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How to maximize financial aid

roykirk1 735 166 September 4, 2016 at 10:48 AM
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Hi

My sons are still 12 and 14 years away from college, but the more I think about it, the more worried I get. I am not one of those people that save for goals. I save ALL the time, and when something comes up, either I can afford it or I cannot.

But this is not an option when it comes to college. Not only do I want and expect them to go to college, I want them to go to the best college they can get into.

How is financial aid calculated? Is it based on total net assets? Cash and other liquid instruments? I have some investment properties, should I keep the income in cash or use it to pay down the mortgages?

Will I even qualify for financial aid? Though looking at the cost of private schools today (60k per year?!?) and projecting it out another decade plus... ouch. Even multi millionaires would flinch at the cost of 2 kids in college at the same time. And I am nowhere close to that.

Any help greatly appreciated!

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#2
Quote from roykirk1 View Post :
Hi

My sons are still 12 and 14 years away from college, but the more I think about it, the more worried I get. I am not one of those people that save for goals. I save ALL the time, and when something comes up, either I can afford it or I cannot.

But this is not an option when it comes to college. Not only do I want and expect them to go to college, I want them to go to the best college they can get into.

How is financial aid calculated? Is it based on total net assets? Cash and other liquid instruments? I have some investment properties, should I keep the income in cash or use it to pay down the mortgages?

Will I even qualify for financial aid? Though looking at the cost of private schools today (60k per year?!?) and projecting it out another decade plus... ouch. Even multi millionaires would flinch at the cost of 2 kids in college at the same time. And I am nowhere close to that.

Any help greatly appreciated!
All I can speak to is 25 years ago.... My sister was valedictorian. She got $500 scholarship and in state tuition. Not very much at all. My parents are middle class. I went to a military service academy and had free school/boarding etc and got a little bit spending money.

25 years ago is long time ago. I would look on Amazon. college financial aid.

https://www.amazon.com/Financial-...ancial+aid

then find them at Barnes and Noble or library.

I know lots of kids are doing community college for 2 years to save money.

Maybe get kids to become independent claim themselves on their own taxes then then your income assets.

Although meeting with financial aid offices of schools kids are interested in. Earlier the better probably. Although changes sooo quickly. My sister was thinking about John's Hopkins for med school. Then financial aid changed midcstream where no longer counted me because mine was free.
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#3
You've got plenty of time and there are LOT of legitimate resources out there. Go do some reading, check out a book or two at the library, etc. Avoid anything gimmicky (it's too good to be true) and focus on saving money in YOUR name. Open 529s to get your state tax breaks (if applicable) and maximize your contributions.

If your kids can get into a $60k/yr school they'll find lots of financial aid available, but don't set your dreams on elite schools, either. Even if you're dead set on four year schools only, which is fine, there are a lot of good options for way, way less than that, especially if your in-state schools are a good fit.
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#4
I'd shoot for an in-state public university unless scholarships provide other alternatives. I'm not sure what people expect with extremely expensive schools other than more money in but not always more money out.

Don't stress yourself out too much -- life won't be worth living if you are going nuts about it. Most financial planners won't have you go broke over your kids higher education. I don't disagree with that too much. I think kids should get a degree but there are limits to what it is actually worth. There are more important options to fret about than which school.

Good luck!
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#5
I've thought the same thing but looking at more of the protecting asset angle - for example - if you have a savings account in the kids names, maybe take that $$ out ("off the grid") a couple years ahead of FAFSA? I'd have to look into how "far back" they go financially.

529 you're stuck... meaning that's $$ on the books with no way to "get it off", but in some states (like mine), contributions to 529 are state tax deductible, so that's a nice bonus.

Then there's the whole approach to college angle - community college, etc etc.
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#6
No need to guess regarding the assets. FAFSA tells you exactly what they consider:

Quote :
Asset net worth means current value of the assets minus what is owed on those assets.

Assets include:

Money in cash, savings, and checking accounts
Businesses
Investment farms
Other investments, such as real estate (other than the home in which you live), UGMA and UTMA accounts for which you are the owner, stocks, bonds, certificates of deposit, etc.

