<p>Go to <a href="http://www.studentaid.ed.gov%5B/url%5D">www.studentaid.ed.gov</a> Do a search for efc formula for a dependent student. Print out pages 9-11 and 17- 20 and you can find your exact efc according to federal guidelines. This is for public schools only not ones that also use the PROFILE. You will be surprised at the impact or lack their of, of parental savings. Your income is really key.</p>
<p>I am interested in the effect of savings on EFC since I am going to sell my house and I would like to invest the money instead of buying another house. The effect of having 200K invested instead of being protected in a house is to raise the EFC by about 10K per year. I totally agree that the EFC can be a stunner. With a single income of about 75K a year and no savings, my EFC is 18.5K. This is more than my mortgage payment and I would never be able to pay it without using the equity in the house. The people hit the worse are those making a lot of income with big credit card debts and home equity lines of credit. Of course, if you find yourself in bad place, you can take the loans and have four years to get things straightened out.</p>
<p>Dufus:</p>
<p>you need to clarify whether you are considering the federal formula (fafsa) or the formula that private colleges typically use. By law, the federal formula, used by public schools, excludes home equity. But, the formula used by private schools takes into account home equity (generally with a cap). Thus, your house equity is ignored for fafsa. If you change the form of the asset, i.e., into cash, it would increase your efc by ~5.6% of the cash. (approx. 6% of parental assets are considered for efc).</p>
<p>I pasted a link below if you really want to slog thru the whys, hows of efc calcs.</p>
<p>Yes the FAFSA and the Profile are both designed to reward the profilgate at the expense of the productive. Saving is punished, debt is rewarded. It is a system designed bt leftwing intellectual elites and the swarm of government officers who exist mainly to eat out the substance of our people and reduce them to total dependence on the state :-)</p>
<p>actually I don't think debt is taken into consideration except when you consider that home equity is considered to be part of accessible assets.
But debt like high expenses for a mortgage/expensive cars/credit card aren't going to lower EFC if your income is high</p>
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<blockquote> <p>my EFC is 18.5K. This is more than my mortgage payment >></p> </blockquote>
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<p>Our EFC is $40,000 per year. That is more than double my mortgage by a lot. But we also have a ton of equity in our home. It's called the "double whammy". But...I'm now whining. We consider ourselves fortunate to have our home and the income and assets we have. No, we aren't thrilled about using most of it for college expenses (for two kids), but the reality is we can.</p>
<p>$200 K of equity in you house is treated more favorably than $200 K in cash or mutual funds never mind the fact that one helps create jobs by being invested in businesses and the other drains federal coffers and adds to the deficit because mortgage interest is deductable.</p>
<p>If you want more of something - like two empty nesters who raised there kids in a three bedroom house going out and buying a 3000 sqft MacMansions thenpay for it. If you want less of something - like investments in the stock market that provide the capital to create jobs then tax it. House mortgages are so preferentially treated by the tax system right now that it has created a housing bubble in most of the major metro areas in the country. When that bubble bursts watch out.</p>
<p>Anyway that lecture is a little off topic but parents should know and know early while there is still time to do something about it how wealth and income are treated by college FinAid departments if they want to avoid some cruel surprises.</p>
<p>patuxent,</p>
<p>A sidebar: the RE prices & re-fi boom <em>is</em> helping the economy (to a degree) because the $ people are taking out of their homes is spent on products, cars, travel etc. I have seen some studies that say increased RE wealth is one of the main things keeping the economy afloat right now. </p>
<p>I agree, watch out when RE gets hurt.</p>
<p>Like all bubbles somebody is going to be caught holding the burst balloon. This one of those "Incredible Popular Delusions...." And it is being fueled by bad public policy. People being induced to pay more than they can afford for houses intrinsically worth far less than they cost because the "investment" is treated favourably by the taxman is ultimately going to lead to disaster. And the people who are letting the loans are not holding the paper. FreddieMax and FannieMae are repackaging these essentially unsecured loans and putting them on the financial markets.</p>
<p>I agree with Dufus..I hope that those who have incomes in the 80,000 to 125,000 range or so...do NOT assume that they will not get financial aid. It is too hard to base this all on the income alone without the other factors as Dufus pointed out. Please do not be discouraged from applying for financial aid. Those in this income bracket can and often DO get some aid. It also might be significant if you have more than one child in college. Even if it is not a lot of aid, it still might be something. Fin. Aid is definitely possible for folks on this bracket....it might vary depending on various factors and on certain colleges. But a blanket statement that those over 80K need not apply for FA is discouraging and can be quite misleading. It does not hurt to apply. You might get aid and be pleasantly surprised. </p>
<p>Susan</p>
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</p>
<p>Thank you. That was very helpful. </p>
<p>I also appreciated the link earlier in this thread to a chart showing income levels of various percentages of the United States population. It surprises me how many prosperous Americans think of themselves as nearer to being poor than to being rich, which is what they actually are by any reasonable worldwide standard.</p>
<p>tokenadult - the problem is you cannot compare incomes without taking into account cost of living. 90K a year is average in the county where I live and I can guarantee you that you could live a lot better on 45-50K in my old hometown of Youngstown. The average school teacher makes $36K a year out in the Great Plains and $58K in New England and I'll wager lives better out on the Plains.</p>
<p>yes that is a drag- apparently the cost of living in the entire state is averaged rather than evaluating the region.
