Help me understand how to pay for college...

[Dianne-TX]

We are looking ahead at preparing for college for our first DS.  He will be a junior next year.  I think I'm understanding the way things are done these days, as opposed to when I went to college and graduated. ('97)  One thing I'm trying to understand is how we are going to pay for his school?  I know we fill out the FAFSA and then we find out our EFC, but then what?  I'm concerned that if we make too much, then we can't qualify for loans or other help.  How does this exactly work out in reality?  It seems the poorer the better?  :-/  Thanks. 

[cjzimmer1]

I'm certainly no expert on the matter but here's what little I know.

 

Everything starts with the EFC and from there it depends on the school what happens next.

 

There are so many scenarios that can play out but here is just a few

 

School says we meet full need and provide assistance to cover the amount between the Cost of Attendance (COA) and your EFC.  Some well endowed schools may even do this without your needing to take a loan.  Others may say, your EFC plus $5500 in federal loans is what you need to pay and they will make up the difference in scholarships.  Others yet will say here is your EFC, your $5500 in loans, we will offer you $X of scholarship and leave a gap that you will still need to pay.  Often times this is where parent loans will come in.  You may also need parent loans to cover your EFC if it is an amount that is higher than you can pay in a year.  To further complicate things, some schools use the CSS Profile which is basically a much more involved method of examining your finances than the FASFA.  These schools may decide that even the the FAFSA says you can pay this amount, we think you can pay some other amount and will use that as a starting point rather than your FAFSA amount.

 

Clear as mud?  I liken it to asking a doctor's office in advance how much something will cost.  There is so many variables and moving parts you won't get a straight answer till much later.

 

As far as loans are concerned, there is 2 types federal loans (I'm lumping both subsidized and unsubsidized in here) that the government has set limits on how much can borrowed each year and they also control the interest rate.  Then there is private loans (I've heard the term Parent Plus loans but I don't know if there are other types as well), these loans are not regulated by the government and are more like applying for a loan like a car would be.

 

I would definitely recommend checking out College Confidential.  There are forums for financial aid etc, and I found them helpful in trying to make some sense of the stuff.

[fourisenough]

I believe there are EFC estimators available. Run one and see where you stand.

 

For us, that was enough to realize we would get zero need-based aid, nor were we able to afford our (ridiculously high) EFC. Rock, meet hard place. For us, that meant finding a school where our student was well-above 75 percentile (based on GPA and test scores) so she could qualify for full or nearly full-tuition merit aid. It worked well-enough for our first DD. She doesn't love her school, but she likes her program and, because she went in with 28 AP credits, she'll be able to graduate in 3.5 years.

 

It isn't a perfect solution and, of course, requires a high stats kid. The other option would have been staying home and commuting to the regional state school. Tuition there would have cost about what it costs for room & board at her small, out-of-state private school (in a beautiful, warm location).

 

DD2 is a little higher stats student (both GPA and test scores), so she might have a few more options. Time will tell. None of our kids will be able to attend the swanky, popular private university where my husband and I graduated. We were all sad for a minute, until we realized our goal of getting four kids through undergraduate education with no debt trumped the chance to attend a 'sweatshirt' college. It's definitely a different ball game than when we picked a school in 1990.

[8filltheheart]

Here are a few more specifics. FAFSA is how the federal govt determines what federal aid you qualify for. (Pell grants if below a certain income.) All students can qualify for $5500-$7500 (depends on freshman to senior standing.) There is a maximum amt each yr that can be subsidized. The remaining portion will be unsubsidized (interest starts accruing when taken out.)

 

Your FAFSA EFC is typically a meaningless number. Your FAFSA EFC is not what you pay any school. For schools that meet need, you typically have to fill out the CSS Profile or an institution specific financial form. Those schools will add in assets and retirement contributions that are ignored by FAFSA. Some schools will also incorporate home equity. Based on their own proprietary formula, meets need schools will generate a parental contribution. Depending on the school as described in one of the posts above, they then may add student loans (that $5500+ federal loan), student work study contribution, and summer student work contribution. It is not uncommon for the student to be expected to contribute between $7000-$9500 on top of the parental contribution.

 

If a student receives a scholarship at meets need schools, the scholarship will reduce need. Some schools will reduce the student contribution first; some won't. Typically, unless the scholarship exceeds the entire institutional grant $$, the parental contribution will not be reduced at all.

 

Keep in mind that your expected contribution is based on what they believe you should pay, not what you believe you can actually afford.

 

Here is how this has worked out for our family. Schools add back in our retirement contribution bc they expect us to use that $$ for college expenses. That might be fine for families that are delaying their contribution by 4-8 yrs. Schools do not care that for our family it means 32 yrs of retirement contribution deferrals. They reduce costs for students overlapping college at the same time. They do not care that we have put x students through college before the current student and that our younger kids are not in college at the same time. Our EFC is absolutely unaffordable. Not even close.

 

Run the net price calculators on college websites. For some families, meets need schools are their best financial option. They are also extremely competitive for admissions so your student needs to be a top competitive student. For other families like ours, they are completely unaffordable. Our kids have to get large merit scholarships or they have to live at home and commute.

Edited March 14, 2017 by 8FillTheHeart

[teachermom2834]

This is highly individual. There was a thread not long ago titled something like "How are you paying for college?" or something like that. For us we knew the EFC was out of reach. Dh makes a decent salary but only in the last few years. We are also unwilling to borrow ourselves and the EFC takes into account that the parent will borrow some. So our EFC is about 3x what we could scrape to pay. So no way.

 

My first ds is at a private LAC. This is how he is paying:

-merit scholarship (20,000)

-state grant match scholarship (3500- college is in neighboring state and they match what state aid he would have gotten here)

-financial aid grant (6000)

-outside scholarship (5000)

-federal loans (5500)

 

He has been able to pay the balance with his summer job (full time warehouse work-not fast food). It worked out great but he applied to ten schools and this is the only one that came out this cheap. Where scholarships were similar at al the LAC, the difference came in that $6000 grant. Other schools offered $500-$1000 in that spot. This college also allowed us to use the private scholarship to pay our portion. Most private schools will take that out of financial aid grants.

 

Next ds will go to a regional state school (not our flagship) This is how he will pay:

-automatic merit scholarship based on ACT/GPA (5-6000)

-state HOPE scholarship (3500)

-federal loans (5500)

-summer earnings

-he will go in with 3 semesters of de credit

 

Both will come out similar. I feel like both will have good experiences and value for their college dollars. We are finding a way to make it work.

 

Some things I want to point out:

-ACT scores in the range of 29-31

-kids that are willing to live in the least expensive dorms, go without cars, low maintenance kids without special needs, common majors

-mom worked hard to find these schools that would work. Same students could have applied to twenty schools each and not come out with affordable options. I had to do the legwork to find these schools that would work.

-no one is at their dream school

-we opt to have them take the federal loans with the understanding that we will attempt to help pay them back on successful completion but we are holding onto that money for now and making them responsible for it.

Edited March 14, 2017 by teachermom2834

[Hilltopmom]

I dunno, I think Kinsa has it closest, lol.

 

My oldest is a jr, not a super high stats kid, going to go to an instate state school & I have no idea how we're going to come up with the $.

Sadly, the state school in our own town does not have a good dept. for his intended major :(

otherwise, he'd be living at home with the toddlers for college, good times, not so much.. (Good times r not part of the decision, btw)

 

But, as it is, he'll be headed out of town to a different state college, thus doubling the cost since room & board is so high.

 

There's no chance of us coming up with the difference he's going to need, out of pocket.

 

He should be able to qualify for some smaller local scholarships & maybe some merit at the state U, but not close to what he'll need. A grandparent put some $ in a savings program for him, but not sure how much.

 

I went to a pricey private school & had a ton of loans, I don't want that for him, but don't see another alternative either.

