income people that get huge bonuses, and it sounds like your H is sole-provider. If so, then your H’s regular income must be quite good - all by itself. Adding a bonus on top could mean that bonus is going to be assessed at more than 25%. Those who earn more than $100k are often expected to pay as much as 33% towards college. </p>
<p>Have you run any FAFSA and CSS profile calculators? Have you run any school’s NPC?</p>
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<p>Actually, I would think the school would be MORE interested in a document from your husband’s employer saying that this bonus will NOT happen again.</p>
<p>I have trouble believing the school will make any adjustment. It was income last year. That income could have been used toward tuition this year. That’s how FA works.</p>
<p>mom2 - just FYI:
When you get money back from the IRS because too much money was withheld from your paycheck, it’s called a tax REFUND. </p>
<p>Your tax RETURN is the paperwork you send in when you file your taxes - 1040, 1040A, or 1040EZ, plus all required schedules and forms.</p>
<p>I’m seeing these terms misused more and more frequently these days (even on the radio by local car dealerships!). But if we’re here to give people advice on tax and FA issues, I think we should try to be as precise as possible in order to avoid confusion.</p>
<p>Please don’t think I’m being snarky here because really…I’m trying not to be.</p>
<p>I don’t understand something. This family had a huge financial windfall in 2011 which they are hoping the college will not consider. They presumably are hoping for more need based aid.</p>
<p>Why is it that it’s ok to ask for more aid if your income is less…but it’s NOT ok to assume you will get less aid when you have an increase in your income?</p>
<p>In both cases…your income…is what it is. If it’s higher for the year, your aid would be adjusted down. If it’s lower for the year, your aid would be adjusted up. (At a school that meets full need).</p>
<p>Why would the school be expected to ignore the increase in income…it happened? The same family would expect the school to look at a reduction of income and adjust aid accordingly.</p>
<p>How is the school to know for sure that the bonus will not happen again?</p>
<p>MomCat quote: "When you get money back from the IRS because too much money was withheld from your paycheck, it’s called a tax REFUND. "</p>
<p>lol…yes, I know that…thanks for the correction.</p>
<p>Thumper is right…past years’ documentation won’t tell them much. It could appear that your H has been promoted in some way and this is how future years’ will be. Some kind of documentation from the job that this is a one-time thing may help.</p>
<p>“Why would the school be expected to ignore the increase in income…it happened? The same family would expect the school to look at a reduction of income and adjust aid accordingly”</p>
<p>True…</p>
<p>And if this family has paid off their debts (cars, credit cards, whatever), then the money that was being spent each month towards those debts is now available to go towards college. That said, I don’t think it’s a good idea to take on new debt for college…but look into using a monthly payment plan the school may offer…or do a gap year so that last year’s income isn’t considered. A gap year would solve this problem.</p>
<p>thumper - I can’t speak for the OP because like you said in a previous post, anyone who gets a bonus that large is probably making a lot already and maybe doesn’t qualify for much aid anyway. But I can speak for our situation.</p>
<p>The way it was explained to me by the college is that aid is calculated on past, present, and future earnings - and the age of the older parent is used too to predict future earnings. If future earnings are decreasing, then the calculation needs to be adjusted. The college documentation suggests if it’s a one time bonus, a note from the employer would be sufficient to review FA awards. </p>
<p>But as I said, our college will be verifying that our income did drop by the predicted amount. At our college, a 10% predicted drop in income would be enough to request a review of the FA offer.</p>
<p>My wife and I are both retired, we don’t own a home, one child just graduated after 5 years of college, a D is going to school this Sept. The bottom line, why go thru paperwork (FAFSA) for them to just say 35% of our AGI is our EC. After multiple pages of CSS we are awaiting word what % of our AGI they expect.
I cannot figure this out, we have a 5 year car loan @ 2.3%, can purchase a house for less than 5%, and cannot get a decent rate loan for college. If we expected our child to graduate with a BA and than straight to Starbucks or Mc D’s, than I would understand, but her brother with BS Engineering Physics and a real job is now paying a small fortune in taxes and we would expect the same from our D.</p>
<p>Cars and homes are collateral. There really isn’t collateral on a student loan. And, while your child(ren) may end up making big bucks, not many college students do…depends on the major, talent, etc.</p>
<p>Your son got his degree towards a profession that historically has a high starting salary…most bachelor degrees do NOT immediately yield high paying jobs.</p>
<p>At this point, it would be truly hard to predict what your D’s starting salary would be. If she starts in eng’g, she may hate it and change to history. If she starts in poly/sci and becomes an elem teacher, her salary will not be close to your son’s.</p>
<p>Perhaps if loan rates were based on major, that would be one thing…but then a student couldn’t really change majors or (worse) quit school without incurring some kind of penalty/rate change.</p>