Please help with some basic questions.....

Paying for College
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<p>My son is probably going to NAU next year and we are looking at a annual cost of somewhere between 17k to 23k per year. Our FASFA shows a EFC of 47k. I do not know what to make of that, but we can come up with about 10k per year and will have to finance the rest.</p>

<p>We did qualify for a Dir Unsub student loan and a Plus loan, but to me those are terrible interest rates, so I do not consider those any type of an 'award' and do not plan to use them. </p>

<p>My wife and I are pretty much clueless with this entire process as our son is the first to go to college. So I have a few quick questions....</p>

<ol>
<li><p>Is it normal for a student to not get any financial aid? </p></li>
<li><p>If I use my home equity line of credit, I assume that I can write off the interest. Is this correct?</p></li>
<li><p>Are there any other costs that I can write off (tuition, books, dorms, food)???</p></li>
</ol>

<p>My son has applied for dozens of scholarships but so far nothing......</p>

<p>Thanks for any advice that you can give.</p>

2

<ol>
<li>Is it normal for a student to not get any financial aid? </li>
</ol>

<p>Your EFC is $47,000 which far exceeds the cost of attendance for your son at NAU. That is why you got no need based aid. With an EFC of $47K per year, your household income is in excess of $150,000 a year or you have a some real estate that is not your primary home OR you have investment income that was reported on the FAFSA OR you have very large assets or some combination of the above. Is that correct? </p>

<p>Schools like NAU typically offer very little need based aid except for the federally funded aid which you would not be eligible for with your EFC and income.</p>

<ol>
<li>If I use my home equity line of credit, I assume that I can write off the interest. Is this correct?</li>
</ol>

<p>Your home equity interest can be written off as any other mortgage interest is written off.</p>

<ol>
<li>Are there any other costs that I can write off (tuition, books, dorms, food)???</li>
</ol>

<p>No. College costs are not tax deductable. You will get an education tax credit of some kind next year.</p>

<p>Re: the Stafford loans. Those are loans in your son’s name, not yours. The interest rate for them is actually very favorable for an 18 year old with no collateral.</p>

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<p>Regarding education tax credit, would education tax credit be applicable to parents whose children have a 0 EFC? I’m guessing not since the parents didn’t contribute anything but I wanted to ask to make sure.</p>

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<p>You get an education tax credit for the money you spend on college costs. I’m not a tax expert…I don’t think you get any tax break if you don’t pay anything. It has nothing to do with your EFC…it has to do with how much you pay.</p>

5

<p>Yes, of course parents of students with a 0 EFC can claim the tax credit. In most cases a 0 EFC does not mean the parents do not contribute anything (except when the student is fortunate enough to go to one of the few schools that meet full need without loans).</p>

<p>At most schools aid will consist of some grants but also some loans. Qualified education expenses paid with loans are eligible for the tax credit.</p>

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<p>Regarding qualified education expenses paid with loans, are student loans acceptable or do they have to be parent loans (assuming the student is a dependent, the student does not file a tax return, and the parents file the tax return)?</p>

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<p>Even if the student files a tax return, if he/she is claimed as a dependent by the parents then the parents can claim the credit. Expenses paid by a student who is claimed by a parent are considered paid by the parents.</p>

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<p>*1. Is it normal for a student to not get any financial aid?
*</p>

<p>Your EFC is higher than the COA of the school. It is normal not to get financial aid when your EFC is higher than the school.</p>

<p>That said, since your EFC is almost as high as a private school, it wouldn’t be odd if you hadn’t gotten any aid for those schools either …other than a student loan for your child.</p>

<p>If you’re really asking about merit based aid, it’s normal not to get any merit-based aid as well…UNLESS…the school typically awards merit aid…AND…your child’s stats are very high for the school…like top 10% for the school.</p>

