College Financial Aid questions

[Cindyluwho]

I have a few questions about financial aid for college and I know I've seen folks talking about it on here before. I tried the "search" to no avail so here goes:

1. Does the amount of money the student has in the bank count against them?

2. Or is it just how much $$ the family has in general and it doesn't matter how much is actually in the student's name?

A friend told me it would be a good idea to "drain" DD's bank account before she goes applies to colleges. We will be giving her our car within the next year and I'm thinking we could make her pay for it with her $$ then put the $$ in a CD until she graduates High School. This is all so confusing!!

 

[trip]

Loads of info here......

http://talk.collegeconfidential.com/


These folks are as obsessive as DISers.

 

[happygirl]

I have a few questions about financial aid for college and I know I've seen folks talking about it on here before. I tried the "search" to no avail so here goes:

1. Does the amount of money the student has in the bank count against them?

2. Or is it just how much $$ the family has in general and it doesn't matter how much is actually in the student's name?

A friend told me it would be a good idea to "drain" DD's bank account before she goes applies to colleges. We will be giving her our car within the next year and I'm thinking we could make her pay for it with her $$ then put the $$ in a CD until she graduates High School. This is all so confusing!!

Have you filled out a FASA, They go by your tax return that what ours went by, I didn't have to give them any bank account info.

 

[Darcy03231]

After having 2 in college and another one headed there in the fall of 2010 I'm pretty familiar with this.

Any money the child has in their name will be expected to be used for college, in the first instance.

The expected family contribution is outrageous. We have two children in college and while DH and I both work and we make a good living, we are by no means rich. Last year, after filling out the FASFA for both children our expected family contribution was about $30,000.00 per child. I'd really like to know where that extra $60,000.00 a year is, because I can find it in my budget.

One thing to keep in mind when applying is that while state colleges/universities may be less expensive, private schools typically have more money to help with financial aid. When our oldest went to school he applied to both state and private colleges. When it came down to it he ended up going to a private school. Their financial aid package was amazing. Our out of pocket his first year was about $2500. The state school our out of pocket would have been much higher (as I recall it was around $15k). So even though the state school was less expensive in tuition/room& board/fees, the private school ended up being less expensive to attend because of the financial aid it offered.

 

[PatsMom]

When you fill out the FAFSA (which is the starting point for any financial aid) you report your income from your tax return. And if your chlid has income, it gets reported from their return as well. You also report your assets and the child's assets get reported separately on the same form. A higher percentage of the child's assets are considered to be available to pay college costs. So yes, there is kind of a penalty for having assets in the child's name.

But most aid (particularly at public colleges) is loans, not grants. The loan rates are not particularly favorable. The advantage to the subsidized loans is that you don't have interest start accruing while you are in school.

If your income is even in what most would consider to be the middle class range you will find that your expected family contribution is high enough that the child won't get anything but unsubsidized loans. And if you commit the further sin of having assets as well as income, the EFC is even higher. I am another one who is baffled at the amount we are expected to be able to pay!

DD is going to graduate with a bunch of loans because she can borrow to pay for college. I cannot borrow to pay for my retirement. And if I mortgage my house to pay for college (one of the more idiotic suggestions made by the financial aid people as a source of money) I will never be able to have the retirement I want! We'll help her but beyond what we already have saved and what we can squeeze out of the budget, (not counting retirement plan contributions which take precedence over college) she is on her own. I'll co-sign since her loans will be unsubsidized private loans. She does have an academic scholarship which will help.

www.savingforcollege.com has lots of great information.

 

[Cindyluwho]

Thank you all for the great advice! I just registered on the college confidential website and it has loads of good information. From what I'm seeing, we most likely will NOT be eligible for any financial aid. I'm pretty sure DD will have many scholarships, she has already been approached by several organizations as well as several colleges. DD is an odd combo of Cheerleader/Robotics Champ/Mathlete and has her own rock band. It is an interesting ride to say the least!!

 

[C.Ann]

Having worked in college financial aide offices - as well as dealing with the FAFSA forms - I can tell you that everything counts - your DD's assets as well as your own..

Glad to hear that scholarships may be an option for her..

 

[yoopermom]

Thanks, trip, for hooking me on another discussion board website

DS is an incoming freshman, and I'm already starting to "plot". I would like to see him graduate with as little $$ owed as possible.

Keep the good info coming!
Terri

 

[Cindyluwho]

Since it looks like there's no way we can get any financial aid we are just going to have to keep saving. There is no way I want her to have any loan balance owing at the end of her college years so she'll just have to work part-time like I did when I went to college, which is what I'd like her to do anyway.

I was really just trying to figure out if I should take money out of her savings to pay for her car or if we should just give it to her outright and have her pay the monthly expenses for it; gas, insurance, upkeep, etc. I will have to buy another car for myself to replace it so I could definately use the $$ from her for a down payment. She makes roughly $400 month now and $300 goes directly into savings. Egads, it's all getting more and more confusing as they get older!!!!

