College financial aid. PROFILE Pre-Application worksheet.

[Sam]

Some of the colleges my kid is applying to want to have the financial application submitted before Feb 1. Since my income tax return will not be completed by then, they ask us to estimate via the PROFILE Pre-Application Worksheet.

Questions:

1) No where in the application did they ask about Prepaid Tuition Plan, which I have (Texas Tomorrow Fund). The only question that's close is "Enter the amount your parents think they will be able to pay for your 07-08 college expenses". Did I miss it? Was it hidden somewhere else?

2) One of the question that bothers me is "Enter the total current value of this parent's tax-deferred retirement, pension, and saving plans. Include IRA, 401(k)..." What is the effect of this question? Are we expected to withdraw from the 401K to meet college cost?

Thanks

 

[jazz4cash]

Take a few patience pills.

Some of the colleges my kid is applying to want to have the financial application submitted before Feb 1. Since my income tax return will not be completed by then, they ask us to estimate via the PROFILE Pre-Application Worksheet.

Questions:

1) No where in the application did they ask about Prepaid Tuition Plan, which I have (Texas Tomorrow Fund). The only question that's close is "Enter the amount your parents think they will be able to pay for your 07-08 college expenses". Did I miss it? Was it hidden somewhere else?

2) One of the question that bothers me is "Enter the total current value of this parent's tax-deferred retirement, pension, and saving plans. Include IRA, 401(k)..." What is the effect of this question? Are we expected to withdraw from the 401K to meet college cost?

Thanks

Its basically a joke that the FAFSA is requested to be filed so early. I am trying very hard to delay until my taxes are done so I won't have to re-do the FAFSA. I have a whole conspiracy theory on that........oops, nevermind. Not sure about that PROFILE form, but I can tell you pre-paid plans DO count towards your EFC. The 401k's and IRAs DO NOT count, but the deductible income DOES count, so FAFSA requires you to report all income that escapes your AGI (except Flexible spending accounts, I think!)

You should maybe try the simulators at various sites such as savingforcollege.org, etc.

 

[Sam]

Thanks Jazz4cash.

I missed it, it was there. The prepaid tuition plan is supposed to be reported in "What is the total current market value of your parents' investments? PA-120"

If the 401k or IRA do not count, why do they ask for it? They also ask for the current value of the house and the equity in it!

 

[Spanky]

I completed a FAFSA application recently and do not recall any reference to retirement savings and house equity. We know that we are not qualified for any financial aid but filled out the application as suggested by the university.

 

[BarbaraAnne]

I completed a FAFSA application recently and do not recall any reference to retirement savings and house equity. We know that we are not qualified for any financial aid but filled out the application as suggested by the university.

I'm curious as to why you filled out the FAFSA when you knew you wouldn't be qualified for financial aid? I am very hesitant to release that kind of personal information unless I know for sure there is a direct benefit. I guess I don't want too much information about our finances etc. floating around.

Do any of you feel that way?

 

[dt123]

Sometimes there are merit (ie, non need-based) scholarships that won't be awarded unless you file a FAFSA first. Filing the FAFSA is just to assure the school that you have not left anything on the table wrt need-based govt aid, before they give you their own money. Even Bill Gates would have to file the FAFSA in this situation.

When looking for aid for your college student is not the time to go all paranoid about your financial info. The only way to avoid releasing it is to pay full sticker price.

 

[Leonidas]

I'm curious as to why you filled out the FAFSA when you knew you wouldn't be qualified for financial aid? I am very hesitant to release that kind of personal information unless I know for sure there is a direct benefit. I guess I don't want too much information about our finances etc. floating around.

Do any of you feel that way?

That same question is on my mind now. I'm certain we're not going to qualify for any needs based scholarships/funding, so my first inclination would be to not do the form. I am prepared to foot the entire bill by myself, but two of the schools we've applied to have huge endowments and they make a point of noting that 80-90% of the students received at least some merit based scholarship funding. A former co-worker's daughter is a freshman at one of these schools, and he said they did not qualify for any needs based assistance, but that that the school gave his daughter enough merit based scholarship money that it brought the tuition down to something that he said was "very reasonable". From the way he talked, she is not exactly the best student on the planet and it almost sounded as if they give out merit based money to just about everyone. Comments from any parents / grandparents who've already been through this??

