Senior's Illness and Future Financial Aid (attn: FaithManor)

[Lang Syne Boardie]

(FOR EVERYONE, just specifically calling out FM since she has personal experience with this topic.) My son had a life-threatening medical situation recently. His health and options are changed forever, and he's not out of the woods (considered "healthy" or "safe") yet. He was in ICU and had several surgeries, and is still in a 6mo preliminary recovery and rehabilitation phase. He has ongoing clinic, lab, hospital, and therapy visits, plus medications that have their own set of problems. We don't have any idea what his long-term health status will be, other than that he is expected to survive all of it in the long run. He might even be mostly fine, eventually. Or he might be permanently somewhat disabled, and he is at risk for more life-threatening complications within a two-year time frame. We'll have to wait and see.

 

When we began the 2014-2015 school year he was considered to be a homeschooled senior. He had already attained the required credits for graduation and college admissions in our state, but he wanted to round out some studies and get some more advanced courses in before graduating with his friends in May.

 

This illness has changed everything. With the month of hospitalization plus problems before and after, and knowing his fall and winter are going to be difficult, he has had a really hard time getting any studying done. Or caring about it at all, frankly. Having not died, he sort of just wants to live. It was a major growing up experience and he and I are both finding it impossible to go back to former life and expectations. He's grown up now. He gets to be.

 

He turned 18 this weekend. I handed him his high school diploma along with his birthday gift.

 

What he would like to do is to take the rest of this year as a gap year, and start college in the fall. He wants to work full-time at a bank (he has references and connections - this is a likely option) but otherwise recuperate physically, emotionally, and mentally from what he's gone through. He wants to go to college in our city in case of the feared complications over the next two years -- he'd need home support, plus his condition is rare and he already has the best medical team we could hope for. The idea of him getting sick again in a far-off city with an outdated hospital...no way. He needs to be here.

 

He's already been accepted to one college he's applied to, and two more are interested and just finishing paperwork. We'll hear back within the week from those. His profile is that he's a very well-rounded student with rigorous high school coursework and top notch SAT scores. He's had significant achievements and awards through well-regarded organizations. All of this combined with a low household income makes him a good candidate for acceptance and for serious financial assistance, especially scholarships.

 

So that's the story. The question is this: Can he work part or full-time this year and still get those scholarships and other financial aid in the fall? Or should he do other things (such as continued special studies and volunteering long hours) that don't add to his bank account so that his financial status in the fall will be the same as it is now? Or can he work so that he can buy a car, enjoy some experiences, save a little, instead of living in total poverty with the rest of the family through the fall and winter? (We're having $ problems.) Please help me not screw this up.

[Lang Syne Boardie]

Forgot to explain that I counted his 8th grade year, which had been advanced, as 9th grade. Also, even though he's recuperating this year he is cleared to work non-physical jobs or go to school, with some accommodations.

[maize]

Work, buy a car, pay for experiences and a decent quality of life. You could even have him pay you for room and board and you could put the money in savings under your name but have it available later to help with college costs. If you have a college savings fund with you as the owner and your son as the beneficiary he may be able to contribute to that, it will count as your asset not his for financial aid purposes and be assessed at a much lower rate. When he fills out the FAFSA, any money in his name will significantly increase his expected student contribution.

[Lang Syne Boardie]

Work, buy a car, pay for experiences and a decent quality of life. You could even have him pay you for room and board and you could put the money in savings under your name but haveit available later to help with college costs. If you have a college savings fund with you as the owner and your son as the beneficiary he may be able to contribute to that, it will count as your asset not his for financial aid purposes and be assessed at a much lower rate. When he fills out the FAFSA, any money in his name will significantly increase his expected student contribution.

 

This is the type of thing about which I know nothing. (One of the reasons we're so stinking poor, probably...) I hadn't thought of having him put his income somewhere other than his own account. I will research. Thank you!

[Lori D.]

Absolutely crucial to counting it as a gap year is to take NO classes (online or in person, from any university or community college). Working part time or full time should not affect gap year status.

 

 

Work, buy a car, pay for experiences and a decent quality of life. You could even have him pay you for room and board and you could put the money in savings under your name but have it available later to help with college costs. If you have a college savings fund with you as the owner and your son as the beneficiary he may be able to contribute to that, it will count as your asset not his for financial aid purposes and be assessed at a much lower rate. When he fills out the FAFSA, any money in his name will significantly increase his expected student contribution.

