Understanding FAFSA Anticipated Family Contribution

[msmayor]

I just go my son's financial aid package in the mail today. Our EFC was 9800(approx). We were only offered loans - no grants. University of Arizona is the school. They offered 3,500 in Stafford sub loan, 2,000 in Stafford unsub loan, and 32,000 in parent PLUS loan. That would cover everything, but is also incredibly out of my budget. I was hoping to get some grant money. I think it's fine for my son to go to a community college.

Its very difficult to get non-federal grant money when you are an out-of-state student. U of A is probably far more generous with AZ residents, just as a NY public might have been more generous to you.

 

[DizMom11]

Its very difficult to get non-federal grant money when you are an out-of-state student. U of A is probably far more generous with AZ residents, just as a NY public might have been more generous to you.

I did not know this - thanks. I have not heard from the NY schools yet, so will keep my fingers crossed

 

[Grumpy's Gal]

We won't be starting the process for another two years but already my blood pressure is high.

I recently read that any money saved in my child's names will be looked at by financial aid at 20% and in my name for only about 6%. Is that true? So should we cash all of their savings bonds in and put the money in my name? Will that help the financial aid? Yes, in the end that money all goes towards college. I'm just trying to make the best use of this knowledge.

 

[msmayor]

We won't be starting the process for another two years but already my blood pressure is high.

I recently read that any money saved in my child's names will be looked at by financial aid at 20% and in my name for only about 6%. Is that true? So should we cash all of their savings bonds in and put the money in my name? Will that help the financial aid? Yes, in the end that money all goes towards college. I'm just trying to make the best use of this knowledge.

I'm not sure of the exact percentages, but yes...a student assets are considered "more" available than parents.

As for cashing in the bonds and shifting the money into your name, that has financial consequences as well. Cashing a bond means needing to pay tax on the interest; as long as the bonds remain uncashed they grow in value tax-free. In some cases (and I don't know all the specifics), waiting to cash the bonds and using them specifically for education expenses can mean that the income is tax free...by cashing them early you'd probably lose that advantage.

Unless your child has thousands and thousands of dollars in bonds, I don't see how it can really be that much of a benefit to cash them and put the money in your name.

 

[eeyorethegreat]

Since it is getting to be that time of year again when parents of college bound students start looking towards having to deal w ith this, I thought I would bump this.

 

[Spacepest]

Hi 4Seasons

Long time reader of these boards but seldom poster. After reading your post I think you should read the following story.

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_wasik&sid=apX_jqTz1zgE

WHOA WHOA WHOA

I think our business qualifies under these guidelines! Thanks, you might have potentially saved my family ALOT of money in the future.

 

[erincon23]

Unless the federal regs have changed in the last 9 months, any single person without legal dependents under the age of 24 is considered a dependent student by their guidelines and must report parents' income. The fact that a student has income of his own and has been supporting himself or that parents are unwillinging to contribute to the expense of college or unwilling to report their income on the FAFSA does not make a person independent. In the feds' viewpoint, they consider it a parent's obligation to contribute to their child's educational expenses--whether the parent actually chooses to or not to.

One my good friends has a daughter my DS's age (19, she's in her 2nd year at CC). She said she had heard from a friend that if you don't take a child as a dependent on your taxes, they're considered independent and qualify for more scholarship, grant and loan money on their own -- and she was basing her DD's college funding plan on that! I found the info online saying just what was said above (there's a gov publication with all the rules and regs), and she was stunned to find out that not only is that not true, but that her new husband's income would be included in the financial calculation. You REALLY have to do your homework these days! If she had, her daughter might be able to plan to go away next year like she wants to.

 

[Marionnette]

Unless the federal regs have changed in the last 9 months, any single person without legal dependents under the age of 24 is considered a dependent student by their guidelines and must report parents' income. The fact that a student has income of his own and has been supporting himself or that parents are unwillinging to contribute to the expense of college or unwilling to report their income on the FAFSA does not make a person independent. In the feds' viewpoint, they consider it a parent's obligation to contribute to their child's educational expenses--whether the parent actually chooses to or not to.

To override this regulation, a financial aid officer is required to have documentation that a parent either abandoned the child or that the child was in some sort of abusive home environment.

I know it doesn't seem fair and many kids are caught in this situation; but on the other hand, there would be plenty to abuse this and just "say" that they are not receiving any support from a parent.

