<p>Prior to embarking on the FAFSA and PROFILE I was just wondering if you folks out there considered your EFC, in both instances, (FAFSA/PROFILE) to be an accurate representation of what is affordable to you. Also, if there are gliches or flaws, in either system, what would you consider them to be? Just curious...</p>
<p>Not even close! According to ours, we should have been able to pay about 30K per year for school out of pocket. Mind you, we drive cars that are 10 and 14 years old, don't eat out, don't have credit card debt, and are generally frugal people. But we don't have that kind of money laying around, and would have to borrow nearly all of it to meet that number. It doesn't seem to bear much relationship to reality.</p>
<p>Ours is not representative of what we are able/willing to pay. What I mean to say is that we <em>could</em> pay it, but we have two kids heading for college over the next few years - and there would go the nest egg. Because I know we will be a full-pay family, we had to limit the schools S could apply to. We can't/won't spend $45-50K a year on tuition/R&B even if FAFSA thinks we can.</p>
<p>They don't expect you to be able to pay your EFC out of current earnings. There is an assumption of saving, planning, borrowing etc.</p>
<p>I think at some level, we all know that had we started SERIOUSLY saving for college when our kids were infants (assuming you don't have lots of kids) we probably could afford any school out there. LOL</p>
<p>In addition to the saving, planning, borrowing, etc, they also want your house.</p>
<p>Well, I'm sure it's correct, but it's hard to see it as reasonable. Certainly we don't have it lying around - but we could borrow it.</p>
<p>
[quote]
I think at some level, we all know that had we started SERIOUSLY saving for college when our kids were infants (assuming you don't have lots of kids) we probably could afford any school out there.
[/quote]
When we were expecting our youngest 17 years ago (she has two older sisters) we met with a financial planner who figured out that it would cost us the equivalent of our monthly mortgage to save enough for three educations by the time the kids went off to college. As we certainly couldn't have squeezed another mortgage out of the monthly budget at that point, we went with plan B - living well within our means and blindly hoping for the best. It still hasn't added up to the EFC.</p>
<p>And then some do plan early and often and have the rug pulled out from under them. Planning is great but ......</p>
<p>As to the basic Fafsa number - no argument out of me. Thought it was fair. Had us paying basic state school prices, even a little less. State school was doable with student loans (unsub-Stafford flavor) and some smallish parent borrowing. Profile? Not so good at $4k higher. Adjustments upwards by the school? Even worse. BUT -and here's the rub -since schools consider student loans, student summer contribution, and student work study as "aid", those monies are not available to pay your EFC.</p>
<p>So in the case of Yale/Amherst you have your Fafsa EFC , plus add another $4k Profile ( mystery assets- including value of an unsaleable sole proprietorship professional business with zero hard assets), plus add back in school adjustments to income (Not recognize business losses -one business makes money, the other lost somem - and depreciation, refuse to consider a ranch you live on like they would anybody else's home and cap equity, then fail to consider property investments not in a "qualified" plan the same as retirement accounts even though you have no other retirement. Not a cent. )</p>
<p>Then you add the student self help numbers to the Yale/Amherst EFC recalculation and suddenly a $13K Fafsa EFC, $17K Profile EFC means $25K out of pocket to attend Yale/Amherst for room/board, tuition, and fees before books, transportation, or "enrichment activities" . </p>
<p>Other than that , I thought it entirely fair.</p>
<p>A middle class business/ranch owner without employer sponsored retirement and healthcare benefits has a tough row to hoe. (Now , had I been more on the ball and a lot more ...uhhhh... "willing to take every advantage", my retirement plan could have maybe owned the ranch and I could have carved out the $70K cabin as a home, and on paper not have been a business owner, and .....there would have been away to scheme it where our number may have been half that. I argued that and everything else I could think of, including more personal matters, and neither school budged a dime. )</p>
<p>I went to a LAC in the mid 70's when LAC tuition was not what it is today. Once we started a family we saved. We did not use professional planners, or pay much attention to what was happening with tuitions. We put money away in a prepaid plan, and in a separate 529 account. When D was beginning her junior year, and I started looking at web pages with tuition/room/board expenses, I about fell over. When I attended college, total expenses were easily under $4000 a year tuition/room/board/fees and I suspect even books. When I realized that this figure was now easily $45,000 for my LAC, and others like it, I just had no idea. Given inflation and the cost of living, I did not realize that tuition and college expenses had grown so much faster than everything else, even gasoline. </p>
