<p>Thanks guys - that's all helpful info. I'm not going to try to pin down details just yet, curmudgeon, so you can rest your brain cells :) If my son gets into his ED school, merit aid won't even be an option. So a general understanding will do for now. BTW, this week I've had the pleasure of completing the CSS profile and finalizing our much extended taxes. I feel your pain, curmudgeon!</p>
<p>EmeraldKity - no I'm not in Ballard, but I am a north-ender. I've always wondered if your kids played for Emerald City? My D is a lifer with that club.</p>
<p>Actually, emeraldkity, I think it's only curmudgeon that enjoys signing the tuition checks ;-)</p>
<p>I agree, cur, it is painful to watch the horror of the realization that parents are stuck with paying the EFC. Scarier than anything Halloween-related.</p>
<p>The only thing that can make a dent in the EFC is if the student somehow earns enough scholarship money to exceed the college's award. For example, </p>
<p>$45,000 tuition, room and board
(20,000) EFC
$25,000 college award package (combinations of loans, grant, etc)(assumes college will meet 100% of your need - BIG
assumption)
(15,000) huge outside scholarship #1
(22,000) huger outside scholarship #2</p>
<p>Which means 12,000 can be applied to your EFC share, and you only have to cough up $8,000. However, most outside scholarships are one-time only and you still have to pay for another three years of college.</p>
<p>I'll try again. When I started this process many moons ago I thought you looked at the costs of the school, calculated your need based aid by estimator (and then for real), and then subtracted that number from costs (R+B, tuition and fees) to give you X- what you pay. Then if you got a scholarship (Merit) that amount came off what you would have had to pay after the need calculation - I thought it came off of X. I may have cried when I found out the truth.</p>
<p>rainmama- no she doesn't play select- her team doesn't even practice anymore-( seniors are soo busy- she also plays rugby- is on her schools undefeated swim team and runs track- ) but they have a good time :D</p>
<p>Nightingale, the only legitimate writeoffs that I know of are added back in to the picture by the school. You can take it off your taxes and but the schools add it back in. Depreciation and business losses for two. Let's say one guy has a taco stand and an auto parts store (apartment complex and accounting practice). He makes $100K from his store and loses $25K from his stand. Schools will disallow the loss (at least Yale/Amherst did mine). (I assume the theory is you could shut off the loss by closing the business. Not always the best option.)</p>
<p>Cheaters cheat and I hope they get caught, too. Makes it tough for the rest of us.</p>
<p>Of course, if you are one of those "wealthy" families like we are (cough, cough) that only qualified for a small subsidized loan, (in other words, right at the edge of need, the worst place to be...but that's another story) then merit awards are like money from heaven. When my D won a scholarship her soph year in college that pays $15,000 toward junior and senior year expenses (ie 7500 each year) we did a victory dance, and she did not need to take out any more loans. so we all won.</p>
<p>newmassdad, what is the line for the "right at the edge of need"? what is the ball park figure to be considered a "wealthy" family? </p>
<p>We have not really sit down and do a EFC or profile or whatever. Based on what is said here, I am afraid that we may have to pay a lot more than what was in my mind.</p>
<p>I'd just throw some caution in here for people sending their eldest off to college. This might sound obvious - but be sure you save some money for kid #2! :)</p>
<p>"Cheaters cheat and I hope they get caught, too."</p>
<p>That does not seem to be the attitude where I live. There is a huge underground economy that deals in cash. If you deal with a small business, especially one that provides a service, you will have a choice of paying with taxable funds, or paying a substantially reduced amount with cash. So even if you are salaried, do you pay high income taxes, very high property taxes and sales taxes in addition, or do you take advantage of the underground economy?</p>
<p>Our EFC thru FAFSA was quite a slap in the face, but then when I calculate in the fact that they are counting DH's 401(k) contributions as "untaxable income," plus other untaxable income that we have, it is probably accurate, as much as I hate to say it.</p>
<p>Our EFC is ONLY capable of being met by my current earnings. We can't afford to take out loans that have to be paid later, and there's no way we can dip into savings/retirement since DH is a good deal older than me and we are not going to be able to pay back loans once he's retired. I'm a fairly good earner at this point, but being self-employed (and also self-UNemployed at times) we have to weather the up and down cycles of (in my case) VC spending. Luckily, things are good right now.</p>
