FAFSA with low income but high net worth

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Smokey21
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FAFSA with low income but high net worth

Post by Smokey21 » Fri Dec 29, 2017 8:21 am

Early retirement scenario question.

Has anyone navigated college expenses with a high net worth(say 5 million range) and a proportionately low income in the 75 k range?

How does this scenario work out for FAFSA or the reportedly more information intensive CSS?

Any advice on asset location, financial maneuvers before your child applies?

Any good resources for planning, hacking, maxing any available opportunities?

Thanks in advance.

livesoft
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Re: FAFSA with low income but high net worth

Post by livesoft » Fri Dec 29, 2017 8:26 am

Yes, you get no financial aid. There is nothing you can do except pay full list price for college.

Use your brain power elsewhere, such as helping your student get a job and working before and during college.
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letsgobobby
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Re: FAFSA with low income but high net worth

Post by letsgobobby » Fri Dec 29, 2017 8:44 am

livesoft wrote:
Fri Dec 29, 2017 8:26 am
Yes, you get no financial aid. There is nothing you can do except pay full list price for college.

Use your brain power elsewhere, such as helping your student get a job and working before and during college.
what if his entire net worth is in a 401k?

livesoft
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Re: FAFSA with low income but high net worth

Post by livesoft » Fri Dec 29, 2017 9:02 am

$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
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cherijoh
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Re: FAFSA with low income but high net worth

Post by cherijoh » Fri Dec 29, 2017 9:06 am

Unless your student gets a merit scholarship, I believe most aid is in the form of parent and/or student loans these days. Pell grants max out at under $6K per year and I don't know if you'd qualify at $75K in income. So keep in mind that when you try and game the system, the person paying the price is likely be your child.

westrichj312
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Re: FAFSA with low income but high net worth

Post by westrichj312 » Fri Dec 29, 2017 9:07 am

You can cut those numbers by about 70% and your still getting ZERO.

rob65
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Re: FAFSA with low income but high net worth

Post by rob65 » Fri Dec 29, 2017 9:20 am

Here’s a FAFSA calculator you can experiment with:

https://studentaid.ed.gov/sa/fafsa/estimate

75k is only low income on this site. Even without substantial net worth, you’re going to mainly get loans and maybe work study at most public schools with that income level.

letsgobobby
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Re: FAFSA with low income but high net worth

Post by letsgobobby » Fri Dec 29, 2017 9:21 am

livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.

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Re: FAFSA with low income but high net worth

Post by Grt2bOutdoors » Fri Dec 29, 2017 9:26 am

I can see an issue if the assets are not liquid. However there are loans for that until you are able to liquidate. Otherwise as indicated trying to game the system is an exercise in futility. Simply go to a cheaper school or state school, get a merit award or pay the full freight. Try some of the net price calculators - after spending 20 minutes you’ll find what we are telling you is 100% on the money.
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Re: FAFSA with low income but high net worth

Post by Grt2bOutdoors » Fri Dec 29, 2017 9:29 am

letsgobobby wrote:
Fri Dec 29, 2017 9:21 am
livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.
There must be a bug in that calculator.
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Re: FAFSA with low income but high net worth

Post by livesoft » Fri Dec 29, 2017 9:29 am

letsgobobby wrote:
Fri Dec 29, 2017 9:21 am
livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.
Please report real-world experiences like this and not some calculator. For some reason, I am familiar with Princeton.
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rob65
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Re: FAFSA with low income but high net worth

Post by rob65 » Fri Dec 29, 2017 9:42 am

Grt2bOutdoors wrote:
Fri Dec 29, 2017 9:29 am
letsgobobby wrote:
Fri Dec 29, 2017 9:21 am
livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.
There must be a bug in that calculator.
If even $1M of the $5M is outside of retirement accounts, the aid package drops below $10k, assuming a family of 4 with 1 child in school, 75k in income and 1M in investments.