It's rather depressing, IMO.

 

Eta- our back up plan is getting the tuition free tech scholarship @ the CC he currently DEs at & going there full time to knock out a bunch of gen eds, then transferring to state U.

Even though the actual tech classes he will have already mostly completed while DEing. Not sure if they'll go for that or not ( the college, that is)

But he really wants to go away to the state U with the great dept & co op opportunities. I agree, their program &'professors were impressive

Edited March 14, 2017 by Hilltopmom

[Hilltopmom]

Here's the thread mentioned above-

http://forums.welltrainedmind.com/topic/586612-how-are-you-managing-to-pay-for-college/?hl=+how%20+are%20+you%20+managing%20+pay%20+for%20+college

[8filltheheart]

For competitive scholarships, students really need to have test scores in the 32+ range. It is hard to say about the new SAT. The initial concordance put out by CB suggested 1450 was equivalent to a 32. However, based on the stats being released by top schools about their admitted students profile, it appears that the concordance could be skewed too high bc their admitted students' scores appear to be shifting lower. That is going to be a wait and see this yr and next yr's application outcomes.

[Julie of KY]

My best advice would be to keep reading stories of how people pay for college. Ask lots of questions. Run the net price calculators on the college websites as it'll give you an idea of automathic grants and scholarships (sometimes). Look around at all sorts of options.

Apply for scholarships. 

[amyx4]

We're not at college yet. However, we live where some of the community colleges offer reduced rates for dual enrollment. Different CC have different policies about tuition. So check around. Ds has knocked off most of his general education requirements this way.   So, we've saved because a CC class is running $500-600 where the same class at State U is running $1200.

 

Ds wasn't interested in AP or CLEP but that's another way to save. I did meet someone who's daughter did enough CLEPs to arrive as a Junior.

[plansrme]

For competitive scholarships, students really need to have test scores in the 32+ range. It is hard to say about the new SAT. The initial concordance put out by CB suggested 1450 was equivalent to a 32. However, based on the stats being released by top schools about their admitted students profile, it appears that the concordance could be skewed too high bc their admitted students' scores appear to be shifting lower. That is going to be a wait and see this yr and next yr's application outcomes.

 

I want to caveat this a bit--even if your child is not a tippy-top student, there is a lot of automatic academic money available.  I have run the automatic-merit-aid calculators at two schools for my high school junior with good but not great stats, and one small private school with a $42K sticker price comes down to $14K (with athletic money, I suspect this would eventually be free).  Another state school in a state far, far from mine would, between academic and athletic money (I'm guessing the coach is talking about 25% athletic money) be free, free for a kid whose first ACT was a 21.  She's improved since then, but she's not going to have a 32+ or anything close to it.  So, if money is a significant concern, don't dismiss second-tier private or state schools, especially if your child is looking at a major where the name of the school does not really affect his or her employability.  If your kid is going into nursing, for example, every nurse has told me that as long as she can pass the licensing exam (and most schools' passage rates are available online), she can get a job.  My first WAS a tippy-top student, so it has come as a surprise to find so much merit money floating around for my solid but not spectacular student.  (She is spectacular in many, many other ways, of course!)

[8filltheheart]

I want to caveat this a bit--even if your child is not a tippy-top student, there is a lot of automatic academic money available. I have run the automatic-merit-aid calculators at two schools for my high school junior with good but not great stats, and one small private school with a $42K sticker price comes down to $14K (with athletic money, I suspect this would eventually be free). Another state school in a state far, far from mine would, between academic and athletic money (I'm guessing the coach is talking about 25% athletic money) be free, free for a kid whose first ACT was a 21. She's improved since then, but she's not going to have a 32+ or anything close to it. So, if money is a significant concern, don't dismiss second-tier private or state schools, especially if your child is looking at a major where the name of the school does not really affect his or her employability. If your kid is going into nursing, for example, every nurse has told me that as long as she can pass the licensing exam (and most schools' passage rates are available online), she can get a job. My first WAS a tippy-top student, so it has come as a surprise to find so much merit money floating around for my solid but not spectacular student. (She is spectacular in many, many other ways, of course!)

I agree that there is money available for lower scores.

 

For most competitive scholarships (not automatic), test scores are going to be an initial filter to progress in eligibility.

 

The further you drop down in rankings, the less competitive the applicant pool. What is competitive for scholarships at UNC, Duke, and Vanderbilt is going to be far more competitive than being competitive at Schools ranked in below 50 which is going more competitive than schools ranked below 100, and so on down the ranking pool. But even at schools ranked around 100, non-automatic, competitive scholarships in our experience are still competitive and 32 seems on major cut-off point. Some schools this yr seem even higher. Temple's automatic awards are unpublished, but from kids on CC, receiving large $$ seem start at a 34. Pitt's seems to be a 34 also.

 

It takes a lot of research to find schools that match your kids' stats and fit financially.

[Alessandra]

Following this thread, appreciate all the responses.

 

Is there an online calculator for CSS, the way there is for FAFSA? Or, better yet, a paper version? I know it's complicated but I would love to get as clear an idea of what is involved. Or, do I have to go to each individual college website?

[theelfqueen]

Everyone up above has it all wrong.

 

First, you sacrifice your firstborn male.

 

Then, you offer up your arm and your leg.

 

Third, you beg, borrow, and steal, sometimes stealing from Peter to pay Paul.

 

After all that, you MIGHT be able to send your child to college. If you're lucky.

 

Or you sell them to the Air Force. Indentured servitude is alive and well in Reserve Officer Training ;)

 

[Lizzie in Ma]

The whole thing is more than a little intimidating isn't it?

 

Youngest has been at the local (highly regarded and highly competitive) tech school for high school.  We will be paying $3,500 ish for her to do dual credit her junior and senior year for all her academics, which is expensive for us but cheaper than an ordinary first two years of college. 

She will also graduate with the equivalent of a years worth of credits in her shop that will transfer to the state colleges.

She already had an advanced rating in her first of three state exams, the scores on the next two will determine, along with her high honors and high gpa status whether or not she will get a scholarship that is a full ride to any state school.  So fingers crossed here.

 

I will say her school's guidance department is exceptional and has been very helpful in steering us right.  Sure beats the one I had, I never even knew financial aid existed til my junior year in college!

[Serenade]

Following this thread, appreciate all the responses.

Same here. Although so often I can't find an old thread, even if I posted on it and even if I've followed it. So I'm going to print this one out so I have time to digest. I've got a couple of years reprieve because it looks like my older son is going to the local community college for his first two years. His choice, not mine.

[8filltheheart]

Following this thread, appreciate all the responses.

 

Is there an online calculator for CSS, the way there is for FAFSA? Or, better yet, a paper version? I know it's complicated but I would love to get as clear an idea of what is involved. Or, do I have to go to each individual college website?

Each school uses their own proprietary formula, so no, there is no public way of knowing exactly how they calculate the parental contribution like for the FAFSA. Running their net price calculator with accurate input is the best way. For schools your student is serious about and if you have a complicated financial scenario (non-custodial parent information, small business owner, rental properties, etc), you can contact individual FA depts and request an early read of FA application.

[Pegasus]

It's a combination of compromising on dreams/desires, cutting expenses, and piecing together various financial resources.  Here's what we've done so far:

 

1. Take advantage of state grants

2. Dual enrollment while in high school to get a jump on general ed credits

3. Community college, following a specific transfer transition guide

4. Transfer to local state school within commuting distance, student lives at home

5. Student earnings from summer and part-time jobs

6. AOTC federal tax credit - I shuffle this into a separate bank account to await the next semester's tuition bill

7. Shop for best prices on textbooks, pack lunch daily, skip expensive activities, etc.

8. Reduce retirement account contributions

[Alessandra]

Each school uses their own proprietary formula, so no, there is no public way of knowing exactly how they calculate the parental contribution like for the FAFSA. Running their net price calculator with accurate input is the best way. For schools your student is serious about and if you have a complicated financial scenario (non-custodial parent information, small business owner, rental properties, etc), you can contact individual FA depts and request an early read of FA application.