 

 

Yes, the order money is looked at by FAFSA for determining EFC (estimated family contribution):

 

1. student income

2. parent income

3. student assets

4. parent assets

 

FAFSA looks at the previous year's income tax return information (both student and parents) for the income aspect and plugs that info into their formula, along with current asset information. Because they already "see" money earned from student and parent jobs, there's not much you can do about that. All you can do is spend or move assets before filing the FAFSA. If your student has considerable assets (savings, stocks, property, etc.), you might want to see if there's a way that can be temporarily moved out of the student's name into a younger sibling's name who will not be going to college and so their financials will not show up on FAFSA. (Although, some colleges require the even more financially invasive CSS financial aid profile, which does require further disclosure of family assets.)

 

You may find this article excerpt helpful:

 

Before you start shifting assets around, use a financial aid calculator to evaluate the impact on your expected financial contribution (EFC). Often assets have a negligible impact on eligibility for student aid. For example, families earning less than $50,000 a year who could have filed an IRS Form 1040A or 1040EZ may qualify for the simplified needs test, which disregards all assets.

 

There’s also an asset protection allowance that shelters about $50,000 in parent assets. Money in retirement plans, the family home and small businesses owned and controlled by the family have no impact on federal aid. As a result, parent assets affect the EFC of less than 4% of dependent students.

 

You should, however, save money in the parent’s name, not the child’s. Child assets have a much more severe impact on the EFC. If you’ve mistakenly saved in the child’s name, you can fix this by moving the money into a custodial 529 college savings plan. Even though the child will be the account owner, such a 529 college savings plan is treated as though it were a parent asset on the FAFSA.

 

The federal need analysis formula is more heavily weighted toward income than assets. If your assets are enough to eliminate eligibility for federal student aid, chances are your income would have eliminated the eligibility even if assets were ignored entirely."

 

— excerpt from a 2011 Q&A article by Mark Kantrowitz, FinAid.org

 

 

You may also find some of the past threads on Financial Aid, FAFSA, Scholarships helpful; there are a bunch in post #5 of the pinned thread at the top of the high school board: "Transcripts... College Prep / Applications, Scholarships/Financial Aid... past threads linked here!" Here are a few:

 

Do colleges consider a parent's retirement funds when deciding on financial aid? (tips for maximizing financial aid)
Is the financial aid package accurate? (how is work study/federal grant $ determined)
College financial aid question (how to apply for financial aid)

Financial aid question   (FAFSA, EFC, etc.)

Looking for an EFC calculator of the FAFSA

FAFSA and scholarships (paying taxes on scholarships)
S/O: Cautionary tale/high college costs -- a brainstorm $$ ideas thread! (creative idea for funding college)
Five big financial aid lies; one-page article (keeping/losing scholarships; eroded value of scholarships; % of met-need; Parent Plus loans; lowering high EFC #, merit aid)

 

Also, FinAid is a very helpful and informative website.

 

 

:grouphug: SO glad your DS is stabilizing! Best wishes for a full recovery for him. To be able to come through such a life-altering experience with such maturity and grace, and to have such a firm grasp on what really is (and is not) important in life is profound wisdom your DS will carry forward into all of his adult life. Blessings to you all. Warmest regards, Lori D.

[Lang Syne Boardie]

Absolutely crucial to counting it as a gap year is to take NO classes (online or in person, from any university or community college). Working part time or full time should not affect gap year status.

 

 

 

 

Yes, the order money is looked at by FAFSA for determining EFC (estimated family contribution):

 

1. student income

2. parent income

3. student assets

4. parent assets

 

FAFSA looks at the previous year's income tax return information (both student and parents) for the income aspect and plugs that info into their formula, along with current asset information. Because they already "see" money earned from student and parent jobs, there's not much you can do about that. All you can do is spend or move assets before filing the FAFSA. If your student has considerable assets (savings, stocks, property, etc.), you might want to see if there's a way that can be temporarily moved out of the student's name into a younger sibling's name who will not be going to college and so their financials will not show up on FAFSA. (Although, some colleges require the even more financially invasive CSS financial aid profile, which does require further disclosure of family assets.)

 

You may find this article excerpt helpful:

 

Before you start shifting assets around, use a financial aid calculator to evaluate the impact on your expected financial contribution (EFC). Often assets have a negligible impact on eligibility for student aid. For example, families earning less than $50,000 a year who could have filed an IRS Form 1040A or 1040EZ may qualify for the simplified needs test, which disregards all assets.

 

There’s also an asset protection allowance that shelters about $50,000 in parent assets. Money in retirement plans, the family home and small businesses owned and controlled by the family have no impact on federal aid. As a result, parent assets affect the EFC of less than 4% of dependent students.

