Quit jobs to gain lower EFC [Expected Family Contribution]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
DrGoogle2017
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Re: Quit jobs to gain lower EFC

Post by DrGoogle2017 » Sat Dec 09, 2017 12:12 pm

GreenGrowTheDollars wrote:
Fri Dec 08, 2017 11:41 pm
Perhaps more straightforward
Have your senior take a gap year. That then gives you full overlap. Your EFC with two kids in college is half for each kid.

But...EFC is just the result of a formula. I don't know ANY schools that promise to meet full need as determined strictly by EFC. Most of the fifty or so "meets full need" colleges use either the CSS/Profile (incorporating a much deeper dive into your assets) or their own financial aid forms.

Identifying colleges where YOUR kids are likely to get large merit (scholarship) awards or that provide generous financial aid for families in your circumstance would generally be effective solutions. Depending on where you live, there may be some great, low-cost choices if your kids have strong grades and test scores. Better SAT/ACT test scores can have a huge payoff if your goal is minimizing college costs.

For students who haven't taken a lot of AP/IB courses in high school, community college can be a very inexpensive route. Strong students with a number of AP/IB credits may not find that route helpful since CCs generally only have lower division classes.
I’m often an advocate for CC route, but I’ve seen many cases of my daughter’s friends who took a lot longer than 4 years to finish college through CC route, so I think there is an opportunity cost here.
Even if the kid is super focused, only spend 2 years at a CC and then transfer to a 4 year institution. And it also depends on the major, for example for certain engineering majors, it might take at least 3 years at the final institution to get a degree. 5 year vs 4 year, cost might be lower the first 2 years, but the kid will forgo one year of earnings.
My kid took 10 AP classes but only could use 2 at her college. So about 6-8 units at most. She could have graduated one term sooner. So it’s not that beneficial to have that many APs.
Last edited by DrGoogle2017 on Sat Dec 09, 2017 12:17 pm, edited 7 times in total.

NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Sat Dec 09, 2017 12:13 pm

Matt Y. wrote:
Sat Dec 09, 2017 1:19 am
I would echo all of what Wild Bill said so well above and add that unless your children are all in the top 15 - 20% as compared to those admitted to the schools of their choice, that by significantly reducing your EFC in the way you consider, you may actually limit the schools that would accept your children. Ability to pay is taken into consideration for admissions at all but a hand-full of top tier institutions, for all but the most attractive applicants.
The vast majority of schools have need blind admissions. The vast majority of schools do not provide much financial aid. The result is that your student may be admitted to any number of schools that you can't afford to pay for. The solution is to carefully evaluate your students and their chances for aid if you don't want to pay full price.

Nate79
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Re: Quit jobs to gain lower EFC

Post by Nate79 » Sat Dec 09, 2017 12:54 pm

And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Sat Dec 09, 2017 1:15 pm

It is never a handout when *I* am entitled to it. It is handout when *you* get it. I thought everybody knew that.

By the way, the absolute best way to game this system is to get a job (any job, including being a janitor) at school where school employee's children get free or cheap tuition and then have the kids get in to that school. Many of ht excellent school have this system including some of very very expensive north eastern schools around Boston such as BU.

NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Sat Dec 09, 2017 1:47 pm

It's like investing and taxes.

If you try to maximize the money left over after paying (tuition, taxes) instead of minimizing the money you pay out in (tuition, taxes) you come up with different solutions.

Jack FFR1846
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Re: Quit jobs to gain lower EFC

Post by Jack FFR1846 » Sat Dec 09, 2017 2:28 pm

wrongfunds wrote:
Sat Dec 09, 2017 1:15 pm
By the way, the absolute best way to game this system is to get a job (any job, including being a janitor) at school where school employee's children get free or cheap tuition and then have the kids get in to that school. Many of ht excellent school have this system including some of very very expensive north eastern schools around Boston such as BU.
Ah, but do your homework first. My son's expensive, private Northeast STEM college allows tuition waivers for kids after 5 years of full time employment.

We attended many college finance seminars before our kids were near ready for college. Although these were usually presented by whole life salesmen disguised as college finance councilors, there were some good valid points brought up. In short:

-Any money you make above the poverty line is available to pay for college.

-You will qualify more easily for state college aid, but they have no money.

-Qualifying for private college aid is more difficult (they use CSS and do look at all assets, retirement accounts, home value) but they have money.

-Remember that "Aid" means something other than what you think it means, In order:
High interest loans.
Very high interest loans.
Piddly amounts of medium interest rate government loans with up front loads.
Work study
For the really lucky, grants.

If your EFC is $32,000, college ABC might reduce its tuition for you from $65k to $55k (for one student). With an EFC of zero, they very well might give you a break....$54k a year.

Also, when you hear people tell you "nobody pays full price", I do. We make good money but easily qualify for full Roth every year (to give you some idea). For us, it's about $65k per year.
Bogle: Smart Beta is stupid

Matt Y.
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Re: Quit jobs to gain lower EFC

Post by Matt Y. » Sun Dec 10, 2017 1:26 am

DrGoogle2017 wrote:
Sat Dec 09, 2017 12:06 pm
wrongfunds wrote:
Sat Dec 09, 2017 10:18 am
Ability to pay is taken into consideration for admissions at all but a hand-full of top tier institutions, for all but the most attractive applicants.
After putting two kids through the system, I did NOT get that feeling. On the contrary, I recall reading statements on the college application websites specifically stating otherwise. Now whether I believed it or not is a different question. Besides, our EFC was in 6 figures, so that was immaterial to us.
Maybe when you are on waiting list where they have the choice to take full pay vs non full pay. We had one case with one of my kids, so I suspect this could be true. But I’m not making a general statement about every case.
The term is called "Enrollment management" which typical aims to improving yields at inquiry, application, and enrollment stages; increasing net revenue, usually by improving the proportion of entering students capable of paying most or all of unsubsidized tuition ("full-pays"). This is a term and topic area higher ed prefers not to talk about. The practices basically frames students as commodities. Schools desire the best yield from a given student. If you can pay full freight (particularly out of state tuition for public universities) your grades become less critical.

