vent-COA and lack of knowing Parents' assets

Parents Forum
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<p>I think parents need to talk to children about finances, and they should expect timeline and academic fit information from GC’s about college, but GC’s may not be the best source of information on finances. A GC can give families an idea of where their child will be a good candidate for merit aid, awareness about programs and opportunities at colleges popular in their area but they have limitations; younger counselors lack a long term life experience with financial issues and they have no training in financial planning or money management. </p>

<p>Within the last year I have met at least two guidance counselors, early in their careers, who have made mention of their own student loans - both far in excess of 100K. Only one of the two had begun to see a problem with that amount of student debt - needless to say that isn’t the type of person I’d want advising my child about the financial aspect of anything.</p>

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<p>I don’t think parents need to say how much they make but certainly should say here’s how much we can afford. It’s only fair that the family go into the search process with the best info. And GC’s DO need to bring up finances so the student can start thinking about it, too.</p>

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<p>As they’ve gotten older, we have shared more about finances (mainly from the personal financial management end of things). S2 asks a lot of questions about what’s a reasonable starting salary, how much health ins costs, how 401(k)s work, etc. Helps that DH and I both are in the field. I taught him to write checks, and he and I sat down and walked through how to do transactions on his online checking account. Also did the ATM thing.</p>

<p>I’ve also talked to other friends/family about FA, so if the guys were paying any attention, they’d put two and two together.</p>

<p>Having to fill out Stafford loan apps and review FA packages was VERY educational. We also brought S2 with us when we took out a car loan (and watched us walk out when the dealer tried to pull a fast one!). He reads the fine print on EVERYTHING now. My DH is so proud. :)</p>

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<p>Thank you, Erin’s dad</p>

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<p>We attended college info nights at school. GCs spent a lot of time talking about FAFSA and deadlines. I don’t think CSS Profile was mentioned (I probably learned about that on CC). They also implied that you won’t know EFC until after FAFSA submitted… no mention of calculators. They could have at least thrown up a ballpark income vs savings chart. </p>

<p>The advise was to apply for fit and see what scholarships and aid were offered. Not bad advises…but not a hint about strategies depending on estimated EFC. That simple general advise could be offered with no need to know family specifics. It would help a lot of people.</p>

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<p>CSS PROFILE is so much harder to fill out and a rude awakening for most folks. </p>

<p>The differences in aid depending on if it’s a CSS PROFILE/FAFSA school vs. FAFSA school can be staggering.</p>

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<p>Samurai, can you elaborate? Were the profile schools better or worse?</p>

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<p>I went into the process with S totally clueless. Part of it was the same early '80’s memories of what it took to afford college.</p>

<p>And buying into the vague generalities of ‘don’t worry about the COA, it’ll work out’. Not logical, but I had financial difficulties throughout the years that made the college fund kind of bleak.</p>

<p>Also, not really understanding EFC - I had thought that it would be my income & my ex’es, he’s been unemployed for 2 years. So once I was straightened out on this, my EFC was double what I thought going into the process.</p>

<p>And finding out that merit aid reduced any need based aid you might be eligible for.</p>

<p>All of this was in time to make a course correction with S’s applications, so no lasting harm was done.</p>

<p>And I specifically asked the GC (at our one meeting) about financial safeties for S; she had no useful suggestions.</p>

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<p>2girls4me,</p>

<p>In my experience, the PROFILE schools aren’t as generous with aid as FAFSA only colleges. (MY OPINION.)</p>

<p>There are lots of differences, and I would be negligent in saying its ALWAYS going to be better with FAFSA only schools, but I have found them to be more generous with aid. The reasons have to do with the formulas used by the Federal methodology and the institutional methodology for the school. Like anything else, your mileage may vary. I can give you lots of anecdotes about how it worked for my kids, or students I know, but it’s all going to be very subjective, based on the family income and a bunch of other factors. </p>

<p>Federal Methodology (FAFSA)</p>

<p>Adjusted gross income
Nontaxable income
U.S. taxes paid
Number in household
Number of family members enrolled in college at least half-time
Cash, savings
Investment and other real estate net worth
Business net worth (if more than 100 FTE employees)
Investment farm net worth
Child support paid (included in Worksheet C)</p>

<p>CSS PROFILE:
Wages
Interest and dividend income
Business income (losses)
Rental income (losses)
Nontaxable income (detail)
U.S. taxes paid, tax credits, itemized deductions
Number in household (detail about
family composition)
Number of family members enrolled
in college at least half-time and year
in school/where enrolled
Child support paid
Medical expenses
Private elementary/secondary school tuition for siblings
Cash, savings
Investment equity
Home value and debt
Business value and debt
Real estate value and debt
Farm value and debt
Noncustodial parent information
Parent assets held in siblings’ names
Student trusts</p>

<p>CSS PROFILE asks for more information about a family’s financial picture than the FAFSA, including siblings savings accounts, home equity and parents tax returns and anticipated income. </p>

<p>If parents are divorced, the CSS PROFILE will take income information from both parents. </p>

<p>With the FAFSA, home equity isn’t a consideration. I have seen that students have often done better with FAFSA only aid packages, particularly those whose families owned a house. </p>

<p>It may be possible to get a better read on a family’s finances with CSS PROFILE, and I totally understand a college wanting to get the best assessment, the PROFILE is a much more complicated form to fill out, correctly (I think). </p>

<p>The FAFSA isn’t that complicated a form to fill out - you pull out your 1040s for the parents and the child, some basic banking docs and you can complete this in about a half an hour. The PROFILE can take a bit more time.</p>

