OT: Looking at College Financial Aid Calculations. How close are they?

[maxaroni]

Living it now, DD is 1st in her class as been accepted so far at 3 of the little Ivies. One has offered an amazing package, It will be as cheap to go there as our state school. The rest of them we are looking at 25 to 30 thousand a year. Still waiting on U Penn and Harvard. Seems all her dad and I say to each other lately is what's the financial package? Can't wait for May 1st so it's all over but the crying ( and paying)

A coworker is in the same boat. They are waiting on Columbia and U Penn. Nothing like waiting for the very end.

 

[tvguy]

I really think people need to realize that successful college planning starts not when a child is born, but before you decide to start a family. It has to be part of your financial picture.
And since colleges are still turning away students, enough people are finding ways to pay the tuition bill to fill all the classrooms.
Both my kids are done with college, the total cost for college came to 3 years of gross pay for DW and I.

Here is what worked for us:
1) We decided was we would not start a family until we had purchased a house.
2) We bought a house that we could afford to pay off in 15 years. The equity in the home would be our backup savings for tution.
3) We waited 4 years after buying the house to start a family.
4) We saved 5% of our gross income in a college fund every year.
5) We stayed in middle of the road investments.
6) We lived frugally. Hence the family car I bought when my oldest was 6 months old, is still our family car 27 years later.
7) We used Parent loans to bridge financial needs.

 

[HeatherC]

TVGUY makes some great points. But I also think people need to remember that a kid does not have to go to a school that costs upwards of$30-50,000 a year to get a Bachelors degree.

I think too many people just jump on the college bandwagon without thinking through the financial ramifications of it. If family can afford that, terrific! But I know a lot of families who have saved...just not enough and think they must now take out a ton of loans they really can't afford so their kids can " get the college experience". The cost is truly astounding and I think people really should look long and hard about the financial aspect of it.

 

[pklein09]

DD19 went to community college. I filled out the FAFSA for her last year just so I knew what to expect when I needed to fill it out for this year for DS17. Our family contribution for her was somewhere in the $47K range. I nearly fell off my chair. It didn't matter because it was community college and we could pull that money from savings. Fast forward to this year and DS. He's attending a college in MN, did early decision, and we knew it was going to hurt. When I did the FAFSA this year, it said our family contribution for him was in the $26K range. Wow...much better than we thought. Well, not so fast. His college uses the CSS Profile. They saw that DD19 was going to county college and took the amount allocated for her that wasn't being used and applied it to DS17's package. Our contribution went up to about $40K. Lovely. I thought the CSS profile would help because they consider property taxes (we're in NJ, so not an insignificant amount of money there) among other things. On the contrary, it seems to have hurt us.

 

[JanaDee]

I really think people need to realize that successful college planning starts not when a child is born, but before you decide to start a family. It has to be part of your financial picture.
And since colleges are still turning away students, enough people are finding ways to pay the tuition bill to fill all the classrooms.
Both my kids are done with college, the total cost for college came to 3 years of gross pay for DW and I.

Here is what worked for us:
1) We decided was we would not start a family until we had purchased a house.
2) We bought a house that we could afford to pay off in 15 years. The equity in the home would be our backup savings for tution.
3) We waited 4 years after buying the house to start a family.
4) We saved 5% of our gross income in a college fund every year.
5) We stayed in middle of the road investments.
6) We lived frugally. Hence the family car I bought when my oldest was 6 months old, is still our family car 27 years later.
7) We used Parent loans to bridge financial needs.

Good for you. Oh and

 

[zoemurr]

I really think people need to realize that successful college planning starts not when a child is born, but before you decide to start a family. It has to be part of your financial picture.
And since colleges are still turning away students, enough people are finding ways to pay the tuition bill to fill all the classrooms.
Both my kids are done with college, the total cost for college came to 3 years of gross pay for DW and I.