Here is a link from way back in 2005 from the Atlantic https://www.theatlantic.com/magazine/ar ... uy/304307/

Matt Y.
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Re: Quit jobs to gain lower EFC

Post by Matt Y. » Sun Dec 10, 2017 1:51 am

NotWhoYouThink wrote:
Sat Dec 09, 2017 12:13 pm
The vast majority of schools have need blind admissions.
While there are about 100 colleges that claim to have a need-blind admissions policy, in reality only 30 - 40 with large endowments -think Harvard and Yale - actually are. Even if a school meets 100% of your “demonstrated financial need,” this does not mean you get to attend for free. It just means that the school has put together a financial aid package that covers 100% of your need. This package could include gift aid (like grants and scholarships), as well as work-study and student loans that you will have to pay back. At most of these "nee blind" schools, if your EFC is low and your student is not sufficiently attractive to a school, your aid package will be commensurately less attractive.
Last edited by Matt Y. on Tue Dec 12, 2017 11:14 pm, edited 1 time in total.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Sun Dec 10, 2017 6:24 am

Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Sun Dec 10, 2017 6:27 am

chipperd wrote:
Sun Dec 10, 2017 6:24 am
Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Our first is also taking/taken 8 AP and two local state U classes. For those whose kids have done this, and I know those who score a "5" on all their AP tests will probably have a higher number, how many credits did the college/university award your student's over what was possible (ie: percentage)?
Thanks!
Chipperd

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TomatoTomahto
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Re: Quit jobs to gain lower EFC

Post by TomatoTomahto » Sun Dec 10, 2017 8:09 am

chipperd wrote:
Sun Dec 10, 2017 6:27 am
Our first is also taking/taken 8 AP and two local state U classes. For those whose kids have done this, and I know those who score a "5" on all their AP tests will probably have a higher number, how many credits did the college/university award your student's over what was possible (ie: percentage)?
For the record, I have avoided the moralizing and have bitten my tongue. This I can answer:
DS had 8 APs with high scores (iirc, one was a 4, the others 5). This will, very slightly, help your oldest because he can say National AP Scholar on his application (double-check, the criteria might have changed).

He did not use them for credit in college. The thinking was that he had busted his ass to get into the school, so why cut short his reward? He did get to place higher (i.e., avoid some pre-requisites). I guess the direct answer is 0%, but they might have accepted some credits had he asked.

marcopolo
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Re: Quit jobs to gain lower EFC

Post by marcopolo » Sun Dec 10, 2017 9:00 am

chipperd wrote:
Sun Dec 10, 2017 6:27 am

Our first is also taking/taken 8 AP and two local state U classes. For those whose kids have done this, and I know those who score a "5" on all their AP tests will probably have a higher number, how many credits did the college/university award your student's over what was possible (ie: percentage)?
Thanks!
Chipperd
A lot of this will depend on the school and the major selected.
The number of credits awarded can be quite different from the number of credits that can actually be used to satisfy degree requirements. This is especially true for many STEM programs that have fairly rigid course requirements.

Through a combination of AP (one 4 and rest 5s) an Dual Enrollment, my son got 43 credits awarded (out of possible 48) by the university. For his engineering major, he will be able to use 28 of those credits towards degree requirements. Other majors may have allowed more flexibility in utilizing the rest of the credits.
Once in a while you get shown the light, in the strangest of places if you look at it right.

livesoft
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Re: Quit jobs to gain lower EFC

Post by livesoft » Sun Dec 10, 2017 9:07 am

I used all my AP credits and graduated a year early, so saved on my college education. STEM program at private elite university. But I was paying all the tuition and fees myself and working during school, too.

My daughter used all her credits and graduated early, too. STEM program at private elite university.

My son used his credits and will graduate on time. Inexpensive state university. All his buddies are going to take an extra year.

If one has parents who are happy to foot the bill, then these AP, IB, and CC credits are probably no big deal, but if one is trying to save money on a college education, then they can be very helpful.
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NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Sun Dec 10, 2017 9:13 am

Matt Y. wrote:
Sun Dec 10, 2017 1:51 am
NotWhoYouThink wrote:
Sat Dec 09, 2017 12:13 pm
The vast majority of schools have need blind admissions.
This is incorrect. While there are about 100 colleges that claim to have a need-blind admissions policy, in reality only 30 - 40 with large endowments -think Harvard and Yale - actually are. Even if a school meets 100% of your “demonstrated financial need,” this does not mean you get to attend for free. It just means that the school has put together a financial aid package that covers 100% of your need. This package could include gift aid (like grants and scholarships), as well as work-study and student loans that you will have to pay back. At most of these "nee blind" schools, if your EFC is low and your student is not sufficiently attractive to a school, your aid package will be commensurately less attractive.
"Need blind" means they admit students without regard for their ability to pay. That's the "blind" part.

"Meets full need" is different claim entirely.

There are a small number of need blind schools that meet full need.
There are a slightly larger number of "need aware" schools that meet full need.
There are thousands of need blind schools that make no claim to meet full need.