WolfgangPauli
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Re: FAFSA with low income but high net worth

Post by WolfgangPauli » Fri Dec 29, 2017 9:46 am

Isn't it a valid assumption that student aid is meant for those who need it and not those with awesome accountants? I think the answer to this is pay for the tuition out of your $5M and move on. You obviously (unless this is all inherited wealth) have incredible capabilities to share with the world - spend time on that would be my recommendation.
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Re: FAFSA with low income but high net worth

Post by Determined » Fri Dec 29, 2017 9:53 am

I make $75,000 and had no significant assets when We first started. My oldest was eligible for unsubsidized loans. My second was eligible for some subsidized loans. They both go to private schools. This year I have assets to declare, so I expect the student loan amounts to be all unsubsidized again.

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DaftInvestor
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Re: FAFSA with low income but high net worth

Post by DaftInvestor » Fri Dec 29, 2017 9:57 am

Do you want to strap your kid with an unsubsidized loan? (accumulates interested the moment they take the money - and fees are high - everyone can take one by filling out FAFSA).
If yes then be sure to fill out the FAFSA. If not - then you are likely wasting your time by filling it out.
You don't need to fill out the FAFSA nor CSS at most schools to be eligible for merit aid.
Most schools encourage filling out FAFSA regardless - I don't know why - I did it with all my children and found it to be a big waste of time (at one school our filling it out made them assume we wanted the unsubsidized loan - it took a lot of work for them to stop sending us the paperwork on it and finally accept the fact we didn't want the high-expense/high-priced loan).

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teen persuasion
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Re: FAFSA with low income but high net worth

Post by teen persuasion » Fri Dec 29, 2017 9:59 am

https://ifap.ed.gov/efcformulaguide/att ... e1819.pdf
Which students qualify for the simplified EFC formulas?
The following criteria determine which students have their EFCs calculated by a simplified
formula. Assets are not considered in the simplified EFC formulas.
For the 2018–2019 Award Year, a dependent student qualifies for the simplified EFC formula
if both (1) below and (2) on the next page are true:
(1) Anyone included in the parents’ household size (as defined on the FAFSA) received
benefits during 2016 or 2017 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the Supplemental Security Income (SSI) Program, the
Supplemental Nutrition Assistance Program (SNAP), the Free and Reduced Price School
Lunch Program, the Temporary Assistance for Needy Families (TANF) Program1
, and
the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC);
OR
the student’s parents:
• filed or were eligible to file a 2016 IRS Form 1040A or 1040EZ2
,
• filed a 2016 IRS Form 1040 but were not required to do so3
, or
• were not required to file any income tax return;
OR
the student’s parent is a dislocated worker.]
AND
(2) The combined 2016 income of the student’s parents is $49,999 or less.
• For tax filers, use the parents’ adjusted gross income from the tax return to determine
if income is $49,999 or less.
• For non-tax filers, use the income shown on the 2016 W-2 forms of both parents (plus
any other earnings from work not included on the W-2s) to determine if income is
$49,999 or less.

Which students qualify for an automatic zero EFC calculation?
Certain students are automatically eligible for a zero EFC. The requirements for receiving an
automatic zero EFC are the same as those for the simplified EFC calculation except for these
differences:
• The income threshold for the parents of dependent students and for independent students and
their spouses is $25,000 or less (for an automatic zero EFC) instead of $49,999 or less (for
the simplified EFC calculation), and
• For independent students, those without dependents other than a spouse cannot receive an
automatic zero EFC.
Note: The income threshold for an automatic zero EFC remains at $25,000 for the 2018–2019
Award Year.
For the 2018–2019 Award Year, a dependent student automatically qualifies for a zero EFC
if both (1) and (2) are true.
(1) Anyone included in the parents’ household size (as defined on the FAFSA) received
benefits during 2016 or 2017 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the SSI Program, SNAP, the Free and Reduced Price
School Lunch Program, the TANF Program7
, and WIC;
OR
the student’s parents:
• filed or were eligible to file a 2016 IRS Form 1040A or 1040EZ8
,
• filed a 2016 IRS Form 1040 but were not required to do so9
, or
• were not required to file any income tax return;
OR
the student’s parent is a dislocated worker.
AND
(2) The combined 2016 income of the student’s parents is $25,000 or less.
• For tax filers, use the parents’ adjusted gross income from the tax return to
determine if income is $25,000 or less.
• For non-tax filers, use the income shown on the 2016 W-2 forms of both parents
(plus any other earnings from work not included on the W-2s) to determine if income
is $25,000 or less.

