<p>I have been lurking on CC for several months and learned a lot from other posters about the college application process. I only wish that I had found CC last summer when my D was drawing up her college list!</p>
<p>Anyway, the good news is that she was accepted at all 7 schools that she applied to, so now we are weighing the pros and cons of each, and fin. aid raises its ugly head. Six years ago we bought into a pre-paid tuition plan, thinking that we would already have some of the tuition paid for by now. When we received the fin. aid awards, six of them seem to agree with this view, but one (the college D prefers) does not include the prepaid tuition in the parents' contribution. Instead, they include it in the fin. aid award. It seems to me that this college is pretending that they are awarding my daughter the money that originally came out of our savings account. Yesterday I called the fin. aid office to ask, and I was told that prepaid tuition plans are categorized as a direct resource and are considered separate from the parents' contribution. In other words, they refused to reconsider the aid award. </p>
<p>I am puzzled and do not know how to proceed. Has anyone met this interpretation of pre-paid tuition plans before? Any suggestions for what I can do next?</p>
<p>I am not sure how your specific pre paid tuition plan would work. I do know a family who did pre pay Duquesne University tuition. If the student did not go to Duquesne, the money was refundable to some degree, not sure what the terms were, or the interest credited. It might well be that if he did go to another school, that pre paid tuition plan would be considered an asset on the schools financial aid forms and assessed accordingly. However, Duquesne may consider it prepaid tuition, particularly if there is some freezing of tuition rates involved. Is the plan you are using somehow tied into this one school more than the other? You need to call financial aid, ask for a telephone appointment with the director, and then discuss the situation with him. Arguing this on the fly is not going to be as useful as having a time carved out where he can focus on your D's file and the issue at hand.</p>
<p>The pre-paid tuition is considered a guarenteed resource that is available specifically for the purpose of paying tuition - they are not 'awarding' it - they are 'including' it as part of the package that they have put together for your D.</p>
<p>Is this school's fin aid award based differently than the others?? Are they insuring to meet all need?? or to meet need up to EFC?? Do the other schools have different fin aid guidelines?? Do they include these funds or are these funds above an beyond the fin aid offers??</p>
<p>Are the pre-paid tuition funds pre-taxed $$ - or no? - so they may be considered as a totally seperate asset from the parents contribution for that reason as they were set aside for a specific purpose.</p>
<p>Aussie - I can see some legitimacy in both interpretations, so I'm no help there. You've done the right thing by explaining to the college the correctness of your view, and they still say no. I'd say it's time to apply a little Donald Trump methodology:</p>
<p>Donald: I see how you might come to your position. But you're the only one who sees it that way.</p>
<p>College: We think we're right.</p>
<p>Donald: You may be right. But I don't do business with people who aren't competitive on price. You aren't the only game in town you know.</p>
<p>Love it, NewHope! Aussie, you can talk to the financial aid people, but if that is the way they do business, it could be useless. You might have a better chance if they have not encountered this situation before. I know when I was dealing with financial aid for my niece and nephew, I had certain legal firewalls set up well ahead of time to separate our assets (meager as they were) from their needs. But the schools did not look at things this way. Just as a prenup in a second marriage is not going to shelter a stepparent's income for college purposes, or the divorce agreement is not going to let the non custodial parent off the hook, a lot of these cases are up to the discretion of the school, and if financial aid has a certain way they look at things it is hard to get them to budge, unless something pretty drastic occurs. And of course this would be the school of choice, it seems like it always works that way. Do talk to the school, but start looking at some alternatives if the financial do not work out for you.</p>
<p>That interpretation was the exact interpretation for all of the awards packages we recieved from schools to which we had to submit the Profile. It is, unfortunately, the common approach. While contributions to a 529 plan are considered assets and only that portion (something like 8%) are considered part of the EFC, 100% of the prepaid tuition $ is considered a resource for to be used for college, akin to an outside scholarship. Probably, you will find that the school in question offset that part of the package that would otherwise have been work study and loan by the amount of the prepaid tuition they expect you to fork over (probably about 25% of whatever the current value is) so, in a way, that is a positive. Hopefully, part of the package was direct grants and very little of it loans. </p>
<p>I first checked into to this alarming reality on Collegeconfidential by visting the financial aid section on the home page, and it led me various places, one of which was the section on financial aid at the College Board website, so I don't think its a problem to refer you to the following link:</p>
<p>Make sure you are correctly categoring your prepaid tuition - that it isn't really 529 funds because, as stated, they would work more in your favor. </p>
<p>Now that I have adjusted to the reality that the prepaid tuition funds were not going to be a pool I was going to be able to tap to come up with the EFC but rather added $ for $ to the EFC, I console myself with the fact that my child (and I) will have fewer loans than I might have. Can't help thinking that I would have been further ahead by not saving at all, but I have finally made that mental adjustment and figure that if the college deems our family capable of what they ask, on top of the prepaid tuition $, I have to somehow figure out how to come up with it. </p>
<p>Boy do I sympathize with your shock though.</p>