<p>I realize FAFSA is based on national averages, but when you live in an overinflated area as we do, our income isn't "high" but merely average. I'm hoping that by having one in college now, and another on the way next year, that the EFC will be split betwixt the two of them, which means I have about 5 years total to pay for 2 colleges. I told both little darlings that grad school is on them!</p>
<p>Sorry to get so micro here, but these posts raise a question for me: does the untaxable income number on CSS include contributions to a 401k, an individual IRA, and a standard civil service retirement plan? I guess the problem is I'm not sure what a defined benefit plan is, and since you guys are so experienced, I'll ask you. Thanks!</p>
<p>Since the EFC is a function of both income and assets, your only way to know is to use a calculator. I say the pain point is at a maximum when you are right on the edge because those with more income than us should have more disposable income to cover college and such.</p>
<p>Rainmama: any salary amount an employee elects to put into a 401K, 403B, traditional IRA, or the Fed's thrift savings plan would be considered income for financial aid calculations. A defined benefit plan is the traditional kind where the employer pays a retirement benefit based on years of service and salary, with no contribution from the employee. The value of these while one is working is not considered in fin aid calculations. Of course, if you were receiving a retirement check, THAT would be counted.</p>
<p>My husband and I had a good chuckle when we calculated our EFC. We kept thinking we had done something wrong. In hind sight, we shouldn't have saved a penny, have taken vacations constantly and not have planned 4 years between our kids. It is frustrating when you are frugal, think saving is the best thing and then aren't even considered for most merit aid because many scholarships still look at EFC even if they were merit based, not need based. Son completed many applications, but heard from many that if you have to put EFC down on application, they do look at it. At this point, I retirement is a distant thought.</p>
<p>I think there have been several discussions threads on CC about that matter. It does seems that those who spent everything win the battle over those saved in the "nned" based game. The same goes for retirement saving and even mortgages. I wish I could have purchased a big house beyond my means so I could now enjoy the "bail out".</p>
<p>Dad, Like the 9M name. Took me a minute to figure out it was me!</p>
<p>I should not complain, but is is so frustrating. If our salaries kept up with inflation rates and increase in college costs, it would not be so bad. I am thinking of picking up a part time job to help off-set the constant negative cash flow. Oh, I just remembered tuition installment is taken out of account tomorrow. Better run and see if enough is there!!</p>
<p>And there is another "gotcha" in this business. FAFSA looks at data from IRS filings made (usually) by the previous April. So the actual tax year is the one that bridges sophomore - junior year (ie.e spring of soph, fall of jr year).</p>
<p>What this means is that by the time most folks figure out what's up, it is too late to do any financial engineering to minimize the pain. And doing financial engineering senior year does not help, as it will reduce the NEXT year's award.</p>
<p>"financial engineering" definitely sounds better than "game the system". </p>
<p>My understanding is that only 5% of the parents' money is counted for "needs". If that is true, a good "financial engineering" of even 50K does not get you much.</p>
<p>I'd like to add a caveat about whether merit scholarships make a difference or not. My S goes to a non-merit school, but won a modest (1500/yr) outside scholarship. This year, we were awarded a decent grant, a loan, and workstudy. the merit award was applied to the loan and to workstudy, so, in effect, our "free" money was the grant plus the merit scholarship. Thus, it was a gain for us. (We know it didn't lower the grant, because the loan and workstudy came in at less than the standard amounts at his school and grade level.)</p>
<p>Count us as another on-the-cusp family, newmassdad. EFC is perilously close to full sticker price. We pray for merit $$$. Daily. DS1 is busting his tail to earn some. Makes me glad (again) our kids are so close in age -- we'll get two years of FA. </p>
<p>We chose to fund retirement over college, and let home equity be the primary funding vehicle for college -- knowing that as much as we hate debt, there would be plenty of motivation to trim the sails and pay back as fast as possible. I'll let you know in 6-7 years how it works out.</p>
<p>Grad school is not on us. Sorry, kids. Get a fellowship or work a couple of years -- or get a job at a great company that will help pay for it while you work.</p>