FAFSA expected contribution is my life savings // other $$ ?s

[DSM_302.0]

Hello!

32 y/o w/ retired parents whose income is basically 0. Accepted to a great school! Waiting to hear back on others.

I filled out FAFSA recently and my expected contribution is basically the amount of cash I have saved up. So, my first year would basically wipe out my cash and put me at 0 and then living the rest of my school out on loans.

I would rather do something with my decade's worth of savings, such as defer a year and spend all my money traveling and maybe buying a car. This could decrease my expected "family" contribution and potentially get me some more aid. Or, regardless, I'd rather spend and enjoy this money than just have it be wiped away in the first year.

Or just like, buy a car. Or put a downpayment down on a house. Can I get student loans if I have a mortgage in my name? I have so many financial questions.

Any thoughts on how folks managed this? It's disheartening to have saved scrupulously for all these years and have 'nothing' to show for it except medical school swallowing it in one fell swoop.

Thanks!

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[acbakshi]

Hello!

32 y/o w/ retired parents whose income is basically 0. Accepted to a great school! Waiting to hear back on others.

I filled out FAFSA recently and my expected contribution is basically the amount of cash I have saved up. So, my first year would basically wipe out my cash and put me at 0 and then living the rest of my school out on loans.

I would rather do something with my decade's worth of savings, such as defer a year and spend all my money traveling and maybe buying a car. This could decrease my expected "family" contribution and potentially get me some more aid. Or, regardless, I'd rather spend and enjoy this money than just have it be wiped away in the first year.

Or just like, buy a car. Or put a downpayment down on a house. Can I get student loans if I have a mortgage in my name? I have so many financial questions.

Any thoughts on how folks managed this? It's disheartening to have saved scrupulously for all these years and have 'nothing' to show for it except medical school swallowing it in one fell swoop.

Thanks!

Have you looked into talking with someone from the Financial Aid office at the school you were accepted to? They might have some of the answers you're looking for. Best of luck!

 

[Lucky Day]

Hello!

32 y/o w/ retired parents whose income is basically 0. Accepted to a great school! Waiting to hear back on others.

I filled out FAFSA recently and my expected contribution is basically the amount of cash I have saved up. So, my first year would basically wipe out my cash and put me at 0 and then living the rest of my school out on loans.

I would rather do something with my decade's worth of savings, such as defer a year and spend all my money traveling and maybe buying a car. This could decrease my expected "family" contribution and potentially get me some more aid. Or, regardless, I'd rather spend and enjoy this money than just have it be wiped away in the first year.

Or just like, buy a car. Or put a downpayment down on a house. Can I get student loans if I have a mortgage in my name? I have so many financial questions.

Any thoughts on how folks managed this? It's disheartening to have saved scrupulously for all these years and have 'nothing' to show for it except medical school swallowing it in one fell swoop.

Thanks!

I don't know the answer to your question, but delaying medical school one year is essentially foregoing a year's worth of your physician salary (from the END of your career, when you'll be making the highest rate). In addition, the interest you save on your first year by using your savings will likely be substantial. For example, let's say you have $30k. If you take that out in loans in your first year instead of using your savings, and you paid that first year off in 15 years with a 7% APR, then you will have paid $18.5k in interest alone.

Sorry I can't offer better information, but maybe this will be food for thought.

 

[DokterMom]

Not to mention that the great medical school that already accepted you won't want to grant you a year's deferment so you can go off and spend all your money...

Borrow less - just as much as you need - and enjoy your future!

