Financial aid is a scam

[Anonymous]

Anonymous wrote:I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?

I know the answers. It depends.

1. It's school by school. Some do not consider equity in primary home at all, some cap it as a % of income so the families in rapidly gentrified neighborhoods do not get dinged, some count it all. You have to ask each school or try to back it out with their net cost calculator. FAFSA does not consider equity, but many private and some public schools request information in addition to FAFSA.
2. Similar as 1, except more schools disregard retirement savings. Again, FAFSA doesn't countit at all, but schools do ask about it, and some of them, if they see large sums in those accounts, assume you have more ability to pay since you don't need to save for retirement as much. Your age might matter here too; if you are in mid-40s, you get dinged more for a large 401K than if you are in your mid-60s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?

I know the answers. It depends.

1. It's school by school. Some do not consider equity in primary home at all, some cap it as a % of income so the families in rapidly gentrified neighborhoods do not get dinged, some count it all. You have to ask each school or try to back it out with their net cost calculator. FAFSA does not consider equity, but many private and some public schools request information in addition to FAFSA.
2. Similar as 1, except more schools disregard retirement savings. Again, FAFSA doesn't countit at all, but schools do ask about it, and some of them, if they see large sums in those accounts, assume you have more ability to pay since you don't need to save for retirement as much. Your age might matter here too; if you are in mid-40s, you get dinged more for a large 401K than if you are in your mid-60s.

PP whose kids' applied to 20+ schools. This is another huge reason why you need to apply broadly as hell. This info isn't terribly clear fwiw in a lot of colleges' info.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?

I know the answers. It depends.

1. It's school by school. Some do not consider equity in primary home at all, some cap it as a % of income so the families in rapidly gentrified neighborhoods do not get dinged, some count it all. You have to ask each school or try to back it out with their net cost calculator. FAFSA does not consider equity, but many private and some public schools request information in addition to FAFSA.
2. Similar as 1, except more schools disregard retirement savings. Again, FAFSA doesn't countit at all, but schools do ask about it, and some of them, if they see large sums in those accounts, assume you have more ability to pay since you don't need to save for retirement as much. Your age might matter here too; if you are in mid-40s, you get dinged more for a large 401K than if you are in your mid-60s.

PP whose kids' applied to 20+ schools. This is another huge reason why you need to apply broadly as hell. This info isn't terribly clear fwiw in a lot of colleges' info.

PP who provided the responses. Colleges have an enormous interest in keeping this information obscure. They do not disclose it for a reason.

Another thing most people do not realize is that besides FAFSA, there is no single formula, and many schools do not pay attention to FAFSA. Your financial situation us assessed "holistically", meaning that when FA office thinks "income", it's not necessarily what is shown on your tax return, especially if you are self employed. Some of your deductions, like a car lease, might be added in. If you have a more straightforward situation - 2 parents married to each other, W2 income, 1 RE property that's your primary home, it's easier to predict what you'll pay. But if there is a divorce or a business, all bets are off.

[Anonymous]

It is surprising to people who aren’t yet aware that college pricing works like everything else. It is not sacred. There are many colleges at different price points and you should attend one you can afford. I think that the point of the article is to enlighten people that they need to shop around and shouldn’t assume anything about either the final cost (like the fake price tag at Ursinus) or financial aid (like the fact that the girl who had need didn’t get anything from Penn State or NYU).

You can research each school before applying (run the NPC and look at the common data set for average merit awards) but no guarantees on how much you will get. Penn State and NYU though are known for not giving aid.

[Anonymous]

Anonymous wrote:I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?

There are two key forms related to financial aid

FAFSA: required by all schools, does not consider most assets
CSS Profile: required by many private colleges and universities does require reporting of assets (with some limits on what can be considered)

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?

I know the answers. It depends.

1. It's school by school. Some do not consider equity in primary home at all, some cap it as a % of income so the families in rapidly gentrified neighborhoods do not get dinged, some count it all. You have to ask each school or try to back it out with their net cost calculator. FAFSA does not consider equity, but many private and some public schools request information in addition to FAFSA.
2. Similar as 1, except more schools disregard retirement savings. Again, FAFSA doesn't countit at all, but schools do ask about it, and some of them, if they see large sums in those accounts, assume you have more ability to pay since you don't need to save for retirement as much. Your age might matter here too; if you are in mid-40s, you get dinged more for a large 401K than if you are in your mid-60s.

Please note that MANY (probably most) schools use the FAFSA and that's it -- no supplemental financial questions -- and it's NOT difficult to determine which schools fall into that category (e.g. simply check out their net price calculators). Similarly, a quick Google search will reveal which schools use the CSS (often very selective schools that DCUMers like) which does ask about home equity, etc.

