Parental Age & FAFSA

Paying for College
1

Hi, y’all.

We are older parents, on the verge of retirement. My husband is 65. I will be 65 in April 2016. We have been saving since 1978, and we have a retirement nest egg.

When our older son enrolled in college, he could not qualify for any need-based financial aid except loans – even though our HHI is well south of six figures – because FAFSA factored in our retirement savings.

Now our second son is ready to transfer from a local community college to a four-year public institution. I am wondering whether it is even worth it to fill out the FAFSA. I am still working full time, although I plan to retire by December 2016. My husband is already retired. And we still have that nest egg.

Will FAFSA still penalize us for having retirement savings – even though we are at retirement age? At what point does it cross their wee little minds that maybe, just maybe, 65-year-olds need their retirement savings for, um, retirement?

Please advise. As I recall, filling out the FAFSA is a royal pain in the neck – so, if it’s just going to be an exercise in futility AGAIN this time around, I won’t bother. Instead, we’ll look for merit-based aid, which is what we relied on with son #1. Son #2 is on the President’s List at his community college and in Phi Theta Kappa – and he recently re-took the SATs and aced them (770 V!) – so merit aid is a distinct possibility.

Any information, advice, and guidance would be greatly appreciated!

Thanks,

LadyDi

2

FAFSA does not factor in retirement savings that are in qualified accounts (401(k), 403(b), IRA, Roth IRA, etc.). How are you holding your “retirement nest egg”?

3

Why aren’t your retirement savings in a qualified plan?

Are you saying that if your retirement savings were zero, your son would qualify for a Pell grant?

(On a side note, have you considered the SS file/suspend strategy to maximize future SS?).

4

How are your retirement funds invested? 401k? protected retirement accts? or just plain ole stocks, CD’s, savings accts??

There is VERY LITTLE asset protection for savings that aren’t in protected retirement accts (ex: 401k).

Taking the SATs as a current college student will mean far less to colleges. It’s a high school exam. And there is little merit for transfers. Even the schools that give “good sounding merit” to transfers, will typically have a very high COA, so the $20k per year in merit will still leave you with a big ole bill.

OR…is your son still technically a ‘high school student’ who was home-schooled and went to a CC for part of his home-schooling? If so, then he’s not a “transfer”…and that could mean great merit at some schools.

As your older son capitalized, the best merit opps are for incoming frosh.

Filling out FAFSA isn’t difficult from what I understand. You can use the IRS retrieval. I know you work for a big company, so that aspect shouldn’t be difficult.

Does your H receive a pension?

Unless you have a very modest income, I don’t see that your son would qualify for much/any Pell Grant. You now only have a household of 3. Did your older son qualify for Pell? If not, then likely this son won’t either.

How much can you contribute to S2’s college costs each year?

Does S2 have a state univ that he can commute to?

if you still live in the same state, then have your son apply to the best instate schools. They’ll likely give the best aid.

5

File and suspend is going away soon, so OP and her husband may not be eligible, depending on when he turns 66.

http://finance.yahoo.com/news/goodbye-social-security-file-suspend-164521581.html

6

Oops, sorry – yes, we have a 401K and at least one IRA. But everything else is either liquid or real estate (house paid off).

7

FAFSA also doesn’t consider equity in your primary residence, so unless you have other real estate assets, real estate has no bearing on your financial aid as determined by FAFSA. How much do you have in other “liquid” retirement assets?

8

Income is usually the main component toward your EFC, and there is a small protection allowance based on age. Assets in retirement accounts are not reported at all. Other assets count 5.6%, after a small protection allowance based on age of oldest parent- that protection allowance was lowered significantly this year. Primary home is not counted on fafsa but CSS profile schools do ask for it. They don’t always use it in the formula but use it to assess overall financial security.

It sounds to me, with one working parent you should request aid and file. Unless you are really clear that you won’t get any, and it seems you have some mistaken assumptions. You could run an EFC calculator based on you current numbers and compare that to the cost of his college. Fafsa is just not hard to fill out, based on your tax return.

Getting merit as a transfer is difficult. Scour the aid pages and also look for department level scholarships in his major. He can apply to ptk scholarships, and depending on unmet need maybe jack Kent Cooke transfer scholarships. He can apply to scholarships by professional associations in the field he intends. But none of those are guaranteed.

9

The FAFSA EFC calculation would only have factored in your 401k and IRA retirement savings if you erroneously included the balances when you filled it out. Sounds like you are insulting and blaming the federal government for your mistake.

10

the equity in your primary home does not count. If you own any OTHER land or real estate, that will count.

401k will NOT count…EXCEPT for the contribution that you made for 2015. So if you contributed $10k, then that will get “added back in” on FAFSA.

Other liquid assets (savings accts, stock investments, CDs, checking accounts, savings bonds, etc) will all count.

@LadyDianeski I think you may be expecting too much from filling out FAFSA. FAFSA is for federal aid, and there is very little “free money” in fed aid. There are Pell Grants which are for low income. Pell grants max out at $5700…and that’s for a 0 EFC

Does your husband receive a pension?