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TomatoTomahto
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Re: Quit jobs to gain lower EFC

Post by TomatoTomahto » Sun Dec 10, 2017 10:36 am

TomatoTomahto wrote:
Sun Dec 10, 2017 8:09 am
chipperd wrote:
Sun Dec 10, 2017 6:27 am
Our first is also taking/taken 8 AP and two local state U classes. For those whose kids have done this, and I know those who score a "5" on all their AP tests will probably have a higher number, how many credits did the college/university award your student's over what was possible (ie: percentage)?
For the record, I have avoided the moralizing and have bitten my tongue. This I can answer:
DS had 8 APs with high scores (iirc, one was a 4, the others 5). This will, very slightly, help your oldest because he can say National AP Scholar on his application (double-check, the criteria might have changed).

He did not use them for credit in college. The thinking was that he had busted his ass to get into the school, so why cut short his reward? He did get to place higher (i.e., avoid some pre-requisites). I guess the direct answer is 0%, but they might have accepted some credits had he asked.
Lest DS sound like a slug compared to the early finishing students referred to above, his AP courses probably helped his progress towards getting a combined MS/BS in Comp Sci in 4 years. And, since this is a financial forum, the sum of his earnings during school and for his first year post graduation (offer already accepted) will be well in excess of the total cost of attendance for those 4 years.

Because his parents wanted to bribe him, he will graduate with $70k in the bank of his savings (we subsidized everything other than purely discretionary spending). I’m not saying this is the only way, but we are pleased wth the results.
🍅🍅

DrGoogle2017
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Re: Quit jobs to gain lower EFC

Post by DrGoogle2017 » Sun Dec 10, 2017 10:43 am

Even if you get 5 on these APs but they are not acceptable to the program then it’s moot. IIRC, one of my daughters in CS received 48 AP credits, but only 8 units of Math were acceptable to her program. There are so many courses in sequence at her school that she has to follow regardless of the number of credits she has. Can’t even do a study abroad during regular term. She had to use the summer between freshman and sophomore for study abroad. Every other summer after that is used for internships. No slack anywhere.

EDIT to add, once you know what school your kid is going to be enrolled, check to see which AP credits are applicable. I don’t think my daughter took all the AP tests in her senior year. It saved a bit of money. $90 a test.

Nate79
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Re: Quit jobs to gain lower EFC

Post by Nate79 » Sun Dec 10, 2017 1:51 pm

chipperd wrote:
Sun Dec 10, 2017 6:24 am
Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd
:moneybag

Sorry to hurt your feelings. I also know people who do similar games on food stamps and Medicaid. I tell them the same thing whether they like it or not.

I hope you understand not all schools only look at income but also include assets and also the 2 year look back on income.

marcopolo
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Re: Quit jobs to gain lower EFC

Post by marcopolo » Sun Dec 10, 2017 2:59 pm

Nate79 wrote:
Sun Dec 10, 2017 1:51 pm
chipperd wrote:
Sun Dec 10, 2017 6:24 am
Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd
:moneybag

Sorry to hurt your feelings. I also know people who do similar games on food stamps and Medicaid. I tell them the same thing whether they like it or not.

I hope you understand not all schools only look at income but also include assets and also the 2 year look back on income.
I am still grappling with where to draw the line on things like this (see recent post, so as not to hijack this thread: viewtopic.php?f=2&t=234216). Do you feel the same way about mortgage deduction, 401K tax-deferral, Roth conversions, etc...?


To OP: i don't think this strategy would have the affect you are desiring. Much of your assets (not just income) go into figuring your aid package, and much of the aid is likely to be in the form of loans. We are full pay for the next 7 years.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Grt2bOutdoors
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Re: Quit jobs to gain lower EFC

Post by Grt2bOutdoors » Sun Dec 10, 2017 4:08 pm

Well, this has been an enlightening thread. I for one would rather keep working and earning money as opposed to being early retirement where the cash flow becomes constrained and you are left hoping that the rules of the “game” are not switched before halftime. Maximizing levers is the best way to play, retiring early is not a lever.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Sun Dec 10, 2017 4:36 pm

If you are going to game the system, it is important to understand both the game and the system, which is something OP needs quite a bit of work on.

And any first year MBA student could tell you about the error of sub-optimization. Optimizing for lower taxes or lower tuition costs or greater aid, instead of optimizing for maximum family resources net of taxes/aid/tuition.

Jack FFR1846
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Re: Quit jobs to gain lower EFC

Post by Jack FFR1846 » Sun Dec 10, 2017 4:42 pm

Grt2bOutdoors wrote:
Sun Dec 10, 2017 4:08 pm
Well, this has been an enlightening thread. I for one would rather keep working and earning money as opposed to being early retirement where the cash flow becomes constrained and you are left hoping that the rules of the “game” are not switched before halftime. Maximizing levers is the best way to play, retiring early is not a lever.
I would heartily agree. The rules can change at any time as we've seen with the FAFSA going to 2 years old financial data. Every private school can use its own form. One question on my son's form was "has anyone else contributed towards schooling costs". This ropes in grandparent gifts, for example. They also do ask "is the student the beneficiary of any 529 plan" which catches the grandparent 529 which has been a fairly standard strategy.

Keep working and just set your expectations low. If the kids can stick with one college and get some merit aid, then be glad for that. Remember that merit aid disappears upon transfer.

I do complain about not getting any aid, but long ago, I determined that I'd need $1M to put both kids through college. I may not have to pay that much which will make me happy.
Bogle: Smart Beta is stupid

WhyNotUs
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Re: Quit jobs to gain lower EFC

Post by WhyNotUs » Sun Dec 10, 2017 4:43 pm

Separating ethical and financial decisions is something I try to reduce rather than increase. More work to do but seeking better alignment.

