<p>I filled out my FAFSA a few weeks ago, and both my parents and I were quite surprised at the EFC that was calculated. We had calculated our efc using calculators before, but my dad recently sold some stock options and that raised the efc significantly.</p>
<p>Anyways, it is impossible for my parents to pay my EFC, thus, is it possible for me/my parents to take out a loan to pay my efc with?</p>
<p>I realize that loans aren't the best option, but in my case, it may be my only option.</p>
<p>Plus loans are available for parents- but Im wondering if your dad sold stock options and that increased your EFC, what did he do with the money?</p>
<p>It is up to your parents how much in loans they want to secure, but an undergrad student, shouldn't take out more than $20,000 or so give or take $5,000 after a BA
IMO</p>
<p>You can take out a loan for EFC...but many schools will count a loan as part of your financial aid and many schools don't meet full need. So even before you have to pay EFC you're taking out loans. I would insist my kids go to a less expensive college if the only way they could attend a certain school was to take out over $20,000 in loans. You don't want to graduate from college with a mountain of debt.</p>
<p>"but Im wondering if your dad sold stock options and that increased your EFC, what did he do with the money?" yes, what did he do?</p>
<p>LOL!</p>
<p>Basically, his company split into two companies, so current shareholders got two stocks (one at each company) for each share they owned.</p>
<p>One of the companies, the stock held steady, and he held on to these stocks. The other, it tanked, from like $40ish, to like $4, and he sold in the midst of that crash.</p>
<p>The stupid part is, since it was stock options, the money we got from it appears both on his annual income (paystubs) and as cash that we have saved in the bank.</p>
<p>As for what we're doing with the cash, he's probably going to use it to finish off his student loan. We're just waiting to see how my aid packages look, if we aren't able to get a loan for the EFC, we may have to use that money to pay for college.</p>
<p>OH my goodness. You have a kid starting college and your husband is still paying off student loans. Ouch. I'll assume you are very young to have a college student.</p>
<p>Can you make an IRA contribution to take out some of the sting?</p>
<p>Sue</p>
<p>Please shed some more light on what you mentioned about contributing to IRA. Although cash strapped, if I contribute to IRA, how would that be helpful - I probably am missing some point here.</p>
<p>thanks alot,</p>
<p>xcrunner: thanks for explanation on "what did he do with the money" - I was just making fun at emeraldkitty when she asked that question; I wasn't serious in asking. But, I do understand when an income is counted but not the loss.</p>
<p>a qualified IRA deduction will reduce your AGI. A lower AGI affects your EFC. I think the max is $5K (not sure about the amount for married people)</p>
<p>My family migrated to the country in 1999. My husband went to school at that time, so, loans are actually quite recent.</p>
<p>Is it too late to make the IRA deduction, and still have an effect on FAFSA and EFC?</p>
<p>actually I did that a few years ago and it raised my EFC, </p>
<p>from instructions for FAFSA</p>
<p>
[quote]
Worksheet B (Tax-Deferred and Untaxed Income) reports income that was not included in taxable income but which are counted during the need analysis process. **These amounts will be added to taxable income. **This includes the following:</p>
<p>Contributions to tax-deferred pension and savings plans.
IRA deductions and payments to SEP, SIMPLE and Keogh plans.
Child support received for all children. Do not include foster care or adoption payments.
Tax-exempt interest income.
Untaxed portions of IRA distributions and pensions, excluding rollovers.
Housing, food and living allowances paid to members of the military, clergy, and others.
Veterans' noneducation benefits such as Disability, Death Pension, Dependency & Indemnity Compensation (DIC), and VA Educational Work-Study allowances.
Any other untaxed income or benefits not reported elsewhere on Worksheets A or B, such as worker's compensation, untaxed portions of railroad retirement benefits, Black Lung Benefits, disability, and so on.
[/quote]
</p>
<p>yes, pre-tax contributions are treated differently than a traditional IRA</p>
<p>Traditional IRA (after tax $$) comes off AGI, there are other income restrictions and stipulations. </p>
<p>But the important thing is that the Pre-tax 401K isn't the same as the After tax IRA.</p>
<p>And I do think it's insane that the govt tells us to save and then treats pre-tax contributions as available income on the FAFSA. </p>
<p>As someone who works in the budget office for a Dept of Defense agency, the insanity and stupidity of the Fed never ceases to amaze me.</p>