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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8156  
Subject: Re: Early retirement/retired parents Date: 2/26/2012 7:16 PM
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inparadise:

<<<A few threads previous, someone mentioned following through on early retirement plans as a strategy for minimizing parental contributions under FAFSA.>>>

"I've mentioned early retirement and Fafsa in the same post, but we are most certainly not retiring as a strategy to reduce our family contribution. It's just a perk that results from the lower income."

Agreed.

"Retirement assets are not counted."

Only retirement assets in IRA's and 401ks are not counted; perhaps annuities and insuracne policies, too, thou I do not recall the details. If you have a bunch of Google stock that you received as wages, and retire early because of the jackpot, those assets will count, whether you consider them retirement assets or not.

"If you are married, and the child lives with you, then any non-retirement assets and income you produce will be counted. Retirement as a "strategy" to lower your expected contribution only works if your income goes down."

Agreed.

"From a recent FAFSA workshop, a question was raised from the audience about what to do in cases of separation or divorce. It was suggested that the parent with fewer assets/income should be the filing parent. There could be something there, but I don't know enough about it.

From Googling: http://www.finaid.org/questions/divorce.phtml "


I am not familiar witht he rules regarding divorced parents because I have not had reason to learn them, but what I recall is that there are specific rules to be followed, and while the parties may, in advance, arrange their lives to be most advanatageous WRT to FAFSA reporting, one cannot simply ignore the facts to report in a better way after the fact

"Related to retirement but not your question, I found it interesting that while the existing retirement assets were not counted, ongoing contributions to retirement funds were considered discretionary expenses that you could halt to pay for college."

Why? The ongoing contributions are coming from income, and are counted on the income side, not the asset side.

To the OP, go to finaid.org and check out its various calculators for EFC and then also look at the FAFSA form at http://www.fafsa.ed.gov/fotw1112/pdf/PdfFafsa11-12.pdf or some other URL where it is available, and see what information is actually requested.

Two other things that you need to know is that (1) private schools may aske for additional information and calculate EFC differently than the FAFSA form and (2) much "financial aid" is in the form of loans, which need to be repaid, with interest, and which are generally not dischargeable in BR.

Regards, JAFO
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