Two daughters, sole payer, upper middle income, private liberal arts schools. It was hard but they worked hard so I worked hard.
I own the next hot stock- VTSAX

Nate79
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Re: Quit jobs to gain lower EFC

Post by Nate79 » Sun Dec 10, 2017 4:51 pm

marcopolo wrote:
Sun Dec 10, 2017 2:59 pm
Nate79 wrote:
Sun Dec 10, 2017 1:51 pm
chipperd wrote:
Sun Dec 10, 2017 6:24 am
Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd
:moneybag

Sorry to hurt your feelings. I also know people who do similar games on food stamps and Medicaid. I tell them the same thing whether they like it or not.

I hope you understand not all schools only look at income but also include assets and also the 2 year look back on income.
I am still grappling with where to draw the line on things like this (see recent post, so as not to hijack this thread: viewtopic.php?f=2&t=234216). Do you feel the same way about mortgage deduction, 401K tax-deferral, Roth conversions, etc...?


To OP: i don't think this strategy would have the affect you are desiring. Much of your assets (not just income) go into figuring your aid package, and much of the aid is likely to be in the form of loans. We are full pay for the next 7 years.
This thread is about whether to work or to take need based aid, not tax law, especially when one has the assets to pay.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Sun Dec 10, 2017 5:17 pm

handout is not a term used when talking in first person; it is only used when talking about other

marcopolo
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Re: Quit jobs to gain lower EFC

Post by marcopolo » Sun Dec 10, 2017 5:25 pm

Nate79 wrote:
Sun Dec 10, 2017 4:51 pm


This thread is about whether to work or to take need based aid, not tax law, especially when one has the assets to pay.
Not at all advocating the OP should do what he proposed, but there does seem to be a bit of unnecessary holier-than-thou moralizing about this.

Where do you suppose the money for the need based aid comes from? The vast majority comes from federal revenue.
So, if you "game" the system to pay less in federal taxes, especially if you have assets to pay the full amount, how is that different than "gaming" the system to get some aid from the same system?

Would you consider doing backdoor Roth contribution a similar sign of "what is wrong with society"? After all, the laws were written to only allow people with income below certain levels to contribute to Roth IRA. People with higher incomes have the "assets to pay" the additional taxes that would be due on a traditional (non-deductible IRA).

Who gets to be the arbiter of which government benefits are OK and which ones are immoral? I have to admit i am conflicted on where one should draw the line. But, i would not condemn others for drawing their line in a different place.
Once in a while you get shown the light, in the strangest of places if you look at it right.

mnnice
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Re: Quit jobs to gain lower EFC

Post by mnnice » Sun Dec 10, 2017 9:10 pm

NotWhoYouThink wrote:
Sun Dec 10, 2017 4:36 pm
If you are going to game the system, it is important to understand both the game and the system, which is something OP needs quite a bit of work on.

And any first year MBA student could tell you about the error of sub-optimization. Optimizing for lower taxes or lower tuition costs or greater aid, instead of optimizing for maximum family resources net of taxes/aid/tuition.
So we have enough information to determine what would produce maximum family resources? I don’t think the OP has given enough detail to figure it out it would have about a billion moving parts.

You seem to be implying that continuing to work will yield the best result, I doubt it is that clear cut though I wholeheartedly agree with Teen Persuasion and some others that they are about two years late for the effects of reduced income to help.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Mon Dec 11, 2017 5:17 am

Thanks all for the input, replies and tongue biting. Some mentioned that more info was needed; feel free to ask and I'll do my best to answer to fill in requested details.
Chipperd

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Mon Dec 11, 2017 11:03 am

Nate79 wrote:
Sun Dec 10, 2017 4:51 pm
marcopolo wrote:
Sun Dec 10, 2017 2:59 pm
Nate79 wrote:
Sun Dec 10, 2017 1:51 pm
chipperd wrote:
Sun Dec 10, 2017 6:24 am
Nate79 wrote:
Sat Dec 09, 2017 12:54 pm
And this is what is wrong with society. When one can work and pay for college and instead stops working so they can ask for a handout.
This is the kind of moralizing/political comments I specifically asked to be tabled for this discussion and would appreciate respect for my request.
Thanks so much for all the other comments and discussion. Enlightening for me to read and think about our situation. When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd
:moneybag

Sorry to hurt your feelings. I also know people who do similar games on food stamps and Medicaid. I tell them the same thing whether they like it or not.

I hope you understand not all schools only look at income but also include assets and also the 2 year look back on income.
I am still grappling with where to draw the line on things like this (see recent post, so as not to hijack this thread: viewtopic.php?f=2&t=234216). Do you feel the same way about mortgage deduction, 401K tax-deferral, Roth conversions, etc...?


To OP: i don't think this strategy would have the affect you are desiring. Much of your assets (not just income) go into figuring your aid package, and much of the aid is likely to be in the form of loans. We are full pay for the next 7 years.
This thread is about whether to work or to take need based aid, not tax law, especially when one has the assets to pay.
Actually this thread is about how much/little to work to position oneself for maximum benefit in the EFC calculation. No matter what my wife and I decide to do, all options involve working. What degree of work is the question posed to the group.
Chipperd

NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Mon Dec 11, 2017 11:48 am

You say your oldest is a senior and the middle child is a junior. What colleges has the senior applied to, and what colleges is the junior considering? What are their GPAs and standardized test scores? What extra-curricular activities are they participating in, and are they nationally ranked in any of these? National Merit Finalists? What state are you in?