Here is what worked for us:
1) We decided was we would not start a family until we had purchased a house.
2) We bought a house that we could afford to pay off in 15 years. The equity in the home would be our backup savings for tution.
3) We waited 4 years after buying the house to start a family.
4) We saved 5% of our gross income in a college fund every year.
5) We stayed in middle of the road investments.
6) We lived frugally. Hence the family car I bought when my oldest was 6 months old, is still our family car 27 years later.
7) We used Parent loans to bridge financial needs.

This is pretty much what I was thinking. Colleges are not calculating 40% of your income. They are assuming that you have been planning and saving for this for 18 years.

 

[MichelleB]

Well in hindsight that all sounds great. However, some of us weren't as "smart" about the college saving and are now trying to figure out what to do. We have saved for the kids but not all along and not nearly enough.

 

[DisneyPeachNJ]

Hi,
Background: my son is a junior so we can not fill out the "official" financial aid forms until next year. I was playing around with a financial aid calculator on a college site. It came back as our family contribution would be 41% of our UNTAXED income. If this was correct, those of us at home will not be eating.

Is 40% of your income normal?

Thanks for any help.

Michelle

Based on our expected contribution, we should stop paying rent or my student loans to pay tuition. Sadly, the school is not realistic and do not take into account your rent/mortgage or any other debts you may have.

Everyone goes through this- you're not alone!

 

[barkley]

Unfortunately, outside scholarships do not help at all for many schools because they deduct them from the amount they are going to give.

Ex. College financial aid package includes a $20,000 institutional grant. Student receives $5,000 in outside scholarships. College then reduces their grant to $15,000 so the student still only receives $20,000.

The scholarships do nothing for the student (who put in countless hours researching and writing essays)-- they still wind up having to pay the same amount. Instead, the college receives the financial reward for the student's effort.

This is not the case for all schools, but it's something worth finding out about because you will need to factor in outside scholarships when comparing the financial aid award information the schools send after the student has been accepted.

it IS important to research how different schools administer financial aid. some do it as you've explained while others (like where our dd attends) deducts any outside scholarships FIRST from the family efc then any loans the student/parent has been offered before they count them against institutional grants.

if a parent (and student) familiarizes themselves with their college's financial aid formulas and procedures (and I've found the college offices to be very forthcoming with the information w/a phone call) then if the kiddo gets an outside scholarship they know if it's better to accept it in full or ask if they can either defer it partially or in full for the following school year (when the student might not get as much from their institution).

one of the big surprises allot of students in our area find out about too late is when they look at their grants/scholarships and choose to become commuter students to save money. the expected cost of attendance at colleges is generally tiered-so the cost is considered higher if a kid is living on their own or in the dorms. deciding to live at home and commute can reduce what a college considers the cost of attendance by 25-40% which results in the student having any institution grants (or if they are eligible-pell and state need grants) drastically reduced.

 

[mom2AidanAndEli]

I really think people need to realize that successful college planning starts not when a child is born, but before you decide to start a family. It has to be part of your financial picture.
And since colleges are still turning away students, enough people are finding ways to pay the tuition bill to fill all the classrooms.
Both my kids are done with college, the total cost for college came to 3 years of gross pay for DW and I.

Here is what worked for us:
1) We decided was we would not start a family until we had purchased a house.
2) We bought a house that we could afford to pay off in 15 years. The equity in the home would be our backup savings for tution.
3) We waited 4 years after buying the house to start a family.
4) We saved 5% of our gross income in a college fund every year.
5) We stayed in middle of the road investments.
6) We lived frugally. Hence the family car I bought when my oldest was 6 months old, is still our family car 27 years later.
7) We used Parent loans to bridge financial needs.

Must be nice to live a perfect life like that. But it's not realistic for most people. We do the best we can. We try to save, but also enjoy life as it happens. We plan, but know those plans fly out the window in an instant when life happens.