I have run a few calculators, very discouraging. As far as you know, do any colleges take into account special needs of a sibling, one who will need lifetime support? I have not seen that as part of forms, so is that something colleges could take into account in any way? (If you know)

[creekland]

It really does make a difference in whether you can afford your EFC or not - and then which schools are applied to.

 

We looked for schools that would really want our kids (geographic diversity, top scores compared to other students, etc).  The more a school wants a student, the more money they often send their way.  If a school has oodles of options just like your student, there's no incentive to offer more.

 

Then one other thing I haven't seen mentioned - a nuts and bolts thing - is our schools allowed us to pay monthly rather than all at once.  I think it cost an extra $25 or $50, but it helped things fit into our budget.

[creekland]

I have run a few calculators, very discouraging. As far as you know, do any colleges take into account special needs of a sibling, one who will need lifetime support? I have not seen that as part of forms, so is that something colleges could take into account in any way? (If you know)

 

Private schools have told us they do take this into account.  If you have schools you are considering, talk with an adult (not student worker) at the Financial Aid office for specifics.

[8filltheheart]

I have run a few calculators, very discouraging. As far as you know, do any colleges take into account special needs of a sibling, one who will need lifetime support? I have not seen that as part of forms, so is that something colleges could take into account in any way? (If you know)

They will take it into acct, but the question is whether or not it is given enough consideration. You definitely need to ask each school and have all necessary documentation: medical bills, cost of providing daily care, etc. In terms of it meaning yrs of dependency beyond the norm, I don't think that aspect will make much difference. The main consideration they will give is how those expenses impact 1 yr's worth of financial resources available to the family while the applicant is in school that yr.

Edited March 14, 2017 by 8FillTheHeart

[teachermom2834]

EFC gets out of whack because they only consider one year at a time as a snapshot of time. Dh has not been making what he made last year for the past twenty years. Yet the assumption seems to be he could have been saving at that rate. They consider how many children are in college that year but not how many you have already hustled to get through or how many you have yet to come. There are just too many factors that impact a family financial situation over the long term but are not reflected in a one year snapshot.

[Lori D.]

The first step is to fill out the FAFSA (Free Application for Federal Student Aid) , which runs your financial figures through calculations to arrive at the amount that the federal gov't believes your family is able to pay for college -- the EFC (Estimated Family Contribution).

 

For a very rough/quick short-cut estimate of what your EFC is likely to be, AND the amount of federal college aid you are likely to be eligible for (excludes scholarships), check out Tony Onink's EFC Quick Reference Table for College Aid Eligibility, reprinted halfway down in a Road 2 College website article on "Thinking About How to Pay for College?"

 

The second step is to run your family info, student info, and financial info through a Net Price Calculator on the websites of various colleges to get a feel for what the cost of the different colleges might be, to see how affordable the different colleges are likely to be. The colleges are using a basic formula:

COA - EFC = Financial Need
(cost of attending the college) SUBTRACT (what federal gov't believes your family is able to pay for college) EQUALS (amount of your remaining financial need)

Cost of Attendance
(per year costs of a typical state university -- COA for private schools tends to run much higher)

$10,000-$15,000  = tuition & fees 
$5,000-$10,000    = room & board *   
$500-750 (or more)   = books & supplies *
$500+                   = transportation *  
$500-1500 (or more) = incidentals *   
$16,500-$28,000 = COA total per year 

* = NOT typically covered by scholarships; MAY be partially to completely covered by grants, work-study, or other aid

 

EFC
- fill out the FAFSA form, which yields the EFC** (Estimated Family Contribution) portion of the Financial Aid equation
- NOT based on how much you have saved, or what YOU think you can afford
- gov't and colleges expect that you HAVE been saving, and that you will use current income and assets (including retirement $$) for college
- gov't and colleges expect that you will take out private loans to cover any shortfall in this EFC

 

** = or, see the Tony Onink chart linked above for figuring out a quick, rough estimate of your EFC, and what kinds of schools you will qualify for financial need with that EFC

 

Financial Need
- colleges use the EFC amount and subtract it from their COA to come up with your Financial Need amount
- colleges meet 60-100% of this Need amount through offering a financial aid package
- the financial aid package will be an offer of a combination of: loans + work-study + grants + scholarships
- any portion of financial need NOT met by the financial aid package must be covered by the family — usually in the form of additional student loans and/or Parent Plus loans, but possibly by parent income/assets, or from "outside" grants/scholarships — this is IN ADDITION TO the EFC amount that colleges expect families to pay

Sources of $$ in the Financial Aid Package to meet Financial Need
Once you apply to a college and are accepted, the college will offer a financial aid package to cover some or all of this amount of NEED. This aid comes in the form of:

- federal LOANS (federal student loans, offered to everyone; amount tops out at $5500/year for Perkins loan, or $5500-$12,500 in direct subsidized/unsubsidized loans)
- federal WORK STUDY (federal $$ your student works for; offered if your EFC number is low enough; tops out at )
- federal/state GRANTS (free federal $$; offered if your EFC number is low enough; tops out at)
- scholarships (free $$ from the college; usually specifically for tuition; awarded on academics (merit-based) and/or Financial Need (need-based))
 

Past threads on the reality of college costs
Rude awakening?? re: college
Kids working, college costs, etc
Can we take college savings?

Past threads on how financial aid works
Understanding Financial Aid
Newbie Q[uestion] about college costs
Self Help - What a Crock!
Is this how subsidized loans work?

Past threads on how scholarships work
Preparing for college: what scholarships/grants to apply for?
Scholarships
Financial aid and scholarships
Experts on merit-based aid...

Past threads on paying for college
How are YOU managing to pay for college?  (and related thread: Discussion on the college board re: paying for college)
s/o: "Cautionary Tale, High College Costs" -- a brainstorm $$ ideas thread! -- past thread with ideas

More Resources
College Xpress: list of colleges that go the extra mile to make it financially possible to attend
Automatic Full Tuition/Full Ride Scholarships -- website list of schools with "automatic aid" for ACT/SAT scores

Edited August 14, 2018 by Lori D.

[Dianne-TX]

This is highly individual. There was a thread not long ago titled something like "How are you paying for college?" or something like that. For us we knew the EFC was out of reach. Dh makes a decent salary but only in the last few years. We are also unwilling to borrow ourselves and the EFC takes into account that the parent will borrow some. So our EFC is about 3x what we could scrape to pay. So no way.

 

My first ds is at a private LAC. This is how he is paying:

-merit scholarship (20,000)

-state grant match scholarship (3500- college is in neighboring state and they match what state aid he would have gotten here)

-financial aid grant (6000)

-outside scholarship (5000)

-federal loans (5500)

 

He has been able to pay the balance with his summer job (full time warehouse work-not fast food). It worked out great but he applied to ten schools and this is the only one that came out this cheap. Where scholarships were similar at al the LAC, the difference came in that $6000 grant. Other schools offered $500-$1000 in that spot. This college also allowed us to use the private scholarship to pay our portion. Most private schools will take that out of financial aid grants.

 

Next ds will go to a regional state school (not our flagship) This is how he will pay:

-automatic merit scholarship based on ACT/GPA (5-6000)

-state HOPE scholarship (3500)

-federal loans (5500)

-summer earnings

-he will go in with 3 semesters of de credit

 

Both will come out similar. I feel like both will have good experiences and value for their college dollars. We are finding a way to make it work.

 

Some things I want to point out:

-ACT scores in the range of 29-31

-kids that are willing to live in the least expensive dorms, go without cars, low maintenance kids without special needs, common majors

-mom worked hard to find these schools that would work. Same students could have applied to twenty schools each and not come out with affordable options. I had to do the legwork to find these schools that would work.

