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Need help with college funding forms
Old 09-09-2015, 11:25 AM   #1
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Need help with college funding forms

So, stepson is in his senior year of high school.... he is wanting to go to a good university...

I have been looking at the various forms etc. and am just starting to look at FAFSA....

Now, I went to the Rice University site to try and get an estimate of college costs and when I was putting in the info it only asked for info from his biological parents... his biological dad has passed... it did not ask for my info...

A little more info to help... I never adopted him... he was older when we married and he was not interested in being adopted... so I do not have any known legal liability...

Am I understanding this correctly that my information is not needed? That my assets will not be included?

Any info or link you have about this would be appreciated.



Oh.... also, I have not earned any money this year... so I think I would be able to file my info making less than $50K if it were necessary....
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Old 09-09-2015, 11:35 AM   #2
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Have him look into an app named "Scholly". It may help with costs. I saw it on Shark Tank.


When we last encountered Christopher Gray, he had recently launched Scholly, which has an app that streamlines the process of searching for college scholarships. Gray had previously won $1.3 million in school aid from a variety of groups.

Now the Philadelphia, Pa-based social enterprise has helped students raise at least $9 million, Gray and his co-founders are in the midst of raising a series A round, they’ve signed several major partnerships and launched a web site, according to Gray. And, oh yes, they recently won a $40,000 investment during an appearance on ABC’s Shark Tank, causing a ruckus in the meantime.
Life Post-Shark Tank At Scholarship App Startup Scholly
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Old 09-09-2015, 11:58 AM   #3
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Sorry to bring you the bad news.
Quote:
If you have a stepparent who is married to the legal
parent whose information you’re reporting,
you
must
provide information about that stepparent as well.
https://studentaid.ed.gov/sa/sites/d...fsa-parent.pdf

If you can legally file a 1040 EZ, do it, but many of us have capital gains, so can't. But as a low income retiree, your expected contribution should be very low. Unfortunately, that might just mean your step son will end-up with a lot of loans, although schools with deep-pocket alumni have pretty good scholarships and grants (I call those "discounts").

You can poke around on this site: Financial Aid & Scholarships - College Confidential to get your detailed questions answered.

The book http://www.amazon.com/Paying-College.../dp/0804125481 is nice to read to get your feet on the ground, but if you can find an old copy at the library, that's fine...you don't need the current version because I don't think the rules change much, and you're just looking for the generalities and what to watch out for. Here's a copy for $0.75 plus shipping: http://product.half.ebay.com/College...919446&tg=info
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Old 09-09-2015, 12:07 PM   #4
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Have him look into an app named "Scholly". It may help with costs. I saw it on Shark Tank.
That's probably an efficient way to find these scholarships, but you've got to think about those in the big picture. As I understand it, outside scholarships reduce your financial aid award, dollar for dollar (at least that's what I experienced*).

Under "Financial Aid Myths" in the book referenced in my previous post, it says
Quote:
One commonly accepted myth regarding financial aid is that the best way to get money for school is to search for little-known awards that go unclaimed each year. The reality is that such scholarships represent less than 5% of all the aid that is available
YMMV, but I didn't get very far with all of that.

* DD got a little scholarship from a great local guy because she won an engineering contest in HS. The financial aid people reduced the grant award by the amount she got from the little scholarship.
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Old 09-09-2015, 05:48 PM   #5
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.... But as a low income retiree, your expected contribution should be very low. ...
But doesn't FAFSA also look at net-worth, and expect a certain % of that to be applied to expenses?


IIRC, the % of the student's net-worth was pretty high ( one reason not to keep $ in the student's name), and the % of parent's was less, but still a considerable amount for many early retirees.

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Old 09-09-2015, 06:37 PM   #6
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I have no answers to these questions - but I'm following the conversation closely since I'll be asking the questions in a few years.
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Old 09-09-2015, 06:46 PM   #7
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That's probably an efficient way to find these scholarships, but you've got to think about those in the big picture. As I understand it, outside scholarships reduce your financial aid award, dollar for dollar (at least that's what I experienced*).
Probably true. The guy who invented the concept received $1.3M from various scholarships. Who needs any financial aid awards if you have enough scholarships.

I do not know if you can take them as cash, but that's almost enough to call it quits and be FIREd...
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Old 09-10-2015, 12:00 AM   #8
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Originally Posted by ERD50 View Post
But doesn't FAFSA also look at net-worth, and expect a certain % of that to be applied to expenses?