[Anonymous]

So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

[Anonymous]

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

This is correct. People who choose to "live large" in having large monthly expenses do NOT benefit under the FAFSA in the calculation of their EFC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

This is correct. People who choose to "live large" in having large monthly expenses do NOT benefit under the FAFSA in the calculation of their EFC.

Funny how the people who are so sure the system is being gamed, are always the ones who can't be bothered to look at a formula.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

This is correct. People who choose to "live large" in having large monthly expenses do NOT benefit under the FAFSA in the calculation of their EFC.

They don't have savings that they are then expected to liquidate

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

This is correct. People who choose to "live large" in having large monthly expenses do NOT benefit under the FAFSA in the calculation of their EFC.

They don't have savings that they are then expected to liquidate

Spending 6% of savings is not liquidating. The point is 47% of current income will be added to EFC no matter how they typically squander it.

[Anonymous]

FFS people!

"I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?"


EFC is what's produced when you fill out FAFSA. FAFSA does NOT look at primary home or retirement savings. There is no conflict. It's just that lots of people in this forum like to give out inaccurate info. But note that schools are not required to only go by what the FAFSA formula tells them. They can ask supplemental questions. And some schools (only about 200) will make you fill out CSS.

--- "But there are a few important assets that the FAFSA ignores: assets inside retirement accounts, home equity value, and the value of any small businesses that the family owns and controls.

That’s not the case with the longer, more complicated CSS profile. With 241 questions to the FASFA’s 108, the CSS profile is a much more in-depth look at a family’s finances, and part of that look is how much equity you have in your home.

About 200 U.S. colleges — generally schools that are both selective and expensive — use the CSS profile in addition to the FAFSA. But unlike the FAFSA and its set percentages, there is no definitive amount of home equity that the CSS thinks your family should contribute toward college expenses." --- https://money.com/college-financial-aid-home-equity/

[Anonymous]

Anonymous wrote:FFS people!

"I'm seeing conflicting info as to whether: (1) equity in primary home, and (2) retirement savings such as IRAs and 401Ks raise your EFC.

Does anyone know the answer?? And whether the # of kids in a family is considered?"


EFC is what's produced when you fill out FAFSA. FAFSA does NOT look at primary home or retirement savings. There is no conflict. It's just that lots of people in this forum like to give out inaccurate info. But note that schools are not required to only go by what the FAFSA formula tells them. They can ask supplemental questions. And some schools (only about 200) will make you fill out CSS.

--- "But there are a few important assets that the FAFSA ignores: assets inside retirement accounts, home equity value, and the value of any small businesses that the family owns and controls.

That’s not the case with the longer, more complicated CSS profile. With 241 questions to the FASFA’s 108, the CSS profile is a much more in-depth look at a family’s finances, and part of that look is how much equity you have in your home.

About 200 U.S. colleges — generally schools that are both selective and expensive — use the CSS profile in addition to the FAFSA. But unlike the FAFSA and its set percentages, there is no definitive amount of home equity that the CSS thinks your family should contribute toward college expenses." --- https://money.com/college-financial-aid-home-equity/

Did you answer your own question? It’s no. No home equity. No retirement accounts. For the FAFSA, which is what gives you your EFC. The FAFSA is completely transparent, you can work through a paper form if you want to know exactly how it works.

The CSS is not the FAFSA, and does not match the FAFSA numbers. Still when it comes to retirement accounts, the main caveat is that anything being saved during the year in question is counted as income. You can’t put current income into an account to shield it. Same goes for medical savings accounts, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So income factors into this highly, but what about expenses? Lets say your income is substantial, your house is worth 1 mil or more, but you have little equity in the house and a high mortgage payment. You also have car payments for expensive, newer model cars. And a lake or beach house (also mortgaged). Compare that to a family with the same income with a modest house that is paid off, so no mortgage payment, and no car payments, either, because they have older cars that are also paid off. The first family demonstrates more need on paper so likely has less EFC but lives much "larger" by choice than family #2.

Just look at the FAFSA formulas, it does not ask about monthly expenses, so, no. For CSS the questions re real estate are purchase price and date, current value, monthly payment. How the school processes that is their prerogative. Some schools don’t use it, some have extra info they collect.

My favorite is schools with a supplemental form, “What do you expect to pay?” One DC got one of these from Smith, the other from Macalester.

This is correct. People who choose to "live large" in having large monthly expenses do NOT benefit under the FAFSA in the calculation of their EFC.

Actually, they would, wouldn't they, if they are not saving for college and have no money available in accessible accounts? Whereas Family B may have saved hundreds of thousands for college and is expected to use it all, Family A may qualify for financial aid.