Which is better for financial aid eligibility?

[disneysteve]

Any financial aid gurus here? When applying for financial aid for college, which is better to have: a paid off house and less in savings or a mortgage and more in savings? Which way would you be more likely to qualify for aid?

 

[Grumpy's Gal]

less in savings

 

[hffmnheidi]

Anything in savings is considered available money to use on tuition and you will get less in financial aid.

 

[disneysteve]

less in savings

Anything in savings is considered available money to use on tuition and you will get less in financial aid.

That's what I was thinking. I just wasn't sure if they considered home equity at all or if they looked at your monthly expenses in which case having no mortgage would significantly lower our expenses.

Thanks.

 

[cmjaffe]

Regarding applying for financial aid for student entering college Fall 2011 which tax returns etc. will be needed -- this past 2009 AND 2010 or just 2010.

Trying to figure out if we should hire someone to "help" with FAFSA and school financial aid forms. Know there's no wiggle room on FAFSA but on school forms some items can be put in different categories which "could" affect package.

Not sure if our family would "officially" qualify for school financial aid (definitely not from FAFSA) but know that what schools offer is different and also for some merit/need scholarships you have to do the forms.

HELP!!!

TIA
Carolyn

 

[mrsklamc]

Won't matter one way or another. You are asked to list the value of your 'assets' including savings, real estate, etc.

 

[punkin]

It depends if you are applying to FAFSA only schools or schools that require Profile. If you are filling out Profile, they will count your house equity.

 

[rockiesfan]

Public schools use the FAFSA, which does not include your home equity, to calculate your aid eligibility. Private schools add home equity back in.

You only need to submit the latest tax returns you have available at the time of application. So if you are applying in fall of 2010 for admission in fall of 2011, you will need to submit 2009 tax info and then update it with 2010 when you have 2010 completed. If the college's aid office has a later financial aid application deadline, and you can get your 2010 return finished by that deadline, then you will not need to submit 2009 info.

 

[msmayor]

Anything in savings is considered available money to use on tuition and you will get less in financial aid.

Not true.

Parents have a protection allowance against their savings; not all of it is considered "available" for college expenses.

The bigger determining factor is really your adjusted gross income from the previous year.

As another poster mentioned, you also need to consider whether the school is a FAFSA only or is a Profile School.

Also realize that many schools have their OWN formula for determining need, and they don't always meet that need.

Remember that loans ARE considered aid, and a school can actually meet your need with aid that is ALL loans.

 

[Psychodisney]

I read a great book earlier this year and will be waiting for the new version to fill out the 2010 FAFSA. The title was something like "How to pay for college and not go broke". It had lots of info on how to fill out the FAFSA form and how to prepare.

 

[allison443]

Not true.

Parents have a protection allowance against their savings; not all of it is considered "available" for college expenses.

The bigger determining factor is really your adjusted gross income from the previous year.

As another poster mentioned, you also need to consider whether the school is a FAFSA only or is a Profile School.

Also realize that many schools have their OWN formula for determining need, and they don't always meet that need.

Remember that loans ARE considered aid, and a school can actually meet your need with aid that is ALL loans.

Great explanation!

 

[allison443]

That's what I was thinking. I just wasn't sure if they considered home equity at all or if they looked at your monthly expenses in which case having no mortgage would significantly lower our expenses.

Thanks.

I don't think they look at your monthly expenses. They look at your adjusted gross income and other assets of the parents and students.

 

[punkin]

Not true.

Parents have a protection allowance against their savings; not all of it is considered "available" for college expenses.

The bigger determining factor is really your adjusted gross income from the previous year.

As another poster mentioned, you also need to consider whether the school is a FAFSA only or is a Profile School.

Also realize that many schools have their OWN formula for determining need, and they don't always meet that need.

Remember that loans ARE considered aid, and a school can actually meet your need with aid that is ALL loans.

Good explanation!

 

[msmayor]

I don't think they look at your monthly expenses. They look at your adjusted gross income and other assets of the parents and students.

Monthly expenses are not considered at all. They don't care how much your mortgage payment is, what your debt payments are, or if you live in an area where the cost of living is much higher than others.

Its a pure numbers formula, plain and simple.

Adjusting the amount of aid is the job of the financial aid department of the school your child will attend, and often the ONLY extraneous expense they will consider in adjustment is if you have significant medical costs or a very unusual living situation (supporting other family members who may have significant medical issues).

The estimated family contribution (EFC) that is computed from the FAFSA will tell you whether you qualify for Federal grant money (again...strictly based on the EFC FAFSA spits out). Any other aid is really determined by the school.

Two things you can know for sure: your EFC will most likely end up much higher than you expected, and having an EFC of $0 does NOT mean your child will go to college without paying anything.

 

[disneysteve]

Public schools use the FAFSA, which does not include your home equity, to calculate your aid eligibility. Private schools add home equity back in.

So I guess the answer to my original question is that it depends on the school. DD is only 14 so we have a few years but if we want to pay off the mortgage before she enters college, we need to start on that now which is why I'm asking the question at this point.

 

[4HppyCamprs]

I am not a parent of a college student I am a college student but you will also want to check your fafsa deadlines because for us it was March for fall 2010 and spring 2011. I missed the deadlines my first year and had to pay out of pocket for Purdue my first year. You can learn about Fafsa from their official website as well. www.fafsa.ed.gov. Good luck and hope that helps!

 

[msmayor]

Public schools use the FAFSA, which does not include your home equity, to calculate your aid eligibility. Private schools add home equity back in.

This is misleading.

Consideration of home equity has NOTHING to do with public vs. private...it has to do with FAFSA-only and Profile schools.

My daughter's school is private, non-public and it is FAFSA-only.

 

[msmayor]

So I guess the answer to my original question is that it depends on the school. DD is only 14 so we have a few years but if we want to pay off the mortgage before she enters college, we need to start on that now which is why I'm asking the question at this point.

Maybe...maybe not. Again it depends on whether the school includes home equity in their aid calculations.

To a school that uses the CSS profile, having $50,000 in the bank and a $50,000 mortgage is the same as having $0 in the bank and a mortgage paid off. The only difference is the "savings" is in the form of home equity.

 

[tar heel]

Steve -- I can't imagine you qualifying. Because of your past posts, I'm sure you have a college fund for your daughter and investments for yourselves. My DH and I work in very moderate income jobs and are definitely not wealthy, but we've never received any need-based aid.

 

[Darcy03231]

Monthly expenses are not considered at all. They don't care how much your mortgage payment is, what your debt payments are, or if you live in an area where the cost of living is much higher than others.

Its a pure numbers formula, plain and simple.

Adjusting the amount of aid is the job of the financial aid department of the school your child will attend, and often the ONLY extraneous expense they will consider in adjustment is if you have significant medical costs or a very unusual living situation (supporting other family members who may have significant medical issues).

The estimated family contribution (EFC) that is computed from the FAFSA will tell you whether you qualify for Federal grant money (again...strictly based on the EFC FAFSA spits out). Any other aid is really determined by the school.

Two things you can know for sure: your EFC will most likely end up much higher than you expected, and having an EFC of $0 does NOT mean your child will go to college without paying anything.

This is so true. The EFC for DD is -0-. Cost of tuition, room & board, mandatory fees, estimated books, & misc. costs for the college she's going to is $38k. She received $24k in financial aid (mix of loans, scholarships & grants). She still had to come up with $14k. She has two scholarships she hasn't heard from yet which may give her another $5k. Since the school is within commuting distance she's decided not to stay on campus which will save about $10k (taking into account commuting expenses).