-no one is at their dream school

-we opt to have them take the federal loans with the understanding that we will attempt to help pay them back on successful completion but we are holding onto that money for now and making them responsible for it.

 

 

 

We are okay with federal loans, too, and have also said that we can help at completion, but can't on the front end.  So, am I correct in understanding that if a family/student is okay with paying back loans then college is still a possibility?  Or, is that even limited these days?  In our college days, if you couldn't pay anything you just got loans if you didn't qualify for grants and scholarships.  (DH experience)

Edited March 14, 2017 by Dianne-TX

[8filltheheart]

We are okay with federal loans, too, and have also said that we can help at completion, but can't on the front end. So, am I correct in understanding that if a family/student is okay with paying back loans then college is still a possibility? Or, is that even limited these days? In our college days, if you couldn't pay anything you just got loans if you didn't qualify for grants and scholarships. (DH experience)

I am not sure I understand your question. Students are limited by the federal student loan limit of $5500 freshman yr, $6500 soph, and $7500 jr and sr. There are no other federal loans to be had (unless a parent cannot qualify for loans, but even then I believe the limit is $12,000. I'd have to look up in my notes.)

Eta: This link is helpful: https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized

 

Parents can either choose to take out parent loans or cosign for loans. This is not a path I would opt for. Depending on the college, cost of attendance can range from $20,000-$70,000+ per yr. Understanding the college application process and finding colleges you can afford is a much better plan.

Edited March 14, 2017 by 8FillTheHeart

[teachermom2834]

I am not sure I understand your question. Students are limited by the federal student loan limit of $5500 freshman yr, $6500 soph, and $7500 jr and sr. There are no other federal loans to be had (unless a parent cannot qualify for loans, but even then I believe the limit is $12,000. I'd have to look up in my notes.)

 

Parents can either choose to take out parent loans or cosign for loans, but those will be private and not federal. This is not a path I would opt for. Depending on the college, cost of attendance can range from $20,000-$70,000+ per yr. Understanding the college application process and finding colleges you can afford is a much better plan.

Agreeing with this.

 

We are having our kids take the federal loan with the understanding that we will help pay back if 1) they take care of business and stay out of trouble and 2) we are able (dh is still employed, we are healthy, etc.)

 

Private loans and parent loans are possible but we do not plan to go that route. The federal loans do not go very far on a big college bill so the strategy is to find the most affordable options and then apply the loans. They aren't enough on their own. You very well can take out many more loans. Those are the people you read about being six figures in student loan debt for an undergrad.

Edited March 14, 2017 by teachermom2834

[Lori D.]

On 3/13/2017 at 9:07 PM, Dianne-TX said:

We are looking ahead at preparing for college for our first DS.  He will be a junior next year.  I think I'm understanding the way things are done these days, as opposed to when I went to college and graduated. ('97)  One thing I'm trying to understand is how we are going to pay for his school?  I know we fill out the FAFSA and then we find out our EFC, but then what?  I'm concerned that if we make too much, then we can't qualify for loans or other help.  How does this exactly work out in reality?  It seems the poorer the better? ?  Thanks. 

And, to specifically look at your situation... From your board name, it looks like you are in Texas? From what I've seen from other TX residents on this board, that's a good state for colleges that offer scholarships towards tuition for state residents, if the student has a half-way decent ACT/SAT score.

_______________________________

Other things you can do to reduce college costs:

Reduce the time spent in college, and therefore the overall cost 
This can be done by accruing college credit NOW, while in high school, through high AP test scores, CLEP tests, or dual enrollment classes. Depending on the university, you may be able to knock out 1-2 semesters -- maybe even as much as 3-4 semesters -- of college in advance.

Note: none of these options are guaranteed to be accepted for credit or transfer as credit to all universities, so check into the policies of the universities your DS may want to apply to and see what will be accepted as credit towards a degree.

Also note: this may not be an option that helps, if the student is going into something like Engineering or Medicine, as many of those degrees have required courses scheduled in such a way that it takes 4 years to complete the coursework. In that case, the only thing APs and dual enrollment might do is open up entering an Honors program early, or make the overall semesters a bit lighter, if all the gen. ed. requirements for the degree were knocked out in advance -- making it a bit easier for a student to work a part-time job, or pursue an internship or research in the degree program.

_______________________________

Earn an all-online degree
Lumerit: Unbound (formerly College Plus) and other similar organizations walk you through the series of specific CLEP tests and online courses and earn your entire degree from home. The course of study is usually at an excellerated rate of just 2 to 2.5 years total, and often done during the student's 11th and 12th grade years, so the student earns the high school diploma and college degree at the same time. The total cost is about $25,000, and there is no financial aid available for this route.

Note: only a limited number of degree programs are available, and the "jury is still out" on how accepted these all-online degrees will be for future grad program entry, as much of the degree (the CLEP tests portion) is without a GPA. Also, for best success, the student needs to be extremely self-motivated and a good solo-learner.

_______________________________

Excel in a less-populated sport
Less popular collegiate sports often offer sports scholarships, and those scholarships are often easier to get because few students participate in the sport, compared to basketball, soccer, or baseball/softball. I know a young man who attended college all 4 years on a golf scholarship! ? Check out this article: "College Scholarships for Lesser Known Sports". If your student is at all athletic and interested, 11th grade is the ideal time to jump on developing a lesser-populated sport that offers scholarships at some schools, and it will give you time to get all of the NCAA requirements figured out.

Or, if good, but not stellar, at a more common sport, consider looking into a  Division II or Division III sports scholarship at school that has teams at these lower levels of competition.

_______________________________

Practice testing
Obviously the best money goes to students who can score high on the ACT/SAT, and in the 99% for the PSAT in 11th grade. But if test prep and practice, maybe even a test-prep class, helps boost your student's score a bit, it might make the difference between no money and a partial-tuition scholarship -- or a small vs. large partial-tuition scholarship.

_______________________________

Shop Schools
Look around and compare costs AND how much aid is available at different schools to bring your costs down into your manageable range. Examples:

- private schools cost much more than public state schools, BUT, private schools frequently have MUCH better aid, which can reduce private school costs down to similar ranges as public state schools

- living at home and commuting to a local university can save $8,000-$10,000/year in room & board costs of living on campus; and most scholarships address tuition -- far less aid is available for room & board, books, and other expenses

- tuition for state residents is often much lower than tuition for out-of-state residents -- but many universities offer one price for all students, so don't automatically cross off all schools outside of your state

- many schools participate in an exchange program, so that you might be able to attend an out-of-state school for in-state tuition costs:
   * Academic Common Market -- schools in 15 southern states
   * Midwestern Higher Education Compact -- schools in 12 midwestern states
   * New England Board of Higher Education -- schools in 6 new england states
   * WICHE/WUE -- schools in 15 western states + commonwealth of Northern Marianna Islands
   * National Student Exchange -- schools in US, Canada, Guam, Puerto Rico, US Virgin Islands
   * ISEP -- schools in 50+ countries

_______________________________

Consider a Tuition-Free School
You might look into whether a tuition-free, or work-for-tuition, college has degree programs that are a good fit for your student.

_______________________________

Really, it boils down to (1) "know your student":
- career interests? (rather than college, perhaps military, community college/trade school, or on-the-job training is the best way to pursue those interests)
- good tester? (consider APs and CLEPs)
- academic, advanced, self-motivated? (consider dual enrollment, Lumerit, etc.)
- athletic? (consider shooting for a sports scholarship)
- average? (consider going for an AAS degree at the community college and go into that field; or, knock out 2 years of general ed credits at the less-expensive community college and then transfer and finish the Bachelor's degree at a university)

And (2) research, research, research:
- can the student work part time, and how will that add to the college picture?
- what can your family finances handle?
- is there a relative interested in contributing to the student education? (with $$, or free room/board to attend out-of-town college)
- what universities have programs that fit your student's interests?
- what universities have the best financial fit for your family?
- is a tuition-free school, or a work-for-tuition school, an option for your family?