IIRC, the % of the student's net-worth was pretty high ( one reason not to keep $ in the student's name), and the % of parent's was less, but still a considerable amount for many early retirees.

-ERD50

I think you are right... it does not matter that I am a low earning retiree... when I did the calculation online for the one college my expected contribution was much higher than the annual expenses...

Now, if it were only DWs assets we would be getting some pretty good help.... but alas, that is not what they want....


I was hoping that the low income would help... does not seem to... but I think I can claim to be a dislocated worker... not sure how that helps...


I also might be doing some temp work starting next year, so that might be out also...

So it looks like private school (Rice) is out... unless he does get scholarships....
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Old 09-10-2015, 01:15 AM   #9
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But doesn't FAFSA also look at net-worth, and expect a certain % of that to be applied to expenses?

Yes, but when I did this year for my son I noticed that it didn't include retirement funds or Home equity. Since all of our investments are in retirement funds, basically the only thing that counted was the money we had in our checking/savings account and a very small after tax Vanguard account.

Most of our income for last year, however, was taxable withdrawals from the retirement account and those do count part of your income just as much as if it was income from a job.

We had been paying DS's expenses outright -- he is at a state school so wasn't that much. But, we decided to fill it out for this year wanting him to get a loan so that we could push some out until after he graduated as part of managing tax brackets.

Bottom line was that filling out the form was good for a total of $7500 in student loans. So while nice, weren't actually all that big a deal. And, that was the maximum available for federal student loans. So, being poorer wouldn't have helped in terms of loans. We would have had to have been a lot poorer to get any aid that didn't have to be paid back.
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Old 09-10-2015, 09:24 AM   #10
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I think you are right... it does not matter that I am a low earning retiree... when I did the calculation online for the one college my expected contribution was much higher than the annual expenses...

Now, if it were only DWs assets we would be getting some pretty good help.... but alas, that is not what they want....


I was hoping that the low income would help... does not seem to... but I think I can claim to be a dislocated worker... not sure how that helps...


I also might be doing some temp work starting next year, so that might be out also...

So it looks like private school (Rice) is out... unless he does get scholarships....
Don't close that door yet, the FASFA is just the starting point, you also have to consider that some of the more expensive schools do some things to defray costs for some students that are stuck between poor and rich. A better question would be, does your SS have something that would make him desirable to an upper tier college? If so, anything that makes him stand out would help in that area. Even public colleges can fall into this area. Both our DD were admitted into a highly rated, very restrictive, Big 10 business college. Are they good kids? yes, but they attended a rural school that had class sizes of around 40 they had rural, farm, backgrounds and they brought some limited "diversity" to an otherwise very urban, upper middle class demographic. I dare say there were many big city students with almost identical credentials that were passed over, and our DD were admitted.
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Old 09-10-2015, 09:53 AM   #11
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Yes, but when I did this year for my son I noticed that it didn't include retirement funds or Home equity. Since all of our investments are in retirement funds, basically the only thing that counted was the money we had in our checking/savings account and a very small after tax Vanguard account.

Most of our income for last year, however, was taxable withdrawals from the retirement account and those do count part of your income just as much as if it was income from a job.

We had been paying DS's expenses outright -- he is at a state school so wasn't that much. But, we decided to fill it out for this year wanting him to get a loan so that we could push some out until after he graduated as part of managing tax brackets.

Bottom line was that filling out the form was good for a total of $7500 in student loans. So while nice, weren't actually all that big a deal. And, that was the maximum available for federal student loans. So, being poorer wouldn't have helped in terms of loans. We would have had to have been a lot poorer to get any aid that didn't have to be paid back.
+1 That's how I remember the FAFSA. No retirement accounts and no home equity.
And I don't know at what level free Federal Aid is available as there was no way we would hit that level.

Also you may want to look into having your child claim himself for tax purposes if your child makes any money and if your step son files a tax return. We were not able to take the deduction/credit but by having our child claim herself as her own dependent, she was able to take it. She had enough income that she filed taxes and it was advantageous overall as the deduction for her was worth more than us taking an exemption for her. However, this was back in 2006-2010 so don't know what the dollar amounts are now but it may be worth looking into this or planning for, particularly if your child has a job.

Who Should Take Education Tax Breaks: Parents or Students? | The TurboTax Blog
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Old 09-10-2015, 10:30 AM   #12
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Originally Posted by ERD50 View Post
But doesn't FAFSA also look at net-worth, and expect a certain % of that to be applied to expenses?


IIRC, the % of the student's net-worth was pretty high ( one reason not to keep $ in the student's name), and the % of parent's was less, but still a considerable amount for many early retirees.