For a household of 3, I would imagine that income with minimal assets would have to be under $45k to get some Pell.

do you remember what your S1’s EFC was WHILE HE WAS an undergrad? He is now in grad school so his FAFSA is now his own (independent) and he doesn’t count for S2’s FAFSA. But, S1’s EFC when an undergrad might give you a rough idea of what S2’s EFC will be.

Edit: I just saw that when you submitted FAFSA for S1 that it yielded no free aid, so likely S2 won’t get any free aid either. EFC too high.

Has S2 already graduated from high school??? or is he still a high school senior (homeschooled) and attending a CC for classes??

If he’s still a high school senior, then what is him M+CR SAT?

He might consider applying to Cornell. It gives good aid to transfers.

How much can you pay each year for S2’s education?

11

Thanks for all the prompt responses! No, DS # 2 is not a high school student; he would definitely be a transfer. We are in North Carolina. The closest instate school is UNC-Greensboro, 27 miles away, which does give merit aid to transfers if they qualify for the Honors College. UNC Chapel Hill is very stingy with merit aid, even for freshmen. :frowning: UNC Asheville (probably the best fit for our shy guy) does not give much merit aid at all, but tuition is VERY low.

BTW, mom2collegekids: Older son graduated from Alabama summa cum laude this past May. YOU are the reason – thanks so much! He attended Bama on a National Merit Scholarship, the old near-full-ride version. With his other scholarships (e.g., departmental), there were some semesters that cost us virtually nothing! We are spoiled, I guess. Alas, younger son just missed the National Merit cutoff. Plus, he was not ready for four-year college two years ago – his choice. Now he is ready and rarin’ to go.

Meanwhile, older son is at Wake Forst (on scholarship_ in the MA in Management program. It’s all good.

Roll Tide!!

12

Yes! I know!

Figure out how much you can spend each year towards S2’s cost. Yes, there are some transfer merit scholarships but they tend to be quite low, and still leave families with a most of the costs.

Does Ashville give any merit?

UNC Chapel Hill may be stingy with merit, but they’re generous with need-based aid. Run their NPC and see what the result is…save the results. You may find that the “net cost” at UNC-CH is about the same as the net cost elsewhere with merit as a transfer.

NPC = net price calculator on their website. You have a relatively simple situation. Parents don’t own a business, and if your only real estate is your home, then the NPC should work for you.

As you can imagine, your net cost for S2 will likely be much higher than S1…because S2 is a transfer.

how much would UNC-G cost with merit? Would he commute?

13

Wow, so much great info – thanks, y’all!!

Re UNC-G: I don’t think he should commute, frankly. He really needs to get away from us, LOL!

We definitely can afford to contribute to his education, and we are planning to. But when I saw the Chapel Hill COA, my jaw dropped. Tuition is only around $8K but everything else is so steep – the estimated COA is over $24K yearly, which might be kind of a strain. (Also, UNC CH might be too big for DS 2 – he was certainly overwhelmed by the campus size whenever we visited Bama!)

We’re not cheapskates, really. We’re just spoiled because of the fantastic deal we got at Bama. :smiley:

DS 2 is not a HS senior; he is completing his AA at community college; will be finished in May. So far he has all As and one B (in General Biology, which was a BEAR). His most recent SAT scores are: 770 CR, 670 M & 730 W. He’s not planning to go into a STEM field – we are all liberal-arts nerds, I fear! – so I assume the 670 won’t hurt him too much. He is thinking of law school, maybe. Older son is planning to go into marketing. Hey, you gotta do something practical with that liberal-arts degree!

14

@LadyDianeski You may not be familiar with the NPC on schools’ websites because I’m not sure they existed when S1 was a high school senior. So, try those on various schools’ websites. You may find that he qualifies for need-based aid at the schools that give that type of aid.

North Carolina State U gives need based aid, and so does UNC-CH…maybe Ashville does as well.

15

Temple does give some transfer scholarships, but probably not enough to offset the OOS price of tuition.

If he went to community college and had good grades, maybe apply to Jack Kent Cooke transfer scholarship?

16

http://www.jkcf.org/scholarship-programs/undergraduate-transfer/

there is not much time! Deadline is December 15, but worth a try.

17

Your liquid and real estate holdings are counted as assets, just like everyone else’s. Bit as noted, your primary residence is NOT mentioned on the FAFSA at all…not at all. The asset protection allowance is higher for you than for younger parents…but really it’s not very high at all anymore.

Apply for aid and see what happens.

18

@LadyDianeski lol…no one is thinking that you’re cheap!

Just try the NCP and see what results you get.

19

Many NPCs will not be accurate for transfer students. To get merit aid at Chapel Hill you really do need to be an exceptional student. They focus on offering need based aid (meet need for all students).

20

UNC-CH also requires the CSS Profile for consideration for institutional need based aid. That is what is going to be used primarily to determine your eligibility there for need based financial,aid…not the FAFSA.

The Profile DOES ask about primary home equity.

Also, I’m not sure your son’s SAT score…taken while he was a community college student…will count for much. The SAT scores used by colleges are the ones taken while the students are in HS, not in college.