 

[PatsMom]

Since it looks like there's no way we can get any financial aid we are just going to have to keep saving. There is no way I want her to have any loan balance owing at the end of her college years so she'll just have to work part-time like I did when I went to college, which is what I'd like her to do anyway.

I was really just trying to figure out if I should take money out of her savings to pay for her car or if we should just give it to her outright and have her pay the monthly expenses for it; gas, insurance, upkeep, etc. I will have to buy another car for myself to replace it so I could definately use the $$ from her for a down payment. She makes roughly $400 month now and $300 goes directly into savings. Egads, it's all getting more and more confusing as they get older!!!!

When we replaced my car right before DD got her license, we gave her my car outright. She has to pay for upkeep, insurance, and gas out of her income or savings. We do help her out sometimes because her jobs are seasonal so in mud season and late fall she is unemployed while the ski area she works at switches from winter to summer stuff and vice versa. We expect her to save enough money to pay her day to day expenses while she is in college. She will need her car because she wants to keep her current job and school will be 100 miles away. But the hours are perfect for a college student - weekends only during the school year.

From a financial aid standpoint, if you're not going to get needs based aid the decision about the car doesn't really matter. It is just whatever your family is most comfortable with.

With your DD's talents, she might have a good shot a aid from a private college - they can sometimes be quite generous with their income limits if they really want to attract a particular skill set.

 

[HunnyPots]

You have absolutely nothing to lose by applying. You may be surprised. Plus, many schools require that you file the FAFSA to be eligible for their own scholarships.

 

[blissventure]

Since it looks like there's no way we can get any financial aid we are just going to have to keep saving. There is no way I want her to have any loan balance owing at the end of her college years so she'll just have to work part-time like I did when I went to college, which is what I'd like her to do anyway.

I was really just trying to figure out if I should take money out of her savings to pay for her car or if we should just give it to her outright and have her pay the monthly expenses for it; gas, insurance, upkeep, etc. I will have to buy another car for myself to replace it so I could definately use the $$ from her for a down payment. She makes roughly $400 month now and $300 goes directly into savings. Egads, it's all getting more and more confusing as they get older!!!!

I'm assuming your student is near college age. Some advice, FWIW. Depending on the school, your financial info on the FAFSA and so on, your daughter (and you) may need a few loans. That's not necessarily bad. You'll have to really look closely at the financial aid PACKAGE that the school puts together. Loans may be a part of that deal.
Working some is helpful in someways, not in others--particularly these days. Students are having a tough time getting enough hours. Where a student could count on maybe, 20 hours per week a few years ago, many aren't getting half that these days. The end result can be that the student plans for "income" that never materializes. They lose on the second count-not taking a heavy enough work load (due to planning for their job schedule). Finally, kids don't always carefully read to see prerequisites for classes. Many courses are only offered one semester or the next, or they fill up. It's not a good thing when students extend their years in college due solely to a few work hours slowing them down, or not paying attention to when their required courses are offered.
Whatever you do, keep those lines of communication open. You don't want to pay for yet another semester of school because a student was doing the "right" thing by being available for work, and they missed an opportunity to knock out another class due to conflict with their part time job schedule.
Finally, I'm a big proponent of AP classes in high school, if that's an option in your area. Both of mine started college with enough credits to be classified sophomores-finished their undergrad in 3 years. The cost of the tests is minuscule compared to what a year of college costs.
If you can eliminate paying for a year completely, that's a huge discount!
(As others have pointed out, file the FAFSA. Most schools require it to be eligible for any scholarships they may offer.)

 

[tzolkin]

Any money the child has in their name will be expected to be used for college, in the first instance.


One thing to keep in mind when applying is that while state colleges/universities may be less expensive, private schools typically have more money to help with financial aid. When our oldest went to school he applied to both state and private colleges. When it came down to it he ended up going to a private school. Their financial aid package was amazing. Our out of pocket his first year was about $2500. The state school our out of pocket would have been much higher (as I recall it was around $15k). So even though the state school was less expensive in tuition/room& board/fees, the private school ended up being less expensive to attend because of the financial aid it offered.

Exactly what I was going to post.

Whatever money is in the child's name is usually expected to go toward tuition. (So the second year after that's gone, the financial aid may be greater.)

I went to a ridiculously expensive private school. However, I paid almost nothing to go there. Many parents wouldn't let their kids apply to certain schools because they were too expensive, but I got much better financial aid than I was offered at schools that cost a fraction of what my school did. Some of the school statistics can be decieving. Many schools show that 90% of their students receive financial aid. Only a small percentage of the students at my school receive financial aid, but because everyone else is paying full price they have more money to give each of the recipients.