Edited August 14, 2018 by Lori D.

[Lori D.]

On 3/14/2017 at 11:05 AM, Dianne-TX said:

We are okay with federal loans, too, and have also said that we can help at completion, but can't on the front end.  So, am I correct in understanding that if a family/student is okay with paying back loans then college is still a possibility?  Or, is that even limited these days?  In our college days, if you couldn't pay anything you just got loans if you didn't qualify for grants and scholarships.  (DH experience)

The rule of thumb in taking on student debt: total debt (i.e., for all the years required to earn the degree) should not be greater than what the student's starting salary would be. So, if the typical starting salary for a job in the student's future degree field is $45,000/year, the student should take on no more than $45,000 total debt. (So, in that example, that averages out to just a little over $11,000 debt/year, if they degree takes 4 years, and about $9,000 debt/year if the degree takes 5 years.)

As far as the amount of parent debt I strongly suggest speaking with a financial advisor who thoroughly understands college finances and financial aid, as well as retirement finances.

Be sure to take into account the possibility of the sudden death, injury, or loss of job of the current bread-winner, or any unexpected hit to the current family financial income, and how that would impact ability to repay loans, or what options would you have for paying back loans other than through income that would not drastically impact your current home and living expenses or your future income/retirement.

Also be sure to take into account that, increasingly and for a variety of reasons, it is taking students more like 4.5 to 5 years to complete a 4-year degree. Also, frequently, a student needs to continue the education through a Master's degree, which is an additional 2 to 2.5 years of study. So your financial planning should reflect a longer period of time spent at school, to be on the safe side.

re: federal student loans:
You really only want to get into subsidized loans, as these are the loans in which interest does NOT start accruing on the loan until the student stops schooling (hopefully because of graduation!). As mentioned above, the top limit on these loans is $5500/year.

Unsubsidized loans are ones in which the interest starts accruing immediately upon taking out the loan. So an unsubsidized loan for the freshman year will accrue 4 years of interest (which is added to the total amount of money having to be repaid, AND interest accrues on the interest!) before the student even begins to have a chance to start paying back the loan. The lot limit on these loans ranges between $5500-$12,000/year, depending on the student's specific situation and finances.

re: federal "Parent Plus" loans:
Because these loans have limited repayment options, and can have potentially very hard consequences for parents who fall behind in payments, it is recommended that parents avoid these loans, or be *extremely* judicious about taking out Parent Plus loans. In fact, it is usually NOT in the parents' best interests to borrow money to pay for the student's college education, unless it is for a very limited amount, and will be able to be repaid quickly, and will not infringe on the family's current living situation or jeopardize future/retirement income.

So many families have completing financial obligations at this stage -- possible paying off their OWN student debt; paying for the care of an aging parent; trying to save for retirement when there will be no income... Again, talk to a knowledgeable financial advisor about your specific situation and finances.

re: private loans
These are loans through your bank, not the federal governement, and they are also a possibility, but usually have higher interest rates and start accruing interest immediately, and so are NOT at all recommended for students, and should only be considered very carefully (short-term, limited amount, ability to re-pay without hardship) for parents.

ETA: One other thought about federal student loans
If your student does not end up with a gigantic amount of student loans (i.e., $10,000 or less), AND is struggling to find work right after college graduation, consider a 1-year volunteer stint with AmeriCorps, which pays for the student's housing & a living stipend, AND contributes $8500 towards paying down FEDERAL student debt, OR, can be used as a future educational tuition credit, if there is no debt.

AmeriCorps (the Vista section) works with a LOT of different organizations and career skill fields, and can provide the student with some experience and networking towards finding a future job.

Edited August 14, 2018 by Lori D.

[creekland]

We are okay with federal loans, too, and have also said that we can help at completion, but can't on the front end.  So, am I correct in understanding that if a family/student is okay with paying back loans then college is still a possibility?  Or, is that even limited these days?  In our college days, if you couldn't pay anything you just got loans if you didn't qualify for grants and scholarships.  (DH experience)

 

It will depend upon what you qualify for in loans (once past federal limits).  Credit isn't as easy to get as it was in the past.

 

Many students/families do opt for some private debt (or Parent Plus).  The investment in a college education is just that necessary for many of us.  That said, we're careful with how much debt we take on.  There are generally less expensive perfectly good options.  What those are depends upon the student and their desires/goals.

 

The differences in cost for my middle son - just from his acceptances - were 33K in how much we had to pay (annually).  The school wanting an extra 33K was dropped from consideration the same day we got their offer...  I would never talk anyone into taking on that extra in debt.  (No problem for those who could afford it via savings or pure payments, of course - buy what you want when you have the money!)

 

It's worth it to do your homework (as a guidance counselor) finding potential affordable options based upon what you feel your family can afford (via payments or debt).  

 

If there's a local college near you, it could be helpful to sit in on any Financial Aid or Affording College seminars they might have.  You can call and ask if they have them.  Ditto that for local high schools.  I know our high school offers one every year.

[Alessandra]

They will take it into acct, but the question is whether or not it is given enough consideration. You definitely need to ask each school and have all necessary documentation: medical bills, cost of providing daily care, etc. In terms of it meaning yrs of dependency beyond the norm, I don't think that aspect will make much difference. The main consideration they will give is how those expenses impact 1 yr's worth of financial resources available to the family while the applicant is in school that yr.

Oh, that is awful, at least for our situation. Capital minus college means less capital to produce interest in future years. That's my concern, obviously.

 

But not so much impact in college year, as capital minus college would not bankrupt us immediately.

 

:-(

[Alessandra]

Private schools have told us they do take this into account. If you have schools you are considering, talk with an adult (not student worker) at the Financial Aid office for specifics.

Oh, really! That would be good news.

 

It does sound as though the aid process is truly college by college. More work than I had anticipated.

 

Btw, this is a very useful thread. Thanks to everyone!

[creekland]

Oh, really! That would be good news.

 

It does sound as though the aid process is truly college by college. More work than I had anticipated.

 

Btw, this is a very useful thread. Thanks to everyone!

 

It is going to be college by college TBH.  Some have more money to work with than others and some are just downright more pleasant to work with than others, but having other legitimate expenses like illnesses, etc, can allow them to adjust an EFC.

[katilac]

We are looking ahead at preparing for college for our first DS.  He will be a junior next year.  I think I'm understanding the way things are done these days, as opposed to when I went to college and graduated. ('97)  One thing I'm trying to understand is how we are going to pay for his school?  I know we fill out the FAFSA and then we find out our EFC, but then what?  I'm concerned that if we make too much, then we can't qualify for loans or other help.  How does this exactly work out in reality?  It seems the poorer the better?  :-/  Thanks. 

 

Great, you are starting earlier than many! 

 

It's not necessarily true regarding "the poorer, the better." You have to be very poor indeed to get the maximum amount of grant aid, which of course comes with its own set of problems, lol. Some people do hit a sweet spot where they are above poverty but low enough that  private schools actually work out cheaper than public, but ime this is rare. Colleges expect that you will have been saving, and they expect that you will take out loans. 

 

You can fill out the FASFA4Caster here for an estimate on your EFC: 

https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

 

Your EFC is the minimum amount colleges will expect you to pay, and many will expect you to pay substantially more, even schools that claim to meet full need (because full need is what they decide it is, not what the EFC is).  

 

Once you have your EFC, start going to various school web sites and running their net price calculator. Do that now, give yourself time to get over the sticker shock, lol. Some schools will ask for test scores and take scholarships into account, others won't. 