Those factors will overwhelm EFC in determining college costs. They will determine what colleges will accept your students, and which ones will provide grant aid or "merit scholarships" to attract them. They will determine whether your students are interested in or competitive for the few schools for which EFC has any particular relevance to college cost.

Your focus on EFC leads me to believe you have not done much research on paying for college.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Mon Dec 11, 2017 12:45 pm

NotWhoYouThink wrote:
Mon Dec 11, 2017 11:48 am
You say your oldest is a senior and the middle child is a junior. What colleges has the senior applied to, and what colleges is the junior considering? What are their GPAs and standardized test scores? What extra-curricular activities are they participating in, and are they nationally ranked in any of these? National Merit Finalists? What state are you in?

Those factors will overwhelm EFC in determining college costs. They will determine what colleges will accept your students, and which ones will provide grant aid or "merit scholarships" to attract them. They will determine whether your students are interested in or competitive for the few schools for which EFC has any particular relevance to college cost.

Your focus on EFC leads me to believe you have not done much research on paying for college.
Not sure if the questions are rhetorical but if not:
Senior: GPA: 4.79/5.0 and 3.98/4.0. Act score of 35. 1 AP soph year, 2 AP and 1 Uconn class junior year, 3 AP Aa nd 2 Uconn classes this year. Engineering 3 years as electives. Commended student for psat.
Applying to Uconn, Northeastern, Carnegie Mellon, U of Penn, Duke, U of Vt., Syracuse, U of Virginia, Lehigh, Bucknell.
Soccer (2 years) and Tennis( 4 years/captain this year). National Honor Society. Founded investing club at high school, participates in Mock trial and Model U.N x2 years. Habitat volunteer, and some other volunteer hours for various local orgs.
You can probably guess what state we live in :D

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teen persuasion
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Re: Quit jobs to gain lower EFC

Post by teen persuasion » Mon Dec 11, 2017 2:20 pm

Actually this thread is about how much/little to work to position oneself for maximum benefit in the EFC calculation. No matter what my wife and I decide to do, all options involve working. What degree of work is the question posed to the group.
Chipperd
Easy answer: AGI <= $25k, eligible to file 1040A or EZ. Automatic EFC = 0.

Calculated EFC = 0: AGI AGI + non-taxable income addbacks <= income protection amount for family of 5 w/ 1 student ($33240) + FICA paid + fed tax paid + state tax proxy (7% * income) + working expenses allowance (35% of lower salary, max $4k, if both work). This assumes no assets included above asset protection amount(per what I remember from previous EFC thread). If AGI < $50k and same 1040 eligibility, assets are excluded.

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Re: Quit jobs to gain lower EFC

Post by UpsetRaptor » Mon Dec 11, 2017 3:34 pm

chipperd wrote:
Mon Dec 11, 2017 12:45 pm
Not sure if the questions are rhetorical but if not:
Senior: GPA: 4.79/5.0 and 3.98/4.0. Act score of 35. 1 AP soph year, 2 AP and 1 Uconn class junior year, 3 AP Aa nd 2 Uconn classes this year. Engineering 3 years as electives. Commended student for psat.
Applying to Uconn, Northeastern, Carnegie Mellon, U of Penn, Duke, U of Vt., Syracuse, U of Virginia, Lehigh, Bucknell.
Soccer (2 years) and Tennis( 4 years/captain this year). National Honor Society. Founded investing club at high school, participates in Mock trial and Model U.N x2 years. Habitat volunteer, and some other volunteer hours for various local orgs.
You can probably guess what state we live in :D
The schools on that list that actually might provide significant need-based grants should your kid get accepted (e.g. Duke, Penn) have their own detailed CSS/FSA applications to fill out. Those forms will, unlike FAFSA, include things like your retirement assets and home value. Your expected contribution is usually much higher from these CSS forms than FAFSA, especially if you have significant retirement and home value assets, which you claim to have.

For the public state schools, FAFSA's EFC is also going to be minimally meaningful because at a federal level there's not a lot of grant $ to go around and what does get doled out generally goes to folks with EFCs significantly below your 10K target (google "Pell Grants"). Beyond that, it's a bunch of loans and work study. So it's either you pay for college anyways or let your kid be burdened with crushing debt if you're counting on federal aid from FAFSA/EFC at typical state U to get to the sticker price.

Which you won't, because good news, you're probably in line for a big merit scholarship to those public universities. Congrats.
Last edited by UpsetRaptor on Mon Dec 11, 2017 3:37 pm, edited 1 time in total.

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Re: Quit jobs to gain lower EFC

Post by Nate79 » Mon Dec 11, 2017 3:34 pm

chipperd wrote:
Mon Dec 11, 2017 12:45 pm
NotWhoYouThink wrote:
Mon Dec 11, 2017 11:48 am
You say your oldest is a senior and the middle child is a junior. What colleges has the senior applied to, and what colleges is the junior considering? What are their GPAs and standardized test scores? What extra-curricular activities are they participating in, and are they nationally ranked in any of these? National Merit Finalists? What state are you in?

Those factors will overwhelm EFC in determining college costs. They will determine what colleges will accept your students, and which ones will provide grant aid or "merit scholarships" to attract them. They will determine whether your students are interested in or competitive for the few schools for which EFC has any particular relevance to college cost.