 

[barkley]

Must be nice to live a perfect life like that. But it's not realistic for most people. We do the best we can. We try to save, but also enjoy life as it happens. We plan, but know those plans fly out the window in an instant when life happens.

absolutely-and that "instant" happened for allot of people when the economy took a dump. I've got plenty of friends who 'did it right', lived and still live frugal lifestyles and started saving for retirement and their kid's education early on but even if they were lucky enough to retain their jobs in recent years many have had to endure wage cuts, unpaid furloughs and increased contributions to health care that have them netting less than they did 15 years ago. even those that didn't lose on their retirement investments are looking at retirement 12 years down the road, crunching the numbers and realizing that what they anticipated needing for the simplest of lifestyles is much more than any of their financial advisors anticipated.

 

[lost*in*cyberspace]

Unfortunately, outside scholarships do not help at all for many schools because they deduct them from the amount they are going to give.

Ex. College financial aid package includes a $20,000 institutional grant. Student receives $5,000 in outside scholarships. College then reduces their grant to $15,000 so the student still only receives $20,000.

The scholarships do nothing for the student (who put in countless hours researching and writing essays)-- they still wind up having to pay the same amount. Instead, the college receives the financial reward for the student's effort.

This is not the case for all schools, but it's something worth finding out about because you will need to factor in outside scholarships when comparing the financial aid award information the schools send after the student has been accepted.

You are absolutely correct. Parents and their kids need to take this into consideration when filling out all those scholarship applications. Sometimes it is a waste of time.

 

[tvguy]

Must be nice to live a perfect life like that. But it's not realistic for most people. We do the best we can. We try to save, but also enjoy life as it happens. We plan, but know those plans fly out the window in an instant when life happens.

You missed the big point. Colleges are still turning away thousands of students, THEY aren't going be making changes because it isn't impacting them. YOU have to make the changes.

And for example, doing without HBO at $15 a month for 18 years saved us $3,240......the cost of one semester at California State Universities.

So little savings, over the almost 2 decades you have to save with a child, really add up.

 

[maxaroni]

You missed the big point. Colleges are still turning away thousands of students, THEY aren't going be making changes because it isn't impacting them. YOU have to make the changes.

And for example, doing without HBO at $15 a month for 18 years saved us $3,240......the cost of one semester at California State Universities.

So little savings, over the almost 2 decades you have to save with a child, really add up.

We just paid our last tuition payment for DS. However, to dorm at a NJ state school is approx $24,000 - $26,000. That's everything but books. Therefore, for many that is a tough nut to crack especially with the economic downturn and life.

 

[MrsPete]

Yes, you have to realize that the financial aid people expect that you've known for 18 years that college is coming, and they aren't interested in whether "life happened" or not. They aren't expecting you to pay 40% of your current income; they're expecting you to reach into savings, which were accumulated a bit here and a bit there over 18 years.

The realistic picture is that most of our kids aren't going to get scholarships, and since the universities can fill all their seats, they aren't going to be sympathetic to your plight. You can wail and gnash your teeth about the unfairness, but the reality is that YOU'RE going to have to figure out what YOU can do; that may mean a less expensive school, it may mean living at home, it may mean military service, it may mean looking for a job on campus that'll provide free housing, it may mean borrowing. Harsh? Yeah, probably, but also realistic.

We started saving before our kids were conceived, and as we earned more, we put more aside. Don't make the mistake of thinking that we didn't have emergencies come up -- like most people, we did. But we saved. We said NO an awful lot -- to ourselves and to our kids. We're upper-middle class earners, but if you walked into our house, you'd think we were lower-middle income; we've always lived below our means. As a result, we have found paying for college to be easier than expected.

 

[georgina]

To answer the OP's question, the college web site net price calculators are generally considered pretty accurate, unless there is a family business involved, or a situation with a non-custodial parent.

 

[tvguy]

Yes, you have to realize that the financial aid people expect that you've known for 18 years that college is coming, and they aren't interested in whether "life happened" or not. They aren't expecting you to pay 40% of your current income; they're expecting you to reach into savings, which were accumulated a bit here and a bit there over 18 years.

