<p>...a house or (and) a car mean that I will pay less for school? (aka, qualify for more grant money?)</p>
<p>Thanks CCers!</p>
<p>-MM</p>
<p>Buying a car with an auto loan will not result in more money for college as loans on autos are not considered in financial aid calculations.</p>
<p>If you pay cash, you would have less money in savings that would be assessed, but the cost of the car would be far more than the small financial aid increase it might create, and the money spent might have been protected assets anyway. Spending $30,000 cash in savings for a car might result in about $1,680 increased aid eligibilty, but the additional aid might be in loans and your $30,000 would be gone. That does not seem worth it.</p>
<p>Thank you for the response. I’ve never looked at this on the CSS or the Fafsa because it didn’t apply to me, but let’s say my parents went ahead and bought their dream home and a car…where do you write those values in? (In terms of the cost of the car and the home equity)</p>
<p>Basically, what is included in these personal assets when assessing the aid eligibility of a student when filling out the CSS/FAFSA?</p>
<p>Thank you!</p>
<p>Follow up:</p>
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</p>
<p>Are mortgages considered in FinAid calculations?</p>
<p>^ You don’t include them as assets, unless it’s not your primary house.</p>
<p>If you purchase a home with a home loan, there will not be any significant increase in financial aid.</p>
<p>If you are at a FAFSA-only school, buying a home *with cash in savings *might protect some money from financial aid calculations. The FAFSA does not assess home equity. If you are at a school that also uses the CSS/Profile, home equity will be included in the calculation, so there will be no increase in aid.</p>
<p>In short, buying a car will not increase your aid, and buying a home will probably not increase your aid, except if you can pay all cash and are at a FAFSA-only school.</p>
<p>Home mortgages are only considered in that they are used to calculate your equity that will be assessed for financial aid.</p>
<p>The equity (value of home minus mortgage outstanding) of the primary home is not included on the FAFSA. It is reported on the CSS, and colleges might or might not consider in in their calculations. Both CSS and FAFSA look at rental and investment property values (i.e. not the primary residence).</p>
<p>A certain amount of personal parental savings are exempted from consideration in the FAFSA depending on the age of the older parent. For us DH is 47 and our exemption is around 50K. I’m not sure about CSS.</p>
<p>Retirement savings (in specific types of accounts) are not considered at all by either FAFSA or CSS.</p>
<p>Car purchases are irrelevant to FAFSA. CSS does ask what the make, model and year of your cars are, and presumably colleges may consider that information in their calculations.</p>
<p>So, I guess the question I have is…</p>
<p>Should my parents wait until after college is over and done with to buy a house or should they just buy it now? That’s kind of the question that’s been thrown back and forth. I’m worried that getting a house would make my financial aid lower and I’d hate if they had to pay more money for mine and my brother’s education… it’s already a pretty penny as is. However, I don’t want them holding off on doing something they’ve wanted to do for a long time… Any suggestions?</p>
<p>Thank you all so much for the responses!</p>
<p>Run both scenarios on a financial aid calculator – both using the Federal method (FAFSA) and the institutional method (CSS Profile.) It’ll just be an estimate and, of course, different CSS Profile colleges use that information in different ways when calculating aid, but it’ll give you some sense of what, if any, difference it would make.</p>
<p>Thanks for chiming in 'rentof2; I was hoping either you or Thumper would give me some sound advice. 
I’ve never thought of trying it out on a calculator. Thank you!</p>
<p>Ok so, I tried both ways.</p>
<p>With the CSS way, it shoots up 6,000. 
That’s a lot of cheddar. :(</p>
<p>Any other additional tips to try avoiding a spike by buying a house?</p>
<p>It really can depend on the circumstances. If your parents have a lot of money sitting in the bank, they are assessed about 5% over $50K on that money. If they buy a primary residence with the money, FAFSA does not include the home equity of a primary residence, so that money disappears for all intents and purposes of FAFSA. The same with buying a car with cash or any other large purchase. People are urged to get large purchases, repairs, etc out of their assets if that can make a difference in financial aid . For instance, if I am thinking about converting the basement into a rec room and happen to have $50K to do it sitting in my account, if I spend all of that money doing that, the EFC would be $2500 less. </p>
<p>But think a moment about this. You spent $50k, in order to lower your EFC by $2500 which your college may or may not give you. Most schools do not meet full need or meet it with loans. Your parents lose the security and use of $50K in money just for the POSSIBILITY that you are going to get $2500 more in financial aid. Is that worth it? If they are going to do it anyways, they might want to get cracking a few months earlier so the money sitting there for it does not have to be reported on the FAFSA, but to do it entirely for the possibilty of maybe getting $2500 more in aid seems to be crazy to me.</p>
<p>To complicate this picture further, most schools that meet full or close to full need do not use FAFSA alone. They may use PROFILE and some of these schools want to know what cars your family owns and the value of your house. So you just be shifting assets to a less liquid form and still getting hit with the value. If your family needs a car, is going to buy a house anyways, the timing can be adjusted for some value, but don’t do this just for the possibility of more aid. It’s the whole picture that counts. </p>
<p>If I inherited a half million dollars and was sitting in a small apartment that was not good for the family, I probably would buy a house with some of the money. And if I had a kid getting ready for college, it would make a difference in EFC and need especially if the school was generous in counting primary home equity. So it would behoove me to buy the house and get rid of the money before filling out the FAFSA and have that half mill sitting in my account. If I needed a car, I might buy one also. But bear in mind, that if my kid does not get accepted and go to a school that meets full need, it could all be for nothing and then I would be out the money that could be used to help him get through college and as a buffer for other needs. </p>