Your focus on EFC leads me to believe you have not done much research on paying for college.
Not sure if the questions are rhetorical but if not:
Senior: GPA: 4.79/5.0 and 3.98/4.0. Act score of 35. 1 AP soph year, 2 AP and 1 Uconn class junior year, 3 AP Aa nd 2 Uconn classes this year. Engineering 3 years as electives. Commended student for psat.
Applying to Uconn, Northeastern, Carnegie Mellon, U of Penn, Duke, U of Vt., Syracuse, U of Virginia, Lehigh, Bucknell.
Soccer (2 years) and Tennis( 4 years/captain this year). National Honor Society. Founded investing club at high school, participates in Mock trial and Model U.N x2 years. Habitat volunteer, and some other volunteer hours for various local orgs.
You can probably guess what state we live in :D
Sounds like you should be looking at CSS, not EFC.

https://profile.collegeboard.org/profil ... tions.aspx

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Edie
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Re: Quit jobs to gain lower EFC

Post by Edie » Mon Dec 11, 2017 3:46 pm

johne417 wrote:
Fri Dec 08, 2017 4:25 pm
Attempting to game FAFSA is going to be a vast disappointment for most. Mayyybe the kid could qualify for a Stafford loan. Meh. Let's not be naive, if you're on the bogleheads board, your kid isn't going to be qualifying for a Pell Grant.
All 4 of our kids should be eligible for Pell grants. Two have already received them, the third will get hers in the fall next year, and the final one should get one as well in two years. Not every boglehead is rich.

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UpsetRaptor
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Re: Quit jobs to gain lower EFC

Post by UpsetRaptor » Mon Dec 11, 2017 4:39 pm

Edie wrote:
Mon Dec 11, 2017 3:46 pm
johne417 wrote:
Fri Dec 08, 2017 4:25 pm
Attempting to game FAFSA is going to be a vast disappointment for most. Mayyybe the kid could qualify for a Stafford loan. Meh. Let's not be naive, if you're on the bogleheads board, your kid isn't going to be qualifying for a Pell Grant.
All 4 of our kids should be eligible for Pell grants. Two have already received them, the third will get hers in the fall next year, and the final one should get one as well in two years. Not every boglehead is rich.
Yeah, I know. And good on you, for getting 4 kids through college. Seriously.

My point was more so that attempting to game FAFSA isn't usually worth it, for the vast majority. Curious, what'd you get, and what was your EFC? Anything beyond a few grand for Pell and a buncho loans?

NotWhoYouThink
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by NotWhoYouThink » Mon Dec 11, 2017 4:59 pm

Great stats, and interesting list. No real slam dunks for significant merit aid that I see - UPenn and UVA (almost) are need-only, CMU and Duke have very little merit aid so are mostly need only, the rest I don't know, and don't know your state other than probably NE US. CMU claims to meet full need, but in reality falls somewhat short with grants, and you fill the gap with loans.

Your 2018 income will become relevant for this kid's junior year and the middle child's sophomore year, so whatever you do now won't reduce your EFC for a couple of years. Maybe after you see the financial aid offers from the acceptances you'll have a better idea. If the preferred school leaves a gap between EFC and grant aid, that might argue more for staying on the job(s) because it's not any easier to fill a gap with less income.

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Edie
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Re: Quit jobs to gain lower EFC

Post by Edie » Mon Dec 11, 2017 7:20 pm

johne417 wrote:
Mon Dec 11, 2017 4:39 pm
Edie wrote:
Mon Dec 11, 2017 3:46 pm
johne417 wrote:
Fri Dec 08, 2017 4:25 pm
Attempting to game FAFSA is going to be a vast disappointment for most. Mayyybe the kid could qualify for a Stafford loan. Meh. Let's not be naive, if you're on the bogleheads board, your kid isn't going to be qualifying for a Pell Grant.
All 4 of our kids should be eligible for Pell grants. Two have already received them, the third will get hers in the fall next year, and the final one should get one as well in two years. Not every boglehead is rich.
Yeah, I know. And good on you, for getting 4 kids through college. Seriously.

My point was more so that attempting to game FAFSA isn't usually worth it, for the vast majority. Curious, what'd you get, and what was your EFC? Anything beyond a few grand for Pell and a buncho loans?
The only way this worked for us was that none of our kids have lived on campus, and that's not anticipated to change (unless our youngest goes out of state). Room and board is more expensive than tuition (almost by half) at the state school our kids attend/will attend, and we live close to campus. We actually had to get waivers to have them live at home.

Our oldest started in fall 2015 with a merit scholarship of $9,500 a year, renewable for 4 years (does not keep pace with tuition). The Pell grant has varied by year, from a low of 1,565 to a high of 2,100 anticipated for 2018-2019. Loans have been kept to 3k in total so far, due to oldest getting a job through the school that has tuition assistance! Unfortunately, graduation will be year 5, due to a change in major, so loans will increase by the end, but still, getting out with under 10k in anticipated loans for the first is awesome IMO.

Our second oldest went to the community college for one semester starting fall 2016 and dropped out by late November :annoyed, but will be going back starting in the fall of 2018 at the same time as our 3rd. Pell grant was ~800 for the semester attended (so would have been ~1,600 for the year). We covered the other 600 of tuition/books out of pocket that first semester. Savings from their job will pay for first semester back at the community college, and we'll start helping again 2nd semester, after the commitment has been shown. There are underlying issues with this one due to living with different parent until high school (and not attending school from 5th through 8th until we wrested custody), so

Our third currently has a merit scholarship of $6,000 per year renewable starting fall 2018, but it could increase if GPA increases by the end of high school. However, the state school has started a new need program for any incoming freshman eligible for the Pell grant. For these students, the school has committed to covering tuition and fees -without- loans, via institutional grants/scholarships/whathaveyou, for the first four years (as long as they stay eligible for the Pell), so even though the merit scholarship is less, the out of pocket and need for loans for us should actually come out less than our first for our third.