letsgobobby
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Re: FAFSA with low income but high net worth

Post by letsgobobby » Fri Dec 29, 2017 10:13 am

livesoft wrote:
Fri Dec 29, 2017 9:29 am
letsgobobby wrote:
Fri Dec 29, 2017 9:21 am
livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.
Please report real-world experiences like this and not some calculator. For some reason, I am familiar with Princeton.
i suspect your countable assets wre greater than $0.

but this is all hypothetical, since OP has not shared where his assets are held.

letsgobobby
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Re: FAFSA with low income but high net worth

Post by letsgobobby » Fri Dec 29, 2017 10:14 am

Determined wrote:
Fri Dec 29, 2017 9:53 am
I make $75,000 and had no significant assets when We first started. My oldest was eligible for unsubsidized loans. My second was eligible for some subsidized loans. They both go to private schools. This year I have assets to declare, so I expect the student loan amounts to be all unsubsidized again.
some schools are less generous than others. but it is true that on the fafsa, the cutoffs are much lower.

Jack FFR1846
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Re: FAFSA with low income but high net worth

Post by Jack FFR1846 » Fri Dec 29, 2017 10:23 am

With FAFSA, if you somehow had that $5M in retirement accounts and in paying off your home, it's invisible. CSS isn't so forgiving. It asks about retirement accounts, the value of your home, and I can't remember if it was CSS or the college's own financial aid form, but I do remember the question "Is the student a named beneficiary of any 529 plan?" which targets grandparent 529's.

And since $75k is well above the official government poverty line, you're not going to get an EFC of zero.
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Smokey21
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Re: FAFSA with low income but high net worth

Post by Smokey21 » Fri Dec 29, 2017 10:51 am

letsgobobby wrote:
Fri Dec 29, 2017 10:13 am
livesoft wrote:
Fri Dec 29, 2017 9:29 am
letsgobobby wrote:
Fri Dec 29, 2017 9:21 am
livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
the princeton financial aid calculator says his EFC would be $7000 and his financial aid package would be $64,000, of which $0 would be loans, $3000 would be work-study, and $61,000 would be grants.

other schools may be less generous, but i think it’s an exaggeration to say with any certainty that all of his aid would be loans.
Please report real-world experiences like this and not some calculator. For some reason, I am familiar with Princeton.
i suspect your countable assets wre greater than $0.

but this is all hypothetical, since OP has not shared where his assets are held.
Thanks for all of the responses.

Basically it's all tied up in company retirement plan and a privately held business as shares in a LLC.

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teen persuasion
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Re: FAFSA with low income but high net worth

Post by teen persuasion » Fri Dec 29, 2017 11:20 am

OP, details matter. "Income" is vague - for the FAFSA, it is AGI that matters. "Assets" is vague - on the FAFSA retirement accounts and the value of your primary home are not counted. Size of family matters, age matters, federal tax paid matters, FICA paid matters, state of residence matters, whether both parents work matters, which tax form you file matters.

Work thru the worksheets in the link I posted above - you will see what info most affects your EFC, and where you can or cannot tweak it.

IFF you can get your AGI below $50k and file 1040A, your assets could be ignored, greatly affecting your EFC (assuming at least some of your assets are non-retirement accounts).

IFF you can get your AGI below $25k and file 1040A, you would be eligible for EFC = 0.

The devil's in the details, though. Can you file 1040A? We can't, since we have an HSA that forces us to file 1040. Our AGI is in the $30k range after 401k and HSA contributions, so we'd fall under the no assets included rule, if we could meet one of the other criteria. In the past we've met it thru free/reduced lunch eligibility (which lasts thru 3 FAFSA years), but our shrinking family size means we are no longer eligible for DS4's 4th FAFSA filing year next year.

Other thoughts: When is your child beginning college? If in 2019, you will file the FAFSA in October 2018, using your 2017 tax return, so it is essentially too late to alter much on that tax return. The assets reported, however, will be as of the date of filing, so October 2018. There is a small Asset Protection amount based on the age of the older parent, roughly $22k at age 50 now, so we will try to prepay large seasonal bills and contribute to Roth IRAs just before filing to reduce checking/saving account balances reported.

