Reply to FA Question: Inherited house, now worth $1M, now what?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]It's hilarious that people here are telling the OP she doesn't deserve financial aid. I think most of the NESCAC schools will disagree. Clearly few people here understand how financial aid works.

No matter what form the school uses, financial aid is based predominantly on family income and savings/investments that are in the **student's** name. Parent savings, investments, and real estate count much, much less.

OP, have you run the net price calculator on the websites of the schools your DD is interested in? I pulled up Middlebury's and plugged in some dummy numbers based on the info you provided: a HHI of $104k, a home value of $950k, mortgage of $0, and 4 children, with $10k in savings. Middlebury's net price calculator spit out the following:

Total cost in first year: $61,360

Expected family contribution: $11,358

Total financial need: $50,002

Estimated financial aid package: $50,002
-Middlebury scholarship: $45,202
-Student loan: $3,000
-Campus job: $1,800

OP, please run the net price calculators yourself. Likely your DD will qualify for significant financial aid at schools that pledge to meet full need. No college really expects you to sell the family home in order to pay for college.
[/quote]

This just blows me away.  I did it, and granted we have a good income (250K per year), but I was curious.  [b]And they are saying that our expected famiy contribution is $59K per year.  How on earth do they figure that?[/b]!  (FWIW we do have a well funded 529 account, I'm just making this observation -- private college is impossible for many people who have decent incomes.)[/quote]

College is not an unexpected expense.  Colleges do not set the parental contribution based on an ability to pay out of ones paycheck.  Parents are expected to save ahead of time.  It is the same for retirement or saving for a downpayment on a house.  There are long term saving issues.  [/quote]

This is wrong. Financial aid is based primarily on income, not savings.[/quote]

10% of parental saving and 35% of student's saving is considered to be okay for [i]each year[/i].  Just because income is primary, doesn't mean the savings isn't a significant factor. [/quote]

I don't think this is correct. Do you have a source for this info?

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

According to this link, parental assets not in retirement accounts (checking, savings, money market, investment real estate, stocks, bonds, mutual funds, and 529 plans) are valued after subtracting an allowance of $30k-$50k. Parents are expected to use up to 5.6% of the net value of these assets. Assets in the students name don't get the savings allowance; students are expected to use 20-25% per year of these. (Note that most 529s are considered assets of the parent who is funding them, not the student.)

As your income rises, savings become more and more irrelevant. A family in VA with a HHI of $150k and $0 savings will have an EFC of about $19,600 at Harvard. If that same family has $200k in savings, the EFC rises to $24,600. IOW, the penalty for saving $200k will be less than $20k over 4 years. And of course, at the end, after paying for college you would still have $100k left over in the savings account, whereas the family with $0 savings might have taken on tens of thousands of dollars in debt to pay its slightly lower EFC. So is saving discouraged under these formulas? I don't think so but ymmv.[/quote]

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