Our fourth should get the highest merit scholarship available at the state school starting fall 2020, but will be applying elsewhere as well, as a highly motivated individual who has us in awe at times. I thought I was competitive/ambitious in high school, but this kid knocks me for a loop. Way more involved than I was, and just really really focused. International Baccalaureate program, multiple sports, FBLA, HOSA, and always looking for something more to get involved with. The last two years could potentially cost us more than the other kids, as the Pell grant will probably go away with only one kid still at home, but with only one kid at home, I think we'll be able to afford the bump :D

Matt Y.
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Re: Quit jobs to gain lower EFC

Post by Matt Y. » Tue Dec 12, 2017 11:25 pm

NotWhoYouThink wrote:
Sun Dec 10, 2017 9:13 am
Matt Y. wrote:
Sun Dec 10, 2017 1:51 am
NotWhoYouThink wrote:
Sat Dec 09, 2017 12:13 pm
The vast majority of schools have need blind admissions.
This is incorrect. While there are about 100 colleges that claim to have a need-blind admissions policy, in reality only 30 - 40 with large endowments -think Harvard and Yale - actually are. Even if a school meets 100% of your “demonstrated financial need,” this does not mean you get to attend for free. It just means that the school has put together a financial aid package that covers 100% of your need. This package could include gift aid (like grants and scholarships), as well as work-study and student loans that you will have to pay back. At most of these "nee blind" schools, if your EFC is low and your student is not sufficiently attractive to a school, your aid package will be commensurately less attractive.
"Need blind" means they admit students without regard for their ability to pay. That's the "blind" part.

"Meets full need" is different claim entirely.

There are a small number of need blind schools that meet full need.
There are a slightly larger number of "need aware" schools that meet full need.
There are thousands of need blind schools that make no claim to meet full need.
RE: NotWhoYouThink
Thanks for going into greater detail and better explaining need blind/ aware as they relate to admissions and meeting financial need to varying degrees. What I had written was incomplete and misleading since it conflated admissions with meeting full need. What you wrote is CORRECT. I appreciate you improving the accuracy of the content here and correcting my mistake.
Best,
Matt

chipperd
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by chipperd » Wed Dec 13, 2017 5:01 am

Thanks to all for their input and information. I truly value this as a place to seek input and learn and this post has lived up to my expectations.
Thanks again
Chipperd

ncbill
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Re: Quit jobs to gain lower EFC

Post by ncbill » Wed Dec 13, 2017 7:40 am

chipperd wrote:
Sun Dec 10, 2017 6:24 am
When I fill out the Net Cost Calculators for schools that our first is considering, the senior in H.S. (mostly private, east coast; one ivy, let me know if you need specifics), we get a number lower than our EFC. For those who have gone through this process over the past few years, is this typical? And between the two numbers (EFC and Net Cost numbers) which did you come closest to paying?
Thanks!
Chipperd
Yes, the private schools that have accepted my kid have offered discounts (what one calls their "trustee scholarship") to reduce the list price of their school. Our EFC is too high to qualify for need-based aid.

For the above that reduces their "all-in" annual cost to within $6,000 of in-state public schools.

Even the last one we haven't heard from yet lists a $15,000/year "scholarship" on their net price calculator, though even with that it would still cost about $10,000/year more than an in-state public school.

If you really want your kid to qualify for aid bribe them to sign up for a 2-year Army contract.

Veterans are eligible for in-state tuition at public schools (regardless of residency) and are automatically independent for FAFSA (not sure about the CSS)

chipperd
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by chipperd » Fri Jan 26, 2018 4:54 am

Just to update, of 12 schools oldest applied to, he has gotten some info from 3 (looks like I left some off the original list), with only one financial package so far.
The private school that is known for being tight on the $ in Boston; net cost after 22k/year merit=35k/yr, but no honors acceptance. Called and spoke with financial aid officer, who said a large amount of home equity hurt the net cost at that school. Turns out they expect a parent to use 5%/year of home equity in their annual college financial package. This individual also noted that if he got into honors at that school, this comes with an additional 4k/year, but they would have just reduced the financial aid we got by that same amount. Guess they wanted a certain amount and they would get it in some form.
The other two out of state schools, UVT and UNH, son got honors offers and 15-18k/year merit. Still waiting for financial packages from those and the other 9 regarding admit/financial info.
Wife and I have open conversations regarding finances with him about his college costs, and given a fairly logical assumption he will probably get into honors with some $ at in-state U, (bringing that net cost in about 23k/year), he was pretty disappointed both on the honors front and the cost since Boston school was one of his top 3-4 choices. Fortunately, our in-state U honors program is really strong and that is also one of his top 3-4 choices.
For now, it's wait and see 'til March.
Thanks again for all the input,
Chipperd

nanosour
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by nanosour » Fri Jan 26, 2018 11:08 am

Thanks for the update. Just read through the entire thread and found it very interesting. From my understanding, only 12% of yearly income is counted toward your ability to pay. Given that, I'd continue to work and take the hit.

BTW, sounds like your in a very similar situation to my wife and I, and we decided that successfully launching our children into society is our #1 job/priority at this point in our lives. Sacrifices will have to be made.

Also, congratulations on the accomplishments of your oldest. I'm sure he will do well no matter the school you all choose.

roflwaffle
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by roflwaffle » Fri Jan 26, 2018 3:51 pm

OP, what's net your net per hour, including time spent getting ready for work/commuting? That IMO is a clearer metric than gross.

