<p>My son has $40,000 in his own money for college and I have saved $25,000 in a 529 plan.</p>
<p>My son chose to attend a private university despite my recommendations to attend the state university. </p>
<p>However, the private university offered about 60% of the cost in financial aid and he paid the rest out of his college fund. Next year, there will only be enough money left in his college fund to pay for 1 semester assuming the financial aid is the same.</p>
<p>Did he set himself up for financial failure? Will he be able to get loans on his own? In 1 year his brother should be attending college and his financial aid offer should be greater.</p>
<p>Priscilla</p>
<p>Does his school claim to meet 100% of demonstrated need?</p>
<p>He will only be able to get Direct Loans in the amt of $6,500 for all of his Sophomore year on his own.</p>
<p>OP, if your son’s money is not in 529 plan, it will assessed at
See [Paying</a> for College: How the Financial Aid Formulas Work - Forbes](<a href=“http://www.forbes.com/sites/baldwin/2013/02/28/college-aid-formulas-fafsa-profile-and-consensus/]Paying”>Paying for College: How the Financial Aid Formulas Work)</p>
<p>I would take out the maximum amount of federally subsidized loans each year that he is allowed. If he doesn’t need all of the loans in the end, he can always take out less the fourth year, or pay it off early without penalty. The goal is to avoid the need for high interest rate loans. You want to spread his college fund out over 4 years, as much as possible. </p>
<p>As savings are depleted, a college that offers to meet 100% of financial need should increase their aid. However, most colleges do not make that promise.</p>
<p>Unfortunately, if a student doesn’t take out the allowed amount of federal loans the first year, they can’t take out an extra amount the second year - the amount is limited per year.</p>
<p>Here’s the official federal site for info. on federal loans. You can scroll down to the table that shows the maximum amounts of federal subsidized and unsubsidized loans per year.</p>
<p><a href=“http://studentaid.ed.gov/types/loans/subsidized-unsubsidized[/url]”>http://studentaid.ed.gov/types/loans/subsidized-unsubsidized</a></p>
<p>What school is this.</p>
<p>The fact that he’s going thru his college savings so quickly suggests that this school doesn’t meet need (and may not give more money when brother goes).</p>
<p>If the school “met need” then only about 20% of your son’s savings would have been assessed towards his first year.</p>
<p>What was your EFC?</p>
<p>He said he should use his money first since it reduces his assets for the following year’s FAFSA rather than my 529. If he used only 20%, then his next year’s award will be smaller because he will have more assets in his name.</p>
<p>Is this not right?</p>
<p>Priscilla</p>
<p>How can reducing an amount by 20% result in increasing the amount? Does he have a job that allows him to save over 8k each year?</p>
<p>But yes, his assets are assessed at 20% for fafsa, the 529 at around 5.6%.</p>
<p>If he used only 20%, then his next year’s award will be smaller because he will have more assets in his name</p>
<p>I think you’re mistaken. If he had reduced his assets by 20%, his aid would have been more the next year since at that point, he’d have less than $40k.</p>
<p>That said, I understand the strategy, but it suggests that YOUR portion was HIGH and he paid that FOR you to get his assets down. </p>
<p>For instance,</p>
<p>If you were supposed to pay $25k and he was supposed to pay $10k, but you paid nothing and he paid $35k, then his assets would be almost wiped out for the next calculation. However, your contribution is still going to be expected, so in the above case, you would have saved your $25k to be used in the future since parent assets have a very low assessment.</p>
<p>Pink lady…does this college guarantee to meet full need? If so, as your son’s assets go DOWN his aid should go UP.</p>
<p>If the school does NOT guarantee to meet full need, then you will have issues.</p>
<p>What exactly is your son paying with his money that MOST of it will be gone after 1 1/2 years? Is your family contribution what he is paying? If so, you need to realize that college so not give need based aid to fund the calculated family contribution.</p>
<p>If he is only using 20% of his asset this year, he would have 80% left. It sounds like he is paying far more than 20% of the asset if he will be out of money after 1 1/2 years.</p>
<p>He can take a $5500 Direct Loan this year (hoping he isn’t already doing so to pay for this year…and bank it. Next year, he will be able to take a $6500 Direct Loan…so that is $12,000 he can have to use for next year. </p>
<p>Junior year…and senior year $7500 each year. </p>
<p>Are you contributing anything out of current earnings or parent loans? Are you willing to cosign a loan for your son?</p>
<p>If this is a meet full need school it may not matter if you spend down the student assets. My personal experience is that the school assumes the entire student asset will be spent equally over the four years. This may be spelled out in your financial aid award - or you may have to ask. The FA office (full need met - no loans) explained to me that the students assets were counted 1/4 of the total per year. If the student chose to spend all the assets in the first year the following years would still count as if there was the asset to spend 1/4 per year.</p>
<p>In your case (if the FA at the school awards this way - again look at your award letter - did they have a student contribution line item) it would look like this</p>
<p>Year 1</p>
<p>Student Asset 10k
Parent Cont 25k
Student Work 3k
Aid Award 22k</p>
<p>Total 55k</p>
<p>The following years would still expect 10k from the student asset. The student work amount may increase.</p>
<p>The FA office (full need met - no loans) explained to me that the students assets were counted 1/4 of the total per year. If the student chose to spend all the assets in the first year the following years would still count as if there was the asset to spend 1/4 per year.</p>
<p>I understand that schools can do whatever they want, and I understand that they don’t want students spending down their savings during Year One to get more aid later…but it’s sad if a student had a legit large expense and had to use savings, and then the school still expects them to have the money for later years. That isn’t expected of parents.</p>