We will have a 3 year window of no FAFSA filing from tax year 2018-2020 (after filing continuously since tax year 2007), so I am running scenarios of financial moves I may want to make before DS5 enters the FAFSA years (tax years 2021-2014). Early retirement can be good or bad for FAFSA. Executing a Roth Ladder would be bad, as Roth withdrawals are added into income calculations (even though they do not affect AGI) on top of the taxable conversions. Not working eliminates several of the things that are deducted from income in the EFC calculation, like the working expense and FICA paid, and removes the retirement contribution option to reduce AGI. Having a paid off mortgage is useful, as it reduces reportable assets and reduces expenses you need to cover.

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teen persuasion
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Re: FAFSA with low income but high net worth

Post by teen persuasion » Fri Dec 29, 2017 11:30 am

https://fafsa.ed.gov/fotw1819/pdf/PdfFafsa18-19.pdf
Net worth means the current value, as of today, of investments, businesses,
and/or investment farms, minus debts related to those same investments,
businesses, and/or investment farms. When calculating net worth, use 0 for
investments or properties with a negative value.
Investments include real estate (do not include the home in which you
live), rental property (includes a unit within a family home that has its
own entrance, kitchen, and bath rented to someone other than a family
member), trust funds, UGMA and UTMA accounts, money market funds,
mutual funds, certificates of deposit, stocks, stock options, bonds, other
securities, installment and land sale contracts (including mortgages
held), commodities, etc.
Investments also include qualified educational benefits or education
savings accounts (e.g., Coverdell savings accounts, 529 college savings
plans and the refund value of 529 prepaid tuition plans). For a student
who does not report parental information, the accounts owned by the
student (and/or the student’s spouse) are reported as student investments
in question 42. For a student who must report parental information, the
accounts are reported as parental investments in question 91, including
all accounts owned by the student and all accounts owned by the parents
for any member of the household.
Money received, or paid on your behalf, also includes distributions to
you (the student beneficiary) from a 529 plan that is owned by someone
other than you or your parents (such as your grandparents, aunts, uncles,
and non-custodial parents). You must include these distribution amounts
in question 45j.
Investments do not include the home you live in, the value of life
insurance, retirement plans (401[k] plans, pension funds, annuities, noneducation
IRAs, Keogh plans, etc.) or cash, savings and checking accounts
already reported in questions 41 and 90.
Investments also do not include UGMA and UTMA accounts for which
you are the custodian, but not the owner.
Investment value means the current balance or market value of these
investments as of today. Investment debt means only those debts that
are related to the investments.
Business and/or investment farm value includes the market value of
land, buildings, machinery, equipment, inventory, etc. Business and/or
investment farm debt means only those debts for which the business or
investment farm was used as collateral.
Business value does not include the value of a small business if your
family owns and controls more than 50 percent of the business and the
business has 100 or fewer full-time or full-time equivalent employees.
For small business value, your family includes (1) persons directly related
to you, such as a parent, sister or cousin, or (2) persons who are or were
related to you by marriage, such as a spouse, stepparent or sister-in-law.

Investment farm value does not include the value of a family farm that
you (your spouse and/or your parents) live on and operate.

rec7
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Re: FAFSA with low income but high net worth

Post by rec7 » Fri Dec 29, 2017 11:31 am

Low income for college is under 50k so you are viewed as rich. Pay up. LOL
Last edited by rec7 on Fri Dec 29, 2017 11:47 am, edited 1 time in total.
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NotWhoYouThink
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Re: FAFSA with low income but high net worth

Post by NotWhoYouThink » Fri Dec 29, 2017 11:37 am

The more important consideration for need-based college aid is whether the student is accepted to one of the couple dozen colleges that offer generous need-based financial aid. If not, the parents' income and assets don't matter. There will be no aid except loans.

