Quit jobs to gain lower EFC [Expected Family Contribution]

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

Post by chipperd » Thu Dec 07, 2017 7:22 pm

Hi all,
Here I go again with an EFC question, this one is a bit of an ethical dilemma tied to it that I would like to leave out if we can.
Wife and I in early 50's. Three kids all in high school; senior, junior and freshman. Given the overlap years, they could each go for 5 years (their majors may demand this: engineering, O.T., and P.T. for now), giving me 8 years of college to pay for and our EFC came in at $32,000/year.
Just for hard number's sake, if we needed to pay full EFC for 8 years this totals $256,000. My wife and I both work two part-time jobs and she has a pension with COLA. If she and I quit most work to get us to basic living and therefore pay a lower EFC, the total cost for 8 years=$84,500. Total savings between the two scenarios =$171,500, post-tax money, so we are talking about $220,000 earnings for work over 8 years. This works out to be about $27,000 gross earnings per year for 8 years. We would have to give up the bigger earning part-time jobs and cut out about $90,000 in earnings to get that lower EFC number.
So the question becomes is it worth giving up $90,000 per year gross earnings to get $27,000 per year gross. This is a net loss of $63,000/year in gross income. We would gain about 30 hours per week of free time each (spouse and self)/year for 8 years. Another way to look at it, would you pay $31.50 per hour for 30 hours of free time for both you and your spouse?
Please check my math and consider. At our age, in our 50's, time is more important to us than money. Thoughtful responses welcomed. Thanks

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Re: Quit jobs to gain lower EFC

Post by ThePrince » Thu Dec 07, 2017 7:28 pm

chipperd wrote:
Thu Dec 07, 2017 7:22 pm
Hi all,
Here I go again with an EFC question, this one is a bit of an ethical dilemma tied to it that I would like to leave out if we can.
Wife and I in early 50's. Three kids all in high school; senior, junior and freshman. Given the overlap years, they could each go for 5 years (their majors may demand this: engineering, O.T., and P.T. for now), giving me 8 years of college to pay for and our EFC came in at $32,000/year.
Just for hard number's sake, if we needed to pay full EFC for 8 years this totals $256,000. My wife and I both work two part-time jobs and she has a pension with COLA. If she and I quit most work to get us to basic living and therefore pay a lower EFC, the total cost for 8 years=$84,500. Total savings between the two scenarios =$171,500, post-tax money, so we are talking about $220,000 earnings for work over 8 years. This works out to be about $27,000 gross earnings per year for 8 years. We would have to give up the bigger earning part-time jobs and cut out about $90,000 in earnings to get that lower EFC number.
So the question becomes is it worth giving up $90,000 per year gross earnings to get $27,000 per year gross. This is a net loss of $63,000/year in gross income. We would gain about 30 hours per week of free time each (spouse and self)/year for 8 years. Another way to look at it, would you pay $31.50 per hour for 30 hours of free time for both you and your spouse?
Please check my math and consider. At our age, in our 50's, time is more important to us than money. Thoughtful responses welcomed. Thanks
I may be wrong, but I think you would be swapping dollars for quarters, which isn’t smart.

livesoft
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Re: Quit jobs to gain lower EFC

Post by livesoft » Thu Dec 07, 2017 7:36 pm

So your EFC goes down, but it seems you are presuming that financial aid will not be students loans if it is offered at all. I say try it and see all the student loan burden that you get.

Also, tell me this: Did your net worth go up by $200,000+ over the past two years? That's enough for lots of college expenses. Plus your net worth should continue to climb for the next 8 years and more.
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chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Thu Dec 07, 2017 7:54 pm

