Thoughts on Need-Based Financial Aid

Paying for College
41

<p>Oh no. Latin, please accept my apologies. I feel stupid. I didn’t realize you were the child, not the parent.</p>

<p>As the child, you can’t know anything I wrote (newborns don’t know about 529’s). All you can do is talk and talk some more with your parents. I don’t think you need to know all the gory details of their finances but you should know the college cost ceiling they are willing to and can pay.</p>

<p>As a high school student, I hadn’t a clue what my parents’ income was but they were very clear about college affordability to me. They had made the classic mistake with my brother. What you described as the worst happened. My brother applied and was accepted to Harvard . Our parents were proud until they saw the total costs. Well with two younger children, they had to say no to my brother. That was tough to watch and a big lesson to me. </p>

<p>Read cpt’s posts #35, #37. They pretty much tell you what you need to know</p>

42

<p>So I guess I’ll ask another question that might be extremely obvious to you CCers: how do you know if you can afford tuition if you don’t know how much money each school is going to give you?</p>

<p>You…</p>

<p>Ask your parents how much they’ll pay each year</p>

<p>Have your parents use the NPC’s on the websites of schools that interest you. </p>

<p>Apply to some reaches, matches and some financial safeties (schools that you know that you can afford).</p>

<p>Apply to a couple of schools that you know for sure will give you large merit for your stats (if you have the right stats). </p>

<p>Apply to a nearby state school that you could commute to.</p>

43

<p>Thanks everybody! This helped a lot!</p>

44

<p>Latin4life- are your parents so secretive that they will not fill out the FAFSA? If they fill out the FAFSA, you will have access to their income and asset information. I work in finanical aid and I have seen families where the parents know they wont qualify for need-based aid, so they won’t do the FAFSA because they don’t want to disclose their info to the child and the school.</p>

<p>You are getting good advice here as far as ensuring you have safeties - I would make sure you have more than one, if you have good stats there should be several available although not ‘elite’ schools. </p>

<p>The asset question is one we run into a lot and as others have said, it does come down to lifestyle choices. You have indicated you are not thinking there should be free federal funds for families in million dollar houses, but the private funds maybe should be available? Schools get to decide how to disburse the funds they have recieved from donors. Most donors to need-based scholarship fundsmake those contributions to schools so that students who have no other resources available
would be able to attend the school. Anyway you look at it, expensive housing is a lifesytle choice. You would be surprised at how many families that earn 40-60k per year have some savings set aside for college yet MANY who earn 150k-200k per year have nothing set aside. They will send in appeals for special consideration based on their expenses- housing, cars, often private schools, etc. All of which are lifestyle choices. I am not passing judgement on those choices, but they have had an opportunity to save that they did not take advantage of.</p>

<p>It sounds like maybe your parents have an expensive house that does not have much if any equity in it, if so that won’t be counted as an asset anyway so may not have much of an impact. Their income is what the EFC will primarly be based on, which may or may not leave you with any ‘need’. Students in your situation are best served going after the merit money available. You want a school where your stats exceed the average student that has funds to entice you to go there. An excellent education can be had at most of these schools, so don’t get hung up on the prestige factor if funding is an issue for you. Keep asking the right questions and you will get there.</p>

45

<p>^ no they are filling out the FAFSA and the profile just to see if we will get anything. In the end, I’m the one who will have to pay back my student loans (at least partially), so every little bit helps.</p>

46

<p>Latin…have you tried any of those net price calculators…yet? They will be the most accurate when you are a high school junior or senior. But really, if you try them, you will get an estimate of potential aid at the colleges.</p>

<p>Also, the VAST majority of students do not have any college savings.</p>

<p>If your list of applications includes places with guaranteed merit aid based on your stats, has at least one affordable option (often this is your instate publics), then you will be OK.</p>

<p>If you ONLY pick $50,000 schools (and yes, I know this isn’t YOUR plan), and you don’t have the stats for merit or the school doesn’t give merit, and your family doesn’t qualify for need based aid, that will be a problem…and they can’t help with the costs. NO ONE should completely fund their college education with loans if those loans will exceed the Direct Loan amounts, in my opinion.</p>

<p>Those net price calculators should be a help to you and your parents as you plan. Just be alerted that if your family owns a business, has real estate other than your primary residence, or if parents are divorced, the NPCs are less accurate.</p>