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Re: FAFSA with low income but high net worth

Post by markcoop » Fri Dec 29, 2017 12:04 pm

There is an interesting vibe in this thread about whether someone who has considerable assets should get financial aid if they can. I know in my case, I made an assumption when my children were young that I would not qualify for any aid (other than maybe loans). Well, here I am with 2 kids in college receiving about $20K in aid for one of my kids. What I can say is that he wouldn't be going to that school (sticker price over $60K/yr) without the aid, given a total cost of a quarter of a million dollars. With 3 kids, this is not chump change. It seems to me what has happened is colleges have priced themselves into a position where everyone but the wealthy can qualify. Yes, not at all schools. But certainly at some. This is the field the colleges have made by outpacing inflation for so many consecutive years and I don't feel at all guilty for taking advantage of what they give me.

I am not saying the OP is in the same boat. But this post is a response to those posters who simply say pay full price and move on.
Mark

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Re: FAFSA with low income but high net worth

Post by adam1712 » Fri Dec 29, 2017 12:52 pm

markcoop wrote:
Fri Dec 29, 2017 12:04 pm
There is an interesting vibe in this thread about whether someone who has considerable assets should get financial aid if they can. I know in my case, I made an assumption when my children were young that I would not qualify for any aid (other than maybe loans). Well, here I am with 2 kids in college receiving about $20K in aid for one of my kids. What I can say is that he wouldn't be going to that school (sticker price over $60K/yr) without the aid, given a total cost of a quarter of a million dollars. With 3 kids, this is not chump change. It seems to me what has happened is colleges have priced themselves into a position where everyone but the wealthy can qualify. Yes, not at all schools. But certainly at some. This is the field the colleges have made by outpacing inflation for so many consecutive years and I don't feel at all guilty for taking advantage of what they give me.

I am not saying the OP is in the same boat. But this post is a response to those posters who simply say pay full price and move on.
I agree. My parents planned to pay for state school for each of us, but my youngest brother got significant aid at an expensive private school after my parents retired. I'd guess my parents' net worth was around $5 million at the time but not very liquid. It wasn't very fair across my siblings and people will have different opinions of the ethics of it all, but the reality is much more complex than some of the answers here.

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Re: FAFSA with low income but high net worth

Post by HopeToGolf » Fri Dec 29, 2017 1:09 pm

markcoop wrote:
Fri Dec 29, 2017 12:04 pm
There is an interesting vibe in this thread about whether someone who has considerable assets should get financial aid if they can. I know in my case, I made an assumption when my children were young that I would not qualify for any aid (other than maybe loans). Well, here I am with 2 kids in college receiving about $20K in aid for one of my kids. What I can say is that he wouldn't be going to that school (sticker price over $60K/yr) without the aid, given a total cost of a quarter of a million dollars. With 3 kids, this is not chump change. It seems to me what has happened is colleges have priced themselves into a position where everyone but the wealthy can qualify. Yes, not at all schools. But certainly at some. This is the field the colleges have made by outpacing inflation for so many consecutive years and I don't feel at all guilty for taking advantage of what they give me.

I am not saying the OP is in the same boat. But this post is a response to those posters who simply say pay full price and move on.
One can make the argument that outpacing inflation then offering discounts was part of the plan to maximize their cashflow while ensuring the “rich” subsidized everyone else.

As for the OP, I have no doubt there are loopholes that will allow his child to garner aid. For example, are there asset disclosure requirements at those schools where children from households that have income less than $100K pay less than most for tuition? If not, the OP has shown that he/she is willing to take the money even though it is truly intended for families without assets to comfortably afford $250k in tuition.

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UpsetRaptor
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Re: FAFSA with low income but high net worth

Post by UpsetRaptor » Fri Dec 29, 2017 1:48 pm

Smokey21 wrote:
Fri Dec 29, 2017 10:51 am
Basically it's all tied up in company retirement plan and a privately held business as shares in a LLC.
Regarding FAFSA, you're looking at Determined's situation: $75K income, "no" assets. Which will get you some Stafford loans, maybe subsidized, maybe not. FAFSA only really dictates federal Pell Grants and Stafford loans though, and you're not getting Pell Grants at that level.

Mass generalization: For most schools that actually do tend to give out a decent amount of need based money, they usually use the CSS profile in their own custom need based formulas. CSS goes far more in depth into your finances, including retirement accounts, home value, etc. All the Ivies including Princeton mentioned earlier in this thread fall into this category.

