I will be a freshman in college next year. My parents are divorced so it was decided that my mother will be the sole provider for all of my expenses. My mother bought a home for 0,000 in 2007, but because of the market the homes around us have been dropping to 0,000 sometimes 0,000. However, i am worried that my mom makes too much for me to get financial aid…she makes 0,000 a year and pays around ,000 in taxes. I tried a EFC calculator and it came out to ,000. I thought my EFC would be much lower than that because even though she makes "a lot" of money she has a mortgage to pay with no equity. So, she basically really has no money….
Is that EFC pretty much what i’m expected to pay?
Sorry if it’s a stupid question since i calculated my EFC, i just don’t understand this whole financial aid or know how the EFC calculated. oh, she also doesn’t want to take out anymore loans since she has a big loan on the home we live in (she bought this home because the high school i am attending is a good school) she also just got this job that pays her that much last year, so she really isn’t that rich.
thankyou
Okay, Poke, let’s see if I can help:
First of all – we’ll start with the bad news, but I promise it gets better.
Your mom’s house – and the falling property values that are afflicting so many people all across this country – that will have absolutely no impact on your aid eligibility. Many, many parents have mortgages – and the fact that your mom devotes a significant percentage of her income to paying hers is not relevant to the question of your financial aid.
It’s like this, Poke. Your mom’s house represents a choice, on her part, of one of the things that you she could have done with her income. She could have chosen to buy a luxury yacht, she could have chosen to buy a Lamborghini, she could have chosen to buy diamonds and jewelery – or she could have chosen to buy you a very expensive college education.
No one tells your mom "this is what you must spend your money on", because it’s her money, and she’s free to do what she wants with it – as long as it’s legal. That’s one of the liberties of living in this country – and it applies to houses and to schooling.
So she chose to buy an expensive house and devote a lot of her income to her mortgage – that was her choice – and all the more power to her. However, the fact that she made that choice, and not the choice to buy a much cheaper house – or rent – so that she could pay all of your college bills – well – that decision to buy doesn’t qualify you for extra financial aid. Your mom’s ability to pay is still going to be based on her income and some of her assets – the FAFSA does not take bills or other financial obligations into account.
If your mother’s income is 120K, it almost goes without saying that you’re not going to qualify for need-based financial aid. Those forms of aid are only intended for – and available to – the neediest of families. These aren’t the families that have a very high mortgage that wipe out a good portion of their income – these are the families that don’t make a lot of money to begin with.
Students get real hung up on their EFC scores, but to be honest, if your score isn’t 4041 or less, it hardly matters what it is. Applicants with scores of 4041 or below qualify for the various special forms of need-based financial aid – applicants with scores above 4041 do not.
If you don’t qualify for need-based aid – well, most of of your fellow students say "welcome to the club". Only about 1/3 of all applicants qualify for need-based aid. That means that you – like 67% of your classmates are eligible for the Federal Student Aid program’s exceptional lending programs.
The federal loans are available to YOU – without any concern for your income, your assets, or your credit history. The loan is your loan – in your name (not your mother’s), and you will not be asked for a cosigner (ever). The interest rate is low and fixed, and your payments aren’t due until you’ve been out of school for 6 months.
Of course, there has to be a catch – and there is. The Stafford lending program has a strict annual borrowing limit – for you – as a dependent freshman – that’ll be only $5500. Next year, you’ll be able to borrow $6500, and in your 3rd and 4th years, the max goes up to $7500.
You’re right – that’s not a lot of money – but that’s all that most students get. If your mom absolutely refuses to borrow to assist you, you’re going to have to target a very inexpensive school. The expensive schools are for students who can contribute a lot of out-of-pocket money, or those who can nail down those big dollar scholarships.
You can look at the private loans to supplement your Stafford borrowing, but you are going to need a highly creditworthy cosigner. The lenders just aren’t making big dollar loans to student applicants with no income and no credit history.
If your mom will help, tell her to look into the PLUS loan program – the government will help her borrow as much as you need to afford your school. But if not – I’m afraid you’ll have to look at schools that you can afford with $5500 in borrowing, plus whatever other money you have available to you.
Good luck!