Modified to add: Looks like this answers my question:

Sometimes there are merit (ie, non need-based) scholarships that won't be awarded unless you file a FAFSA first. Filing the FAFSA is just to assure the school that you have not left anything on the table wrt need-based govt aid, before they give you their own money. Even Bill Gates would have to file the FAFSA in this situation.

When looking for aid for your college student is not the time to go all paranoid about your financial info. The only way to avoid releasing it is to pay full sticker price.

Thanks dt

 

[TromboneAl]

2) One of the question that bothers me is "Enter the total current value of this parent's tax-deferred retirement, pension, and saving plans. Include IRA, 401(k)..." What is the effect of this question? Are we expected to withdraw from the 401K to meet college cost?

Although this isn't asked on the FAFSA, I'd say this falls under "The college can ask anything they want to." If I were a college, I'd ask this. If you have 2 million in your retirement accounts, they won't have any qualms about taking all your taxable money.

 

[jazz4cash]

Sometimes there are merit (ie, non need-based) scholarships that won't be awarded unless you file a FAFSA first. Filing the FAFSA is just to assure the school that you have not left anything on the table wrt need-based govt aid, before they give you their own money. Even Bill Gates would have to file the FAFSA in this situation.

When looking for aid for your college student is not the time to go all paranoid about your financial info. The only way to avoid releasing it is to pay full sticker price.

OK, I tried to restrain myself, but here comes the darkside. A major portion of the whole FAFSA thing is the papermill effect. The schools want personal profiles of the student body that is only available via FAFSA. It gives them 1st shot at offering loans at medocre rates which generate a 3% fee. The language can be very intimidating, but if you read carefully, there is no requirement to do FAFSA for merit-based aid. We were selected for "random" audit of our FAFSAs two years in a row even though we've never qualified for anything other than a loan. As I say this, I am about to break my own rule and file a FAFSA ahead of my tax return simply because the schools imply we will have a better chance for aid that we wont qualify for anyway

 

[jazz4cash]

Besides the FAFSA calculation for EFC (Expected Family Contribution), there is a secondary methodology which I believe is used by some private schools. They may use home equity, retirement savings, and if I recall even the make and model of automobiles in the household. Here is a link with an EFC simulator.:
http://www.fafsa.org/calculators/finaidestimate.phtml

 

[Sam]

I completed a FAFSA application recently and do not recall any reference to retirement savings and house equity. We know that we are not qualified for any financial aid but filled out the application as suggested by the university.

Spanky, yes. It's in the 2007-2008 form.

Retirement account: "Enter the total current value of this parent's tax-deferred retirement, pension, annuity, and saving plans. Inclue IRA, SRA Keogh, SEP, 401(a), 401(k), 403(b), 408, 457, 501(c) plans". PD-175

Home and equity: "Current market value of parents' home" PA-130. "What do your parents owe on their home?" PA-135.

Edit: I thought FAFSA is the same as CSS/Collegeboard. They're not. I'm referring to the private college Financial aid form.


Barbara, J4Cash, I have no idea whether I will qualify or not, so this is my way for finding out. If I don't get anything, may be I won't do it next year.

 

[Sam]

2) One of the question that bothers me is "Enter the total current value of this parent's tax-deferred retirement, pension, and saving plans. Include IRA, 401(k)..." What is the effect of this question? Are we expected to withdraw from the 401K to meet college cost?

Although this isn't asked on the FAFSA, I'd say this falls under "The college can ask anything they want to." If I were a college, I'd ask this. If you have 2 million in your retirement accounts, they won't have any qualms about taking all your taxable money.

TromboneAl, yes, the question is asked, worded exactly as above.

Edit: Once again, I'm referring to CSS/Collegeboard for private school, NOT FAFSA

 

[rockyj]

...it almost sounded as if they give out merit based money to just about everyone. Comments from any parents / grandparents who've already been through this??