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Re: FAFSA with low income but high net worth

Post by Archimedes » Fri Dec 29, 2017 1:59 pm

Everyone's circumstances are so different. It totally depends on the details.

A relative of mine was a very successful surgeon with large retirement assets living in a very expensive home. He developed a serious illness and went on disability.

His kids were able to get substantial aid because his retirement assets, his home value and his disability income were counted (not counted) in such a way that his kids received lots of help with their college costs.

Runner01
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Re: FAFSA with low income but high net worth

Post by Runner01 » Fri Dec 29, 2017 2:12 pm

As others have already pointed out, lower your household agi below $49,999 and there is no asset test. Simple enough.

Edit: this only applies to FAFSA

metrunt
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Re: FAFSA with low income but high net worth

Post by metrunt » Fri Dec 29, 2017 4:09 pm

Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after

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Re: FAFSA with low income but high net worth

Post by Grt2bOutdoors » Fri Dec 29, 2017 4:15 pm

metrunt wrote:
Fri Dec 29, 2017 4:09 pm
Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after
Some of those CSS Profiles ask about the value of your car, your watch, value of homes less any outstanding mortgages. Private institutions are quite intrusive in their financial probing.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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DaftInvestor
Posts: 4091
Joined: Wed Feb 19, 2014 10:11 am

Re: FAFSA with low income but high net worth

Post by DaftInvestor » Fri Dec 29, 2017 4:28 pm

Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:15 pm
metrunt wrote:
Fri Dec 29, 2017 4:09 pm
Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after
Some of those CSS Profiles ask about the value of your car, your watch, value of homes less any outstanding mortgages. Private institutions are quite intrusive in their financial probing.
Since you are asking them for money (some of which may be subsidized by tax-payers) they have the right to be as "intrusive" as they want.

Grt2bOutdoors
Posts: 19502
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: FAFSA with low income but high net worth

Post by Grt2bOutdoors » Fri Dec 29, 2017 4:35 pm

DaftInvestor wrote:
Fri Dec 29, 2017 4:28 pm
Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:15 pm
metrunt wrote:
Fri Dec 29, 2017 4:09 pm
Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after
Some of those CSS Profiles ask about the value of your car, your watch, value of homes less any outstanding mortgages. Private institutions are quite intrusive in their financial probing.
Since you are asking them for money (some of which may be subsidized by tax-payers) they have the right to be as "intrusive" as they want.
Exactly. My point to the poster who suggested going on a spending spree is that you can not game the system with such "tricks".
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
DaftInvestor
Posts: 4091
Joined: Wed Feb 19, 2014 10:11 am

Re: FAFSA with low income but high net worth

Post by DaftInvestor » Fri Dec 29, 2017 4:38 pm

Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:35 pm
DaftInvestor wrote:
Fri Dec 29, 2017 4:28 pm
Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:15 pm
metrunt wrote:
Fri Dec 29, 2017 4:09 pm
Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after
Some of those CSS Profiles ask about the value of your car, your watch, value of homes less any outstanding mortgages. Private institutions are quite intrusive in their financial probing.
Since you are asking them for money (some of which may be subsidized by tax-payers) they have the right to be as "intrusive" as they want.
Exactly. My point to the poster who suggested going on a spending spree is that you can not game the system with such "tricks".
Ah - I see. Sorry - sarcasm always seems to be lost on me :)

metrunt
Posts: 270
Joined: Thu Jul 16, 2015 9:36 am

Re: FAFSA with low income but high net worth

Post by metrunt » Fri Dec 29, 2017 5:06 pm

Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:35 pm
DaftInvestor wrote:
Fri Dec 29, 2017 4:28 pm
Grt2bOutdoors wrote:
Fri Dec 29, 2017 4:15 pm
metrunt wrote:
Fri Dec 29, 2017 4:09 pm
Stuff as much into retirement accounts
Pay off your house
Put as much as you can in a family owned business
Buy new stuff, cars, furniture, home improvement, etc before you apply, not after
Some of those CSS Profiles ask about the value of your car, your watch, value of homes less any outstanding mortgages. Private institutions are quite intrusive in their financial probing.
Since you are asking them for money (some of which may be subsidized by tax-payers) they have the right to be as "intrusive" as they want.
Exactly. My point to the poster who suggested going on a spending spree is that you can not game the system with such "tricks".
Actually, you can game the system. Those 'tricks' are perfectly valid ways to reduce the assets the FAFSA counts. No, not the CSS, but yes, FAFSA.