 

You should, however, save money in the parent’s name, not the child’s. Child assets have a much more severe impact on the EFC. If you’ve mistakenly saved in the child’s name, you can fix this by moving the money into a custodial 529 college savings plan. Even though the child will be the account owner, such a 529 college savings plan is treated as though it were a parent asset on the FAFSA.

 

The federal need analysis formula is more heavily weighted toward income than assets. If your assets are enough to eliminate eligibility for federal student aid, chances are your income would have eliminated the eligibility even if assets were ignored entirely."

 

— excerpt from a 2011 Q&A article by Mark Kantrowitz, FinAid.org

 

 

You may also find some of the past threads on Financial Aid, FAFSA, Scholarships helpful; there are a bunch in post #5 of the pinned thread at the top of the high school board: "Transcripts... College Prep / Applications, Scholarships/Financial Aid... past threads linked here!" Here are a few:

 

Do colleges consider a parent's retirement funds when deciding on financial aid? (tips for maximizing financial aid)

Is the financial aid package accurate? (how is work study/federal grant $ determined)

College financial aid question (how to apply for financial aid)

Financial aid question   (FAFSA, EFC, etc.)

Looking for an EFC calculator of the FAFSA

FAFSA and scholarships (paying taxes on scholarships)

S/O: Cautionary tale/high college costs -- a brainstorm $$ ideas thread! (creative idea for funding college)

Five big financial aid lies; one-page article (keeping/losing scholarships; eroded value of scholarships; % of met-need; Parent Plus loans; lowering high EFC #, merit aid)

 

Also, FinAid is a very helpful and informative website.

 

 

:grouphug: SO glad your DS is stabilizing! Best wishes for a full recovery for him. To be able to come through such a life-altering experience with such maturity and grace, and to have such a firm grasp on what really is (and is not) important in life is profound wisdom your DS will carry forward into all of his adult life. Blessings to you all. Warmest regards, Lori D.

 

Lori, thank you soooo much. I am printing this for ds and DH to read. You and Maize have really given me some hope here!

 

[creekland]

I'll offer the suggestion of calling the Financial Aid office at the college and speak to an adult, not a student.  We've found them to be superbly helpful for our situations.

 

I'm not sure having your guy put his work earnings anywhere else will help as they go off tax forms for work income.

 

And  :grouphug: .  Tons of  :grouphug: .  His plan sounds good in the overall realm of things IMO.

[8filltheheart]

No answers, but I am so sorry he has suffered so much.

[elegantlion]

((( He's grown up now. He gets to be.)))

 

He turned 18 this weekend. I handed him his high school diploma along with his birthday gift.

 

 

 

((Tibbie)) The above made me tear up. He is so fortunate to have you all as parents. 

[maize]

I'll offer the suggestion of calling the Financial Aid office at the college and speak to an adult, not a student. We've found them to be superbly helpful for our situations.

 

I'm not sure having your guy put his work earnings anywhere else will help as they go off tax forms for work income.

 

And :grouphug: . Tons of :grouphug: . His plan sounds good in the overall realm of things IMO.

Where the money goes doesn't affect the income part of the financial aid calculations, but it does affect the asset part. Parental assets up to $35,000 are not included when calculating EFC from the FAFSA, but student assets have no such protection. Additionally, student assets are assessed at a much higher rate than parental assets. Money in a 529 plan is considered a parental asset, so this is a good place to put money earned if it will be used for educational expenses. I'm not sure about the legalities of having the student just put their money into a parent's saving's account, at the least this could trigger a gift tax if the money exceeds a certain amount. That is why I suggested having the student pay the parents for room and board so the money is not a gift; I'm not an expert though and maybe this would not be a concern.

 

Here is a good explanation of how parent and student assets are treated under the different types of financial aid calculations:

 

http://www.forbes.com/sites/troyonink/2014/02/14/how-assets-hurt-college-aid-eligibility-on-fafsa-and-css-profile/

[Kareni]

Wishing your son improved good health, Tibbie.

 

Regards,

Kareni

[Sebastian (a lady)]

I have no idea how much effect it would have, but it seems that situations like this are just the sort of situation that warrant giving extra information to the financial aid office, or filing a financial aid appeal.

 

I remember reading an article about a girl who was attending Emory.  It was all about her struggles taking a very big step up from her not great high school to a high caliber college. One of the issues that came up in the article was that the financial aid given assumed that the family had more assets than  they really did.  Turns out that they had lost their house in a hurricane and were still rebuilding.  When the newspaper asked about the lowball financial aid offer, the aid office said that they should have filed an appeal to give more information. (Though I'm not sure how a family going through the college application cycle for the first time would know this.)