For what it's worth, two for two of private undergraduate schools that accepted our entering freshman offered merit scholarships that were not tied to need. The deals were very similar. The one we took was $9K/year on what would have been about a $40K yearly total (tuition, room board and estimate of expenses). All that's required to continue the scholarship for the four years is maintaining a 3.0 (with some "forgiveness" on the 3.0 during first year). $36K would have been a lot to leave on the table for want of filling out a FAFSA, and I got the sense that there are a lot of these offered.

 

[Leonidas]

For what it's worth, two for two of private undergraduate schools that accepted our entering freshman offered merit scholarships that were not tied to need. The deals were very similar. The one we took was $9K/year on what would have been about a $40K yearly total (tuition, room board and estimate of expenses). All that's required to continue the scholarship for the four years is maintaining a 3.0 (with some "forgiveness" on the 3.0 during first year). $36K would have been a lot to leave on the table for want of filling out a FASFA, and I got the sense that there are a lot of these offered.

Okay, pretty similar to what we're looking at. Although I re-read the website and realized I made a mistake. 80% of the students receive some type of aid, but only 50% received merit based aid.

So, it seems that completing the FAFSA is the right thing to do unless I want to completely forego any shot at merit based aid. I love my kid and would gladly pay the full boat for him, but since I'm all about LBYM where I can, I'm definitely completing the FAFSA.

Thanks stw and everyone else for the info.

 

[Leonidas]

For Sam and anybody else working on getting a kid into college, I found a decent website that has some good information. I've been lurking there for several years and have found some useful stuff. There is a discussion board that deals with all the categories from selecting a college, applications, chances of admission, college life, and financial aid. It's not anywhere near as active as this board. And while there are some areas that have very knowledgeable contributors, I think there are people here could give many of them a run for their money. Still, it's not a wasted trip if you have a few moments to spare when you're not busy with essays, applications and financial aid forms.

http://www.collegeconfidential.com/index.htm

 

[Dreamer]

I have not completed the FAFSA yet, but will be doing it within the next week or two. WV has a Promise scholarship that is not based on need. It is based on merit, but you must file the FAFSA. It will pay my daughter's tuition to any public WV college. I don't understand why we have to file the FAFSA either, but I am definitely going to do it.

They did not have this program when my 28 year old son went to college and we did not file the FAFSA. He would not have qualified even if they had had this program. His grades were not very good. We just paid for his college ourselves, until he decided to start taking out student loans, since that was what all of his friend were doing. Unfortunately, he was partying too much and never did get a college diploma. I was not about to pay for his college and let him use the loans to party on.

 

[Sam]

For Sam and anybody else working on getting a kid into college, I found a decent website that has some good information. I've been lurking there for several years and have found some useful stuff. There is a discussion board that deals with all the categories from selecting a college, applications, chances of admission, college life, and financial aid. It's not anywhere near as active as this board. And while there are some areas that have very knowledgeable contributors, I think there are people here could give many of them a run for their money. Still, it's not a wasted trip if you have a few moments to spare when you're not busy with essays, applications and financial aid forms.

http://www.collegeconfidential.com/index.htm

Thanks, Leonidas.

I have not completed the FAFSA yet, but will be doing it within the next week or two. WV has a Promise scholarship that is not based on need. It is based on merit, but you must file the FAFSA. It will pay my daughter's tuition to any public WV college. I don't understand why we have to file the FAFSA either, but I am definitely going to do it.

I just completed the FAFSA, based on 2006 tax estimate. The FAFSA is not as intrusive (financially speaking) as the CSS/Profile. As Spanky recalled correctly, no need to disclose retirement account value nor home value and equity.

 

[jazz4cash]

Spanky, yes. It's in the 2007-2008 form.

Retirement account: "Enter the total current value of this parent's tax-deferred retirement, pension, annuity, and saving plans. Inclue IRA, SRA Keogh, SEP, 401(a), 401(k), 403(b), 408, 457, 501(c) plans". PD-175

Home and equity: "Current market value of parents' home" PA-130. "What do your parents owe on their home?" PA-135.

Edit: I thought FAFSA is the same as CSS/Collegeboard. They're not. I'm referring to the private college Financial aid form.


Barbara, J4Cash, I have no idea whether I will qualify or not, so this is my way for finding out. If I don't get anything, may be I won't do it next year.