Although I received a great financial aid package, I still worked at least 30 hours a week while in school. I had a child and did not want my parents to pay anything toward my education. A part-time job (especially one on campus-- which should be more flexible for classes) should not harm one's education. It helped me with time management and planning. Even with multiple jobs and child, I was able to do well in all my courses and even took on a second major.

 

[blissventure]

Exactly what I was going to post.

Whatever money is in the child's name is usually expected to go toward tuition. (So the second year after that's gone, the financial aid may be greater.)

I went to a ridiculously expensive private school. However, I paid almost nothing to go there. Many parents wouldn't let their kids apply to certain schools because they were too expensive, but I got much better financial aid than I was offered at schools that cost a fraction of what my school did. Some of the school statistics can be decieving. Many schools show that 90% of their students receive financial aid. Only a small percentage of the students at my school receive financial aid, but because everyone else is paying full price they have more money to give each of the recipients.

Although I received a great financial aid package, I still worked at least 30 hours a week while in school. I had a child and did not want my parents to pay anything toward my education. A part-time job (especially one on campus-- which should be more flexible for classes) should not harm one's education. It helped me with time management and planning. Even with multiple jobs and child, I was able to do well in all my courses and even took on a second major.

You should be proud of your accomplishments. But, your situation doesn't compare with the OP's. As a parent of a child, you received (understandably) far more favorable treatment under the FAFSA rules. Students that are over 24, or are parents, or are married, or are prior military service file on their own. Students under 24 (that don't fall within the above exclusions) file under their parents. It's just how the rules are written.

 

[Cindyluwho]

You should be proud of your accomplishments. But, your situation doesn't compare with the OP's. As a parent of a child, you received (understandably) far more favorable treatment under the FAFSA rules. Students that are over 24, or are parents, or are married, or are prior military service file on their own. Students under 24 (that don't fall within the above exclusions) file under their parents. It's just how the rules are written.

But from what I'm seeing, it always makes a difference how much $$ are actually in the student's name.

 

[blissventure]

But from what I'm seeing, it always makes a difference how much $$ are actually in the student's name.

Yes, the student's cash is factored into the equation.

Here's a pretty good explanation of the whole picture, and what pitfalls they recommend to watch out for: http://www.finaid.org/fafsa/maximize.phtml

 

[tzolkin]

You should be proud of your accomplishments. But, your situation doesn't compare with the OP's. As a parent of a child, you received (understandably) far more favorable treatment under the FAFSA rules. Students that are over 24, or are parents, or are married, or are prior military service file on their own. Students under 24 (that don't fall within the above exclusions) file under their parents. It's just how the rules are written.

This is true, but did not apply to my situation. In return for my parents allowing us to live with them, they counted my DD and me as their dependents on their tax returns. I was not considered independent and their financial info was used to file my FAFSA. My financial aid was based on my parents' income.

 

[luv2sew]

When my daughter was starting college we went to the high schools college financial aid information night and the guest speaker was from a local private college and what she told us was....

If your child has any money in his/her name you should, NOW, before you fill out any financial aid fafsa forms take a look at what he/she may need for college and use that money to buy those items. Even if it a car that will be needing because they use the childs money as all going towards the college tuition. After you have done that figure out someone to transfer the remaining money's name into...which could be a younger sister or brother.

We closed both my kids accounts at that point. I don't know if this is on the up and up so to speak but we did it. We still did not get any money towards college tuition except for the staffords loans and after my son started college we got some grant money because we had two in college at the same time.

On the subject of the college AP courses we found that the AP course work transferred but the credits did not accumulate for them so what happened she did not have to repeat any of that course work but was still required to take the total number of credits that was required to graduate....meaning that it did not save us any money in college tuition.

On the subject of working in college. We found that if you did not have the distinction of being a Work Study student it was next to impossible to get any jobs on campus because all the jobs on campus were given to work study kids first and (since this was a fairly large campus) they were all taken. so they could only get jobs off campus.

 

[ctinct]

Yes, the student's cash is factored into the equation.

Here's a pretty good explanation of the whole picture, and what pitfalls they recommend to watch out for: http://www.finaid.org/fafsa/maximize.phtml

Excellent link. It confirmed some of what I have been hearing, like if you happen to have extra cash and debt, pay it off, or if you are planning on making a big purchase and have the cash for it socked away, pay for it before applying for aid.

 

[bballmom56]

I definitely agree with those who say not to reject private schools by their price tag. They are generally very good with both merit based and need based money, particularly if the student is near the top of the incoming class. However the top tier schools don't offer merit money (because everyone would qualify). So the trick is to find the schools where her stats put her in the top 25% of their applicants.

We did have DD use money in her account to buy her car since they do give greater weight to the student's accounts. That helped her qualify for a little more need based aid.