ThePrince wrote:
Thu Dec 07, 2017 7:28 pm
chipperd wrote:
Thu Dec 07, 2017 7:22 pm
Hi all,
Here I go again with an EFC question, this one is a bit of an ethical dilemma tied to it that I would like to leave out if we can.
Wife and I in early 50's. Three kids all in high school; senior, junior and freshman. Given the overlap years, they could each go for 5 years (their majors may demand this: engineering, O.T., and P.T. for now), giving me 8 years of college to pay for and our EFC came in at $32,000/year.
Just for hard number's sake, if we needed to pay full EFC for 8 years this totals $256,000. My wife and I both work two part-time jobs and she has a pension with COLA. If she and I quit most work to get us to basic living and therefore pay a lower EFC, the total cost for 8 years=$84,500. Total savings between the two scenarios =$171,500, post-tax money, so we are talking about $220,000 earnings for work over 8 years. This works out to be about $27,000 gross earnings per year for 8 years. We would have to give up the bigger earning part-time jobs and cut out about $90,000 in earnings to get that lower EFC number.
So the question becomes is it worth giving up $90,000 per year gross earnings to get $27,000 per year gross. This is a net loss of $63,000/year in gross income. We would gain about 30 hours per week of free time each (spouse and self)/year for 8 years. Another way to look at it, would you pay $31.50 per hour for 30 hours of free time for both you and your spouse?
Please check my math and consider. At our age, in our 50's, time is more important to us than money. Thoughtful responses welcomed. Thanks
I may be wrong, but I think you would be swapping dollars for quarters, which isn’t smart.
Yep, mathematically just about dollars for quarters to get 60 man hours per week off!

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Thu Dec 07, 2017 7:57 pm

livesoft wrote:
Thu Dec 07, 2017 7:36 pm
So your EFC goes down, but it seems you are presuming that financial aid will not be students loans if it is offered at all. I say try it and see all the student loan burden that you get.

Also, tell me this: Did your net worth go up by $200,000+ over the past two years? That's enough for lots of college expenses. Plus your net worth should continue to climb for the next 8 years and more.
Income is weighted more heavily in the Net Cost calculators and the EFC. Much of our net worth is in retirement accounts and our home, which isn't figured into the EFC formula. The EFC is used as the feds recommended cost per family for a year of college prior to any merit money.

fabdog
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Re: Quit jobs to gain lower EFC

Post by fabdog » Thu Dec 07, 2017 8:11 pm

EFC does not equal what you will pay in tuition... our first FAFSA was filed the same year I retired and had a bunch of deferred income roll in... my EFC was high six figures... full tuition and room and board at a state school was $22K

At your age I think you'll regret trading dollars for quarters

Mike

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Re: Quit jobs to gain lower EFC

Post by randomguy » Thu Dec 07, 2017 8:15 pm

chipperd wrote:
Thu Dec 07, 2017 7:54 pm

Yep, mathematically just about dollars for quarters to get 60 man hours per week off!

Yes. So why are you working today? At a high level you are saying you are willing to work for 100k/year but not 50k/year or whatever the number work out to. That is a fine choice. But where do you draw the line? 80k, 60k?

Things to think about
a) how you feel about your kids graduating with an extra 32k/year in debt. Your assumption at most schools is that you are getting loans and work studies, not scholarship money

b) what effect scholarship money would have on your EFC. You can make some guesses how likely this is

c) it isn't an either or. You can make this decision every year with some hand waving about how things are backwards looking.

d) what happens in year 8? Try to ramp up income or are you retiring.

cherijoh
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Re: Quit jobs to gain lower EFC

Post by cherijoh » Thu Dec 07, 2017 8:31 pm

You seem to be focusing in on college costs at the expense of all else. Are you prepared to be retired permanently? At your ages, you may find it very difficult to get a full-time, well-paying job after 8 years of minimal part-time work. So my advice would be to make darned sure that you have a very well-funded retirement and a really good handle on expenses before you embark on this "plan".

Have you considered the impact of this "plan" on your future SS benefits? How safe is your wife's pension? Is the pension indexed for inflation? How much risk are you taking in your retirement accounts? Could their value tank during an economic downturn leaving you with limited options to rebuild your retirement nest-egg?

I also agree with others that you may find that all you did was shift the college cost burden to your kids in the form of student loans.

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teen persuasion
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Re: Quit jobs to gain lower EFC

Post by teen persuasion » Thu Dec 07, 2017 10:00 pm

If you have a senior and a junior now, you are 2 years too late to do this for all eight years. The senior should have filed the FAFSA on 2016 tax info, and 2 kids will file next year on 2017 income figures that are all but set in stone now.

Get the FAFSA formulas and crunch the numbers to see what EFC you'd have based on however you plan to get your income under this hypothetical situation : pension, taxable withdrawals, Roth IRA withdrawals (hint: these are included in EFC calculations, even though they are tax free if from contributions), part time income, etc. The best outcomes are when your EFC approaches zero, so you are eligible for PELL and any state grants. Once your EFC exceeds max PELL and state grants, aid falls off rapidly.

