Hi, I’m a parent of a junior wading into the college application swamp. We have some money saved in a college fund. We don’t own a home, but have been saving to buy, but not sure if we will have bought by the time of college applications since we are in a competitive market. Will the 100k or so of down payment saved count badly against us in financial aid applications? Our only other assets are a mutual fund of about 150k and money in a 401(k).
Yes it will. If it were invested in a primary residence, it would be a protected asset, as are the 401k funds. If it’s sitting in a bank account or mutual fund, it’s considered to be available to pay tuition.
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It won’t matter when you are applying to colleges, but will matter when you file the FAFSA. Usually you do that in Oct of Senior year, but you can put it off.
It also may not matter at all. If you have a large income, having assets may not change the financial aid you qualify for.
Thank you both. AGI is about $125K, so not big income, but comfortable.
I believe your $150,000 mutual fund will be counted as an asset (@kelsmom is that correct) in addition to the $100,000 you have in your house savings account.
If that is correct, that’s $250,000 that will be counted if it’s still in your accounts the day you file your financial aid forms.
For the FAFSA, that would add about $14,000 to you expected family contribution (5.6% of the amount).
Schools that use the Profile might assess differently.
But really…what colleges will your kid be applying to? This will make a difference if you are applying to colleges that guarantee to meet full need. But if not, your family contribution might have been the same anyway.
I would suggest you run a couple of college net price calculators…do them with and without that house downpayment money. The NPCs are current set for kids starting in fall 2021…but this will give you a ballpark of the difference.
I agree that the amount of the savings & the amount of the mutual fund will count as assets, assuming you still have the money intended for a down payment at the time you file your FAFSA. I also agree that it might not make any difference in the aid you are offered. Unless your child goes to one of the few schools that meet need, you aren’t likely to get grant aid. If the child is looking at schools that meet need, you can put off filing the FAFSA as long as possible, with the hope that the down payment will get used before you have to file. Just make sure to watch dates carefully.
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For now their top choices are either UPenn or Smith, but applying to most colleges in the NY tristate area. Safety will likely be CUNY and Stony Brook.
Thanks for now when I did the NPC, I got a figure around 18k for family and 2-3k for my kid. We have about 50k in a college fund for them, but I wasn’t sure how to account for that in the NPC.
College fund in what type of account? That would be included as an asset.
You have $100,000 in house savings…AND $150,000 in mutual funds. Just that alone would give you a $14,000 family contribution. Your income of $125,000 a year, I believe, would add more than $4000 to your family contribution.
Did you include your house savings and mutual fund…and please add in the college fund.
The college fund is NY 529
I believe 529 accounts are considered parent assets.
We are in a similar situation now, have more than we should in checking because we intended on doing a lot of renovations over the winter, but due to the higher cost and lack of availability of materials due to covid, decided to hold off. We will have 3 in college next year but only received FA from 1 college. According to the calculator, FA next year will go down only $2000 when we have only 2 in college, have no more 529’s, and have $125,000 less in cash.
Yes, the value of the 529 account is a parent asset.
Beginning in the 2022-23 financial aid year, the EFC (which will be renamed Student Aid Index) will no longer be divided by the number of students in college.
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My understanding is that these changes will not take effect until the 2023-2024 academic year (the FAFSA that will be available on October 1, 2022). Is that not correct? Or perhaps the changes will be rolled out over several years.
That’s not always true. The value of your home will be counted in the evaluation of an aid award at many private colleges. The value of our home and business in California precluded us from even applying to a few private schools that used home value in their calculations. It’s case by case.
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I know, my youngest are twins. We’ve never received FA with 2 in college in the past, and only 2 out of 20 offered it this year with 3, I’m guessing because of higher price tags. We sent an email to the financial office to sort it out.
You are correct.
I was under the impression that most schools make an allowance for excluding a certain amount of home equity from the equation, in addition to excluding what’s in parents’ retirement accounts. You should fund the retirement and HSA accounts to the max now, for 2020 (I think this can sometimes be done if before April 15th) this year, in order to reduce your cash reserves, and also on January 1st of next year for 2022 - you may be able to hold off on submitting the FAFSA until January 2nd, 2022, for the regular admission schools. I think that if you don’t like the offers from the early action schools, you can refile the revised FAFSA with them with an appeal, too.
The biggest difference by far is going to be getting your cash reserves sheltered by buying a house. You would be better off purchasing a home by fall 2021, using the entire amount of your savings and mutual fund (if the mutual fund is not in a protected retirement fund). You can always take a HELOC on the house, if you need access to the money you put into the house, to pay tuition.
If your child is of a caliber to be thinking Penn or Smith, they’re probably going to get into SUNY schools, so you don’t need to limit your housing search to within the NYC limits, so that they’d qualify for CUNY.
BTW, if your child qualifies for CUNY schools, that must mean you are a NYC resident. In which case, with the cost of housing in NYC, 125K doesn’t seem like it leaves you that much room for tuition, living anywhere within commuting distance to jobs in NYC.
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You’re correct. Sorry. The changes happen in 2022 (October), but they are for 2023-24.