<p>I agree, it is ridiculous and the government is out of control, which I have ranted on in other posts. I have a similar sitation to the OP.</p>
<p>Every college isn't affordable for every family. "Meeting need" is a very generalized concept that really surprises families with relatively high current income who spend most of it and who haven't been saving for college. Those who live in areas where a six figure income will barely get you a starter house really get a bad case of EFC-shock.</p>
<p>Can you increase your need-based aid by spending everything and saving nothing? In most cases, yes. But, do you really want to show up at college time without even a year's worth of tuition? Small business owners (like the horse-farm guy and even docs with their own practice) may have more tools to try to game the system than wage-earners, but many schools require detailed information on those business to look for that sort of thing. And generally it's tough to sustain that kind of manipulation for several years in a row. I don't doubt your story, Hindoo, but I doubt if many middle-aged docs could manage their income in a way to score major financial aid.</p>
<p>A few years ago, I wrote Ants</a> and Grasshoppers: Are Savers Victimized by the Financial Aid Process?, and very little has changed. If you KNOW you are going to be eligible for substantial aid, then lower savings will increase your award. If you are unlikely to be eligible for aid, you are better off with a pile of savings to minimize the need to tap current income or take out loans. The problem is that most families will have a hard time predicting what their income will look like at college time, even five or ten years before the student heads off to college (a point at which substantial savings should already have been accumulated).</p>
<p>In most situations, ample savings in the parent's name are a good thing. Even if they have an impact on aid, they increase the student's ability to choose a college without being focused purely on cost.</p>
<p>"I don't doubt your story, Hindoo, but I doubt if many middle-aged docs could manage their income in a way to score major financial aid."</p>
<p>I doubt that many would be dishonorable enough to manage their income in such a way as to score major financial aid. But it has been done. Where we live, our daughter and another student from her high school (the doctor's son) were accepted at the same LAC. Both were exemplary students with strong test scores, GPAs, etc. Each received an identical small merit award to this school. At the time, we were essentially told that we could handle the rest. We felt we couldn't, so declined the offer. The boy's family, however, aggressively appealed the lack of need-based money. Eventually, the school upped the ante by an astonishingly considerable amount, and off he goes to the "school of his dreams." What's strange is that we live in small (paid-off), unpretentious little house in a decent neighborhood, but hardly upscale, and drive 10 and 11-year-old cars. The other family lives in a mansion at least three times the size of our home, in a gated community, with all the expensive accessories one might expect. How they convinced this school that they required more money so their boy could attend is a mystery to me. They could have sold one new Lexus SUV and paid for a year's tuition. ... Hey, but I'm not bitter.</p>
<p>Dear Cezzium,
Your situation is really unfair. I would like to include it in a story I'm doing for Money Magazine, which is preparing a bunch of stories in an upcoming issue on college affordability. I would really like to interview you about it. Would you be willing to share your story?
I hope so. Judy</p>
<p>I just had to join in the collective rant! Playing around with a LAC's online calculator, I just discovered that what I thought was a pretty high FAFSA EFC jumps by $7000 using the Institutional Method. And it tips us over the projected COA by $400. No aid in our future :( and it's primarily because we work hard at demanding jobs, and live in an area with sky-high housing.</p>
<p>Is there an honorable way to manage your finances to get a low EFC? What about saving a lot of money in your retirement accounts and home equity, and then keeping your income low during the FAFSA years, after you have set it up so you don't need much income?</p>
<p>Would that be OK, or would it be gaming the system?</p>
<p>DT- that would be perfectly legal, assuming you can survive on the amount you get! Most of us would rather earn more money than less money at any given time, but there may be certain times when a $1000 increase in income puts you over a threshold and takes away more aid & aid eligibility than it buys- like if you lose Pell grant, you lose SMART grant, Gates $, etc.</p>
<p>Part of financial aid is learning what it reality and what it not. If you own a home, paid for in full, on either coast, it has a pretty high value. You could ahve purchased your home in the 1980s for $100,000 and now have a $1,000,000 home fully paid for. YOU have not done anything, other that stay in one place, to earn $1,000,000 and you cannot access the equity (on a low income, for example) and afford to stay in the home, you're fine for FAFSA, but you will suffer at Profile schools. That's life.</p>
<p>Even more frustrating, it makes schools with the new no loans, better aid for lower income even more of a life chnaging experience. A student in California who aspires to top schools may get UCLA with aid, Vassar with a big EFC plus loans, and be denied from HYPS where they would have gotten both private school education and affordability. That is frustrating, but that is just the way it goes. It does make the top schools even more desireable as they are doable, if you get in!</p>
<p>Dear Cezzium,
Your situation is so common and you express it so eloquently. I would love to feature you in an upcoming piece in Money Magazine.