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teen persuasion
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by teen persuasion » Fri Jan 26, 2018 7:28 pm

nanosour wrote:
Fri Jan 26, 2018 11:08 am
Thanks for the update. Just read through the entire thread and found it very interesting. From my understanding, only 12% of yearly income is counted toward your ability to pay. Given that, I'd continue to work and take the hit.
It is 12% of assets that is included, after subtracting the asset protection amount based on parents age. All income is included, after subtracting: an income protection amount based on family size, fed tax paid, FICA, state tax proxy, working expenses offset. The sum of these two gets a progressive rate applied; the top rate is 47%.

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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by NYC_Guy » Fri Jan 26, 2018 9:25 pm

My sister-in-law had/has three kids going to U Penn, Amherst and Northwestern. Roughly $65k per year x 12 years for full cost (less per year 5 years ago, more when the last is done in a few years). She and her husband were each making about $85k. I advised her, based on PSAT test scores and grades and some intuition, to leave her job on Dec 31 of the year her oldest was a junior in high school. I advised them to move as many assets to retirement accounts as possible starting about four years before that. This included a cash-out mortgage to wipe out home equity. I guaranteed the mortgage. The goal was to get all assets out of the household that would count for EFC. We found some creative ways to do that. Ultimately, her kids got almost complete need-based packages. My advice probably will save them $500k in exchange for about a like amount of post-tax income. And she got to spend more time at home when her kids were teenagers.

YMMV

chipperd
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by chipperd » Sat Jan 27, 2018 5:54 am

NYC_Guy wrote:
Fri Jan 26, 2018 9:25 pm
My sister-in-law had/has three kids going to U Penn, Amherst and Northwestern. Roughly $65k per year x 12 years for full cost (less per year 5 years ago, more when the last is done in a few years). She and her husband were each making about $85k. I advised her, based on PSAT test scores and grades and some intuition, to leave her job on Dec 31 of the year her oldest was a junior in high school. I advised them to move as many assets to retirement accounts as possible starting about four years before that. This included a cash-out mortgage to wipe out home equity. I guaranteed the mortgage. The goal was to get all assets out of the household that would count for EFC. We found some creative ways to do that. Ultimately, her kids got almost complete need-based packages. My advice probably will save them $500k in exchange for about a like amount of post-tax income. And she got to spend more time at home when her kids were teenagers.

YMMV
Interesting. Can you let me know what roughly their AGI was after your sister-in-law quit her job and what they paid per year for the education?
Thanks
Chipperd

chipperd
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by chipperd » Sat Jan 27, 2018 5:57 am

roflwaffle wrote:
Fri Jan 26, 2018 3:51 pm
OP, what's net your net per hour, including time spent getting ready for work/commuting? That IMO is a clearer metric than gross.
Combined, my wife and I work about 2,325 hours/year and will gross about 150k this past year. Net about $52/hour before commuting and getting ready. If you add in that time for both of us, the net per hour, using last year's income (pretty steady year to year) then our net drops to about $44.75/hour.
Interested to see your take on these numbers.

jrbdmb
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by jrbdmb » Sat Jan 27, 2018 7:02 am

NYC_Guy wrote:
Fri Jan 26, 2018 9:25 pm
My sister-in-law had/has three kids going to U Penn, Amherst and Northwestern. Roughly $65k per year x 12 years for full cost (less per year 5 years ago, more when the last is done in a few years). She and her husband were each making about $85k. I advised her, based on PSAT test scores and grades and some intuition, to leave her job on Dec 31 of the year her oldest was a junior in high school. I advised them to move as many assets to retirement accounts as possible starting about four years before that. This included a cash-out mortgage to wipe out home equity. I guaranteed the mortgage. The goal was to get all assets out of the household that would count for EFC. We found some creative ways to do that. Ultimately, her kids got almost complete need-based packages. My advice probably will save them $500k in exchange for about a like amount of post-tax income. And she got to spend more time at home when her kids were teenagers.

YMMV
1. What did they do with the cash? Money in savings also counts for FAFSA / CSS.
2. How much were they able to "hide" in retirement accounts? The schools you mention all use CSS, which does look at retirement assets.
3. Wonder how much of that $500K was based on their children's academic achievement vs. all of this financial maneuvering.

SimonJester
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by SimonJester » Sat Jan 27, 2018 9:57 am

We are finding that many of the collage scholarships are asking for unweighted GPA, This has annoyed my son as it discounts the extra effort put in for Honors and AP courses. He is now thinking what was the point of taking those harder classes...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

snowman
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Re: Quit jobs to gain lower EFC [Expected Family Contribution]

Post by snowman » Sat Jan 27, 2018 10:39 am

OP,

First, I would head to collegeconfidential forum, financial aid section. You will find answers to 99% questions you might have just by browsing and searching the forum. In case you don't find answer, you can post your own question and knowledgeable people will point you in the right direction.

It's too late for your oldest one now, but there is still time for younger ones. The world of college financial aid is complicated, but it does follow certain set of rules, and is fairly easy to figure out once you understand them.

Just one example is home equity. It does not show up on FAFSA, but it does on CSS Profile. However, even when it's on CSS, different schools will treat it differently - some don't consider it at all, some do, and those that do take various approaches. Yet there are public schools that will request home equity info if you are asking for institutional grant. So when your kid gives you a list of potential schools, you want to be able to quickly scan which consider home equity (and what their formula is - it's not a secret), and which ones don't.

BU is the one school that disappoints many parents EVERY year, because they take the largest chunk out of home equity when considering their financial aid package - even if family income is really, really low! That type of family should have never applied to BU, as the package will ultimately be disappointing. This is just one example.

I would also recommend borrowing from your local library "Paying for College without going broke" by The Princeton Review. The book is updated annually, but you don't really need the latest edition if it's out at the moment. It's an excellent high level overview of how financial aid works, and it will give you ideas how you can personally benefit the most.

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