<p>College is not the end all of life. The costs have to be taken into perspective with the rest of the family financial situation,needs and quality of life. If you really work at it, it is possible to squeeze more out of the financial aid situation by playing some games, particularly if you quit your job and get little or not income in the key years for determining aid, but then you are not getting that income and you don’t have a job. Is that worth it? Do you really want to put all or most of your money into houses, cars, material goods on the chance that you get more money out of a college? There are risks to doing all of these things.</p>
<p>Wow, cptofthehouse…thank you SO much for the detailed response. It really helps put everything into perspective. I’ll pass on the info the 'rents. Thanks! :)</p>
<p>Thanks, Miss. I just realized you are the same poster on another thread that caught my eye. In your case, going to a LAC that meets full (if that is indeed the case), it might make a difference in your award. Ask your financial aid director what the formula is that sitting assets are assessed. For FAFSA alone, it is about 5%, a little more, I think. BUT your college may use a different number. Also ask if the home equity value is capped or included in assets. If it is, if your parents paid cash for a house, it could make a significant difference in your need. If not, they could be just taking assets in case and converting them to assets in home equity. Colleges differ in how they assess these thing so you need to get the calculator formula for how your school assesses need. Visit your fin aid office and have them go over this years figures and awards and see what can be done to increase your award next year within the framework of risks and needs that your family has. It might be worth it. It might not.</p>
<p>If your family is very low income and has a certain amount of cash sitting there that is the only reason they are not getting the automatic zero EFC through the Simplified Needs Test of FAFSA (look it up), it could make a difference in your government money. You could then possibly be eligible for up to $5500 in PELL grant money, subsidized loans and possilbly other money if your college participates in the programs such as SEOG and Perkins Loans and/or any state aid if applicable to you. Financial aid is very much income oriented so that is what makes the most difference unless you are talking about a whole lot of money. Also if you have money in your name, that is hit at 20% as opposed to the 5% of your parents, so you should spend that down first.</p>
<p>Thank you again for the tips. I’ll call Smith’s FinAid office. </p>
<p>It’s kind of ironic…and sad in a way. When parents start saving for college early, they end up paying more (since the liquid assets get factored into how much you end up paying). Ahhh, the dreaded world of finaid! Thank you very much for the sound advice, Cpt.</p>
<p>Not really, Miss. Those who save have more alternatives. You are one of the more talented and lucky ones to get into such a fine school with solid financial aid. Except for a very small handful of school, colleges in the US do not come anywhere near to meeting aid. Many offer loans to pay the costs but loading up undergrads with a huge debt burden (I’m talking more than half the cost of some of these expensive schools, not the STafford and Perkins maximums which are high enough as it is), is giving them future problems. So, those who have families who saved, have the amounts saved to buffer them from over borrowing. </p>
<p>The financial aid process is loaded heavily on the income and far less on the assets. Look at the formulas. Only about 5-6% of assets, savings are hit, over $50K, for school costs. Many schools exempt primary home equity or cap it. So it’s not like they drain your family’s savings. There are a few unusual situations where a saver might have gotten less than a non saver, but still, the saver had and has flexibility that the non saver is not going to have. </p>
<p>I would prefer to have enough money to pay my kids’ college tuitions where ever they want to go and forego any financial aid eligibilty than have to take the chance that they get into schools that will give them enough financial aid or scholarship money because we don’t have any money to spare.</p>
<p>I have to agree with cpt. You seem to be making a common mistake, in assuming that just because you have less money / assets you’ll get free financial aid to make up for that. What you’ll end up actually seeing is that you’ll get a high-interest Parent PLUS loan that you’ll start paying interest on immediately, meaning that whatever tiny increase in eligibility for financial aid that you might get by reducing your assets will be more than offset by the fact that you just gave up money that you could have used to avoid those loans.</p>
<p>Cptofthehouse’s post is so excellent and informative. As a person on the high-need end of the spectrum, I can also attest that even though it may not seem like it from people’s anecdotal stories, you are always better off with more money than with less money. We could not save for our kids’ college costs because we had a very hard time just keeping the bills paid. We’re not big spenders – we have one 18 year old subcompact car, a 60 year old 1000 sq ft house, no investments, retirement accounts, we don’t go on vacations… nothing like that. Paycheck to paycheck.</p>
<p>My son got excellent need based aid from his very generous college, which has made it possible for him to go there, but we still pay our share, he works summers and during the school year. When I started earning a little more, our aid package went a little down, but not dollar-for-dollar down. I am still a little bit ahead of when I was making less. No matter how you reckon it, you’re always better with more money than less money, even with regard to financial aid.</p>
<p>And cptofhehouse is also right about the wider options you have with more money. My daughter goes to a public university and she gets a decent amount in merit scholarships and significant need based aid, but paying for her college is really killer. They don’t meet need the way my son’s school does.</p>
<p>Views can get skewed where aid is concerned. There is often a belief that the colleges just print money as opposed to that they have a limited amount that should go to those who really need it.</p>
<p>Good point, parents. </p>
<p>Thanks for the detailed responses. :)</p>