Please consider it. We are particularly focusing on the challenges of legacies.
Thanks for thinking about it.
Judy Rakowsky
<a href="mailto:Judy.Rakowsky@gmail.com">Judy.Rakowsky@gmail.com</a></p>
<p>As you may have seen in earlier posts, I am a correspondent for Money Magazine and I am looking to interview parents facing the challenging situations described on this blog.
I don't want to intrude on your conversation.
I am impressed with the poignant situations described here.
In particular, I am looking fo examples of these situationsr:</p>
<p>A family that had hoped to send offspring to an alma mater but soaring tuition is making that implausible. </p>
<p>The steep climb in tuition at great public schools scuttling plans for attending there. (Doesn't mean that the student has not wound up somewhere else where they are happy).</p>
<p>A situation that looked hopeless but a last-minute discovery of a creative financing method or particular loan has made the dream come true after all.
Please write to me as Boston58 or <a href="mailto:Judy.Rakowsky@gmail.com">Judy.Rakowsky@gmail.com</a>.
Thanks so much.
Judy</p>
<p>"This seems to be the message that many middle class families get. It's true, but not helpful, and I for one find it frustrating. Kind of like: "Stop whining! And why are you looking at those expensive LACs that give little or no merit money! Sorry your savings were too pitiful to help, but you DO have options: Go into enormous debt; take out huge loans; keep them home, attached firmly to your invisible umbilical cord; find some way to do college on the cheap, perhaps at a sixth-tier school that'll toss some merit $$ your way." "</p>
<p>I'm in the group of people who aren't wealthy, but don't qualify for need-based aid. With our 12 and 13-year-old Windstar and Sable cars, we don't live high on the hog. </p>
<p>S is attending a second tier LAC that is giving him some merit aid, and is having a good experience. Older S turned down a top 25 private that offered him no money and went to an out of state second tier public that offered him very nice merit aid.</p>
<p>I've taught at a second and third tier public university, and I know that one can obtain a good education at such a school, and can leave with excellent graduate and career options. For instance, 2 of my former students after college got fellowships to Harvard. Another went to Georgetown Law School, and yet another went to Harvard Law School.</p>
<p>I feel lucky to be in a country in which virtually everyone who has the intelligence to qualify for college can find a way to go to college. Certainly not everyone whose stats qualify for a top college will be able to attend one. Even if one takes money out of the picture, there aren't enough slots at top colleges to hold all of the students who qualify.</p>
<p>Still, virtually everyone who has the intelligence for college can find a way to get a college education, which is a far greater range of options than exists for most intelligent people in the world. The U.S. also is not a country in which only graduates of top colleges can have excellent post college options.</p>
<p>One of the biggest mistakes families make, finaid-wise, is saving for college in the kids' names.</p>
<p>Planning ahead and preparing is great, but part of that is researching how the aid formulas work, and putting your finances in the best possible position for aid when it's time to fill out the applications.</p>
<p>So-- let's take a middle-income family, one kid, making around 60K, who are frugal and managed to save 80K for their kid's education. If they put the college savings in their (parent's) name, they end up with an Expected Family Contribution of around $7k, and will likely get a substantial aid package.</p>
<p>BUT-- the same family, if they saved for college in the kid's name, ends up with an EFC of over $22K. And likely no need-based aid from any Public, and only modest aid from most private schools.</p>
<p>I think this is what's happening for some families of modest means, who end up with a relatively high EFC.</p>
<p>On the other hand, I have little sympathy for the families making 200K a year, who complain about getting a high EFC.</p>
<p>I used to work in financial aid many moons ago, and I still recall a family that made what was a lot of money at that time. The husband had a software development business on the side. He "lost" so much money that his kid was Pell eligible. I also saw quite a few families that owned rental homes, and they got pretty amazing write offs that increased their eligibility for need based aid. 19 years later, here I am ... after 2 years in a row of decreasing AGI, we were fortunate to have grossed around $10k more last year than the previous year (we probably won't make that much this year, though). In the meantime, we paid out thousands from our savings for college costs. What happened? Our EFC went up more than $3000 this year. One step forward, two steps back.</p>