Crunch the numbers for each year - one student, two students, three students, two, one. Note how shrinking family size affects the calculation (as older kids leave the nest). My youngest will appear to be an only child, and it will drastically change his FAFSA calculations vs for the older kids as members of a family of 7.

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Re: Quit jobs to gain lower EFC

Post by gluskap » Thu Dec 07, 2017 10:16 pm

We are sort of thinking about doing something like this in that our plan is to retire by the time our oldest daughter is 15. Since our income will be minimal after we retire, we’re hoping that she will get more financial aid. Most of our assets will be in retirement accounts or home equity as our house will be paid off. We do plan to save some money in a 529 but we are thinking that income is more heavily weighted than assets in the FAFSA calculations. But as someone stated earlier, they look at income about 2 years before your kid starts college so this is something you need to plan pretty far in advance.

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Re: Quit jobs to gain lower EFC

Post by CAsage » Thu Dec 07, 2017 10:19 pm

Is everyone assuming that lowering the EFC will actually result in money appearing from somewhere else, or would it just be more student loans? I had not thought it was so readily available.... Facing this shortly.
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Re: Quit jobs to gain lower EFC

Post by rob65 » Thu Dec 07, 2017 10:54 pm

All colleges have a net price calculator. You should explore this at the schools you are considering.

https://collegecost.ed.gov/netpricecenter.aspx

Unless your income is low enough to qualify for a Pell Grant, aid at most public schools will be in the form of loans, with some work study.

Some private schools have more grants, but be aware that many use the CSS Profile in addition to FAFSA.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 4:18 am

cherijoh wrote:
Thu Dec 07, 2017 8:31 pm
You seem to be focusing in on college costs at the expense of all else. Are you prepared to be retired permanently? At your ages, you may find it very difficult to get a full-time, well-paying job after 8 years of minimal part-time work. So my advice would be to make darned sure that you have a very well-funded retirement and a really good handle on expenses before you embark on this "plan".

Have you considered the impact of this "plan" on your future SS benefits? How safe is your wife's pension? Is the pension indexed for inflation? How much risk are you taking in your retirement accounts? Could their value tank during an economic downturn leaving you with limited options to rebuild your retirement nest-egg?

I also agree with others that you may find that all you did was shift the college cost burden to your kids in the form of student loans.
To answer your questions:
1: Yes, we are thinking about retiring permanently.
2: Yes, I have done the math to find out how this would impact SS benefits for both myself and wife.
3: Pension is govt with COLA and within the PBGC limits
4: Risk for retirement accounts is appropriate to our risk tolerance and yes, of course, the value could go down or up based on market fluctuations, but I think that question you asked may be rhetorical.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 4:20 am

rob65 wrote:
Thu Dec 07, 2017 10:54 pm
All colleges have a net price calculator. You should explore this at the schools you are considering.

https://collegecost.ed.gov/netpricecenter.aspx

Unless your income is low enough to qualify for a Pell Grant, aid at most public schools will be in the form of loans, with some work study.

Some private schools have more grants, but be aware that many use the CSS Profile in addition to FAFSA.
Yes, I have run the net cost calculators for all schools applied/will be applying to and interestingly, most are below the EFC number, making this idea I have posted about less attractive.

iflyjetzzz
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Re: Quit jobs to gain lower EFC

Post by iflyjetzzz » Fri Dec 08, 2017 4:33 am

I'll toss in a curveball. Ever consider getting divorced? Then have the person who earns the least have custody of the children with very little child support from the other; no alimony. Since you're trying to game the system, that may be a 'better' solution.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 4:47 am

iflyjetzzz wrote:
Fri Dec 08, 2017 4:33 am
I'll toss in a curveball. Ever consider getting divorced? Then have the person who earns the least have custody of the children with very little child support from the other; no alimony. Since you're trying to game the system, that may be a 'better' solution.
I had no idea that divorce would lead to a lower EFC but, to answer your question, not in consideration for me. I love my wife, but not my job.
And no, I'm not trying to "game" the system here. As I said in my original post, there is an ethical dilemma aspect to this consideration around the value of work that I want to leave out of this discussion. I'm truly just exploring all options, as most who plan thoughtfully would do around other financial issues, like taxes.
(ie: If you could pay 32k for a car or 11k for that same car and work less to pay for the less expensive car, I believe most would at least consider the cheaper vehicle).
I am really trying to look at this from all angles, as most Bogleheads do with any major financial decision, and I appreciate those who respect that approach.