 

Our oldest is a high stats kid. She opted for a school with guaranteed scholarships based on ACT scores and GPA. She dropped out of a few scholarship competitions at other schools because she really did not want to wait until March or April to make a decision, and she really liked the school with guaranteed scholarships. She was at orientation and scheduling classes the first week of April in her senior year, and that was ideal for her personality. 

 

The remaining amount is pretty low, so we are able to pay it as we go. We know the likely costs for her sister if she doesn't match those scholarships (a lot more, lol, there is a big jump between top scholarships and the next level), and that would be divided by pay as we go, savings, and loans. 

 

Run those calculators so you have an idea, and then be clear with your student what type of help they can expect. Don't let them dream about going away to school if that's not a possibility. Also research guaranteed scholarships (most schools have at least some; they might come in the form of waiving OOS fees) and the scores needed for them. This can be very motivating when prepping for ACT. 

 

Which brings me to my next point: he needs to take a practice ACT if he hasn't done already, so he can get a feel for what schools might accept him and what schools might offer him money. Standard advice is that they need to be in the top 25% for scholarships, which is true, but we found that dd really needed to be in the top 15% or better for the really big money. Like I said, there tends to be a substantial jump between the top scholarships and the next level. 

 

I would also start visiting schools. If he has no idea of where he wants to go, start by visiting local schools. You will learn something with every visit, and it will prepare you for other trips. 

 

I highly recommend starting a binder to keep track of all the information. If you're casting a wide net, or if you are just really unsure where to start looking, there is a TON of information. 

[readinmom]

I would run the numbers through the cost estimate calculator (EFC) and start a college vision board with your dc.  Discuss the finances and goals early and often.

Scholarships/estimated contributions are great, but only when that money is in hand and safely deposited in the student account.  We learned the hard way that there are no guarantees with ds1 (school raised tuition/dropped scholarships).  Although he enjoyed his education, he now wishes he had opted for the smaller, less expensive state college.

 

In retrospect, we were starry-eyed parents who were excited about his admission and didn't see the big picture until it hit us in the face.  We planned for x amount of expenses based upon what school had promised; the recession took care of the rest.  

 

Dd will have the benefit of our "wisdom" when it comes to her college choices...

 

 

 

 

[8filltheheart]

I would run the numbers through the cost estimate calculator (EFC) and start a college vision board with your dc. Discuss the finances and goals early and often.

Scholarships/estimated contributions are great, but only when that money is in hand and safely deposited in the student account. We learned the hard way that there are no guarantees with ds1 (school raised tuition/dropped scholarships). Although he enjoyed his education, he now wishes he had opted for the smaller, less expensive state college.

 

In retrospect, we were starry-eyed parents who were excited about his admission and didn't see the big picture until it hit us in the face. We planned for x amount of expenses based upon what school had promised; the recession took care of the rest.

 

Dd will have the benefit of our "wisdom" when it comes to her college choices...

So awful that that happened to your family. Did you have the scholarship offer in writing or was it part of the financial aid package and called an institutional scholarship? One caution is the unethical practices of some schools. These schools will call institutional grant money scholarships. FA is variable yr to yr and some schools are notorious for front loading freshman yr offers and gapping sophomore to sr yrs. (a horrible and unfair practice)

 

http://hechingerreport.org/in-a-college-bait-and-switch-financial-aid-often-declines-after-freshman-year-2/

https://www.usnews.com/education/best-colleges/paying-for-college/articles/2015/04/01/watch-out-for-front-loaded-financial-aid-packages

https://www.usnews.com/education/best-colleges/paying-for-college/articles/2015/06/16/10-colleges-where-upperclassmen-get-less-financial-help

 

Anything represented in a general FA offer is typically a yr by yr assessment. Otoh, admissions' scholarships are typically offered in writing as $x or in the value of tuition for 8 semesters as long as the following requirements are met (usually minimum GPA and full time enrollment.)

 

Wording is definitely key. Even scholarships offered as a fixed number can be more risky than scholarships in the value of tuition bc if costs go up, fixed numbers will leave you gapped unless the school has a fixed for 4 yr price guarantee (some are doing this now.)

[G5052]

Keep all of your options open. Our experience was that the merit aid still made it unaffordable for us.

 

Mine don't want loans, and when DS was getting ready to go, DH was making noises about retiring. He has significant medical bills every year that perpetually strain our budget.

 

As it turned out, DS decided to go locally to the community college because he was uncertain about a major and wanted to figure things out for himself. We have an excellent local community college. He came in with one of the highest SAT in the whole school (three campuses), multiple SAT II's, dual enrollment, and multiple APs. He was awarded a good merit scholarship.

 

He's loved it and found his major. They have a solid honors program, and he's liked his small classes. This year he got even a better scholarship that brings our out-of-pocket with books and supplies to around $2,000 for the year. We're waiting on the acceptance, but he's applied to a top-20 business school and should get in (4.0 GPA). He probably will be in line for a merit scholarship.

 

My younger one starts at the same community college in the fall with a similar background. Her brother has had such a wonderful experience there that she doesn't want to go anywhere else. She's more focused on a major, but will be able to explore some because of dual enrollment and advanced standing.

 

In the future, we'll see. DH retired the end of 2016 and our income is quite a bit less, so we submitted the FAFSA with 2015 income of course, but I'll write a letter explaining our current income, which around half of what it was with my teaching and his pension.

[Mom2boys]

Here is how the families in our homeschool group are paying for college - those of us who qualify for little to no need-based aid, and who have smart kids who qualify for some academic scholarships, but are not high-stats kids with the big competitive scholarships.

 

1. student is commuting to a local college to save the cost of room and board, or

2. mom is re-entering the work force because the student was an only child, or

3. a generous relative is chipping in, or

4. student has joined ROTC, or

5. student has reduced the number of semesters spent in college through dual enrollment or AP credit, or

6. parents and students are both going into debt through subsidized and private loans, or

7. some combination of the above. 

 

We are all committed to not touching our retirement savings at this point. But most of us are only on our first kid in college. We'll see if that changes as subsequent kids go to college. I realize I haven't shared anything new or earth-shattering here. The reality is that many families are going into debt to pay for college. 

Edited March 15, 2017 by Mom2boys

[Arcadia]

Is there an online calculator for CSS, the way there is for FAFSA? Or, better yet, a paper version? I know it's complicated but I would love to get as clear an idea of what is involved. Or, do I have to go to each individual college website?

My kids are younger than yours but we relocated to the states in 2005 so totally foreign to the education system here. I did ran the net price calculator for Stanford and Harvard while doing my efile of tax and it was as painful as filing tax in terms of information to key in.

 

CSS example from U of Norte Dame from page 35. https://admissions.nd.edu/assets/190116/2016_fafsa_profile_webinar.pdf

We are actually hit hard by Page 53 as our home "value" has gone up by $160k going by lowest recent (past 2 years) sale prices of identical floor plan in my condo complex, and our mortgage is negligible (and likely paid up by then). Our home value did went down by $130k when the property market crashed. However it is hard to predict if it would be property boom or bust when my firstborn apply for college. Our emergency savings is also on the higher side because of our high COL but I assume college would expect us to use that for tuition instead of leaving it untouched.

 

2014-15 CollegeBoard CSS paper version http://www.lehigh.edu/~infao/forms/14_15/2014-15_CSS_Early_Applicaiton.pdf

Edited March 15, 2017 by Arcadia

[8filltheheart]

My kids are younger than yours but we relocated to the states in 2005 so totally foreign to the education system here. I did ran the net price calculator for Stanford and Harvard while doing my efile of tax and it was as painful as filing tax in terms of information to key in.