<p>I understand the system very, very well. I just wish I were rich enough that I could pay for school & not bat an eye while writing the check. Unfortunately, I have friends who can do that ... so I keep telling myself to concentrate on the many people I know who can't even afford community college. But, yeah, I do my share of wallowing in self pity.</p>
<p>My problem with EFC is that there is little attention given to the region of the country one comes from. A salary of 60k, or 80k in Boston, or NYC, does not offer the same standard of living as in rural Nebraska.</p>
<p>Why is that falling apart vacation home that the OP inherited counted, if antique furnishings, such as a couple of $50,000 oil paintings, or a $30,000 antique oriental rug is not counted? Can't that rug pay for a 1.5 years at an instate public, or 1.5 semesters at a private college? These kinds of items can sit in someone's home and it goes unnoticed. Two of those $50k oil paintings can pay for 2.5 years at a private college.</p>
<p>northeastmom,
Yeah, I hear you about geographic diversity. My sister and her family live in a part of the country where they make 1/3 of the salary we do and they have a MUCH nicer life. They own a boat, two new vehicles, are looking at buying a lakeside vacation property, have DIY-ed major home renovations, and spend their summers doing travel sports. They would qualify for free tuition at most of the elite schools that have revamped their FA policies.</p>
<p>We are in a high COL area, no boat, modest 42-year-old house that needs repairs, two aging vehicles, 10% of income in medical bills, no expensive rugs on the floor or cabins in the woods. Have saved dutifully and racked up home equity rather than trading up. EFC is within $200 of COA at most of DS's schools. We chose this area for the schools, though, so we knew what we were getting into. It still stinks.</p>
<p>We are in an a high COL because of my H's employment. All of our other relatives, other than one parent, has moved away. They all have nice new, and more beautiful homes than our 55-60 y/o home, much lower property taxes, and are not as financially strapped as we are. The one who moved out first had a boat, but sold it. He also has a sports car in addition to his regular car.</p>
<p>We don't have the antique rug either. Ours are the $100 machine made rugs from the local home store.</p>
<p>COL can be absurd. I was looking in the Boston paper the other day, and there was an add for "affordable apartments." The income limit for a family of 2 to be able to qualify for "affordable"? $63,000. While that's a heck of a lot of money in other places; in Boston, you need "affordable housing" to be able to live. Financial aid policies certainly don't take that into account.</p>
<p>"Where we live, our daughter and another student from her high school (the doctor's son) were accepted at the same LAC. Both were exemplary students with strong test scores, GPAs, etc. Each received an identical small merit award to this school. At the time, we were essentially told that we could handle the rest. We felt we couldn't, so declined the offer. The boy's family, however, aggressively appealed the lack of need-based money. Eventually, the school upped the ante by an astonishingly considerable amount,"</p>
<p>I'm guessing the LAC anted up to get a strong male student. LACs have a hard time attracting males, and those colleges know that if their male:female ratio indicates a disproportionately large number of females, the colleges will have a hard time attracting females, too.</p>
<p>That's a good point, Northstarmom. I hadn't thought about that, but you may well be right.</p>
<p>My EFC is 52% of combined take home pay of both me and my spouse. This is ridiculous. I have saved for college, but not at the rate tuition has gone up. The money will all be long gone before my youngest (hs freshman) hits college. </p>
<p>The problem is we have no business to write off. We both work for large companies and make good money. We have a $2500 mortgage payment, but $700 of that is escrow for taxes.</p>
<p>Don't tell me I should sell my expensive home and move into something small and affordable. We have looked at that and if we did, we coudln't itemize and I would be giving the govt 45% of gross income instead of 30. </p>
<p>We have four cars, 3 of which have over 100K miles. I do put 10% of my gross income away for retirement and so does hubby.</p>
<p>The formula has to be flawed.</p>
<p>I will agree that the EFC doesn't take into consideration as much as it could differences in cost of living in a state and between states.
I haven't researched this- but I am also wondering if there is a correlation between high costs of living & states that have good funding for ed, including higher ed.
Since FAFSA EFC does not take into consideration property values- perhaps those of us with rapidly appreciating real estate actually come out ahead if tax dollars are then invested in the state's universities?</p>