This does not apply to graduate students or those who are enter a graduate level professional program. We've been to a lot of financial aid talks at medical schools with our daughter this fall. Our financial info will not be needed for her FAFSA next year.

 

[linnylu]

Folks should be aware that skipping the FAFSA in your freshman year can have consequences in the future...I've heard that if you don't file in your first year, you can be denied Stafford Loans in your soph-senior years as a result, and if your ability to pay out of pocket changes in those years you may regret not being able to get a Stafford Loan.

I was wondering if someone here could verify this. We did not file the FAFSA for my son's 1st year of college. I called the college's financial aid office to verify that it wasn't necessary for his merit scholarship. The lady I talked to said we could always file it for sophomore if our circumstances changed. I know there could be a problem if we hadn't been able to pay for 2nd semester freshman year and needed money for that.

 

[punkin]

I was wondering if someone here could verify this. We did not file the FAFSA for my son's 1st year of college. I called the college's financial aid office to verify that it wasn't necessary for his merit scholarship. The lady I talked to said we could always file it for sophomore if our circumstances changed. I know there could be a problem if we hadn't been able to pay for 2nd semester freshman year and needed money for that.

It depends on the individual school. My DD's school will not give financial aid in subsequent years unless you filed for financial aid the first year.

 

[mrsklamc]

This does not apply to graduate students or those who are enter a graduate level professional program. We've been to a lot of financial aid talks at medical schools with our daughter this fall. Our financial info will not be needed for her FAFSA next year.

You are also independent if you are married, have a child, or have completed military service.

 

[linnylu]

I wanted to recommend a book that explained a lot to us about the financial aid process, filling out the FAFSA, ways to maximize eligibility, etc. It's called "Paying for College Without Going Broke". It was really helpful.

 

[mom2grace]

I am not sure the hesitation to fill out the FAFSA. You are not committing to spending any money OOP, and if you don't fill it out you or your child is not eligible for any federal or state aid. Private aid depends on the school.

My situation is that I am a returning student, I already hold a B.A. & M.S. (both 15 & 20 years ago) and am finishing another B.S.

I am married & have 2 school aged children. I am attending a state university. My EFC is more than DOUBLE the annual tuition & I still qualify for the FULL amount of Stafford Loans (unsubsidized, which means that the interest accrues while I am in school but I have the option to pay it as I go or not, no penalty if I don't but then it 'compounds') + Private loans. Many private loans are based on your credit score, so YMMV.

And last year I also received a small scholarship from the university that covered about 5% of my costs. It was a scholarship for a specific interest area, not exactly merit, but definitely not need-based.

 

[Belle5]

I have not read all the replies. I just wanted to share that FAFSA does not take into consideration how many children you have. We have six children (four of whom were in college at once...two have now graduated). FAFSA informed each of our kids that the expected contribution from their parents was $22,000! Add it up! That's right...$88,000 per year!! I guess the other kids are not supposed to eat or have a house in which to live...


Just for fun...we had four in braces at once, as well. Two of them had to have two sets! We're just about to have number five in braces. (I am sure FAFSA wouldn't think they should have had braces...) Hopefully, they won't all get married at once...we just paid for the groom's family portion for our oldest son in August.

 

[msmayor]

I have not read all the replies. I just wanted to share that FAFSA does not take into consideration how many children you have. We have six children (four of whom were in college at once...two have now graduated). FAFSA informed each of our kids that the expected contribution from their parents was $22,000! Add it up! That's right...$88,000 per year!! I guess the other kids are not supposed to eat or have a house in which to live...


Just for fun...we had four in braces at once, as well. Two of them had to have two sets! We're just about to have number five in braces. (I am sure FAFSA wouldn't think they should have had braces...) Hopefully, they won't all get married at once...we just paid for the groom's family portion for our oldest son in August.

Actually, FAFSA computations DO change as it relates to children in college. And the EFC is not expected to be paid out of current income; the expectation is that your sources will also include savings made over the years.

If each child's individual EFC turned out to be $22,000 then I can only figure they must have chosen colleges with a high cost of attendance.

You are correct, though, that it doesn't matter overall what your family size is. This is because the size of the family is considered a lifestyle choice.

I read on many sites the complaints that the formulas should take into account the cost of living in certain areas, the fact that a family with one child has more available income than a family with 5 children making the same income, etc. The fact of the matter is its a pretty darned fair formula because it DOESN'T take all of that into consideration.