OK, just for clarity..........FAFSA does not ask for retirement account balances or home equity values. Just got done with it and wish I had just waited to do 1040 first. The biggest problem is it wants to know how much income tax paid in 2006 (after I have already indicated "will file"), so everything is estimated and will need correction later.

 

[Brat]

One of my kids was still in school when I retired. I recall being told to mention anything pertinent to our financial condition that was not reflected in current income/assets info on the FAF. Somewhere on that form I mentioned that I was retiring and what my estimated pension would be.

Years have passed, and forms change, but if that type of situation applies at least attach a note.

 

[Moemg]

Fill in the financial aide .You never know .My son excellent student got non-need related grants to MIT .My daughter okay student got non need related grants to U of Mass..It ended up being a real saving.

 

[dt123]

For those that have been out of the game for a while, college tuition these days is like airline seat pricing. Everyone is paying something different. Colleges use sophisticated inventory management techniques just like the airlines and Wal-Mart.

Merit scholarships are discounts off sticker price designed to entice high academic-stat applicants or to fill special needs, like an oboe player for the symphony or a Heisman candidate for the football team (a common "need"). The stated tuition or sticker price is paid by a few who don't care how much it costs or are unable to play the game.

There is a level of school for almost every level of student where discounts are available. The dilemma is, do you pay full price for your student to go to a higher-prestige school where he is average or below, or do you take a discount and get perks like Honors programs at a lower level school where your student is at the top of the applicant pool?

 

[TromboneAl]

I do a pretty good estimate of my taxes at the end of December, then fill out FAFSA first thing in January. I figure that even if my estimates are off by up to 10%, it won't matter. I've never had to correct the FAFSA, but I'm guessing that that isn't too difficult.

No, it's not clear that doing the FAFSA early makes a difference, but I'm going to have to do the taxes at some point anyway, so I may as well get them out of the way early.

 

[Sam]

I've never had to correct the FAFSA, but I'm guessing that that isn't too difficult.

Don't they require you to correct it regardless of how accurate your estimates were? Since I had to check the "estimated" box, I expect to least remove that checkmark sometime in the future.

 

[Nords]

OK, I tried to restrain myself, but here comes the darkside. A major portion of the whole FAFSA thing is the papermill effect. The schools want personal profiles of the student body that is only available via FAFSA.

Heck, yeah, maybe they use the data for case studies in their MBA programs...

I love my kid and would gladly pay the full boat for him, but since I'm all about LBYM where I can, I'm definitely completing the FAFSA.

I think that somewhere between a full parental ride and child abandonment, there's a middle ground where the kid can have some skin in the game without being reduced to blatant manipulation or cheating. You know, sorta like the business world.

So if our kid could use her skills & effort to attract scholarship money of any kind I'd be happy to share the savings with her.

Thanks for that website, Leo, it's going in our college file. I'd hate to think that all this research and analysis will be wasted on a USNA candidate!

Our local high school lets a consortium of banks & financial-management companies give presentations on college planning & financial aid. One of the sales staff said that the feds stopped asking for home value back in the 1990s when they realized that the colleges don't appreciate the price difference between owning a hovel in Hawaii and a mansion in Dubuque.

Sam, what I'm seeing in your posts is the news that there's not only a FAFSA but a different "standard" financial aid form as well. Oh joy. Maybe my profit-sharing plan with my kid should include a deduction for parental paperwork...

 

[Sam]

So if our kid could use her skills & effort to attract scholarship money of any kind I'd be happy to share the savings with her.

I agree. The efforts must come from both sides. My kids have received a few substantial merit scholarships, and both are finalists for one full tuition scholarship. Unfortunately, it's not their first choice college, so I need to be prepared for the "worst".

FAFSA is mainly for public colleges, although some private colleges use it too.

CSS / Financial Aid Profile is used by most private colleges.
https://profileonline.collegeboard.com/index.jsp

Maybe my profit-sharing plan with my kid should include a deduction for parental paperwork...

Let me know how it works out. I've tried it before, deducting this, compensating for that... In the end, I always found myself on the losing end, but happy.