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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 4:54 am

Well, i did game the system. I stopped working full-time when my oldest was about 16. Then I stopped work altogether when I had two kids in college. I found out that one could get $250,000 or more a year which was about the cost of a 4-year college degree at a private elite university back then. It was great!
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chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 5:28 am

livesoft wrote:
Fri Dec 08, 2017 4:54 am
Well, i did game the system. I stopped working full-time when my oldest was about 16. Then I stopped work altogether when I had two kids in college. I found out that one could get $250,000 or more a year which was about the cost of a 4-year college degree at a private elite university back then. It was great!
Thanks for taking my request seriously. I value your feedback and insights on this forum.

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Re: Quit jobs to gain lower EFC

Post by samsoes » Fri Dec 08, 2017 6:29 am

chipperd wrote:
Thu Dec 07, 2017 7:22 pm
Hi all,
Here I go again with an EFC question, this one is a bit of an ethical dilemma tied to it that I would like to leave out if we can.
Wife and I in early 50's. Three kids all in high school; senior, junior and freshman. Given the overlap years, they could each go for 5 years (their majors may demand this: engineering, O.T., and P.T. for now), giving me 8 years of college to pay for and our EFC came in at $32,000/year.
Just for hard number's sake, if we needed to pay full EFC for 8 years this totals $256,000. My wife and I both work two part-time jobs and she has a pension with COLA. If she and I quit most work to get us to basic living and therefore pay a lower EFC, the total cost for 8 years=$84,500. Total savings between the two scenarios =$171,500, post-tax money, so we are talking about $220,000 earnings for work over 8 years. This works out to be about $27,000 gross earnings per year for 8 years. We would have to give up the bigger earning part-time jobs and cut out about $90,000 in earnings to get that lower EFC number.
So the question becomes is it worth giving up $90,000 per year gross earnings to get $27,000 per year gross. This is a net loss of $63,000/year in gross income. We would gain about 30 hours per week of free time each (spouse and self)/year for 8 years. Another way to look at it, would you pay $31.50 per hour for 30 hours of free time for both you and your spouse?
Please check my math and consider. At our age, in our 50's, time is more important to us than money. Thoughtful responses welcomed. Thanks
What is EFC?

Non-intuitive acronyms are ubiquitous on this forum.
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user5027
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Re: Quit jobs to gain lower EFC

Post by user5027 » Fri Dec 08, 2017 7:49 am

samsoes wrote:
Fri Dec 08, 2017 6:29 am
What is EFC?

Non-intuitive acronyms are ubiquitous on this forum.
Expected Family Contribution

rkhusky
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Re: Quit jobs to gain lower EFC

Post by rkhusky » Fri Dec 08, 2017 8:00 am

Quit your jobs because you want to retire early and spend more time with the family and doing other things that you enjoy more. How it affects the EFC or the cost of college should be a ways down the list on the reasons for retiring early.

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Soul.in.Progress
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Re: Quit jobs to gain lower EFC

Post by Soul.in.Progress » Fri Dec 08, 2017 8:15 am

OP,

Do you have any investment money outside of retirement accounts? In other words, do you have any investment money in taxable accounts or CDs, etc? If not, will you live solely off the pension money in your 50’s and until Medicare?
Start by doing what is necessary; | then do what is possible; | and suddenly you are doing the impossible. | -- Francis of Assisi

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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 8:43 am

chipperd wrote:
Fri Dec 08, 2017 5:28 am
Thanks for taking my request seriously. I value your feedback and insights on this forum.
You're welcome! To see more of how we did it, search for 'livesoft college savings' and similar search terms.
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NotWhoYouThink
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Fri Dec 08, 2017 8:52 am

There is no financial aid fairy.

The biggest determinant of college cost is the list of schools your student is accepted to. The second biggest determinant is your student's high school academic and extracurricular record.

If your student goes to Community College for 2 years, then the closest (non-flagship) campus of your state university for 2 years your college costs will be much lower than your EFC. If your student goes to a mid-tier private university where the average test scores for admitted students are about the same as your student has, expect to pay about a quarter million for those 4 years, regardless of your income and assets.