-ERD50
FAFSA looks at assets (not net worth) and expects about 5% to be used as part of the annual expected family contribution. These assets do not include retirement accounts or equity on your home. There is also an adjustment to these assets based upon age of parents, the older you are the more that is not counted.

I've done a rough estimate for my son (begins in 2016) and the non-retirement assets is the show-stopper for him to get any financial aid for the school he is serious about. The EFC is income and asset dependent, maybe when second son goes to college we may be eligible for some financial aid.
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Old 09-10-2015, 11:45 AM   #13
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I did not know that retirement savings did not count.... that is good to know... probably will make a difference...


SS does not do much outside activities... he has been to a couple of architecture competitions and won... but that is about it... I have tried to get him in soccer (he is good, but might be a bench warmer on the team but it is a good team) or debate (he refuses) or anything else... nope, his after school activity is to go to the gym with his friends...

He did make a good SAT score... scored perfect in math... English is his second language, so that actually might help a bit... but Rice is very tough and his scores are just avg or maybe slightly below...



Checked and it does make a difference.... I would get some aid, but not enough for Rice... I am allocating $20 to $25K per year and it calculates my contribution at $43K... and it does look like they take out any scholarship he receives from the help to keep us at the same amount...
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Old 09-12-2015, 08:05 PM   #14
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Dare I use the foul language, but variable annuities are considered retirement assets. Vanguard has some of their funds wrapped as an insurance product, so it's not always a commission horror story. You don't ever have to annuitize, but you have to pull the gains out first, paying tax without the perks of capital gains, etc, before getting to pull your basis tax free., of course. You'd need to do that in 11th grade, though, since they look at interest and dividends and make sure what you're telling them about assets jives. If you thought the IRS was intrusive, you'll just love what you have to disclose to the finanial aid office!

The federal methodology spares home equity, but the insitutional methodology doesn't, and many schools make you run both, and they don't do it to save you money!
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Old 09-13-2015, 09:40 AM   #15
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Dare I use the foul language, but variable annuities are considered retirement assets. Vanguard has some of their funds wrapped as an insurance product, so it's not always a commission horror story. You don't ever have to annuitize, but you have to pull the gains out first, paying tax without the perks of capital gains, etc, before getting to pull your basis tax free., of course. You'd need to do that in 11th grade, though, since they look at interest and dividends and make sure what you're telling them about assets jives. If you thought the IRS was intrusive, you'll just love what you have to disclose to the finanial aid office!

The federal methodology spares home equity, but the insitutional methodology doesn't, and many schools make you run both, and they don't do it to save you money!

I guess you need to plan ahead.... but, this is not (and was not) and option for me.... my cap gains for assets held in taxable accounts are pretty big.... the tax bill alone would not make it worth it... and I do not want to move my 'cash' to an annuity...
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Old 09-13-2015, 10:31 AM   #16
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Speaking as the wife of an Architect:

Construction Management is a much better choice career wise than Architecture. If the school offers both programs usually the freshman and sophomore classes are the same.
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Old 09-13-2015, 10:44 AM   #17
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OP (and others). Remember when you look at private schools like Rice that they also require you to complete the CSS/Profile form. Schools using that form take a harder look at your assets. Rice is quite generous compared to many schools and guarantees to meet need (of course they get to define what need is...)

My DD is a Rice graduate and although DW and I had an income north of $100k (several years ago) we we given very generous aid (total costs including room and board were less than $20k for two years and less than $10k for the years when our DS was also in college). At the time the sticker price for tuition + board was ~$55k per year. If I remember correctly, Rice did consider the value of your home but not your retirement assets. It does consider savings.
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Old 09-13-2015, 10:51 AM   #18
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I just noticed the comment that he has a diverse ethnic background, this might change the aid/scholarship scenario quite a bit, depending on the school.For example we have a highly rated public 4 year univ in this state that's a land grand charter and all eligible American Indian students who quality may attend tuition free.
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Old 09-13-2015, 11:40 AM   #19
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....Now, if it were only DWs assets we would be getting some pretty good help....
A quickie divorce and live in sin for four years? only problem is that she might decide not to re-up.
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Old 09-13-2015, 04:13 PM   #20
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Speaking as the wife of an Architect:

Construction Management is a much better choice career wise than Architecture. If the school offers both programs usually the freshman and sophomore classes are the same.
I am hoping that he changes his mind and does something like you say... some kind of construction engineering... DW is on DS side... 'let him do what he wants'.... REALLY
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