My brother has a 10 yr old 5 bedroom house in a gated community with a country club that he paid $150,000 for in another state.
Our house is taxed at $350,000 and it is two bedrooms 1 bath & it is 105 years old. In an industrial area however it is in one of the *most livable cities in the country<a href="if%20you%20don't%20look%20at%20the%20school%20system%20or%20price%20of%20gas-%20housing%20costs%20are%20a%20much%20bigger%20chunk%20out%20of%20everyones%20wages%20than%20they%20used%20to%20be">/i</a>
oh well-we are planning on moving out of the country for retirement anyway :)</p>
<p>@ Patuxent: Yeah, I know that cost of living differs in different regions, because I have lived in various regions of the United States. But, come on, that doesn't mean many people want to move to rural China for the wonderfully low cost of living there. Americans are rich, period, by world standards, and people with six-figure incomes (in United States dollars, living anywhere in the United States) are not struggling financially. </p>
<p>The point made earlier in the thread is well taken that just because a person is part of a household with a six-figure income does NOT mean that the person is ineligible for financial aid (= discounts from list price) at most colleges. Indeed, quite a few "financial aid" recipients are persons whose family incomes are up in the high percentiles of the United States income distribution. So I always advise my prosperous friends to apply for financial aid to see what they will be offered: what's the harm in applying?</p>
<p>There is the factor that in our low cost of living areas , our wages are surpressed at a rate far greater than any advantage we gain by our relatively lower COL. Someone posted a while back that a teacher (or nurse) and custodian in their city make over $120K , I think it was. In my part of Texas, that'll get you an RN, and a LVN, a teacher, and a policeman. Be careful what you wish for. Ain't nobody buying a house and selling it in less than two years for any profit (after sales commission and costs) either, much less six-figure profits.</p>
<p>Yeah curmudgeon but that IS my point. A family with $90 ot $100K income IS wealthy in your part of rural Texas. Put them on the San Francisco peninsula and they would be lucky to buy a one bedroom condominium with a revearse amortization loan. Obviously the trade-off is opportunity.</p>
<p>But a Ford costs the same, and my groceries costs the same, and my gas is the same, and my interest rates on debt are the same. The two major variables I see are housing and wages. Our cheap houses stay cheap. Your expensive houses can make you wealthy. In a recreational county near me , there is a Ca. or Northeastern city person a week moving in that was a plumber, manufacturing worker, mid-manager in a high $ area. Did he save? No. Did he invent something of continuing value? No. What did he do for that nice spread he just paid cash for? He sold his 3 BR house for $700,000-$1.3 million dollars. That's all. I'm not whining, I choose to live where I do and am willing to pay (or not earn) for the privilege. But that EFC stuff doesn't favor rural people at all, whether they be Northern or Southern.</p>
<p>Your food is cheaper than you think and your taxes are less too. But yes I know how you feel. I strongly believe the government should not be treating real estate investment so favourably. It distorting the economy and driving up prices.</p>
<p>If it is any concolation to you I don't own a house. I foolishly saved my money to put the kif through college and I am looking at a bunch of damn fools having their house double in price every two years:-) Yeah OK it is the tulipmania all over again and a lot of instant millionaires are going to wind up instant bankrupts when the bubble bursts but there is no justice in that either because the economy will suffer along with them.</p>
<p>
[quote]
If it is any concolation to you I don't own a house.
[/quote]
Goodness, that's no consolation at all. I don't begrudge their good fortune, and I wish you and I had some. LOL.. Wish I could join them. But there is one problem, O.K. maybe more than one problem. I don't like cities (to live in) at all, or crowds, or freeways, or malls, or chain restaurants, or crime, or pollution, most humans,foo-foo dogs, dress clothes, Starbucks,chain stores, Big National Chain Banks.......(I'll stop there, but every year my real list gets longer and longer and my desire to get lost in the woods grows stronger and stronger.)</p>
<p>Curmudgeon....you'd like it here then. We don't even have a traffic light in our town, lol. .....NO chain stores, no fast food restaurants, no billboards, no trafffic, no pollution, no crowds (except on the ski lift lines during XMAS week), and so forth. Ya know, I was thinking about all this tonight. I was driving back home on an 8 hour drive. It started on the New Jersey Turnpike and Garden State Parkway which were SOOOOOOO crowded. Actually the other night going down there, I was stuck on the GSP going 10 miles per hour for 90 minutes and kept saying to my daughter...can you imagine people doing this every single day...I could hardly take it. Yes, we drive a lot at home but at least we keep moving! ;-). Then tonight, my journey ended with the final hour drive which is on a windy road through the mountains...did not pass or see another car the entire time. What a contrast. Always feels good to get back, let me tell ya. </p>
<p>No offense to anyone else's community intended. By the way, my child is going to college in Manhatten next year...how is that for the complete opposite. Last week, I nearly had an accident as I came upon three huge moose in the road in the darkness going 50 mph. I have to remind her that in NYC, NOBODY stops for pedestrians just cause you feel like crossing the street like they do in Vermont. Hope she makes it. It is like a different world.</p>
<p>I think you live on a ranch, right? Well, no ranch here but we are on five and a half acres...bordered by woods too...and I know that sounds like a lot to most folks on here but it is not that big of a deal in my neck of the woods. We don't have anything on the windows. </p>
<p>Susan</p>