I’ve been trying to do some planning for college for my daughter, but it’s confusing. I know about NPCs, but would love to get some real world feedback.
In general, how do they look at low income/higher assets?
My hubby and I both work in public service jobs, so of course our income stinks.
However, he inherited some money from a grandparent, which we have squirreled away for retirement. How, not all of it is in retirement funds. Plus we own our house. The house is worth about $300K, and there’s about $300K in non-retirement assets.
Does this knock us out of financial aid? We are obviously planning on spending some on college (for this and our younger child), but we’re trying to see if our daughter should target public or privates colleges.
Our DD is a very good student so there’s a chance of some merit as well.
The money IN that non-retirement account will be an asset if it’s there the day you file your financial aid forms.
An inheritance isn’t income…I believe…so not sure the year you received it matters.
Run a net price calculator, and see what you get…do a few. You may find that as a two income family, your child won’t get a lot of need based aid anyway.
Hi, he’s had the assets for years. Part of the issue is if we sell them, we’ll owe taxes on the gains.
Our income is low, I only work part-time time right now at a school. I used to have a professional job (which is how we paid off our house). Our total income is about $55,000, including investment income.
I do know we are lucky, and I’m not trying to get something we don’t deserve. But looking at college expenses of $50k plus is so daunting when we live our daily lives living on our moderate income and trying to preserve our assets for the future.
She is mostly looking at our state schools but wants to apply to a few reaches.
Hi, yes, the assets are in stocks and mutual funds. How will they count the house equity?
She is a Junior with a 3.96+ UW, 4.6+ weighted. Just took the SAT. Her PSAT was 710W/630M but she studied a ton so she’s hoping it came up. Not sure about major yet, leaning towards a STEM major. Varsity athlete (top few girls on the tennis team). Volunteering, NHS, Robotics, etc. Really a great kid
We are in a very, very similar situation. You need to run the net price calculators of every college in your list. You will probably see a great variation and might find you are much better off at schools which use the only use the FAFSA and not the CSS Profile because profile schools usually consider the value of the home.
We have almost no money in retirement funds because our income was so low there was no benefit. I wish I knew ten years ago what I know now. I also have younger kids I need to get through college.
You make too much money for the simplified needs test, so your assets will be counted.
Unless you have a passel of kids, your $55k in income will probably make you ineligible for Pell grants
While monies in your retirement account (401k, 403b, etc) will not be considered an asset, the contribution will be considered an assets.
Many of the colleges who give the best aid will require the CSS profile or their own institutional forms. Different schools have different models especially how they look at home equity. Some cap home equity as a multiplier of your salary (1.2x, 1x, 2x) while other schools will look at all of your home equity as an asset being available for college.
your $30,000 in the bank will add $16,800 to your EFC on the FAFSA.
I think she should definitely retake the SAT to bring the score up. For a STEM kid, the math is kind of low. She should consider taking the ACT (as some students do better on this exam because it is more closely correlated to what you actually learned in school).
Don’t sleep on the Womens colleges. Many are part of consortiums, so there will be men around.
If testing is not her strong suit, look at fairtest.org for the list of test optional school (but be reminded, some schools that are test optional for admissions, will require test for merit $$.
Hi, those were her PSAT scores. Awaiting SAT score in a few weeks. She really hopes the Math came up. She’s getting As in AP Calculus, so she is good at Math, just needs to test that way. She will take the ACT too.
She is not a D1 recruit, she goes to a small HS and, while good at tennis, not D1 good.
I just want to give her an idea of what to expect. It is so sad to see the kids here who are excited about getting in somewhere, but then can’t go.
But she is lucky because our state schools in Maryland are good and we can make that happen.
If she hasn’t already, get her studying for the SAT Math II subject test. Advanced math kids are often several years removed from the material covered on the test so a refresher can be vital.
Run the College Board EFC Estimator (just Google that phrase) to get a quick idea of your EFC.
There are two methodologies in the output.
The FM (Federal) is the FAFSA. The IM (Institutional) is the CSS/Profile. The IM estimate is less accurate because schools tweak their formulas more, especially around the amount of home equity they assess.
If you cannot afford schools in the range of this tool, you need to focus on schools that either give merit aid or have lower price tags (in-state tuition, possibly living at home to save dorm costs).
Good thoughts. Yes, she is preparing for SAT II math test.
We have been putting max in retirement every year (Roth IRA). We’re in pretty good shape for retirement, with a paid off house, retirement funds, and several pensions. But we have to live in the meantime, and pay for college.
The federal tax rate on long term capital gains and qualified dividends can be zero percent if your marginal rate on ordinary income is in the 15 percent bracket. So saying you haven’t sold the assets because you’d have to pay alot of tax…Are you talking about state income tax?
Also, here’s a link to an article that details the difference in FA based on home equity. http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances-a-case-study/
(if blocked just search for “thecollegesolution home equity affects need based aid” - This is an outstanding blog (even though her kids have already graduated she still updates it), especially re her desire to help people understand how mid-level privates can actually be a great college value, and how to pay for college and ‘find the money’.)
someone else recommended you run many different NPCs and that is an excellent idea. You’ll get a feel for which schools are most financially friendly for your specific situation.
Merit aid has also been suggested. This is probably a better bet for you guys. There are lots of schools that offer merit, but it needs to be something you specifically target because it’s just not something that all schools do.
Another thing … OOS is a very expensive route unless merit aid is significant and effectively guaranteed. They will offer no FA other than loans.