The realistic picture is that most of our kids aren't going to get scholarships, and since the universities can fill all their seats, they aren't going to be sympathetic to your plight. You can wail and gnash your teeth about the unfairness, but the reality is that YOU'RE going to have to figure out what YOU can do; that may mean a less expensive school, it may mean living at home, it may mean military service, it may mean looking for a job on campus that'll provide free housing, it may mean borrowing. Harsh? Yeah, probably, but also realistic.

We started saving before our kids were conceived, and as we earned more, we put more aside. Don't make the mistake of thinking that we didn't have emergencies come up -- like most people, we did. But we saved. We said NO an awful lot -- to ourselves and to our kids. We're upper-middle class earners, but if you walked into our house, you'd think we were lower-middle income; we've always lived below our means. As a result, we have found paying for college to be easier than expected.

And, unless you are very near full Social Security Retirement age, (not the early retirement age some pension plans allow) any money you are taking out your paycheck to put in a 401k/IRA or similar federal recognized retirement plan is considered to be available to pay for college. No what you have in the account prior to your child starting college, what you are having taken out of your check or regularly deposit.

 

[crisi]

You missed the big point. Colleges are still turning away thousands of students, THEY aren't going be making changes because it isn't impacting them. YOU have to make the changes.

And for example, doing without HBO at $15 a month for 18 years saved us $3,240......the cost of one semester at California State Universities.

So little savings, over the almost 2 decades you have to save with a child, really add up.

And the government has other things to do with their money. Although some states still have great deals - you can move to North Dakota, a year's residency and tuition at UND is $9k - plus room and board. Unemployment is low, too.

 

[lost*in*cyberspace]

And the government has other things to do with their money. Although some states still have great deals - you can move to North Dakota, a year's residency and tuition at UND is $9k - plus room and board. Unemployment is low, too.

The only problem is, you have to actually live in North Dakota,

 

[MomToOne]

DD is a Freshman in (a college prep) HS. We have 2 state colleges within daily commute distance - one less than 5 miles from the HS. There are also 2 community colleges within 10 miles. I've monitored the tuition costs of all of them, as well as tuition+room/board costs for other universities in the state, for many years and have discussed with DD the fact that I can fully pay for her to go to one of the local 4 year colleges while living at home (having saved and planned for years based on my early research - even as a single parent with a decidely middle-class income and the same typical "emergencies" as most families), or to start at a community college then transfer to a school where she has to board. If she wants to follow a different plan, she'll have to figure out how to pay the extra - hopefully through jobs, not student loans. We've talked about student loans, and she's well aware already of the pitfalls of them. And other than keeping tuition rates somewhat in the reasonable range, I don't expect taxpayers to help pay her way. I'm not sure why people insist on thinking of the family contribution in terms of a percentage of one years income - your child wasn't born one day, then immediately going to college the next - this has been 18 years in coming, you should think of your family contribution in terms of your income over all those 18 years. (Yes, I have my flame suit on!)

In one of DDs classes earlier this year, each kid had to do a presentation on the universities they were considering going to. DD was the only child that had one of the local universities in her presentation - all the other kids were more worried about going to "well known" or "party" schools - just so they could brag. And I know most of their parents can't afford that - student loans will be heavily involved. I'm sorry, but you have got to wonder just what some parents are discussing with their kids. When I tell other parents that our plan is for DD to live at home during college, they almost always make some sort of comment about me being too protective, or not letting my child experience the "freedom of college", or they just look down on the local colleges because they aren't ivy league or similar. I find that interesting - living at home doesn't mean locked in her room for goodness sake! As far as I'm concerned, she can come and go as she pleases from the house at that point. And for most careers, what school you went to won't matter a lick 5 years after you graduate. To me, it's all about getting my child a college degree and then sending her out to start her adult life debt-free. That's more important than a few years of fake "freedom", after which they may well end up back at home with Mom and Dad because of the loan burden!! I'm just amazed that more parents don't seem to think that way. I know not everyone lives within commute distance of a college, but all of the parents I deal with do and I am just amazed at their thinking (or lack thereof).

And don't get me started on DDs teachers that bad-mouth the community colleges, which offer the same general-ed courses at a fraction of the cost of the 4-year colleges...