 

[Crayola227]

I wonder if there's some way to put this money up or gift it somewhere it won't be the same sort of thing towards EFC...
because that money really comes in handy during med school... lots of things aren't covered on in your aid... like residency relocation, Step 2 CS, etc

 

[Crayola227]

depending on the amount of loans they'll let you pull, I would highly suggest creating a budget for the things the aid doesn't cover (Step costs, costs for materials like Qbanks to study for them (easy a few hundred dollars just for each of those), residency interview expenses like flights (average expense value I saw was $8-10K, there are private loans from banks for this, still...) and residency relocation (first month last month rent, COL before first check which takes a few weeks - 1 month, etc, again, there are loans for this but....), also I'm not sure that my summer living expenses between MS1-2 were covered in aid, also if you do VSAS and away rotations 4th year, some of that wasn't covered (I had to spend $800 one month for car rental in a city across the country), I did an international away rotation and vacation abroad with fees and expenses of $1200 for flight, $2500 for rotation, $1500 doing bad ass stuff

so sometimes minimizing the amount of loans you pull each year isn't the best way to go, if you don't pull 2nd year thinking you don't need it, but then you do 3rd year... too late, they limit what you can get each year

emergencies come up too that might not be covered (have to fly home for holiday, parent's funeral (dark, I know))

many of these loans don't accrue interest in school, or they don't capitalize and the rate is low, so I say pull, and if you don't need it, you can pay it back immediately with no penalty or capitalization or accrual at the end of school

 

[Crayola227]

if your parents make so little, there is an amount that you should be able to gift them that won't be a problem taxwise for anyone, and it probably won't raise their "income" to where it would be expected to be contributed towards your education, if you trust them enough not to spend it, they could put it in an acct and "gift" it back to you as you need it for the expenses I mentioned

I'm not sure if your parents have SSI or the type of "retirement" benefits that are negatively affected by having such money go their way

getting it trickled back to you or holding on to it would be preferably than having your aid reduced or taking out less loans first year, I would think

it would have been best to figure out how to get rid of this money sooner (in a way you can get back, obvs)

one might think of a special needs trust - look into that online, an attorney might be worth the money it takes to set one up and keep this money up from financial aid

in general, financial aid won't help you with your questions beyond the one you had about a mortgage

 

[Crayola227]

car is a good idea if you need one for school, aid won't cover that

 

[trev5150]

Yes you can still get fed sub and ubsub loans, but you're not getting squat as far as free money is concerned until you're legit broke af.

I'm in the same boat. My retirement fund counts to them and I don't get a penny more than what the GI Bill doesn't cover (which is 70% because reasons).

When you fill out the FAFSA in your situation, you're not their dependent so they don't exist as far as the form is concerned. It's me, myself and I.

 

[3toedsloth]

If you buy a car now, you can update your fafsa.

You can also give this money to Family, put it under your mattress, or pay down your mortgage. You can update your fafsa once you've done this as well.

I agree, don't spend all of that on tuition. The money will be useful.

 

[DBC03]

I’ve noticed over the years that I can still borrow as much as necessary to cover tuition here even though I can theoretically contribute far more than the cost of each semester. So I think you can borrow what you need and still keep the money in savings. But I could be wrong...


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[djtallahassee]

Yes you can still get fed sub and ubsub loans, but you're not getting squat as far as free money is concerned until you're legit broke af.

]

Is this true? Any idea what percentage of students get any free money in the first place? No way that less than 20% of these students dont have some savings from their parents. Maybe they aren't reporting it? I'm inclined to gift it away if thats the case.

 

[DBC03]

]

Is this true? Any idea what percentage of students get any free money in the first place? No way that less than 20% of these students dont have some savings from their parents. Maybe they aren't reporting it? I'm inclined to gift it away if thats the case.

There’s no free federal money, so this would be entirely School-specific (why does autocorrect capitalize random words???). You can get federal loans. Schools may offer a combination of loans, scholarships, and/or grants.


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[trev5150]

I'm sure you can suss all that out via the DoE.

 

[trev5150]

There’s no free federal money, so this would be entirely School-specific (why does autocorrect capitalize random words???). You can get federal loans. Schools may offer a combination of loans, scholarships, and/or grants.


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A grant for example a Pell grant is free federal or state money. The only thing a school may grant is a scholarship or grant. The deferred interest on fed sub and unsub loans is (indirectly) free money.

