Is it advantageous to have kids in college simultaneously from an aid perspective ?

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skor99
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Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by skor99 » Fri Feb 02, 2018 10:10 am

I have been researching college finances and talking to people. Somebody mentioned that the EFC (expected financial contribution) of the family goes down drastically for the second kid onwards, if somebody has 2 or more kids in college together, REGARDLESS of the family’s financial status - meaning they could be multi millionaires and still have a low EFC for the second or third kid.
Is this correct ? This seems unfair for parents who have two or three kids but spaced apart in age as they would have to pay the full fare for each one, even if their finances might be lower than the ones with kids together. Is this true or false or are there nuances to this ?

bloom2708
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by bloom2708 » Fri Feb 02, 2018 10:15 am

A lower EFC means more loans.

Some think that more loans is a win. Others don't see that as a win for a student exiting college.
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NotWhoYouThink
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by NotWhoYouThink » Fri Feb 02, 2018 10:17 am

There are many nuances.

The EFC per child, as calculated by FAFSA, goes down if multiple children are in college at once.

For most families, what they pay for college has little or nothing to do with EFC. If the colleges your children are accepted to do not provide financial aid, then it doesn't matter whether your EFC is $0 or $99,999. Ok, it matters a little, you might get a few hundred for a Pell Grant that would help with Community College.

boglegirl
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by boglegirl » Fri Feb 02, 2018 10:36 am

Generally, yes.
Last edited by boglegirl on Fri Feb 02, 2018 4:00 pm, edited 1 time in total.

Jack FFR1846
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by Jack FFR1846 » Fri Feb 02, 2018 10:38 am

EFC means for all kids in college. If your EFC is $90k, then they expect you'd pay $90k for all of your kids, whether that's one kid ($90k for him alone) or 10 kids in college ($9k average each).

So yes, there may be advantage to multiple kids from the perspective of receiving "aid".

As others have said, "aid" isn't always grants like it used to be. It's often high interest government loans with a front end 1% load (Stafford). Stafford is a student-only loan currently at 6%. Subsidized is like the old days when I used to get student loans.....interest paid by government until 6 months after graduation. Un-Subsidized starts tallying interest from the day the college cashes the check.

In looking at FAFSA for many years, I've explained that if you are above the government poverty line for your family size and age of older parent, any assets and income above that line are up for grabs to some degree or another.
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skor99
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by skor99 » Fri Feb 02, 2018 10:45 am

bloom2708 wrote:
Fri Feb 02, 2018 10:15 am
A lower EFC means more loans.

Some think that more loans is a win. Others don't see that as a win for a student exiting college.
Is it only more loans or more Aid like grants etc. which does not have to be paid back ? Being a boglehead, I obviously do not see a loan as a win, but any aid that does not need to be paid back or just a plain reduction of tuition by the college is a big win . Logically that would only make sense for deserving students with limited financial means, but from what I have heard some colleges just reduce the tuition fees for the second or third kid if roughly the same age and don’t look at the financial status of the family.

masteraleph
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by masteraleph » Fri Feb 02, 2018 10:48 am

In terms of federal aid, grants phase out very quickly as you move up the income ladder. But schools that provide grants of their own, especially (top tier) private universities, may give you bigger grants.

skor99
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by skor99 » Fri Feb 02, 2018 10:50 am

Jack FFR1846 wrote:
Fri Feb 02, 2018 10:38 am
EFC means for all kids in college. If your EFC is $90k, then they expect you'd pay $90k for all of your kids, whether that's one kid ($90k for him alone) or 10 kids in college ($9k average each).

So yes, there may be advantage to multiple kids from the perspective of receiving "aid".

As others have said, "aid" isn't always grants like it used to be. It's often high interest government loans with a front end 1% load (Stafford). Stafford is a student-only loan currently at 6%. Subsidized is like the old days when I used to get student loans.....interest paid by government until 6 months after graduation. Un-Subsidized starts tallying interest from the day the college cashes the check.

In looking at FAFSA for many years, I've explained that if you are above the government poverty line for your family size and age of older parent, any assets and income above that line are up for grabs to some degree or another.

OK, if it is primarily loans, then I don’t care much at all, otherwise I will try to find a time machine and bring forward the birthdate of the second kid. ;-)

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teen persuasion
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by teen persuasion » Fri Feb 02, 2018 11:12 am

There's nuances, and it very much depends on your details.