Echoing others to say there is little relationship between your EFC and what you will pay for college. "The government" provides nothing but Pell grants and loans. Most schools provide little to no financial aid. Many mid-tier schools will provide significant tuition assistance to students whose academic credentials are much higher than the school's average. Some state schools will provide merit aid (not need-based aid) to high scoring students to keep them in state. A very few schools, all of which are very difficult to get in to, provide generous need-based aid that is dependent on parental income. Federal Service Academies, as always, are affordable to all who are admitted.

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Re: Quit jobs to gain lower EFC

Post by iflyjetzzz » Fri Dec 08, 2017 9:04 am

chipperd wrote:
Fri Dec 08, 2017 4:47 am
I had no idea that divorce would lead to a lower EFC but, to answer your question, not in consideration for me. I love my wife, but not my job.
And no, I'm not trying to "game" the system here. As I said in my original post, there is an ethical dilemma aspect to this consideration around the value of work that I want to leave out of this discussion. I'm truly just exploring all options, as most who plan thoughtfully would do around other financial issues, like taxes.
(ie: If you could pay 32k for a car or 11k for that same car and work less to pay for the less expensive car, I believe most would at least consider the cheaper vehicle).
I am really trying to look at this from all angles, as most Bogleheads do with any major financial decision, and I appreciate those who respect that approach.
Sorry, I didn't mean to offend. However, I consider leaving the workforce to be a rather drastic measure. As for lowering the EFC, I was never asked about my salary when my kids went to college. The EFC was computed off of my ex's salary even though I paid for their college. My daughter went to a private school and it made her eligible for a decent scholarship from the college. I don't remember the impact on my son's tuition.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 9:30 am

Soul.in.Progress wrote:
Fri Dec 08, 2017 8:15 am
OP,

Do you have any investment money outside of retirement accounts? In other words, do you have any investment money in taxable accounts or CDs, etc? If not, will you live solely off the pension money in your 50’s and until Medicare?
Yes for emergencies. We would use 457 monies, which can be accessed without penalty at any age (more than a year since leaving that employer) to suppliment as needed.

chipperd
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Re: Quit jobs to gain lower EFC

Post by chipperd » Fri Dec 08, 2017 11:04 am

livesoft wrote:
Fri Dec 08, 2017 8:43 am
chipperd wrote:
Fri Dec 08, 2017 5:28 am
Thanks for taking my request seriously. I value your feedback and insights on this forum.
You're welcome! To see more of how we did it, search for 'livesoft college savings' and similar search terms.
Livesoft,
I searched as you suggested and found many posts from you on this topic but not one that describes how you managed this scenario. Can you point me in a specific direction?
Thanks
Chipperd

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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 11:15 am

Sure. We did reduce our income drastically when I stopped work. That way we were able to get the American Opportunity Tax Credit for many years. Also, while working we saved and invested a lot of money, so much money that while our oldest was in college our portfolio went up by more than $250,000 each year for a few years in a row. That is, stock market gains made getting financial aid a moot point and easily paid for several college educations.

Our oldest saved us money by working during the school year and summers as well as graduating early (with a MS in engineering) saving us a year of tuition. Our youngest goes to an inexpensive state university, so with the AOTC the costs are cheap. He wants to do O.T. and/or P.T. and has done two years of job shadowing before he heads to grad school.

Our EFC was $99,999 when we did the FAFSA even though our income was much much less when that was filed.

So my advice to you is to pretend you have stopped working without actually stopping work and save all your money and invest it for college expenses. Of course, make your kids work while in high school and summers and during college and so on. The gains you make on your investments each year should be able to pay for your children's college expenses without you having to dip into principal.

Quitting your job is not going to get you any significant non-loan financial aid. When I quit my job, we were offered loans at one school that my oldest was admitted to, but she did not attend that school. None of our kids have used loans for college.
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Re: Quit jobs to gain lower EFC

Post by NotWhoYouThink » Fri Dec 08, 2017 11:45 am

Quitting your job is not going to get you any significant non-loan financial aid.
Most important quote in this thread. Read it over and over until you understand it.

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Re: Quit jobs to gain lower EFC

Post by WildBill » Fri Dec 08, 2017 11:54 am

Howdy

The expectation that reducing income and the EFC will lead to some university granting you a lot of money for your kids tuition is not very reasonable, and in practice is almost solely dependent on how good the student is.