 

[DBC03]

A grant for example a Pell grant is free federal or state money. The only thing a school may grant is a scholarship or grant. The deferred interest on fed sub and unsub loans is (indirectly) free money.

Are there pell grants for med school? I was under the impression those were not available. I was also told you cannot get subsidized loans for med school - only unsubsidized. And many schools offer loans - some are even interest free (the schools I have applied to have a few- but you still have to pay back the money).


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[djtallahassee]

Are there pell grants for med school? I was under the impression those were not available. I was also told you cannot get subsidized loans for med school - only unsubsidized. And many schools offer loans - some are even interest free (the schools I have applied to have a few- but you still have to pay back the money).


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From what I understood those pell grants were like very rare and for extreme circumstances. I was also under the impression that nobody really gets offered federal money and the EFC doesn't matter too much. I think I'm going to make a face to face with my financial aid dept (luckily local) and try to figure this stuff out. I'm not sure it is necessary or they want me spending all my savings or doing shady stuff with the money lol.

 

[DBC03]

From what I understood those pell grants were like very rare and for extreme circumstances. I was also under the impression that nobody really gets offered federal money and the EFC doesn't matter too much. I think I'm going to make a face to face with my financial aid dept (luckily local) and try to figure this stuff out. I'm not sure it is necessary or they want me spending all my savings or doing shady stuff with the money lol.

Just confirmed pell grants are only available to those without a bachelor degree and cannot be used for graduate school. Definitely check with your financial department. I’m trying to apply for a bunch of private loans right now. My top choice schools offer very little free money.


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[djtallahassee]

Just confirmed pell grants are only available to those without a bachelor degree and cannot be used for graduate school. Definitely check with your financial department. I’m trying to apply for a bunch of private loans right now. My top choice schools offer very little free money.


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Do you have a link to some of these private loans? Haven't explored that option, but I'm just starting my research. I asume the purpose is to avoid the 6-7% asskicking our government gives us.

 

[trev5150]

Are there pell grants for med school?


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I don't know. I have too much money in my retirement account to ever qualify for one so it's moot to me. I'm not here to do your research for you. Go to the appropriate websites and get the numbers for yourself.

 

[Magus5454]

I don't know. I have too much money in my retirement account to ever qualify for one so it's moot to me. I'm not here to do your research for you. Go to the appropriate websites and get the numbers for yourself.

As stated above, they are only for undergrad

 

[Magus5454]

Yes you can still get fed sub and ubsub loans, but you're not getting squat as far as free money is concerned until you're legit broke af.

I'm in the same boat. My retirement fund counts to them and I don't get a penny more than what the GI Bill doesn't cover (which is 70% because reasons).

When you fill out the FAFSA in your situation, you're not their dependent so they don't exist as far as the form is concerned. It's me, myself and I.

Also just unsub up to 41k i believe, then grad plus

 

[Crayola227]

Are there pell grants for med school? I was under the impression those were not available. I was also told you cannot get subsidized loans for med school - only unsubsidized. And many schools offer loans - some are even interest free (the schools I have applied to have a few- but you still have to pay back the money).


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there are definitely subsidized loans available, if you meet the criteria

 

[Crayola227]

From what I understood those pell grants were like very rare and for extreme circumstances. I was also under the impression that nobody really gets offered federal money and the EFC doesn't matter too much. I think I'm going to make a face to face with my financial aid dept (luckily local) and try to figure this stuff out. I'm not sure it is necessary or they want me spending all my savings or doing shady stuff with the money lol.

No, they do want you to spend it all. I've worked with financial aid before, they are generally unhelpful in helping you stretch your personal dollars or get more aid in any way, in my experience.

 

[Crayola227]

Do you have a link to some of these private loans? Haven't explored that option, but I'm just starting my research. I asume the purpose is to avoid the 6-7% asskicking our government gives us.

Private loans typically do not have a better rate, and not for the amounts you need for school. They can supplement, which is why people get them for things like residency interviews. I don't recommend them in general.