<p>Our FASFA shows a EFC of 47k. I do not know what to make of that</p>

<p>That means that after looking at your income and assets, it determined that you have the means to pay that much each year out of a combination of…savings, current income, and loans. That may not be true…as you have discovered…but based on your income (which is probably around $150k or more), the formula believes that you should have been saving something all along and that with some current income and loans, you should be able to contribute that much.</p>

<p>When you say that you can pay about $10k…that’s current income. You’re having to borrow about another $10k per year…that’s future income. Since the school costs a lot less than COA, you’re “off the hook” for not having saved much for college. So, there is a bright side…which you may not realize right now.</p>

<p>I would also have my son work a summer job to contribute towards books and “day to day” expenses while he’s in school.</p>

9

<p>Since you said that this child is your first to go to college, I would be very concerned about how any debt will affect your ability to fund the college education for the rest of your kids. </p>

<p>If your loans are still outstanding when Child #2 goes to college, then what will you do?</p>

<p>Is Northern Arizona Univ the most affordable school on Child #1’s list? If not, why is he going there if cost is a concern? It doesn’t make a lot of sense to me to pay OOS fees for this school. (and, BTW…OOS publics generally do not give need-based aid to OOS students…that’s why they charge OOS rates.)</p>

<p>What Calif publics did he get accepted to?</p>

<p>If Child #2 has good stats, then I would recommend steering that child towards schools that give merit scholarships for high stats. If your first child had done that, you may not have had to pay as much as you’re having to pay now.</p>

<p>I see that your son got accepted to CSUF…why isn’t he going there…it’s a better school and less expensive.</p>

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<p>wow!!! thanks to everyone for their comments. To answer some of the questions…</p>

<p>My wife and I do make more than 150k, so I guess we did not need to fill out FASFA. Being from Socal, it is not like we are living the high life. We are like most out there living paycheck to paycheck. My car has over 180k miles on it as well and is 11 years old. We do spend on sending my 2 boys to a private high school that costs just over 10k per year, so we can continue to spend that plus a little more for NAU. The only Calif school we were accepted to was CSUF. The more we looked into CSUF, the less we liked it. CSUF is 45 min drive from our home and over 1hr with traffic, so we would need to have our son live on campus or close to it. I also believe that the average age at CSUF is around 26 years old, so that tells me that there are many working professionals there and less true freshman. Plus we wanted our son to go off to school, so we are going to pay for that.</p>

<p>On the plus side, NAU has the WUE program, so we do not have to pay OOS. Tuition is going to run us about 11k per year, and NAU will lock in that rate for all 4 years.</p>

<p>I just hoped that we would get some type of grant or scholarship. I was told that nobody pays full price, but I guess that is not the case.</p>

<p>also, mom2 - what do you mean by saying this:
“You’re having to borrow about another $10k per year…that’s future income. Since the school costs a lot less than COA, you’re “off the hook” for not having saved much for college. So, there is a bright side…which you may not realize right now.”</p>

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<p>mom2 probably meant “the school costs a lot less than your EFC” which is true, you are off the hook for that one! socaldad1kid could have fallen in love with a private U that was just exactly as expensive as your EFC. The COA at NAU is less than half your EFC. That is lucky!</p>

<p>It is a good thing that you filed the FAFSA. Without that, your son would not be eligible to take out the Unsub. Stafford Loans. Anyone who files the FAFSA can get those, even the child of a billionaire.</p>

<p>“I was told that nobody pays full price, but I guess that is not the case.”</p>

<p>There was a nice article about this in the Washington Post a couple weeks ago about the prevalence of this rumor: [Michelle</a> Singletary - Get real on scholarships](<a href=“http://www.washingtonpost.com/wp-dyn/content/article/2011/03/12/AR2011031204262.html]Michelle”>http://www.washingtonpost.com/wp-dyn/content/article/2011/03/12/AR2011031204262.html) You weren’t the only one who was taken in by it.</p>

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<p>By completing the FAFSA, your child is eligible for the Stafford loans.</p>