<p>And given that until I have two in college, our EFC is pretty much the entire cost of college, I never would have guessed. </p>
<p>I lucked into an LAC. Funny, D is not that impressed with campuses that are no bigger student body wise than her high school. And since she wants to stay in-state, hopefully at a flagship U, our savings will cover undergrad and graduate schooling. But only if we go public for one or the other.</p>
<p>Haven't done a calculation yet, but you guys are scaring me!</p>
<p>Our EFC exceeds the cost of any college in the land but I feel I really can't complain. We do have more than adequate retirement funds (401-Ks and IRAs) and own our house outright. No complicated financial stuff, pretty plain vanilla income mostly from salaried jobs. We always lived simply and under our income and both socked away as much as we could into retirement from early on, and put most of any bonus monies into college funds. </p>
<p>The one issue I have is that our kids are six school years apart and there is no consideration of our funding two college educations, since they don't overlap. If the schools expect you to fund your kids' college over more than the four years (by saving in advance and borrowing into the future), then they should give you some credit for kids who are spaced more than four years apart. Instead they are each treated like onlies. Were they closer in age we would qualify for FA for the years they were both in college. </p>
<p>But again, I can't complain, and am glad we can do it.</p>
<p>No, not an accurate picture of what is affordable for us. Also, one or two problems that cost money, and you are dipping into savings if you have any, and if you don't then I don't know where you turn. A new furnace, new car (even a used one), new roof, tree removal, tutoring for a younger child, old sick parents need some money and ouch....it spells financial trouble.</p>
<p>There are two great shockers to unsophisticated parents when it comes to aid. (I was one so I should know.;))</p>
<p>One for need based : self-help like workstudy, summer earnings contribution, and loans up to an institution decided level do NOT serve to reduce EFC. </p>
<p>One for merit-based: while there are some exceptions, institutionally granted merit scholarships do not reduce EFC. (Outside scholarships routinely do not reduce EFC either, just the self-help amount. There are also some exceptions here. )</p>
<p>For this post "institution" means college or university.;)</p>
<p>Every cycle there are parents even at this late date just finding this out. It's usually quite painful to watch.</p>
<p>Very accurate for my family. Is it easy? No, our EFC would wipe us out, but no more. The goal of aid is not to make paying for college easy for everyone-- it simply isn't an easy thing these days period. The goal is to make it doable. That's exactly what my EFC reflects-- it'll be tough for me and my family, it'll take a lot of what we have, but I'll get out almost entirely debt free and my parents will have emptied all of the savings for my sister and I for college (combined over six figures) and have had a few years of living tight.</p>
<p>I'm lucky enough that though my parents combined income only crossed over the six-figure mark in the last 5-7 years (despite living in one of hte most expensive places in the country) that they were able to save for me from when I was very young.</p>
<p>My aid package is quite nice for the next to years now that my sister is also in college, and it's as much as we can expect.</p>
<p>I guess the point is, FAFSA and Profile nailed exactly the amount we could pay if we completely wiped ourselves out on college, and that's the way it should be. It's not aid to make things easy or even reasonable, but doable. It still requires sacrifice to send your kid away to a top school, but there is an end in sight afterwards. </p>
<p>I'm also lucky to go to a school with plenty of money for Financial Aid so I receive quite a bit of grant money, etc. I'd like to think eventually everyone can go for an affordable price, but the only place with an endowment large enough to make that a reality is Harvard.</p>
<p>I know a business owner who takes money under the table to lower his income. . As a result his annual income is about only 2/3 what he actually earns. I'm not advocating that by any means. In the end he is cheating us all. I'm thinking there might be some LEGITIMATE business write-offs that would help those who owned a business.. maybe not.</p>
<p>curmudgeon - Regarding your two shockers, I hope I'm not one of the clueless parents, but you never know! Just to make sure I understand, you're saying that anything the student "earns" - be it merit awards, loans, work or hypothetical work that he could have done but didn't - has no effect on expected parent contribution? So if your kid is lucky enough to get merit aid, that typically reduces the necessity to "earn" those other aspects of the student contribution? If the merit award were to exceed the expected student contribution, would it then reduce EFC? I find it counterintuitive to exclude the student from the "family" in EFC, but I think I understand how it works. Please correct me if I don't have this right. </p>
