I think the system is so unfair when they count emergency savings in a money market account against you. Just because we have been responsible & saved up money for an emergency (like if my husband lost his job) instead of spending it, our daughter will not be eligible for financial aid. Her only choice will be a state school. If we had not saved at all she would get much more aid & have many choices of private schools because she has excellent grades & high test scores. Diligent, smart, hard working, responsible parents who don't have lots of children get the short end of the stick when it comes to paying for college. Is there a place for liquid assets that don't lower your EFC?
Yes you are right to feel this way. The education game is a racket right from K through college. Having vented my own bit of frustration, I assume you have at least $100K in non-IRA savings. I believe that is the figure at which your EFC is the full price. I hate to say it, but it would be hard for most parents to feel sorry for you if you have a $100K war chest to pull from. I'm sure the government would feel even less sorry.I'm not trying to be a wise guy. I have 2 kids in college and I really feel that the cost has gotten out of control, except for the 2 year community college option.
There are ways to legitimately maximize eligibility -- see http://www.finaid.org/fafsa/maximize.phtmlHas your daughter begun applying to schools yet? If she's an outstanding student, she might have schools offering more attractive aid packages. And she should be haunting her adviser's office, looking for any and all scholarships that she could apply for -- there are a lot of non-need-based scholarships. Also try these sites for scholarship searches: http://www.fastweb.com/http://collegeapps.about.com/cs/scholarships/http://collegeapps.about.com/cs/major/Financial aid is complicated and confusing -- there's a limited amount of money, and a lot of kids to divide it among. Those who get "much more aid" generally get a good deal of it in loans, and graduate with significant debt. Diligent, smart, hard working, responsible parents should save for their kids' college education as well as for emergencies. And kids should hustle for summer jobs and save as much as possible toward their own education, in order to maximize their options and minimize the loans they'll need.
I think the system is so unfair when they count emergency savings in a money market account against you. Just because we have been responsible & saved up money for an emergency (like if my husband lost his job) instead of spending it, our daughter will not be eligible for financial aid. Her only choice will be a state school. If we had not saved at all she would get much more aid Most of the children who get better financial aid packages come from families that don't have anything even resembling an emergency fund.The bulk of financial aid for middle income student is in the form of loans, so you're not missing out on a whole lot. Plus, you can still take out Unsubsidized loans if you choose. Only the lowest income families receive federal grant aid. Be happy that you don't fall into this category--being poor is a lot worse than losing eligibility for financial aid. NellieD
Before anyone runs out to get an Unsubsidized loan, you better read the fine print. The Unsubsidized loan and Minor accounts are the two biggest collegiate rip-offs of all time. Each must have its beginning in the Middle Ages.
she has excellent grades & high test scoresThere are a number of schools where, if this is the case, she will be offered merit aid. Her only choice will be a state schoolDepending upon her choice of major, this may be her best choice, anyway.I'll echo what everyone else has said - most need-based aid is in the form of loans. A home equity loan may well be a better choice anyway if it is the parents borrowing the money.rad
Before anyone runs out to get an Unsubsidized loan, you better read the fine print. The Unsubsidized loan and Minor accounts are the two biggest collegiate rip-offs of all time. Each must have its beginning in the Middle Ages. I am curious why you say this about Unsubsidized loans. These loans are available to any U.S. citizen (or eligible non-citizen) as long as they have not previously defaulted on a student loan, with absolutely no collateral. I don't know of any other loan program with such generous terms. If you have collateral and good credit, you can probably obtain a lower interest loan elsewhere. But most college students are not be able to obtain a loan elsewhere.NellieD
I am curious why you say this about Unsubsidized loans. These loans are available to any U.S. citizen (or eligible non-citizen) as long as they have not previously defaulted on a student loan, with absolutely no collateral. I don't know of any other loan program with such generous terms. If you have collateral and good credit, you can probably obtain a lower interest loan elsewhere. But most college students are not be able to obtain a loan elsewhere.NellieDMaybe I'm wrong. I have always thought that with this kind of loan, interest is added to you principal each month (if you are not making monthly payments on the interest). So, if you borrow say $2500, by the end of the year, you might owe $2750. Then you start to pay it back and that $2750 itself picks up interest, so you are paying interest on the earlier interest. Would love clarification on this one. If I'm wrong, good.If I'm correct, I'll push it back to the Dark Ages.
most need-based aid is in the form of loansCan someone give me a footnote on this one.
most need-based aid is in the form of loansCan someone give me a footnote on this one. Sure.http://www.collegeboard.org/press/cost00/html/TrendsinStuAid2k.pdfIf you want other studies, I can probably post them.rad
Go here :http://nces.ed.gov/ipeds/cool/Search.aspPick a school. When you get to the school, look at the bottom of the page for a link to Financial Aid. The link will take you to something like this :http://nces.ed.gov/ipeds/cool/FinancialAid.asp?UNITID=212115You can see how the financial aid breaks down for that particular college. You will begin to see some shift toward grants in some state that have begun merit or other scholarship programs. However, most of these programs cover tuition only so the student may still have loans for other expenses. New Mexico's Lottery Scholarship program is a good example. rad
What you ought to do is lie outright on the FAFSA. Just don't fudge your actual income records, as they verify that against your W2 records from the IRS. But as for assets, they are not reported to the IRS (other than the income flow generated thereby, and extrapolating the value of the underlying asset from that is impossible.)So don't report your assets, or greatly understate them. Sure, it's illegal, but so are lots of other things your kids will be doing at college, and the odds of anyone actually getting prosecuted for "forgetting" some dormant asset that gosh, they just didn't think about at the time they filled out the FAFSA, are negligible.The government isn't honest about the financial aid game, why should you be? By playing honestly in a corrupt system, you put yourself at a disadvantage.
Oh for pete's sake.Financial aid is complicated and frustrating, but fraud is not an appropriate -- or a smart -- response. Better to work to find ways to raise money, save money, borrow money if need be.See http://www.finaid.org/fafsa/maximize.phtml for tips on *legally* maximizing aid eligibility. In contrast to your blithe assumption that you won't be caught, they say: "Financial aid administrators are obligated to notify the US Department of Education when they encounter cases of fraud. (If they don't, their school is held liable when the US Department of Education audits them.) Every school verifies the FAFSAs of at least one-third of their students, and some schools verify 100% of the financial aid applications. This is in contrast with the IRS, which audits only a very small percentage of tax returns. So if you lie on your financial aid forms, there's a very good chance you'll get caught. ... If you get Federal student aid based on incorrect information, you will have to pay it back; you may also have to pay fines and fees. If you purposely give false or misleading information on your application, you may be fined $10,000, sent to prison, or both."Here's a court document -- http://www.kentlaw.edu/7circuit/1999/apr/98-2992.html -- regarding an appeal from a sentence received after being found guilty of three counts of filing false income tax returns and one count of presenting a false statement on a college financial aid application. (the restitution related to tax liability was modified, the rest was upheld)And see the March 19, 2001 Chronicle of Higher Education for this article: "18 Parents and Their Financial Advisers Are Charged With Federal Student-Aid Fraud" From a followup article in the March 30 issue: "Nearly all of those cases are being resolved with consent judgments in which the defendants agree to pay double the amount of the actual fraud. The judgments currently total more than $825,000, and the money is being returned to the U.S. Department of Education."
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