<p>After a painful bout with unemployment, my wife and I have been steadily saving money for the past few years. The stock market has been iffy during this time, so we've just stuck it in a money market account, and now we've got essentially four years of savings just sitting there. I don't know how FAFSA works, but since the money isn't in a dedicated retirement account, I'm afraid FAFSA will consider it all free for the taking. There's about $40k there and my senior wants to go to a LAC.</p>
<p>So my question for those who have been there is, if I just leave the money there, will the college take it all? I'm worried that they'll clean us out his freshman year and offer need-based aid after that.</p>
<p>The last number I saw came to 5.6% of parents assets would go toward the EFC each year. You do need to check on the LACs in which your daughter is interested. Many also require the CSS Profile or their own additional form which also looks at other assets like second homes. If your savings is all you have then some LACs might work out well. If she’s high scoring then she might get some good merit aid to make the LAC less expensive than the Public U.</p>
<p>FAFSA allows for a certain amount of savings. I believe if you are married the excluded savings is approximately $50,000 (someone please correct me if I am wrong). For a single parent it is approximately $15,000. It sounds like you should be ok. BTW parent assets are assessed at 5.6% - income is the biggest impact on the EFC.</p>
<p>Parents DO have an asset protection number that is based on a number of things. It is about $50K for a married couple. SO…your savings would probably be protected. </p>
<p>Even IF the FAFSA considered your money market account, it would be considered as an asset which for parents is assessed at about 5.6%…so for $40K would be $2240. They would NOT wipe you out for your kiddo’s freshman year. </p>
<p>Your family contribution is largely based on your income unless you have very large family assets which would then make a significant contribution towards your family contribution.</p>
<p>Your savings is within protected limits. If it exceeded that amount, then only 5.6% of the exceeded amount would get considered.</p>
<p>As Thumper mentioned, income is what largely affects EFC.</p>
<p>**
Also…don’t get confused about EFC**. EFC is NOT the most you’ll have to pay. EFC is just a FEDERAL number. Colleges don’t have to do ANYTHING with that number except see if you qualify for Pell Grants (mostly for low incomes) and small student loans.</p>
<p>**
The words “Estimated Family Contribution” are very misleading **and really need to be changed. It sounds like that all a family has to pay…so not true!!!</p>
<p>So, even if you end up with an affordable EFC number, that does NOT mean that colleges are going to give you the difference. Most colleges do NOT have much aid to give. </p>
<p>**There’s a misconception that colleges charge a “sliding scale” based on EFC. That’s not true in most cases. ** Only top schools that can afford to meet need…most schools gap!</p>
The protected asset allowance is based on the number of parents and the age of the older parent. The older the older parent is, the higher the protected assets. Single parents get less than half the protected assets that 2 parent families have. It changes every year (and very strangely has actually been reduced for the 2011-2012 school year).</p>
<p>A 2 parent family where the older parent is 51 would have the quoted protected asset allowance of $50,000. If the older parent is younger the allowance would be less. For a single parent it would be $17,000. If they are older it would be more (for instance ours is 74,000 because my husband is over 65). </p>
<p>But as other posters have said, your EFC is driven much more by income than it is by assets. To get any federal grant aid your EFC must be very low - about 5200 ish for the current school year. For FAFSA, as income increases the maximum % of income that goes to the EFC is 47%, while the maximum % of assets is only 5.6%.</p>
<p>I suggest you use one of the EFC calculators to determine your EFC so you have an idea what it will be. But keep in mind that not many schools promise to meet full need. Of those that do even fewer promise to meet full need without loans. So your EFC may not be all you will pay.</p>
<p>Poorhaus, try the EFC Calculator on the College Board Website! </p>
<p>Use your 2009 Tax Returns as a Guide. You can “Save” the information.
Do both “IM” & “FM” Formulas, print out both detailed calculations & look them over. </p>
<p>Just see what it says for “Contributions from Assets” “Contributions from Income”
While it will not be 100% accurate, it may give you some type of ballpark figure. </p>
<p>If your applicant does not have the stats to get accepted to a school which meets 100% of need & is need blind, at least start looking around. Try looking for schools which report that their Average Percentage of Need Met is between 85%-95%. While these are just Averages that the schools report themselves (no one checks up on them!) it may help you out to look at these type of statistics. </p>
<p>Does your applicant have a hook? Athlete? Musician? Is school more Male or Female?
Geographical Diversity? Does applicant come from a state where school enrolls very few Freshmen from that state?</p>
<p>But to be fair - I remember the first time I used the EFC calculator - it shocked me… They think I can afford that much, only if everyone else stops eating for 4 years…</p>
<p>But hang in it often ends up working out, even if most of it is just that we somehow get over the shock… (of parents plus loans)…</p>
<p>But as everyone else said $40k (if unprotected) will add to your EFC at the 5.6% (but remember thats every year that it’s there that you file the FAFSA) so 5.6% a year is likely a lot more than your making in a mm. Consider other investments if you can, including retirement accounts.</p>
<p>I agree with kelsmom and mom2. The EFC can’t take a single dime of your money, regardless of where you put it. If you and your high school senior choose an expensive college that doesn’t offer merit or need-based aid, however, that’s what’s going to cost you. Even if your college doesn’t count any of the money in that account, they still might not give you enough aid to avoid having to borrow or spend a lot of money out of the account.</p>
<p>*But as everyone else said $40k (if unprotected) will add to your EFC at the 5.6% (but remember thats every year that it’s there that you file the FAFSA) so 5.6% a year is likely a lot more than your making *</p>
<p>It sounds like the $40k is protected because it comes under the limits for a married couple.</p>
<p>Thanks to everyone who took the time to educate me on this. I’ve still got a lot to learn, but it’s a relief to know they won’t simply raid my savings that first year.</p>