When calculating the EFC (Expected Family Contribution), the income protection amount depends on family size and number in college. That amount goes up ~$4k for each additional person in the family, but goes down ~$2k for each child in college. Since the income protection amount is subtracted from income when calculating EFC, reducing income protection increases your EFC. However, EFC is divided by each child in college, so each child's EFC number becomes smaller.

For grant programs like PELL and TAP, your EFC must be below the maximum level of each to receive anything. PELL and TAP are both currently under $6k, so if your EFC is $6k you'd receive zero TAP and PELL. When a second child enters college, the family EFC increases to ~$6650, but each child's EFC portion is $3325, so now they may be eligible for partial TAP and PELL grants.

We've been at essentially zero calculated EFC with one in college. When a second joined them, the smaller income protection amount increased our EFC above zero. The rate above zero is 22%, so it probably increased to $450. Still small, and divided between 2 it became $225 each, but it meant a $225 reduction in both PELL and TAP for each of them, since each one subtracts EFC from maximums. Counterintuitive change to drop aid when college expenses double for a family.

On the other hand, if your EFC is high enough, dividing it between multiple children may still result in little to no aid beyond loans.

OnTrack2020
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by OnTrack2020 » Fri Feb 02, 2018 11:17 am

We have two in college--a sophomore at a private university and a freshman at a more expensive community college. Both live on campus. I have seen no advantages from an aid perspective. They are willing to offer loans, which we simply are not interested in at this point.

MOBugeater
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by MOBugeater » Fri Feb 02, 2018 11:17 am

It can help - depending on your situation.

When I had 2 in at once, one child got a small grant which he wouldn't have got were he the only child in college.

the other way it can help is you might get more Govt subsidized loans (which don't accrue interest or have to be paid while in school). Any time my kids were offered even a small subsidized loan, we would take those (free use of money) - then I'd pay them off last semester of Senior yr.

skor99
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by skor99 » Fri Feb 02, 2018 11:21 am

OnTrack2020 wrote:
Fri Feb 02, 2018 11:17 am
We have two in college--a sophomore at a private university and a freshman at a more expensive community college. Both live on campus. I have seen no advantages from an aid perspective. They are willing to offer loans, which we simply are not interested in at this point.
Would there have been more grant type aid or a reduction in the tuition for the second kid, if they had decided to attend the same private university as the first one ? Does having two at the same university provide any advantages from a grant or tuition reduction perspective ( not loans) ?

MOBugeater
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by MOBugeater » Fri Feb 02, 2018 11:42 am

my oldest first attended a private university and they offered a whopping $1000 reduction (off of $35k) for the second child if he attended, based on first child going there. They usually publish that info on their financial aid info on school website.

In the end, child one transferred to a state university and child 2 went to a different state university and both graduated debt free.

markcoop
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by markcoop » Fri Feb 02, 2018 11:43 am

The answer depends on the school you go to. Sure, in some cases you may just get more in loans. However, in other cases you can get a large amount of aid from the school. Some select schools meet full need of the student. At such a school it is a huge deal having multiple kids in college at the same time. For example, if you have one child in college and your EFC is $30K at a school that costs $60K, you will receive $30K in aid (some schools will give some of the aid in the form of loans). If you now have a second kid in college, you EFC is $15K per kid (actually, I heard some schools use 60% instead of 50%, so in that case it would $18K). At a school that meets full need, they will award the difference in aid - a total of $45K. It depends on the school.

In my case, I never expected to get any financial aid. However, with 2 kids in college and my kid at a meets-full-need school, I did get some institutional aid for my younger child (older child goes to a state school and gets no aid). The only loans were the gov't Stafford loans ($5,500 freshman year). I do expect when I only have 1 in college for the aid to be cut.
Mark

OnTrack2020
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Re: Is it advantageous to have kids in college simultaneously from an aid perspective ?

Post by OnTrack2020 » Fri Feb 02, 2018 11:56 am

skor99 wrote:
Fri Feb 02, 2018 11:21 am
OnTrack2020 wrote:
Fri Feb 02, 2018 11:17 am
We have two in college--a sophomore at a private university and a freshman at a more expensive community college. Both live on campus. I have seen no advantages from an aid perspective. They are willing to offer loans, which we simply are not interested in at this point.
Would there have been more grant type aid or a reduction in the tuition for the second kid, if they had decided to attend the same private university as the first one ? Does having two at the same university provide any advantages from a grant or tuition reduction perspective ( not loans) ?
Yes, it looks like $1,000 per year. Not enough to make that large of a difference when we are talking about private universities where tuition is in the $40k range.

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