If your kid is admitted to and attends one of the rare universities that is need blind on admissions - there are 30-40, with large endowments -Harvard and the like - they may indeed get grants. Thus your proposed strategy may work. Recognize that admission rates at these schools average well below 10%.

If your kids are excellent students and attend a private university not in the above category where they are in the top 20% of the admitted pool, they may indeed get merit aid to attract them. The merit aid is often tied to the equivalent cost of attending the State Flagship, as this is who the school is competing with for this group of students. Thus your proposed strategy may work, to the point of reducing cost to that of the state flagship school. Think Rice vs UT.

If your kids are national merit semifinalists, a number of schools will offer them a free ride to attract them. In this case your strategy is unnecessary.

If your kids are excellent students the state flagship may offer them merit aid to keep them in-state. In this case your strategy is unnecessary.

Note that all of these scenarios are based on your kids being exceptional students. If they are not, the aid you may anticipate will be mostly in the form of loans, which must be paid back.

These questions about employment and financial contortions to reduce EFC, or other financial gymnastics re reducing university costs are a hardy perennial on Bogleheads. As livesoft noted, given the number of tax and other incentives available and the opportunity costs of the proposed financial gymnastics it is usually a lot cheaper and easier to go ahead and pay for college.

Good luck

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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Re: Quit jobs to gain lower EFC

Post by greg24 » Fri Dec 08, 2017 11:57 am

chipperd wrote:
Fri Dec 08, 2017 4:47 am
(ie: If you could pay 32k for a car or 11k for that same car and work less to pay for the less expensive car, I believe most would at least consider the cheaper vehicle).
I wouldn't consider this purchase if it meant my child was then saddled with a 20k loan for the vehicle.

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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 11:59 am

WildBill wrote:
Fri Dec 08, 2017 11:54 am
As livesoft noted, given the number of tax and other incentives available and the opportunity costs of the proposed financial gymnastics it is usually a lot cheaper and easier to go ahead and pay for college.
It may not be cheaper, but is certainly usually more profitable.
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Fri Dec 08, 2017 1:01 pm

livesoft wrote:
Fri Dec 08, 2017 4:54 am
Well, i did game the system. I stopped working full-time when my oldest was about 16. Then I stopped work altogether when I had two kids in college. I found out that one could get $250,000 or more a year which was about the cost of a 4-year college degree at a private elite university back then. It was great!
Never mind! You explained this later.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Fri Dec 08, 2017 1:12 pm

By the way, getting "$250K or more a year" had absolutely nothing to do with your kids being in school or you purchasing a LearJet. Your explanation sounded more like "if they don't have the bread, let them eat the cake" category to me.

livesoft
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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 1:19 pm

I gamed this thread, too. :)
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DrGoogle2017
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Re: Quit jobs to gain lower EFC

Post by DrGoogle2017 » Fri Dec 08, 2017 1:35 pm

Haha, the gamers. I gamed my kids EFC through scholarship money.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Fri Dec 08, 2017 1:52 pm

livesoft wrote:
Fri Dec 08, 2017 1:19 pm
I gamed this thread, too. :)
You certainly did! I loved it but I am not sure what OP feels about your so helpful contribution. Something tells me that OP does not have the necessary $4M in invest-able assets generating $250K per year to pay for his kids education but I could be definitely wrong.

How many games have you played so far? "How not to pay a dime in taxes even having $100K of income" was one of your best game. This 250K one I must have missed in the past. Can you tell me the chronological orders of all your memorable games?

livesoft
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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 1:59 pm

I don't think the OP is retiring early on less than a million dollars in their portfolio. Since both US and International total market index funds are up more than 20% so far this year, the OP's portfolio has probably made more than $100,000 and possibly more than $200,000 this year. He's got plenty of time to increase that portfolio before his last child is out of college.

Also the OP did not state he needed $250K a year and neither did I.

Basically, he doesn't need even close to the $4MM that you wrote about. We are not talking about a sustained withdrawal rate here.
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MDfive21
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Re: Quit jobs to gain lower EFC

Post by MDfive21 » Fri Dec 08, 2017 2:28 pm

the better financial option is for your kids to marry someone before they start college..


marry?

