<p>I have always been under the impression that our EFC is less than $20,000. Since we are a typical middle income family with only one so so income.</p>
<p>Last night, wife and I did a detailed exercise with one of those web sites and I was 100% totally shocked at the results. Our EFC with Federal method is around $28,000 and institution method is around $40,000. </p>
<p>We did not have time to do the same with a different calculator. Those numbers are not real I hope because there is no way we could afford that much after tax money.</p>
<p>Is there one particular web based caculator that is known for acturate estimation? How do I find out any particular school is using institutional method or Federal method?</p>
<p>A merit scholarship to a school not currently at the top of your daughter's list might start looking pretty good, now that you have a better idea of the financial realities (assuming the calculator is correct).</p>
<p>I know the list is already made, and probably some of the applications are already done. Your best move at this point, in my opinion, is to try to get your daughter to stay open to all of the schools on her list. It simply may not be realistic to attend some of those that cannot be paid for in a reasonable manner.</p>
<p>this changes everything is an understatement right now. </p>
<p>I did use the princeton's estimators a couple times and was fairly confident about less than 20K EFC. However, wife (H & R tax accountant) pointed out a few mistakes in my inputs. Whola... ... $40,000 EFC. </p>
<p>Almost everyone of those need based school looks impossible now. Don't know what and how to tell DD this weekend.</p>
<p>My expectations and actual EFC were very similar to yours!!!! My oldest is a junior, but basically, unless she is accepted at some private I just can't say no to, I think she'll go instate public. Her dad has a big box of old comic books and baseball cards in the basement and I'm sure we can sell that to make up the difference =)</p>
<p>Princeton is one of the most generous of need-based aid, so if they're showing $40,000, you must change your expectations at once. When we were applying for aid, the EFC became Extremely Fat Chance. All of the schools expect parents and students to incur debt; it's only a matter of how much. </p>
<p>Talk to your daughter. She should know now, before her dream school accepts her with unacceptable aid. You can still apply to schools like Dickinson that are good schools but which offer significant merit aid to top students.</p>
<p>Are you comparing Princeton's estimator with finaid.org's estimator? I've played around many times with our numbers and found them to be different. Dartmouth's estimator is another one which gives out a lower than expected EFC. I have no idea if these estimates change when the real world offers are made. </p>
<p>I take it home equity is a big hit as it is for many people with institutional methodology?</p>
<p>MoF, yes. The high numbers I am getting is from the finaid. org and low number I could accept was from Princeton's estimator. Please tell me the finaid's numbers are always too high to be real. </p>
<p>entomom, for us
1. Past savings - very little
2. Current income - middle income
3. Future earnings - retire soon</p>
<p>Dad II,
I'm just stating the way FA works, ie. that colleges expect parents & students to pay using more than just current income streams. </p>
<p>Yes, we all have our own personal circumstances, that's why over and over again many veteran CC parents have emphasized that college lists should be made keeping BOTH academic and financial realities in mind. Also, 'retire soon' is a choice that you have every right to make. However, that does not mean that FAFSA or Profile should or will treat you differently because you choose to do so.</p>
<p>"3. Future earnings - retire soon"
Maybe that needs to be re-thought. My future plans certainly changed. When I am finally able to retire, my standard of living will also take a serious slide.</p>
<p>Our institutions of higher learning can also provide some additional alternatives. They are willing to take your home equity.</p>
<p>Dad II,
You said your D had been accepted to Ohio State. Heard any more info about merit stuff there? Is she excited about the chance of going there? You said she was talking to someone from OSU...</p>
<p>Remember that the Institutional Methodology is only an estimate. Each college will figure out its own estimate of EFC -- and it's usually even higher. Curmudgeon didn't call it Every Freakin' Cent (EFC) for nothing.</p>
<p>What caught me by surprise was that the methodologies add back our 401(k) and IRA contributions as available funds for college expenses. Not in this house -- DH didn't start contributing to retirement until 10 years ago -- we were still paying off grad school loans before that.</p>
<p>Home equity or private loans...or taking a great merit package at a flagship state U or next-tier school. She'll be going to college, and you'll help her get there -- but now the decisions get tough. It's not too late for to apply to schools that are likely to give merit $$. At least you know now, not in April.</p>
<p>It is not too late for your high-achieving D to apply to some schools that will offer good merit $$. I think we have all been suggesting this from the beginning. Or consider honors programs at state U. Motivated people can get a really good education almost anywhere.</p>
<p>Cross-posted with CountingDown. You may not believe this, but some schools that offer good merit $$ are more than fine academically.</p>
<p>The other thing schools using the Profile expect is that you will tap into your home equity to help finance college costs.