We all have choices to make in life. Going to your 'dream' school isn't always an option and certainly not one that aid providers should be forced to subsidize just because of an acceptance.

We can't all drive a Mercedes.

 

[Patience]

I really don't want to fill out the FAFSA because I know our EFC will be high (we own a business, we have savings for college, etc.), we do not plan to take out loans and it seems to be a bit of a pain to fill out. Our school guidance counselor, however, is insisting that we fill it out. She says that some merit scholarships require that one be on file. Can anyone confirm this? My daughter has been accepted to 3 universities (early decisions) so far and is waiting to hear from 3 more. Two of the schools have offered some scholarship money already which I assume is not dependent upon a FAFSA since they offered the money knowing nothing about our finances.

 

[maggiew]

Many/most schools require the FAFSA to be filled out to be eligible for their scholarships. Even if the scholarships aren't need based. They want the FAFSA so they can complete the entire financial package which will include potential loan eligibility, need-based scholarships, merit-based scholarships, work study, etc.

It really isn't that big of a deal to fill out and should only take a few minutes once you have your taxes done. The biggest thing to me was getting the stupid pin code and then remembering where it was the next year!

Maggie

 

[RitaE]

I really don't want to fill out the FAFSA because I know our EFC will be high (we own a business, we have savings for college, etc.), we do not plan to take out loans and it seems to be a bit of a pain to fill out. Our school guidance counselor, however, is insisting that we fill it out. She says that some merit scholarships require that one be on file. Can anyone confirm this? My daughter has been accepted to 3 universities (early decisions) so far and is waiting to hear from 3 more. Two of the schools have offered some scholarship money already which I assume is not dependent upon a FAFSA since they offered the money knowing nothing about our finances.

I don't like filling it out either because frankly I don't like broadcasting our financial info for no reason. We are NOT going to qualify for any need based aid. But yes, my oldest son (a Senior in College) has had a grant every year that they won't give him unless we have a FAFSA on file with the school. I don't know what the reasoning is, maybe the college gets a gold star somewhere if a really high percentage of their students submit the FAFSA.

Last year our file got flagged for some reason to do an audit and the financial aid office sent out a letter asking for copies of documents. I was like "you want me to send you our tax forms? You are offering us no financial aid other than loans we aren't taking and you think I should send you copies of my tax forms for that privilege????" I didn't send them. His grant was applied like always, well at least so far. Hopefully it will be in the spring too.

 

[luvsJack]

I don't like filling it out either because frankly I don't like broadcasting our financial info for no reason. We are NOT going to qualify for any need based aid. But yes, my oldest son (a Senior in College) has had a grant every year that they won't give him unless we have a FAFSA on file with the school. I don't know what the reasoning is, maybe the college gets a gold star somewhere if a really high percentage of their students submit the FAFSA.

Last year our file got flagged for some reason to do an audit and the financial aid office sent out a letter asking for copies of documents. I was like "you want me to send you our tax forms? You are offering us no financial aid other than loans we aren't taking and you think I should send you copies of my tax forms for that privilege????" I didn't send them. His grant was applied like always, well at least so far. Hopefully it will be in the spring too.

You were probably chosen for verification. Its normally just random and chosen by FAFSA, not the school. Financial aid is not considered complete until the verification is completed. Its a form to fill out and a copy of the tax forms. They don't normally need ALL of the forms, just the front page and the signature page. And if you own a business, they will need the form that shows a loss (if there is one).

If his grant was applied and there was no issue of any holds on his account, then you may be ok. We don't apply ANY financial aid (including scholarships, etc) until all of the paperwork is completed. I never understood why if it wasn't dependent on the FAFSA, but that is the rule.

I would suggest strongly that your son or you double check and make sure everything is ok on his account. You don't want them to suddenly take out the grant at the end of the semester.

 

[mom2grace]

I really don't want to fill out the FAFSA because I know our EFC will be high (we own a business, we have savings for college, etc.), we do not plan to take out loans and it seems to be a bit of a pain to fill out. Our school guidance counselor, however, is insisting that we fill it out. She says that some merit scholarships require that one be on file. Can anyone confirm this? My daughter has been accepted to 3 universities (early decisions) so far and is waiting to hear from 3 more. Two of the schools have offered some scholarship money already which I assume is not dependent upon a FAFSA since they offered the money knowing nothing about our finances.

I would ask each school and get the response in writing.