Assets do not include:

The home in which you live
UGMA and UTMA accounts for which you are the custodian, but not the owner
The value of life insurance
Retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)
https://fafsa.ed.gov/help/assetnetworth.htm

In terms of how the amount is determined, that is, unfortunately, far more vague.

Quote :
How much financial aid am I eligible to receive?

The financial aid office at your college will determine how much financial aid you are eligible to receive. Your eligibility for most federal student aid depends on a variety of factors, including your Expected Family Contribution (EFC), your year in college, your enrollment status, and the cost of attendance at the college you will be attending.

Note: Your EFC is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. Think of the EFC as an index number used by your college to calculate how much financial aid you are eligible to receive.

For more information, contact the financial aid office at your college or see Funding Your Education: The Guide to Federal Student Aid at http://studentaid.ed.gov/resources.
https://fafsa.ed.gov/help.htm


Note that they look at the prior year's income, not the current year. My mom lost her job several months ago and her income is limited entirely to unemployment. When she completed the financial aid documents for my sister's final year of college, they looked at her income of $200K+ from last year and my sister got nothing in terms of aid. Zero. Zilch. They were happy to give her a student loan at ~7% interest though. :p
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#7
Quote from ManUpOrShutUp View Post :
No need to guess regarding the assets. FAFSA tells you exactly what they consider:



https://fafsa.ed.gov/help/assetnetworth.htm

In terms of how the amount is determined, that is, unfortunately, far more vague.



https://fafsa.ed.gov/help.htm


Note that they look at the prior year's income, not the current year. My mom lost her job several months ago and her income is limited entirely to unemployment. When she completed the financial aid documents for my sister's final year of college, they looked at her income of $200K+ from last year and my sister got nothing in terms of aid. Zero. Zilch. They were happy to give her a student loan at ~7% interest though. :p
I just knew there was a horizon and thought it went back a couple years. At any rate, "cash" is self reported.... so if you drain Jr's accumulated cash accounts say 1-2 years before FAFSA, there's no way to prove you actually have that $$.
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#8
I went to school with a guy. He had free ride. His parents had put away$100k. He expected that money as his. Not sure if his parents gave it to him or not. But he was kind of a mess my opinion because of the anticipated $100k
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#9
go to a community college first two yrs. transfer after second yr. credits will transfer. I'm a doctor now so it doesn't matter which college you go to. it's all about the gpa
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#10
Quote from mrdeals2015 View Post :
go to a community college first two yrs. transfer after second yr. credits will transfer. I'm a doctor now so it doesn't matter which college you go to. it's all about the gpa
This one is pretty big why not consider a community college your first two years that would save you a ton of money instead of going straight to the university. As "mrdeal2015" said nothing wrong with it I also went to a community college than transferred out it all worked well.

Instead of maximizing FAFSA maybe look into all the considerations. Possible scholarship (if your kiddo can pull it off a full paid scholarship would be a big boast). Maybe military? Depending as of what you make and how many you are maybe its best to focus on a 529 account because if you just make to much you wont be able to get any aid its best to just put some savings in the 529. I had a friend applied for FAFSA denied no chance dad made over 100k, but even with a family of 6 still no go.
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Last edited by gpister September 11, 2016 at 08:08 PM.
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#11
Quote from mrdeals2015 View Post :
go to a community college first two yrs. transfer after second yr. credits will transfer. I'm a doctor now so it doesn't matter which college you go to. it's all about the gpa
What would have happened if you went to a community college and got C/B grades? Would you have had a hard time getting into a "decent" college? For example, you are qualified to get into University of Illinois straight from HS (much higher tuition than community college). Instead you opt to go to a community college. If you maintained a C/B average at U of I for four years, you would get a degree from there. If you go to a community college and get C/B average, you may no longer be able to get into U of I. Scenario I've wondered about.
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#12
There are programs for high school students as well. In my state they have a running start program where they can start college in their Jr year in high school fully funded minus books and fees and graduate with an AA degree and do a transfer student to university. There are programs of there but nothing is going to be 100%funded unless scholarships kick in which are few and far between for students 18-23 years old.
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