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<p>Just correcting some information… according to CSUF’s website, the average age is 24.3, not 26, and the median is 22. Also, it’s highly likely none (or very few) in that age range are freshman. However, the information on CSUF’s website does not state what class level each age is. I also don’t see any mention whether that average is just undergraduates or if it includes graduates (I’m possibly overlooking it, though).</p>

<p>My mom got her masters from a CSU when she was nearly 60. I guarantee that she and the handful of others close to her age that I met at the graduation ceremony messed with the average age at their school if they included graduate ages in the calculations. They certainly weren’t the majority, though. Far from it.</p>

<p>Source: [About</a> Cal State Fullerton](<a href=“http://www.fullerton.edu/world/csuf/aboutcsuf.html]About”>Thank you | Extension and International Programs)</p>

<p>Totally not trying to steer you towards a school that your family doesn’t like, but just wanted to make sure correct information was given since the average age of students seems to be a huge factor in your family’s decision on a college. Just something to consider what classes and what study level (undergrad or grad) the average age at a school includes.</p>

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<p>That’s not true about CSUF. I grew up about 15 minutes from there and visit often. That school has many, many “true freshmen.” It may also have some adults who have returned to school, but those might mostly be attending night classes. During the daytime, it’s typically-aged college kids on campus.</p>

<p>*I just hoped that we would get some type of grant or scholarship. I was told that nobody pays full price, but I guess that is not the case.</p>

<p>*
I don’t know who told you that “nobody pays full price.” If it was a college-kid-tour-guide, then that student’s circle of friends may include high stats kids. Kids tend to think that whatever is going on in THEIR circle is typical for everyone. Believe me, at most publics, many people are paying full-freight…especially if you’re OOS because some merit scholarships might be for instate students only. </p>

<p>That said, with WUE you’re not paying full price…you did get a discount. The school probably reserves its merit scholarships for students who don’t get WUE. Another family at another WUE school was told that they could have WUE or a merit scholarship, but not both.</p>

<p>also, mom2 - what do you mean by saying this:
“You’re having to borrow about another $10k per year…that’s future income. Since the school costs a lot less than COA, you’re “off the hook” for not having saved much for college. So, there is a bright side…which you may not realize right now.”</p>

<p>Happymom is right. Since your child will be going to a school that costs a LOT LESS than your COA, then your contribution is more easily covered with current income and Parent loans. Your situation is much less painful since you weren’t able to have a college fund for your child. Imagine if you had to pay your full COA for a pricier school? </p>

<p>Your child wanted to go to a UC, and you were upset that he wasn’t accepted. However, a UC would have cost you about $30k per year (and possibly a lot more since there is talk of raising UC fees/tuition significantly). It may be a blessing in disguise that he wasn’t accepted, if paying for NAU is a stretch.</p>

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<p>Minor point - your income seems high enough that the education tax credits will phase out to zero. Home equity is probably your most cost-effective loan option. However, nothing wrong with having your kid assume a moderate amount of debt.</p>

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</p>

<p>What constitutes as “qualified education expenses”? So as long as loans are used to cover education costs and not used to buy a car or whatever, then my parents would still be eligible for tax credit, right?</p>

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<p>Qualified expenses are tuition, fees and books.</p>

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<p>So cost of housing and food aren’t qualified expenses?</p>

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<p>Housing, food, transportation and personal expenses are NOT qualified expenses. If your financial aid exceeded the cost of tuition/fees/books…it is considered taxable income because it’s NOT for qualified educational expenses.</p>

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<ol>
<li>If I use my home equity line of credit, I assume that I can write off the interest. Is this correct?</li>
</ol>

<p>This may not be correct. Do you pay Alternative Minimum Tax? If so, the interest on the part of the refi/HELOC that was not used to buy or improve your home will not be deductible. It still may be a better deal than PLUS loans, but it’s something to look into.</p>