<p>If the online estimators are at all accurate, no, I don't feel the parental contribution is going to be affordable. It will be a third of our after tax income, or 43% of our savings to support a year of a private LAC for one of our 2 children. We have a house in a ridiculously inflated market, and our retirement accounts, but we're actually quite close to retirement age. So it's daunting, to be sure. But we'll figure it out, or send them to the StateU if we have to.</p>
<p>We saved like crazy over the years - both for retirement and college. While we may have made a mistake by saving in the kids' names (!), I'm glad we have the money now. That, living somewhat frugally, and choosing colleges that gave a couple of nice merit scholarships should pretty much do the job. (EFC is just about exactly the cost of our 2 kids' colleges...)</p>
<p>It's hard to part with that savings - but it's what we saved it for!</p>
<p>But still I look back and think about all the crap we bought that we could have lived without.</p>
<p>rainmama, what curmudgeon was saying (I think) is that "merit" awards, whether inside our outside, count toward the "financial aid award" part of the equation, not the EFC. In other words, the EFC must come out of the family pockets, not someone else's.</p>
<p>Keep in mind that the FAFSA formulas are set by congress. When I last looked at the underlying formulas a few years ago, I concluded that they discriminate heavily against those who:</p>
<ul>
<li><p>make more than about 60K per year, as family income above that is "taxed" at a high rate (45 percent or so?)</p></li>
<li><p>those who don't have defined benefit retirement plans and are saving istead via 401K plans get shafted, as 401K contributions are added back into income whereas a company's contribution to a defined benefit plan is not.</p></li>
<li><p>assets in the kid's name are the worst, as they are taxed at a 35% rate. The same asset held by a parent is taxed at a much lower rate (5% if I recall).</p></li>
<li><p>selling assets to finance that education, such as stock, gets tricky, as the proceeds from the asset sale can be counted as income in the next year's calculation.</p></li>
</ul>
<p>So most of us don't feel these numbers are even close to reasonable, but blame congress...</p>
<p>rainmam, it appears you are talking about institutionally granted merit aid and how that is calculated for a student who also qualifies for need based aid. My D was in that situation at Scripps and Hamilton. P.M. me with more specifics and I'll see if I can help. I know it is confusing so I don't want to muck up this thread with talk of "preferential" packaging of need awards for merit scholarship winners.</p>
<p>you're saying that anything the student "earns" - be it merit awards, loans, work or hypothetical work that he could have done but didn't - has no effect on expected parent contribution?</p>
<p>Im not great at answering questions- but I try and use a hypothetical to explain it how I understand it.</p>
<p>Say school is $40,000</p>
<p>EFC- is $20,000- included in this is $3,000 that the school expect the student to contribute from earnings- not necessarily merit aid- that isn't the same.
So need is $20,000
Package could be( assuming school meets 100% of need)
$13,000 in a school backed grant.
$ 5,000 from a Stafford loan ( subsidized or unsubsidized)
$ 2,000 from work study.</p>
<p>If merit aid is won, then likely the loan portion of financial aid is reduced.
No it won't reduce the aid package, but it will reduce the portion of self help that makes up the aid package.</p>
<p>I hate to break it to you rain mama, but 1/3 of after tax income is par for the course in my experience.
( do you live in Ballard by any chance?)
We even had to take out a equity loan to tap the equity ( that had only accrued through a wildly inflated housing market), in order to pay EFC.
( another expense that BTW , we hardly were looking forward to- I think only mini likes writing the tuition checks)</p>
<p>However- our EFC was roughly the cost of instate expenses- and although our D does have( subsidized) Stafford and Perkins loans that she is paying back, the school was good for her and its possible she would do it again.</p>
<p>BUT... now that we have one fewer dependent- our EFC has increased dramatically ( by about $6,000) & the only schools that will be possible for her sister to attend will likely be ( as the bulk of the schools that meet 100% of need are very competitive- most schools gap- or whats worse they gap * after* freshman year) either instate schools or schools that are part of the undergrad exchange agreement ( 150% of instate tuition)</p>
<p>nmd, in basic terms - yes. That is what I meant. I seem to have lost a few brain cells doing my much extended tax return yesterday. I needed what I had to function as I didn't have any to spare. I'll stop now since I seem to be posting gibberish. Sheesh. I need some of those brain vitamins...if I could even remember what the hell they are called.</p>