 

Anyway, I would say that anytime that there is a serious financial situation that has affected your ability to save money or pay bills, that this is worth an appeal. 

 

My $0.02

[Frances]

I'm sorry to hear about your son's illness. Since the FAFSA for next school year will be based on 2014 tax data, he probably won't have much income to report for this year if he has been sick. I would suggest doing the FAFSA as soon as possible after January 1 before he has time to accumulate very much savings in his name.

 

Any income he earns in 2015 may potentially affect his financial aid for the following school year.  

[FaithManor]

Tibbie, I think that Lori D, Creekland, and others covered it well for you.

 

If you see my post in the college acceptances thread, you'll find that we've had another crisis here and are reeling from it. College is not entirely off the table for ds for the fall, but pretty darn close. So, I get the fear. I'm right there with you, hanging on because well, I can't have a meltdown since I'm the glue holding these people together at this point.

 

Let me just say that it's not easy to be glue when one is having some PTSD issues. But, it is what it is and can't be changed.

 

Hugs to you dear friend! Somehow we will make it through this.

[maize]

If there have been significant medical expenses those should be reported to the financial aid office. I filled out the FAFSA for myself just a few months ago, but I can't remember if it has a section for additional information such as this. Does anyone know?

[JulieA97]

If there have been significant medical expenses those should be reported to the financial aid office. I filled out the FAFSA for myself just a few months ago, but I can't remember if it has a section for additional information such as this. Does anyone know?

No there is not a section on the FAFSA for additional information. However, you can contact the school Financial Aid office and they will give you the forms you need. I would definitely call the FA office and talk to them about this. You probably have significant medical bills and those can be taken into consideration for a Professional Judgement. Us Financial Aid counselors are a pretty understanding group and will try to do what we can to help.

 

As for the student income and assets, if a student has an income AND saves that income, he is hit twice on the FAFSA and pretty hard. Assets don't count as much as income of course but student assets are still hit at a much higher percentage than the parents. So buy a car, put the money in your name, travel and spend it.

[FaithManor]

I'm on the run, but I'm wondering about the possibility of arranging the bank job like an unpaid internship. Not fair, but I think he could get a stipend from the bank for mileage, and then only have him work part time. He'd learn a lot, and I don't think his mileage reimbursement would be counted against his FASFA. I know dh had an unpaid internship his junior year of college, and the company paid his mileage. It did not affect his financials, but if he'd drawn a paycheck, it would have been a disaster in terms of state pell grant and such.

 

Not a fan of unpaid internships because it's a lot of free labor that companies shouldn't be entitled too, but on the other hand, the learning aspects are usually super important, and well, in this instance, his having income could be really detrimental.

 

Gotta run,

:grouphug: :grouphug: :grouphug:

[maize]

I think it would be worth running some different scenarios through an EFC calculator to see how things might play out.

[Lang Syne Boardie]

I knew this was the place to ask. I hadn't even thought about how the humongous medical bills are changing our financial profile, or about doing the FAFSA in January, or appealing if the financial aid doesn't turn out to fit the situation. This is a wonderful thread. Thanks to every poster for the sound advice, which I am printing.

 

And thanks to each of you for the kind thoughts, well wishes, and prayers. I know you understand what I'm going through here and this kindness helps so much. FaithManor, I will go get caught up on what is happening with you.

[FloridaLisa]

Wow, Tibbie. I addition to graduating your first, you have all of this as well. Sending you  :grouphug: and hope that you find just the right information and resources.  

I will tell you one thing my ds shared this weekend which neither he nor I knew at the time. My oldest had finished his freshman year when dh died suddenly.  He powered through the next year, but made his first B's.  He was pre-med and in an early admittance program so his GPA counted for a lot. He mentioned that he later learned that the university has a program to assist students that have had a traumatic event to work with grades. I wish I had even thought to look into what programs/resources the university had. It was just completely outside of  our experience.  

 

All that to say, it might be helpful to research proactively what options/resources are available just in case. Prayerfully, never needed. 

 

Lisa

[brehon]

Tibbie, I have no advice for you, but simply couldn't read your post and not send you heartfelt hugs and prayers for you and your precious son.

[creekland]

I knew this was the place to ask. I hadn't even thought about how the humongous medical bills are changing our financial profile, or about doing the FAFSA in January, or appealing if the financial aid doesn't turn out to fit the situation. This is a wonderful thread. Thanks to every poster for the sound advice, which I am printing.

 

 

We just returned from my grandma's funeral, so I'm a day or two late catching up on things, but I want to really emphasize the suggestion I made earlier to be in contact with the financial aid office (and an adult in it).

