<p>First...I'm not trying to get out of paying what I should. I'm just making sure I have all of the facts correct before I do something stupid. </p>
<p>I have a HS senior this year and am preparing for filing the FAFSA next January.</p>
<p>I have a considerable amount of consumer debt (credit cards), but I also have enough in non-retirement savings to pay these off. </p>
<p>Ignoring the fact that I am paying more in interest than I'm making on my investments and ignoring the fact that liquidating investments might add some capital gains to my current year income, would it look better on my FAFSA application to have debt with larger savings, no debt with lower savings or is it just the wash? </p>
<p>they don’t ask you about debt on the fafsa. they do ask about savings. if your savings are above the amount ‘protected’ per the government calculations, based on age and marital status, then they will be assessed in the fafsa calculation</p>
<p>It would probably be good to pay them off regardless of the FAFSA impact. But Sue is right that assets count, debt doesn’t, so eliminating the assets through dept reduction could reduce family EFC.</p>
<p>Sue is correct. Run your numbers through the online calculators both ways. It may not make much or any of a difference, and if that’s the case, you may want to hold onto your cash. If it does, however, it would be smart to wipe out those debts with the assets. They don’t care what your debts are for financial aid, just your assets and those are hit up for contribution towards your child’s college costs.</p>
<p>However the EFC is driven more by income than it is by assets. So the cap gains you are saying to ignore could have a larger impact than the assets (depending on much there is of any of it).</p>
<p>I agree with all of the posters above. Not only will you save all the interest, but you get the bonus of a lower expected EFC. I went through this for the 1st time with NU last year, and I will also add, though, that CSS Profile asked for my total amount of non-mortgage debt, too. (what amount I owed on the date I filed).</p>
<p>Before you do this, try to figure out what your protected asset allocation is. There is an amount that FAFSA ‘allows’ you to have without counting for college and it is based on whether you are a one or two parent family (two parent is allowed more) and the age of the older parent (the older the parent, the more is allowed). I don’t know if there’s anywhere online that tells you how to compute it but I think How to Pay for College Without Going Broke has that info. That way, if you want to keep part of the money accessible, you can without a penalty.</p>
<p>The asset protection allowance is based on the age of the older parent. Here are some of the data points (age, asset protection allowance with 2 parents and with a single parent):</p>
<p>Wow!! This is more information than I could have ever expected, and just right.</p>
<p>My thanks to all of you. I’ll try to repay by being a contributing member in the future. Beginning next year I’ll likely have children in college for the next 12 years.</p>
<p>And we thought seven years of college bills was a lot!! Welcome to this forum…it’s a friendly place with lots of collective experience and opinions.</p>
<p>One thing we did BEFORE our kids went off to college was assess things like our cars, and any capital improvements we needed to do on our home (luckily none since the house was only 8 years old) because we KNEW we wouldn’t be buying anything while we were paying college tuition bills. In our case, we did buy one new/used (it was off lease) car just before the oldest went to college…with the idea that it would have to last until NOW (kids are now out of college woohoo). So, in addition to looking at your current debt level (yes…try to reduce that if you can), you might also see if there is anything else that NEEDS to be done before those college tuition bills begin. You can also use some of that savings to pay for part of college:)</p>
<p>*
Beginning next year I’ll likely have children in college for the next 12 years.*</p>
<p>Now is the time to determine how much you can spend each year on your kids’ education. Do not rely on financial aid based on EFC since most schools cannot meet need. </p>
<p>Don’t assume that if you have 2 or more kids in college at the same time that your costs for each child will go do </p>
<p>Keep in mind that you’ll be setting a precedence with the older child. If you “break the bank” and/or take out big loans to send your first child to a pricey school, it can be painful (and cause some sibling jealousy) to later tell the younger ones that there’s no money for them.</p>
<p>More to that point… it’s not a good idea to rely on big Plus loans to fill in the gaps when you have multiple kids because you’ll still owe money for the earlier loans and not have the borrowing power for the later ones.</p>
<p>Encourage your kids to do well in school and practice for their SAT/ACT exams. Those results can bring in some merit money that can greatly reduce your costs at some schools.</p>
<p>I think I have the best plan for us, which includes paying off the debt with some investments that have little or no gains. Should leave me in good standing with FAFSA and under the asset projection allowance.</p>
<p>I had another question about US Savings Bonds, but I found the answer to that in a search.</p>
<p>I like the idea of setting realistic limits as to what we can afford to spend on each kids’ education. I’m going to search the forums for some guidelines on that. If I don’t find anything I might start another thread on that topic.</p>
<p>A couple of people have mentioned “Paying for College…” so I’ll get it for sure.</p>
<p>I’ve been in the same situation, 4tran4, as my kids average 3 1/2 years apart and I have 5 of them. Along with the 15 years of diapers and 15 years of half day pre school/k, I will be suffering 17 years of college with 2 kids in school half of the time. Not to mention private school. I won’t even do the arithmatic to calculate the years of tuition we have paid. If we count H and my college and grad schools, the number would be overwhelming. With the overlaps, probably more than our lifetimes.</p>