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<p>Thanks for the generous reply. It is challenging enough to figure out which schools are a good “fit” and then one must still try to figure out which of those schools are more likely to be affordable to a particular family. Financial aid always feels like a bit of a black hole to me.</p>

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<p>My parents categorically refused to tell me their income, assets, or what they could afford to pay. I finally did get a ball-park estimate of our EFC in March or April of my SENIOR year (after all was pretty much said and done), which was bizarrely close to the number I had guesstimated pretty much out of thin air as the max they could pay if they stretched a bit (i.e., painful but probably doable). I asked repeatedly what they thought they could afford during my junior year so that I could make my list accordingly, but they just brushed it off and encouraged me to apply to schools that I knew they probably couldn’t afford (top tier schools which didn’t have merit aid–this was prior to the more middle-class friendly FA policies at HYPS and the like). I eventually just decided to shoot for merit aid, the more, the better. It worked out in the end, though I definitely would have appreciated more financial guidance.</p>

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<p>This is a great forum for financial aid. My daughter met with the guidance counselor this week and he reviewed her college list. His comment was you have plenty of academic safeties but you also need a financial safety. The 3 of us will meet next week, he’s not asking what my income is but at least putting COA on the table as a subject. I suspect the answer is my local state U which my daughter does not want to attend but we might put it down anyway.</p>

<p>Does the FAFSA consider Cost of Living in their equation? The reason I ask is because I live in the Northeast, my income is much lower than the norm for my area, but not too bad if I lived in another area of the country. These hard and fast income cut-offs make it very difficult when applied universally.</p>

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<p>No, Cost of Living does not factor in, another factor that did not work in our favor. Living in the suburban Boston area, what I consider middle income would make me fairly wealthy in other areas of the country. The EFC is the same.</p>

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<p>I think the main time this is NOT the case is when a family has income between 100-200k and the student has been accepted to HYPS. The main thing to remember with the Profile is that even though mostly the same information goes to all schools (some schools have additional questions), they each use their own formula to calculate need, unlike FAFSA which uses a single formula.</p>

<p>p.s. SL, how did you roll your odometer forward? I don’t think it’s humanly possible to have that many posts in 2 yrs ;)!</p>

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<p>krmom8 wrote: “Does the FAFSA consider Cost of Living in their equation? The reason I ask is because I live in the Northeast, my income is much lower than the norm for my area, but not too bad if I lived in another area of the country.”</p>

<p>Yes…and no. FAFSA asks for your state of residence for a reason. The primary reason so far as I can tell is that state and local taxes vary considerably across the country. This means that families who live in low tax states can expect to find their EFCs HIGHER than they would be in a low tax state.</p>

<p>For example, I just typed in identical financial data for a fictional family of four on FinAid.org’s EFC calculator. The New York family of 4 had an AGI of $100,000, had $50,000 in the bank and had $150,000 in home equity. The student had no income and no savings. This family’s EFC is $17,543.</p>

<p>The same family, when the state of residence is changed to North Dakota, is expected to pay $20,543 towards their child’s college education.</p>

<p>Does this account for cost of living? I don’t think so, but it does account for the higher taxes that New Yorkers pay.</p>

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<p>“Does this account for cost of living? I don’t think so, but it does account for the higher taxes that New Yorkers pay.”</p>

<p>Let me amend that: FAFSA does account, in part, for the higher taxes NYers pay. Fact is, a $200,000 house is taxed much more in Syracuse than it is in Dutchess County. $200,000 might get you a two-car garage and a shack in parts of Westchester County.</p>

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<p>entomom,</p>

<p>I don’t know - some weird glitch when I registered! Definitely don’t have that many posts. ;)</p>

<p>Every institution is so different in the way their interpret data, that it is hard to know truly what will happen with a package. I am often surprised by the seeming disparity of it, and yet…there are formulas at play.</p>

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<p>

There’s an adjustment for state taxes, but it doesn’t look like it is nearly large enough to include both state income tax and property tax.</p>

<p>For example, for my state the adjustment is 7% for the first $15,000, then 6% for the rest. We pay a little over 5% in income tax, which would only leave 1% or so for property and other taxes. We have a sales tax, so this probably accounts for most of that 1%.</p>

<p>This doesn’t leave anything for property taxes.</p>

<p>Plus, a lot of people rent and pay no property taxes. There’s no “reward” for owning a house.</p>

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<p>“One size fits all” never does. :wink: There is never going to be a FA formula fair to everyone. Just way too many variables in life.</p>

<p>Lots of things I’d want them to fix, too…but they ain’t been fixed yet. :wink: I won’t be holding my breath.</p>

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<p>I was thinking about all the things I’ve heard counselors/college admissions personal/etc. say over the past 2 years. A couple of things stand out. </p>

<p>1) Over and over again we hear - “apply, apply, you’d be amazed at the amount of aid, we/they make it work, blah, blah, blah”. Obviously, for some people this is true. OTOH, there is a certain slice of the population for which it is most definitely NOT true. People may not know where they fit until they get to the point of actually filling out the forms and finding out which slice of the pie they are in.</p>

<p>2) We hear, from friends, relatives, acquaintances, etc. about So-and-So the Not-so-well-off whose uber-kid is getting a full ride to Great U. Rich kids are going there, some poor but worthy kids are going there, but somehow for OUR equally worthy kid it is not, in any way, possible. We’ve worked hard. Somehow that seems unfair. We have to suck up again the fact that life isn’t fair. It takes awhile, and a lot of rationalizing.</p>