If they’d just cut their marketing and printing budgets, there’d be more aid. So much mail over the last 18 months. It’s fancy, thick, and abundant. LOL!
9 Likes
Yes, that’s what they assume. When your other kids are ready for college, you’re likely to get more substantial FA packages.
The FAFSA (government) EFC or “estimate” is misnamed and is not what the government thinks any family that completes FAFSA can afford.
2 Likes
Thank you for correcting me
@BelknapPoint is correct. In fact, it will finally be renamed for the 2023-2024 financial aid year. It will be called the Student Aid Index. The number generated by the EFC formula is simply a number used to award aid. Your financial situation is assessed, and aid is awarded accordingly. If you can’t afford the school, no one is going to force you to pay for it. It’s okay to be bummed about a lack of aid, but I know from my professional experience that many students who get full Pell grants and what some would consider a lot of aid still cannot afford to attend school (because housing is rarely covered except by a very few schools). If they don’t have a school within commuting distance, or if they don’t have transportation (or even a place to live and study), they can’t go to school.
4 Likes
Our EFC on the FAFSA was about 40% of total gross income. We are both over 50 and max out our 401k contributions so that’s 52k right there that’s not available for us to pay a school.
I believe CSS asks for things like equity in primary residence and our retirement savings, but just based on the inflated income number they’re looking at (was paid out severance in 2019 and started a much lower paying job, husband’s income seriously impacted by covid business conditions to this day) we are seen as full pay even before that. I did do a write up on CSS- doubt it will have much impact.
1 Like
To @RichInPitt point, we set up investments specifically for education vs. general investing or retirement. These had far less risk with built in hedges against downturns, were tax efficient, etc. Thinking was/is I can afford volatility based on time horizon with retirement for myself but not for education for my kids (as their was a known date and no way to recover quickly should an extended downturn occur). The plan was to pay for college with these funds. We have done some of that, but the funds have performed so well and our HELOC rates are so low, we’ve actually paid for most of it with the HELOC. It’s all our money so it doesn’t really matter. At any time, we could use the funds to pay off the HELOC. The cost to do this is simply the interest, but again it’s lower than the lost opportunity cost of pulling money out of our program.
Not going to get into the investments on this forum but if you know what you’re doing it’s quite doable. No different than using leverage on anything when you can afford to write the check but just don’t want to for a variety of reasons.
A side note - we were planning on downsizing anyway so the HELOC will automatically get paid off soon and we’ll have our investments in tact.
2 Likes
This is a fabulous post. It’s so true!
@rmulvane, I would suggest that you contact the schools individually to request a special circumstances review. It’s possible that what you describe might result in increased eligibility for aid. It’s worth a try. The schools won’t do anything based on a note on the Profile form - you have to speak with them individually.
Thanks, if he gets in anywhere that doesn’t give merit I will. Right now his top pick is giving him enough merit that we definitely wouldn’t qualify either way. But we are lucky enough to have the resources to do full pay if we have to.
@kelsmom If @rmulvane is able to fully max out their yearly 401(k) including the over 50 true up ($52k per year) - then schools are going to see those yearly contributions as available to pay for school, yes? That was always my understanding of FAFSA and CSS - that the year’s contributions made to retirement are fair game in terms of how financial aid officers saw family money.
It is a choice of how to spend current income - retirement or school. With schools not agreeing that choosing to save for retirement should be given priority by the school.
4 Likes
The contributions made…that $52,000 put into those tax deferred retirement accounts during the aid form tax year are added back in as income for financial aid calculation purposes. So…for this family, their income would increase by $52,000.
The balances in the accounts are not tapped.
True, it is our choice. I’ve always heard it makes sense to prioritize retirement savings over college savings and it’s always made sense to me. But if we had to knock down the 401k contributions for a few years we could.
so best to fund retirement or school first?
It’s always best to fund retirement, you can’t borrow for that.
7 Likes
@beebee3, I am suggesting it only because I don’t know the overall, true financial picture. @rmulvane opined that the financial picture had changed. I merely offered a way for them to appeal if they truly felt it might make a difference. I don’t like to make assumptions, so I offer advice and leave it to them to decide if it makes sense in their situation.
I think what is lost on the thread is that FA is not (except for Pell-Grant Families) based on family need but on school need. Schools will give different aid amount to two families with the same income and assets based on which student the school “needs” for its freshman class. Especially this year with the admission process put on its head by COVID and test optional, there are many schools out there that “need” your student and will offer merit aid. Complaining over counting assets misses the point of FA as it relates to the individual school and why they use FA and the calculations in the first place. Just my two cents.
1 Like
Thanks for the education…even though I dislike that particular piece of information. LOL!
This may be true at some schools with merit aid, but it is generally not the case with need-based financial aid.
4 Likes
Given that I’ve retired, I’m up for this for my D22 starting college next fall. It would be hard to call this fair though.