You seem pretty judgy about doing it. So don't do it.

GreenGrowTheDollars
Posts: 356
Joined: Fri Dec 18, 2015 11:09 pm

Re: FAFSA with low income but high net worth

Post by GreenGrowTheDollars » Fri Dec 29, 2017 5:14 pm

livesoft wrote:
Fri Dec 29, 2017 9:02 am
$75K is not low income, so no financial aid anyways except perhaps loans. Even $5MM in a 401(k) says "This family can easily pay off loans."
FAFSA does not consider the funds in a qualified retirement account. (40K, 403b, IRA, SEP-IRA,...) It also does not include the value of your primary residence or a business that you own, as long as you don't have more than 100 employees.

If your student is applying to a school that only uses FAFSA, you could well be eligible for grant aid if your assets are in the protected category.

Outside of the protected category, figure 6%/assets/year as a contribution - so $1,000,000 in countable assets increases your EFC by $60K, and that will make you ineligible for FA at most colleges.

$75K income without significant assets will definitely qualify you for significant financial aid grants at most private and some public colleges.

markcoop
Posts: 811
Joined: Fri Mar 02, 2007 8:36 am

Re: FAFSA with low income but high net worth

Post by markcoop » Fri Dec 29, 2017 5:17 pm

johne417 wrote:
Fri Dec 29, 2017 1:48 pm
CSS goes far more in depth into your finances, including retirement accounts, home value, etc. All the Ivies including Princeton mentioned earlier in this thread fall into this category.
It depends. My understanding is retirement accounts are not considered by most schools, even though you must disclose their value. In other words, retirement accounts are not part of the equation used by these schools. If you were to appeal, they may use retirement accounts as a justification or maybe factor it in in certain situations. Home value is used differently by many of the CSS schools ranging from not using it all to using the full value.
Mark

duckcalldan
Posts: 146
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Location: Colonial Virginia

Re: FAFSA with low income but high net worth

Post by duckcalldan » Fri Dec 29, 2017 6:02 pm

OPs situation is pretty much our situation.

We have a HS senior so we are smack in the middle of application season. She’s a high achiever with rigorous studies (over a dozen AP classes so far) and stellar test scores. We retired this year and have another kid in college already, at a state school (that’s what we’re paying for, no more). But her little sister wants to go out of state, preferably private.

All of her schools require CSS Profile in addition to FAFSA, so we are not able to try for the simplified needs test (couldn’t anyway due to HSA deduction and the need to file a 1040). We did our best to steer her towards schools that are more generous with merit aid (the Common Data Set was a big help, google it if you haven’t heard of that term).

But she knows full well we won’t get any need-based aid and she will have to make up the difference in tuition if she wants to go out of state. She is also applying to McGill whose sticker price is comparable to a flagship’s in-state tuition.

Stressful times!

GreenGrowTheDollars
Posts: 356
Joined: Fri Dec 18, 2015 11:09 pm

Re: FAFSA with low income but high net worth

Post by GreenGrowTheDollars » Fri Dec 29, 2017 7:44 pm

markcoop wrote:
Fri Dec 29, 2017 5:17 pm
johne417 wrote:
Fri Dec 29, 2017 1:48 pm
CSS goes far more in depth into your finances, including retirement accounts, home value, etc. All the Ivies including Princeton mentioned earlier in this thread fall into this category.
It depends. My understanding is retirement accounts are not considered by most schools, even though you must disclose their value. In other words, retirement accounts are not part of the equation used by these schools. If you were to appeal, they may use retirement accounts as a justification or maybe factor it in in certain situations. Home value is used differently by many of the CSS schools ranging from not using it all to using the full value.
I've been told by several financial aid officers at colleges that use the CSS/Profile that they holistically review retirement assets, but that any retirement balances under 1.5MM are essentially ignored.

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