47

<p>Before you even start thinking about taking out loans, you should find out what your parents are willing and able to pay each year for college, and also what the colleges are going to expect them to pay. The NPCs are not always accurate but if you fill out a number of them, especially those that guarantee to meet full need, it will give you a idea of what the best possible picture could be. A school, like Colgate or Brown would be pretty accurate in what they say your parents are expected to pay as those schools have no merit money and meet 100% of need. You can then get an aidea of what the most generous school will expect you to pay. Many parents and kids are shocked to see that they are expected to pay a whole lot more than they would have guessed, as most folks think they are middle class and living not very extravagently and cutting back much is not what was on the agenda. So NPC results can be an eye opener. THE FAFSA EFC is also valuable in that it tells you the least you will pay and get federal aid. None of the these numbers you get are entitlement figures but give you the BEST case scenarios, for the most part when it comes to financial aid. Merit money is more of a lottery because if really depends on who is in the applicant pool, though you can also look for schools, and some are listed that do have set threshhholds for which they will give scholarships. </p>

<p>Yes, parents can be a stumbling block when they refuse to give out financial info. My DH’s cousin was that way, as were many of those family members. They had a lot of trouble giving out their info, and when you have to fill out FAFSA nd PROFILE, you quickly learn that EFC stands for “Every Friggin’ Cent”. They need to list income from their tax returns as they are often verified and they also need to list all assets… Really makes you let it all hang out there. But they pretty much had to do the same to get a mortgage and would for any other kind of government money. </p>

<p>When you compare school costs, you want to look at the bottomline costs to you without including loans and work study, because you can always add loans and employment income as part of where you can come up with money. My son in college had some things go wrong second semester one year and he took out some of those loans which he did not need on paper. Not much, about $3500 worth to tide him over for some unexpected expenses, including a summer school course, loss of income over the summer that he had planned to make, a travel opportunity he desperately wanted to take and a part time job at school that he had to drop. He also wanted to pay it off in a year, and that did not happen. He’s chipping away at it, and he will have it paid off soon, but, man, it is very difficult and he is learning how that meter works, ticking away with that interest, and how hard it is to come up with a few hundred dollars each month. My older kids, out of school, warn him that it’s even more difficult when you are in the working world and trying to make it on your own with your own place and expenses. They are ever so grateful not to have loans as some of them are barely makeing it and even the one with a high paying job is finding that the wants/needs alway are more than the money to cover them. His friends have some things going on that he wants to do with them, and they cost money. And even with a high paying job, and living pretty economically, there isn’t a whole lot left when you want to save something too. Now that visits home come out of HIS pocket, he understands why transportation costs were a concern to us when our kids picked colleges. He wants to vist us for some high school homecoming even this month, for Thanksgiving, and for Christmas, and that is a big chunk of change in terms of airline tickets, not to mention eating a bit into his vacation time which is limited. But he has no school loans to repay, so, yes, flying home a few times a year will be in his budget instead of those payments, but I have a feeling they won’t be so frequent as he comes up with other things to do with his money. And he doesn’t have a house, a wife, kids, those sort of obligations yet. So leave as much of the loans out as you can.</p>

<p>Many parents also don’t want to come up with a fixed figure and really want the flexibility to pay as the opportunities come up. I can understand that as I’d have loved to do the same. When we came up with our fixed figures for our kids, I had to grit my teeth as two of mine went right up to the max and they could have gone for a lot less, but I did not want cost to be part of the picture beyond what we could afford. A lot of parents pointed to options less expensive and they would have paid more if those options weren’t there. Also they would cough up more for certain schools over others. Around here parents would sell their organs to pay for Harvard, but many will balk at paying for some other private schools not as well known, without the reputations and ratings. And seriously, if my kids had a chance at some of the most selective, well known schools and got accepted, I probably would have taken out some serious loan money to send them there.</p>

48

<p>I’m the one who will have to pay back my student loans (at least partially), so every little bit helps</p>

<p>???</p>

<p>What kind of loans are you talking about? Fed student loans? private student loans?</p>

<p>How much are you thinking of borrowing???</p>

<p>For Fed student loans, YOU can only borrow the following amounts:</p>

<p>Frosh 5500
Soph 6500
Jr 7500
Sr 7500</p>

<p>To borrow more would mean having your parents co-sign (and qualify for) private student loans. These are a BAD IDEA. Too much debt…and your parents may not qualify at some point and then you’d have to leave school.</p>

<p>What is your career goal and how much do you think you’ll be earning as a newish grad?</p>

49

<p>Perhaps “student loans” was poor word choice; I meant college debt.</p>

50

<p>Latin…the point Mom2 was making is that beyond the Direct Loan amounts, the debt will be your parents’ debt. YOU cannot take loans yourself beyond those amounts without a cosigner.</p>

51

<p>Perhaps “student loans” was poor word choice; I meant college debt.</p>

<p>??</p>

<p>What difference does the word choice make??? How much will you be borrowing?</p>