DrGoogle2017
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Re: Quit jobs to gain lower EFC

Post by DrGoogle2017 » Fri Dec 08, 2017 2:30 pm

You can’t assume OP is fully invested in the stock market.

livesoft
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Re: Quit jobs to gain lower EFC

Post by livesoft » Fri Dec 08, 2017 2:31 pm

DrGoogle2017 wrote:
Fri Dec 08, 2017 2:30 pm
You can’t assume OP is fully invested in the stock market.
That is totally true which is why I didn't assume that.
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Re: Quit jobs to gain lower EFC

Post by WildBill » Fri Dec 08, 2017 4:18 pm

wrongfunds wrote:
Fri Dec 08, 2017 1:52 pm
livesoft wrote:
Fri Dec 08, 2017 1:19 pm
I gamed this thread, too. :)
You certainly did! I loved it but I am not sure what OP feels about your so helpful contribution. Something tells me that OP does not have the necessary $4M in invest-able assets generating $250K per year to pay for his kids education but I could be definitely wrong.

How many games have you played so far? "How not to pay a dime in taxes even having $100K of income" was one of your best game. This 250K one I must have missed in the past. Can you tell me the chronological orders of all your memorable games?
Howdy

While chiding livesoft also recognize that the “How not to pay a dime in taxes even having....” thread was both very useful and definitely actionable. It certainly educated me and has been beneficial to many others as well.

Happy tax avoidance to all

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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UpsetRaptor
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Re: Quit jobs to gain lower EFC

Post by UpsetRaptor » 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.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » Fri Dec 08, 2017 4:58 pm

don't we go through this every few weeks? somebody claims that NOBODY pays the full price to the college and then we get in to arguments how that is untrue and lots of BH have forked over quarter million per child for singe undergraduate degree and we keep on going in circles. But it is true that it does boggle my mind as to how the rest of the country manages to do that though.

cherijoh
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Re: Quit jobs to gain lower EFC

Post by cherijoh » Fri Dec 08, 2017 10:30 pm

chipperd wrote:
Fri Dec 08, 2017 4:18 am
cherijoh wrote:
Thu Dec 07, 2017 8:31 pm
You seem to be focusing in on college costs at the expense of all else. Are you prepared to be retired permanently? At your ages, you may find it very difficult to get a full-time, well-paying job after 8 years of minimal part-time work. So my advice would be to make darned sure that you have a very well-funded retirement and a really good handle on expenses before you embark on this "plan".

Have you considered the impact of this "plan" on your future SS benefits? How safe is your wife's pension? Is the pension indexed for inflation? How much risk are you taking in your retirement accounts? Could their value tank during an economic downturn leaving you with limited options to rebuild your retirement nest-egg?

I also agree with others that you may find that all you did was shift the college cost burden to your kids in the form of student loans.
To answer your questions:
1: Yes, we are thinking about retiring permanently.
2: Yes, I have done the math to find out how this would impact SS benefits for both myself and wife.
3: Pension is govt with COLA and within the PBGC limits
4: Risk for retirement accounts is appropriate to our risk tolerance and yes, of course, the value could go down or up based on market fluctuations, but I think that question you asked may be rhetorical.
I think the PBGC only covers private-sector plans, so I'm not sure how you think the PBGC limits come into play.

From the PBGC website:
The Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of nearly 40 million American workers in nearly 24,000 private-sector defined benefit pension plans. A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service. PBGC was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum.

GreenGrowTheDollars
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Re: Quit jobs to gain lower EFC

Post by GreenGrowTheDollars » 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.

Matt Y.
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Re: Quit jobs to gain lower EFC

Post by Matt Y. » 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.

wrongfunds
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Re: Quit jobs to gain lower EFC

Post by wrongfunds » 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.

DrGoogle2017
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Re: Quit jobs to gain lower EFC

Post by DrGoogle2017 » 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.

Soon2BXProgrammer
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Re: Quit jobs to gain lower EFC

Post by Soon2BXProgrammer » Sat Dec 09, 2017 12:08 pm

i'm not saying the OP should retire to get a lower EFC..

but if the op wants to retire.. the op should retire...

then if this is the case.. there is other need based aid.. other then federal:

http://www.wsac.wa.gov/state-need-grant

also if you commit to be poor from 7th grade on:
http://www.wsac.wa.gov/college-bound
Last edited by Soon2BXProgrammer on Sat Dec 09, 2017 12:18 pm, edited 1 time in total.

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