<p>I used FinAid's EFC calculator and entered my financial situation prior to selling our house a few months ago (lots of equity, $0 savings, broke) to post-sale (don't own a house but now have a large savings acct). With my newly healthy savings account, my expected contribution is three times what it was when I owned the house. I won't be ready to buy another house for several years.</p>
<p>Getting out from under that stress was worth it, but... darn!</p>
<p>Fully fund your IRA</p>
<p>I thought that $4000 was the max you could contribute each year. Is there some type of exception for those who sell a home & want to put proceeds into their IRA?</p>
<p>Even if she places the money in an IRA where it will be protected, if she has a child going into college in the 2007 the contribution will still be considered as income for 2006, and will be a factor in determining the EFC for the 2007-2008 school year.</p>
<p>Right-- IRA contributions get added back in to income for purposes of FAFSA-- so you can't decrease your EFC from income that way.</p>
<p>Remember not to confuse income and assets, though. It's the assets that are killing you, not the income (assuming your gain on the house didn't get counted as income).</p>
<p>Bad timing, frankly. You can convert some of the liquid asset to illiquid assets-- invest in stuff that doesn't get counted, like a car. But I think you'd just be working around the margins. Max contribution from parental assets is about 6%, as I recall-- you might just have to bite the bullet and use some of those funds for college.</p>
<p>Or move up your timetable for buying another house.</p>
<p>sybbie & sblake: Thanks for the info. Is my original assumption correct, though? I thought $4000 is the max annual contribution & there is no provision for rolling a home sale proceeds into an IRA?</p>
<p>I guess I can pray this is true.</p>
<p>Setting aside the fact that possibly a parent should discourage their child from attending a school whose yearly tuition is 1/2 the parent's yearly income, let me just ask you if the EFC is as literal as it seems: Say the parent makes only 60k/year, tuition is 30k per year, but temporarily has 250k in the bank partly for college tuition, but also for a down payment on a house (yes, that's a moderate down payment in this area - I don't want to head toward retirement with a giant mortgage). Do the EFC calculators figure "hey, you've got the money!" or do they see that parents have a right to their money too (and to support younger siblings!)? ;-)</p>
<p>They will take the total assets available (including the down payment) and assume a percentage of that is available for tuition. I don't know the actual percentage, but someone here will tell you. The percentage is higher for assets in the students name than for assets in the parents name. Best bet is to use the money before you file the profile.</p>