52

<p>@thumper1: Oh! I knew that. I just meant that I will end up covering the costs by either paying back my parents or taking over the payments so my cosigners (parents) will not have to pay the bill when I get older and have a job.</p>

<p>@moms2collegekids: with all do respect it is none of your business how much I am taking out for loans, if I am at all. I understand you are trying to help, but (although this website is confidential) I will not be sharing my financial situation. </p>

<p>Thank you everyone for clarifying the aspects of financial aid I asked about (and more!); I greatly appreciate it. With this newfound wisdom, I think I will being the right track for selecting colleges to apply to that I will probably be able to afford. Thank you very much again!</p>

53

<p>*@moms2collegekids: with all do respect it is none of your business how much I am taking out for loans, if I am at all. I understand you are trying to help, but (although this website is confidential) I will not be sharing my financial situation. *</p>

<p>chillax…no one is asking you for personal financial or identifying info. Your entire thread has exposed how confused you are about the whole FA process. Your own words in post 45 suggests that you’re considering borrowing a lot. That is a dangerous decision.</p>

54

<p>Haha. I haven’t heard “chillax” in such a long time!</p>

55

<p>And no I’m not considering borrowing “a lot” just more than $5500 or whatever the maximum is before I have to take out private student loans. Not THAT much more.</p>

56

<p>Latinlife, you can borrow on your own, the Direct Loan amounts. As a young high school grad, it’s highly unlikely that you can get anymore loan money without your parents borrowing it with you. Which would mean it’s on their credit record as well as yours, and for most of this co-borrowed monies, if you die, become disabled, can’t find a job, have too low of a paying job, etc, etc, they’ll go after your parents. If they get an opportunity that requires a credit check, the borrowed amounts are sitting there just as if they borrowed it themselves. It is truly a load on many who are having a tough time financially anyways. And large loan amounts oftnen take a l-o-n-g time to repay, like a mortgage, but you get no house in the end and it can keep you and your cosigners from getting houses in the meantime. </p>

<p>When affordable, a loan can be a great way to stretch out the payments, but really, the future payments should be an average of what has been saved and paid to college out of income . Highly unlikely one is going to be able to pay what one has not been able to cough up. I have seen families, some of the close friends’ of mine, who saved nothing, could not pay anything out of current income and yet expected to be able to pay several hundred dollars a month once the kdi was graduated from college. Totally unrealistic.</p>

<p>I am sensitive about this, Latin4Life, because a very close friend of mine is having a lot of trouble with large loan amounts that she cosigned with her daughter who can’t find a full time job. Yet the loans are due, and it has wrecked their credit and she can’t move with her business due to the crippling effect all of this has. They owe in the six figures now, thanks to the effect of interst. These loans do NOT have favorable itnerest rates many times, given what the prime rate is, once you get out of the student loan area and into the Parent loans and cosigned loans. </p>

<p>What’s very important is how much your parents are willing and able to pay. And cosigning those loans is putting them right on the hook for it regardless of intentions to do it. THings do not always turn out as planned and it’s been a rough go for young college grads and making a living wage these days. And even if you have a well to do parent, what they will actually pay for your school is important as I can tell you many kids whose parents draw the line, regardless of what the calculators say they can pay, and they just don’t want to do it, have some obligation unrecognized by the aid system and don’t want to downsize. </p>

<p>Also, I am seeing ever so many kids who insisted on going to sleep away school at age 18, and now in their 20s and even 30s can’t afford to live on their own and are back in the parents’ home. Having a loan payment due each month really cuts into what you can afford, believe me.</p>

<p>My one son who is living quite a distance from home, with a great paying job and is independent of us is finding that it’s tough paying those bills, the needs, the wants, travel,etc. Wants to come home ot vist–plane fare costs. Friends getting married, some special events–plane fare costs. Great opportunites, fun times, can cost money. Need to pay for insurance, needs pop up all of the time. He was telling me that he feels badly for his coworkere who owes a lot in loan money and whose family is strapped as well. Even with a well paying position, the guy is constantly behind the financial 8 ball. Car breaks down, he can’t afford to get it fixed anytime soon. Every issue is a financial crisis. ANd problems pop up at home ofr him too and they need money. DOn’t get yourself in too deep. I’ve seen it too many times.</p>

57

<p>I understand that I will not be able to take out more than the $5500 the direct loan might give me without my parents’ help. And I assure you, I am aware of the consequences of overborrowing. Therefore, I am applying for full ride and full tuition scholarships at some colleges. Applying for these automatically “applies” me for other big merit scholarships even if I do not win the full tuition or full ride. So I am going after the merit money and then I’ll see what happens.</p>