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Author: KKKF1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8108  
Subject: mortgage/college Date: 4/12/2012 1:06 PM
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I have a question for paying for college:

My stock/mutual fund/cash balance is ~300k (not including retirement account).
Mortgage balance: ~250k. (3.75% 10yr fixed, 9 more yrs left).
Family annual income: ~$180k

Child will be in college in 2014.

Option 1: pay off my mortgage to lower my EFC. Apply for loans later (subsidized, non-subsidized, equity loan, etc.)

Option 2: do nothing.

For option 1, I need to sell my stocks, which will force me to pay more tax for tax year 2012. Does it increase my gross income so that actually increase my EFC since in late 2013 or Jan 2014 it is the 2012's tax return will be used, not 2012. Compared to the new loan I would have, is the current 10yr fix loan offering me more savings regards to interest paid, tax benefit etc.?

Thanks,
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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7959 of 8108
Subject: Re: mortgage/college Date: 4/12/2012 1:32 PM
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Option 1: pay off my mortgage to lower my EFC.

Some colleges, mostly private IIRC, have you fill out a second financial aid form which takes home equity into account, so paying down your mortgage may just make you less liquid and just as much liable for tuition payment, depending on where your child goes.

There are certain investments, like annuities, that can be counted as retirement funds and not count in your EFC. This again makes you less liquid, however.



IP

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Author: mschmit Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7960 of 8108
Subject: Re: mortgage/college Date: 4/12/2012 9:47 PM
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Selling stocks, for any reason, will increase your income for the year and make it look like you make more every year.

But your numbers are high enough that you will likely max out the EFC anyways. So you are one of those who planned and saved rather than spent it all on toys and vacations. Instead of Club Med, you get to pay for Club Ed. :)

Mike

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Author: nagdabbit One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7961 of 8108
Subject: Re: mortgage/college Date: 4/25/2012 7:52 AM
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I agree, your numbers are high even without selling the stock...good thing you've been socking it away...

Collegeboard has an EFC calculator and so does finaid.org - so you can do 'what if' - but basically they don't care about what you owe...only what you make.

nag

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