 

Our financial situation changed a ton over the past year with both medical situations and our selling a piece of property we'd had as retirement savings.  The first only ended up affecting us via lower work income and assorted expenses since the medical bills were all covered by our health share, but we weren't 100% sure what the future would hold for work or more medical issues or whatever.

 

The property we sold made our income appear very abnormally high to where we would have essentially been full pay (- merit aid) at both schools my guys are attending. If this had happened, the retirement funds we had saved in that property would have been 100% (or close to it) gone.  I honestly couldn't have spent all the $$ that way.  My boys would have had to take gap years - something both understood, but neither wanted.

 

We were in contact with the schools from the beginning.  They talked us through the steps for appeal.  Youngest's school (where he is now a freshman) was superb from the start - doing as much as they could for us and running scenarios in different ways to see which worked out better for US.  I'm eternally thankful!

 

Middle son's school required a second appeal (where he enlisted letters of support from oodles of his profs/lab mentors, etc) and they ended up doing a little more than we asked for.  Again, I am eternally thankful.

 

However, without being in contact with a person, they'd have no way of knowing our situation and what made it different from the basic black & white that they were seeing on paper.

 

It's possible that a school doesn't have the funds to do much.  Not all do, but it sure is worth checking with them in person to see if anything can be done.

 

Then too, I know we'll continue to support the schools my guys have gone to well after they graduate.  All three schools made it financially possible for my guys to go and have or are giving them great educations.  (Oldest's school helped him/us through the economic downturn when our income dropped 50% or so.)

 

Mine aren't going for free - and all three have federal student loans (we're ok with that) - but what we are paying is affordable to us as it was before the "issues" came up.  It's still a significant portion of our income, so I don't want to mislead, but we're not draining our retirement or taking on parent loans.

[Twigs]

Tibbie,  :grouphug:  :grouphug:  :grouphug:  for all these difficulties you are having.

And  :hurray:  :hurray:  :hurray:  for your son and all his accomplishments. Well done.

[flyingiguana]

I would sit down with the FAFSA and enter your information as you currently know it.  You can get an estimate of what your expected contribution.

 

This is one site that supposedly does estimates: https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

There are a number of others if that one isn't complete enough.

 

It may turn out that you are so far away from getting any aid that what he does or saves this year is irrelevant.  Or that you're so far from the cut off in the other direction that what he does will have little effect.

 

If he wants to get a job, I would never discourage him, even if you think it might have some effect on his financial aid.  For his future employment, a job is likely going to do him a lot more good than an unpaid internship.  His future earnings may therefore be higher.  He'll also have more pride in it.

 

If he wants a place to stick that money that isn't going to affect financial aid, you might look into whether an IRA would fit the bill.  He'd still own the money, there'd be no gift implications, and he'll have made a good start toward saving for retirement.

 

I'm pretty sure parental IRA's do not get counted in the FAFSA calculations, so I would suspect student ones wouldn't either.  (And if he ever needed to pull it out for educational purposes, there may be ways to do that).  (I might be totally wrong about this, but it might be worth checking into it)

 

If he's got good grades, you may find that much of his financial aid will actually come in the form of merit aid anyway, so whatever the FAFSA has to say about your EFC would be irrelevant.  And if you can swing having him live at home, that's a big chunk of money saved (says the mom who's now putting her 2nd kid through college without dorm fees)

[flyingiguana]

My 2nd also took an extra year due to health issues -- nothing as extreme, but it was really good for her peace of mind to know she could get her health sorted out and back on track before jumping in to college.  She can also think a lot clearer now, due to a lot of physical things getting cleared up.  This has had a huge impact on what her grades would have been.

 

The only downside is that her fellow freshman seem pretty darn immature.  Even some of the seniors seem pretty immature.

[flyingiguana]

And keep in mind that for a lot of kids, a lot of need based financial aid turns out to be loans anyway.  So it's really not aid, in the big picture.  Given that, would it be better to make a ton of money in the next couple years and pay upfront for college?  Or to not make any money and hope you get enough financial aid --which might be loans that will have to be paid with interest over the next 20 years?

 

And I don't know how many colleges really care whether the student takes some classes in their "gap" year or in those couple years between high school and college.  There may be some who are real sticklers about that in terms of giving aid -- you'd want to check with the schools to see.  But I would not automatically assume this is the case for all (or even most) colleges. 

 

The colleges I have contact with don't seem to care about this at all.  They'll give freshman merit aid scholarships to kids who come in with so many credits they count as seniors.   In fact, these kids are a lot MORE likely to get the merit aid because it's obvious they can do college  (I can't speak to need based aid though....)