<p>Thank you for your helpful info! Here are some more details which might clarify things even further. We live in VA, so this is a state ed. dept. pre-paid tuition plan, called VPEP. This plan covers tuition at in-state public schools, or a set amount can be applied to tuition at out of state schools or in-state privates. VPEP is not a 529 plan in that it involves after-tax dollars, not pre-tax. We bought this contract with money from our savings account. I have no problem with the terms of the plan or how it is administered. </p>
<p>The school in question is out of state and private. It required the Profile, as did 3 other schools that admitted my D. The problem in my mind is that this school is the only one that put the pre-paid plan in the fin. aid award. The other three schools did not mention it in the award letter, so I have (naively??) assumed that that money would be considered part of the parental contribution if my D were to attend one of the other three schools instead. </p>
<p>My discussion with "a" (not "the") fin. aid director on the phone was pre-arranged, so it was not "on the fly" and she was definitely looking at my daughter's award at the time she spoke to me. This is why I think that that fin. aid office has given me what they consider to be a final word.</p>
<p>After reading the helpful articles posted above, I am bracing myself for biting the bullet and trying to view the pre-paid tuition plan as a way of minimizing the loans instead of seeing it as part of the parents' contribution, but I can't help wondering if the pre-tax vs. after-tax dollars distinction would make a difference to how the college categorizes it. I have to admit that I am pretty ignorant on all financial matters and not very confident as to how to proceed, so any further suggestions that anyone has would be very welcome!</p>
<p>Your plan is exactly that which I have. Bummer.</p>
<p>The only other thing I could offer up is that financial aid offices often state that if there is a disparity their award v. that from other schools they would be willing to re-evaluate theirs if you send them copies of the other awards. I am not sure there was a disparity in the overall aid package, or just a difference in the way they treated the prepaid tuition. It doesn't sound as if the option of reevaluation was offered to you during your phone conversation, but if the total package was signficantly out of line from all of the other Profile schools, see if they would be willing to re-exam it against copies of the other offers.</p>
<p>To the extent that any difference in offers related solely to how they treated the prepaid tuition $, I doubt the favored school will or eve should budge. But maybe there is something else going on here that might make the difference between the net aid package from that school and others. </p>
<p>I actually did mis-characterize the 529 component of our savings and the one school which was out of line with the others (as in your child's case, the favorite school) was able, upon reviewing the other awards, to speculate what the problem might have been. After a brief phone discussion, Favorite School's award was put right in line with all of the others. Favorite school was correctly interpreting the information as I reported it - the other schools were giving me the favorable interpretation regardless. In the end, the prepaid portion was still treated in the same fashion, but the net amount of aid to me was essentially the same across the board, the only difference being that at Favorite school there was no loan or work study and at the other schools there was a modest amount.</p>
<p>Hopefully the school will look at the other offers - its surely worth a shot. You can't "negotiate" your package, but you can typically ask for a re-evaluation as a way to explain a real discrepancy in total aid, and you can let them know that, aside from this concern, theirs is far and away the school of choice (if that is true).</p>
<p>After all was said and done, I started to view the prepaid tuition plan funds as more loan that you take out far in advance and which is paid in full by the time college starts - with the slight advantage that you can almost bet college tuition in VA will increase each year so that to the degree it does, your available funds will maybe keep pace with inflation.</p>
<p>Thank you, Ohmadre (great name!), for your helpful comments. You have wised me up! Sorry to say that we are in the same unhappy boat on the stormy seas of fin. aid. I'll try to talk with favorite school's fin. aid office again.</p>
<p>Michigan does the same thing with its pre-paid tuition plan. I was shocked, actually, and it didn't make sense to me. But if it's any comfort to hear yet someone else say this isn't uncommon....</p>
<p>Yet another Virginia resident here in the same VPEP situation regarding the pre-paid tuition plan. The folks at the agency that administers the program told me that if I convert the pre-paid plan for 2005-06 to a regular 529 plan (the VEST Plan) I will receive about $6,300 toward tuition at an out-of-state private college versus the $5,600 value of the VPEP for next year which represents the average tuition of all VA 4-year publics this year (which will probably go up 7-8% for 2005-06). I just look at it as $6,300 in PLUS loan funding that I can avoid next year. Hope this helps.</p>
<p>Sorry to ask you this publically, but you don't have your e-mail activated. In order to get the $6,300, which VEST fund are you putting your money in? How do the people know it will be worth $6,300?</p>
<p>I was wondering about that kind of transfer, Saintofme. And whether the college would construe it an avoidance thing or whether I could safely do it or if in my state there would be an advantage to it (right now my prepaid tuition $ is doing better, tied as it is to tuition increases) than the 529 $ is tied to the mutual funds it is invested in. I do know that for next year, I do not have to fill out a new Profile, just the FAFSA - but am expected to report to Financial Aid any change in my financial situation - which that would surely be.</p>
<p>I don't think the college knows. I usually do it right before school starts and have the plan sent me a check. It did work out to be more money when I switched from VPEP to VEST his first year, but not last year so I was wondering about the information that Saint provided.</p>