 

CSS example from U of Norte Dame from page 35. https://admissions.nd.edu/assets/190116/2016_fafsa_profile_webinar.pdf

We are actually hit hard by Page 53 as our home "value" has gone up by $160k going by lowest recent (past 2 years) sale prices of identical floor plan in my condo complex, and our mortgage is negligible (and likely paid up by then). Our home value did went down by $130k when the property market crashed. However it is hard to predict if it would be property boom or bust when my firstborn apply for college. Our emergency savings is also on the higher side because of our high COL but I assume college would expect us to use that for tuition instead of leaving it untouched.

 

2014-15 CollegeBoard CSS paper version http://www.lehigh.edu/~infao/forms/14_15/2014-15_CSS_Early_Applicaiton.pdf

The problem with judging this way is that not all schools use the CSS the same way. Some schools do not count home equity. Some do and at different percentages. Lynn's The College Solution blog is an excellent place to first start researching how college formulas determine parental contribution.

 

Here is a great starting point: http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

 

Will Your Home Equity Hurt Financial Aid Chances?

 

by Admin on August 7, 2014 in Financial aid, Money

Have you given any thought to how home equity might hurt your child’s chances for financial aid?

 

Actually, at most state and private colleges and universities, the equity in your primary home is a non-issue. That’s because most schools only require families to complete the FAFSA (Free Application for Federal Student Aid) when applying for financial aid and the FAFSA doesn’t even ask about home equity.

 

There are, however, roughly 260 schools, nearly all private, that are quite interested in the value of your house and how these schools treat home equity varies dramatically. The schools in this category include the nation’s most prestigious institutions. These colleges use an additional financial aid form called the CSS/Financial Aid PROFILE.

 

6WaysButton

 

Depending on how schools treat your home equity, your chances of getting financial aid could blow up while at other institutions your money timebombodds wouldn’t be jeopardized even if you are living in an exclusive zip code.

 

How Your House Can Impact Financial Aid

 

Many schools that assess home equity for financial aid purposes do so by linking it to the family’s income. For instance, a school might assess home equity at no more than two times the family’s income. Let’s look at an example of how this would work:

 

Family’s income: $60,000

Home equity: $400,000

Normally, the schools that use the PROFILE formula would assess the home equity (as well as other parental assets) at 5% for financial aid purposes.

 

400,000 x 5% = $20,000

 

In this example, the home equity value would have boosted the expected family contribution (EFC) by $20,000 (a significant hit!) if the school didn’t link the home equity to income.

 

By the way, if you don’t know what an EFC is, read this post:

 

Do You Know What Your EFC IS?

 

But now let’s look at what happens when the school ties the home equity assessment to no more than two times the family’s income of $60,000.

 

$60,000 x 2= $120,000

 

In this example, the school would only use $120,000 of home equity this family’s aid calculation.

 

120,000 x 5% = $6,000

 

So in this example, the parent’s EFC would rise $6,000 rather than $20,000.

 

How Individual Schools Treat Home Equity

 

If you hope to qualify for financial aid — and the more expensive the school the more likely you will – it’s important to know how individual schools treat home equity. To help you with this effort, I am sharing with you the following spreadsheet of the home-equity policies of 110 schools:

 

Home Equity Spreadsheet

 

The spreadsheet comes courtesy of Paula Bishop, a friend of mine, who is a CPA in Bellevue, WA, and a financial aid expert. She contacted the schools about their home equity policies this summer, but keep in mind that schools can change how they assess home equity at any time so don’t just depend on this list.

 

Schools that Ignore Home Equity

 

As you’ll see from Paula’s list, some PROFILE schools don’t consider home equity at all, which is obviously the best scenario. Institutions in this smallest category include:

 

Bard College

Bucknell University

California Institute of Technology

DePauw University

Hamilton College

Harvard University

Princeton University

Santa Clara University

University of Virginia

Washington University, St. Louis

Whitman College

Schools That Hit Home Equity Hard

 

On the other extreme, some schools use the full weight of parents’ home equity to help determine financial need, which can seriously hurt aid changes. Here are some examples:

 

American University

Bentley College

Boston College

Elon University

Emory University

Holy Cross College

Ithaca College

Johns Hopkins University

MIT

Northeastern University

Providence College

Rensselaer Polytechnic Institute

Roger Williams University

Stonehill College

Union College

University of Michigan

Williams College

Some schools that take this draconian approach will consider parent appeals, but how many families even know this is a possibility? In fact, parents typically won’t even know why their aid packages seems so paltry.

 

It’s highly unlikely that parents are going to trace a poor award back to their home equity. But now everyone reading this knows this is a possibility and can appeal.

 

Schools That Limit Home Equity Hit

 

Other institutions use a home-equity cap that’s tied to the family income so it’s less likely that someone who is house rich, but cash poor will be penalized. The home-equity caps below range from 1% to 4%, which is a huge span.

 

Here are a few schools in this category:

 

Amherst College (1.2x)

Brown University (3x)

Grinnell College (1.5x)

Haverford College (1.2x)

Johns Hopkins University (3x)

Lewis and Clark College (2x)

Kenyon College (4x)

Macalester College (2x)

Middlebury College (1.2x)

Muhlenberg College (1x)

Oberlin College (1.2x)

Reed College (2x)

Rice University (2.5x)

Stanford University (1.2x)

University of Chicago (2x)

University of Southern California (2x)

Vanderbilt University (2.5x)

Vassar College (1.5x)

Wake Forest University (2x)

 

Eta: Keep in mind that your EFC is assessed every yr, so that $20,000 increase in EFC due to home equity is approximately $80,000 more or less depending on what happens to your home's value and your equity. Edited March 15, 2017 by 8FillTheHeart

[Arcadia]

The problem with judging this way is that not all schools use the CSS the same way. Some schools do not count home equity. Some do and at different percentages. Lynn's The College Solution blog is an excellent place to first start researching how college formulas determine parental contribution.

 

Here is a great starting point: http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

Thanks. The spreadsheet at your link is useful to get an overview.

 

Our home equity is currently lower than our AGI so we would have to research merit aid that is not needs based. If I didn't key in wrongly on more than a handful of net price calculators for commuter colleges including state universities, our EFC is slightly higher than COA for even Stanford just based on W2, and I left out the amount in our "emergency savings" bank account.

 

What I do not understand is that when I try the net price calculators assuming my oldest is a college freshman and my younger is applying to college, the numbers don't move much even though our EFC << 2*COA. My kids are a year apart and I did not input any bank savings amount.

[Kathy in Richmond]

The listing above is a good starting point, but please research every college you're interested in for updates. Things change!

 

For example, MIT no longer considers home equity in determining financial aid (see bottom of page).

 

 

 

 

[8filltheheart]

Thanks. The spreadsheet at your link is useful to get an overview.

 

Our home equity is currently lower than our AGI so we would have to research merit aid that is not needs based. If I didn't key in wrongly on more than a handful of net price calculators for commuter colleges including state universities, our EFC is slightly higher than COA for even Stanford just based on W2, and I left out the amount in our "emergency savings" bank account.

 

What I do not understand is that when I try the net price calculators assuming my oldest is a college freshman and my younger is applying to college, the numbers don't move much even though our EFC << 2*COA. My kids are a year apart and I did not input any bank savings amount.

FA is confusing bc every school has its own calculations. By far, most universities to not meet need. There are only about 70 meets need schools in the country. Most state universities do not meet need. A typical state university simply administers Pell grants and federal student loans. Some offer need based merit; some offer non-need based merit; some might offer institutional grants.

 

If you have home equity, contribute to retirement accts, etc, it is really apples and oranges to compare FAFSA EFC and a CSS Profile EFC. Once you hit your maximum in protected assets, your assets will be assessed at over 5%. You cannot exclude your emergency funds. A state school might end up being higher cost simply bc they don't meet need, but it could also be that the NPC on the website did not ask enough detailed information and yielded junk results. Not all NPCs are equal. If they don't ask a lot of nitty gritty details, then the results are probably less accurate than the ones that do.