1. Past Earnings (savings)
2. Current Earnings
3. Future earnings
4. Home equity.</p>
<p>
[quote]
MoF, yes. The high numbers I am getting is from the finaid. org and low number I could accept was from Princeton's estimator. Please tell me the finaid's numbers are always too high to be real.
[/quote]
</p>
<p>I wish I could but I think it's much more likely that Princeton is very generous. They go out of their way to give away money and still only around half of students have any need. That's some kind of wealth.</p>
<p>Anyway, for us mere mortals, I haven't been through the process yet so I have no idea how accurate the calculators are in the real world. From reading here it seems there can be a wide range or results from one school to another for some people.</p>
<p>D received likely letter from Princeton in early November along with an estimate of financial aid from FA office. The Princeton methodology seemed to be different than at other schools. Maybe that is why they rank #1 in financial aid. Of course, we do have 2 kids in college next year!</p>
<p>
[quote]
Those numbers are not real I hope because there is no way we could afford that much after tax money.
[/quote]
The formulas assume that you have either saved for college or that you will borrow. </p>
<p>Very roughly, take 45% of your after-tax income and add in 5% of your assets and you will get a figure that is probably slightly higher than your FAFSA EFC. (The FAFSA EFC also gives you an income and asset protection allowance, so you could get closer to the real number if you look up those allowances and subtract them out).</p>
<p>Obviously no financial-aid qualifying family can afford to spent 45% of their after tax income (even with the income protection allowance considered) -- but if you look at what you can pay to carry debt via a PLUS loan, then the situation changes. </p>
<p>I found the best way for me to look at it was to ask myself how much I was willing and able to pay for a monthly loan payment at the end of 4 years. Let's say I think I can pay $600 month. I divide that by 4 -- that means, each year I can borrow an amount that equates to payments of up to $150. For a PLUS loan that means I can afford to pick up $12,000 of debt a year. </p>
<p>Obviously at the end of 4 years that leaves me with $48K worth of debt for my kids college, on top of what I've managed to pay directly-- so this whole college finance thing involves 14 years of payments. </p>
<p>It sucks, but then again I probably could have gotten away with a monthly payment half that size if instead of making loan payments for 10 years after my kids graduate, I had started paying into a 529 account 10 years before they started. My choice. (Of course, back then I didn't have a clue as to what a 529 account was.....)</p>
You can borrow whatever you need from the PLUS loan. However, I think Thumper meant to say that is why the Profile schools count home equity as an asset -- if you do not have significant equity, then you are not getting that extra hit to your EFC from having the asset counted.</p>
<p>Let's say 2 families have the same income - one rents and pays the same amount each month that the other pays to a mortgage. So no difference in ability to pay. </p>
<p>The home-owning family has $200K of equity - therefore, their EFC will be about $11,000 higher than the renter-family. </p>
<p>The private colleges are assuming that because that home-owner family has $200K worth of equity, they are in a position to borrow $44K (4 X $11,000) - from whatever source -- and the renter family isn't. Because the worst-case scenario for the homeowner family down the line is that they can sell their house to pay of the debt and still have about 75% of the proceeds of sale left over -- so they are financially stronger than the renter family.</p>
<p>So the short answer to the scenario of your not having much equity is that your EFC is much, much lower. (Even though only 5.6% of assets is counted in the EFC is counted, home equity tends to represent a 6-figure asset, so it often ends up being a very big hit on EFC)</p>
<p>Dad II: FWIW we found Princeton's financial aid calculator to be pretty much dead on with what they actually offered for S1. The other calculators seemed accurate for other schools where he was accepted (higher EFC than Princeton). Princeton and a VERY few other schools (I'm not sure which, might include Harvard) no longer consider home equity when calculating your need, so that is the main reason they give more (at least that seemed to be our case). </p>
<p>That being said, even Princeton's EFC is much higher than we would like, but after a lot of soul searching, we decided to take home equity loans and probably delay retirement a few years in order to pay for four undergraduate degrees. We are very lucky that our four are spread over only five years, so we should be able to manage when we average it all out between the kids. </p>
<p>Unfortunately there are the truly wealthy who can write the checks without even noticing, the truly struggling whom schools are able to help improve their lot in life, and the stuck between a rock and a hard place rest of us working middle class. On the other side of the argument, there are lots of alternatives like state schools, gap year of work, scholarships from lower tier schools, etc. We made a decision and I won't ever say it's not fair that we need to sacrifice a bit, even though it's not an easy thing to do.</p>