 

In terms of more than 1 child in college at a time, again it is going to depend on the school. Even the most generous schools typically only split 60-60 and not 50-50.

 

Unfortunately, it is impossible to predict what it will look like when your kids are freshman bc FA changes so frequently as Kathy's link about MIT points out. The article I posted is from 2014. This yr's prior-prior is another example.

 

You might find this article helpful: https://www.forbes.com/sites/troyonink/2017/01/08/2017-guide-to-college-financial-aid-the-fafsa-and-css-profile/#6d8f118d4cd4

 

ETA: I am not sure what you meant by your comment about equity and AGI. Are you assuming that if equity is less than AGI that it is not incorporated into your parental contribution?

Edited March 15, 2017 by 8FillTheHeart

[Arcadia]

If you have home equity, contribute to retirement accts, etc, it is really apples and oranges to compare FAFSA EFC and a CSS Profile EFC. Once you hit your maximum in protected assets, your assets will be assessed at over 5%. You cannot exclude your emergency funds.

 

ETA: I am not sure what you meant by your comment about equity and AGI. Are you assuming that if equity is less than AGI that it is not incorporated into your parental contribution?

I was excluding all bank accounts for simplicity when getting estimates for EFC since our EFC is already above $60k without adding in all cash assets. The estimated EFC are higher when I use the same net price calculators with all cash assets in.

 

I misread about the home equity part. It would raise our EFC by $2k per year assuming home prices here stop climbing.

[8filltheheart]

This article will give a simpler explanation on home equity: https://collegeselectionstrategy.com/how-to-calculate-home-equity-for-financial-aid/

[Alessandra]

My kids are younger than yours but we relocated to the states in 2005 so totally foreign to the education system here. I did ran the net price calculator for Stanford and Harvard while doing my efile of tax and it was as painful as filing tax in terms of information to key in.

 

CSS example from U of Norte Dame from page 35. https://admissions.nd.edu/assets/190116/2016_fafsa_profile_webinar.pdf

We are actually hit hard by Page 53 as our home "value" has gone up by $160k going by lowest recent (past 2 years) sale prices of identical floor plan in my condo complex, and our mortgage is negligible (and likely paid up by then). Our home value did went down by $130k when the property market crashed. However it is hard to predict if it would be property boom or bust when my firstborn apply for college. Our emergency savings is also on the higher side because of our high COL but I assume college would expect us to use that for tuition instead of leaving it untouched.

 

2014-15 CollegeBoard CSS paper version http://www.lehigh.edu/~infao/forms/14_15/2014-15_CSS_Early_Applicaiton.pdf

Many, many thanks for these. When you do the online ones, do you get to see what is being calculated before submitting? For example, in TurboTax, the program gives you a running total of taxes owed.

 

And -- I noticed both forms asked for unreimbursed medical expenses. Is insurance included here, or did I just miss the insurance question. Insurance is.HUGE expense.

[Alessandra]

The problem with judging this way is that not all schools use the CSS the same way. Some schools do not count home equity. Some do and at different percentages. Lynn's The College Solution blog is an excellent place to first start researching how college formulas determine parental contribution.

 

Here is a great starting point: http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

 

Eta: Keep in mind that your EFC is assessed every yr, so that $20,000 increase in EFC due to home equity is approximately $80,000 more or less depending on what happens to your home's value and your equity.

Thank you. That blog is something I will spend time on. Looks so helpful.

[...................]

We know people with big mortgages, (expensive area) and 3 kids in college at the same time, including a set of twins. she's an eye Doctor and businessman...making good  money...

 

Despite financial stability, savings, excellent jobs, and a big salary, They couldn't meet the out of pocket requirements (EFC) for their girls and had to take out some parent loans, ---and their girls won significant scholarships and all chose the least expensive flagship state universities (despite being accepted to Cornell, etc.) because they just couldn't make it work.  But the financial aid powers to be expected them to pay literally thousands of dollars out of pocket for each girl, and wouldn't give them any more student loans because they had "too much assets" ...THEY LITERALLY told them to sell their house (and live where?)

 

You are absolutely, abysmally penalized for looking wealthy.  If you have retirement savings, they count that against you.  If you have a house, they will literally say, "Sell that because it is an asset and gets counted against you"....basically yes  not only is it "the poorer the better" but it is also actively hurting middle and upper middle class kids.  

 

BUT all that said, private universities are famous for trying to make up the difference and make it possible for you, if they want your student.  So you should ALWAYS apply, and see what happens, to any university you are interested in, since you never know.

 

 

[8filltheheart]

We know people with big mortgages, (expensive area) and 3 kids in college at the same time, including a set of twins. she's an eye Doctor and businessman...making good money...

 

Despite financial stability, savings, excellent jobs, and a big salary, They couldn't meet the out of pocket requirements (EFC) for their girls and had to take out some parent loans, ---and their girls won significant scholarships and all chose the least expensive flagship state universities (despite being accepted to Cornell, etc.) because they just couldn't make it work. But the financial aid powers to be expected them to pay literally thousands of dollars out of pocket for each girl, and wouldn't give them any more student loans because they had "too much assets" ...THEY LITERALLY told them to sell their house (and live where?)

 

You are absolutely, abysmally penalized for looking wealthy. If you have retirement savings, they count that against you. If you have a house, they will literally say, "Sell that because it is an asset and gets counted against you"....basically yes not only is it "the poorer the better" but it is also actively hurting middle and upper middle class kids.

 

BUT all that said, private universities are famous for trying to make up the difference and make it possible for you, if they want your student. So you should ALWAYS apply, and see what happens, to any university you are interested in, since you never know.

In terms of the bolded, I strongly disagree. Being poor is never better. Admission to tippy top schools is insanely competitive. 70 schools out of the thousands in the country meet need. At those select few that meet need, the poor might receive more institutional support, but the odds of admission are low, and the vast majority of poor end up not being able to afford to attend their instate flagship b/c they don't meet need. A family with a dr and businessman made life choices. If their choices mean that they can't afford to pay for a tippy top school, then their kids still have the ability to attend a less expensive college. Tippy top schools are not a right. If you can't afford to attend, such is life. (We live there, bc we made the life choice of having 8 kids and homeschool. It is what it is. I wouldn't change my life choices for anything. My kids do still have the opportunity to attend college anyway. That is far removed from the dismal k12 education and limited college choices and other struggles that the poor face daily.)

 

In terms of the red, I also disagree. They are not famous for making up the difference and making it possible for you if they want your student. Run the NPC. If it is a calculator that asks a lot of questions and your finances are fairly straight forward (no non-custodial parent, no small business, no rental properties, etc which all complicate FA), your estimated familial contribution is going to be close to what is calculated. Most meet need schools do not offer merit scholarships and it is all need based aid. There might be some preferential packaging amg some schools, but it is a fallacy that they make things work for students they really want. Most meets need schools are pretty inflexible about that parental contribution. If the NPC shows an amt that is completely out of your realm of being able to afford, it is NOT worthy your time applying b/c it will simply be an application to an unaffordable option.

Edited March 15, 2017 by 8FillTheHeart

[teachermom2834]

I'm with 8 on this. I think there is a lot of info out there about what kind of aid students get at various schools, etc. We were not surprised by any of our financial aid packages. They all came in close to what the NPC predicted. Ds applied to a couple private schools where he was in the top 5% of students stats wise and they did not give any extra aid beyond standard merit aid. I have not, IRL, seen this example of private schools giving far more aid than NPC would predict.

 

There is a very sweet spot for a very small number of students. Those are the very high stat students with very low EFCs. Those students can get great deals at the highly competitive schools. I think this is a very small percentage of students.

 

There are tons of very high stat students applying to college. Universities do not need to dump buckets of money on kids to fill their classes.

Edited March 16, 2017 by teachermom2834