Consolidation of your federal loans after graduation to private lenders is possible, and can get your rates down. Trade off if that you lose certain benefits from the loans staying federal, like instances where you would need forbearance. Gotta read the fine print.

 

[Crayola227]

You need to figure out how to shelter your assets from needing to be reported on the FAFSA.

So figure out what DOESN'T count towards EFC, and how you can get that EFC down. Have to be careful with "gifts" not just for tax purposes for yourself or who you've gifted it to, but because I'm not sure that doesn't count against you.

They don't want people gifting the money just to wring the gov't of more loan money. I recommend maxing your loans because you can always un-max them, you can't recover savings that have been spent. So many times I see students frakked because they didn't have a savings to fall back on, or they didn't borrow enough and end up short.

Sometimes you can put the money in a non-revocable special needs trust for a family member, but that puts a lot of constraints on how you can utilize if for yourself. If you put your house in, you can stipulate as trustor/trustee that you can live in it to protect the asset on behalf of the beneficiary. There's tons of other ideas in this vein.

An attorney or a financial advisor or the internet will likely be of more help than the Financial Aid office. Even just asking these questions puts them onto you that you are trying to max things to your benefit, and then get you scrutinized. Just, no.

I learned all this the hard way as I've stated.

 

[chooks]

I had a similar situation and essentially paid for 2 years out of pocket from my liquid cash reserves. I didn't touch any investments or retirement accounts. At 6.8% interest compounded, maxing out loan money every year didn't appeal to me. Med school gave me a couple of thousand dollars per year in scholarships that only required me to write a thank you note to the donor. Also found some easy extra-mural scholarships from the financial aid office. Nothing huge (1000-1500 each), but string a couple of those together along and you can get 4-5K paid each year off the top, all said and done.

Super glad that I didn't go with my initial plan - buy a house and then try to do a home equity line of credit or something like that for tuition. I would have bought at the top of the bubble and would have wanted to sell at the bottom of the bust (essentially - the exact opposite of what you want to do). Still - I probably could have maximized my dollars a bit more by having a better strategy. Even something as simple as take out all the loans and then use savings to go toward Roth IRA while in med school (and zero income -- could probably fund a Roth pretty well and stay under the taxable radar). But I am not good at finessing finances, so did it the brute force (easy, inefficient) way. My total loans was < 100k, so I guess that isn't too bad, all said and done.

Best thing is to talk to a financial advisor. If you are going to med school, believe me, they will WANT to talk to you, and most likely will do so free.

 

[djtallahassee]

Best thing is to talk to a financial advisor. If you are going to med school, believe me, they will WANT to talk to you, and most likely will do so free.

Was thinking about financial advisor but have never actually talked to one before. It would probably be a good idea since I do have some savings and retirement money I am willing to play with. Is there a certain company you'd recommend? How would I find one of these free or low cost advisors?

 

[Crayola227]

I had a similar situation and essentially paid for 2 years out of pocket from my liquid cash reserves. I didn't touch any investments or retirement accounts. At 6.8% interest compounded, maxing out loan money every year didn't appeal to me. Med school gave me a couple of thousand dollars per year in scholarships that only required me to write a thank you note to the donor. Also found some easy extra-mural scholarships from the financial aid office. Nothing huge (1000-1500 each), but string a couple of those together along and you can get 4-5K paid each year off the top, all said and done.

Super glad that I didn't go with my initial plan - buy a house and then try to do a home equity line of credit or something like that for tuition. I would have bought at the top of the bubble and would have wanted to sell at the bottom of the bust (essentially - the exact opposite of what you want to do). Still - I probably could have maximized my dollars a bit more by having a better strategy. Even something as simple as take out all the loans and then use savings to go toward Roth IRA while in med school (and zero income -- could probably fund a Roth pretty well and stay under the taxable radar). But I am not good at finessing finances, so did it the brute force (easy, inefficient) way. My total loans was < 100k, so I guess that isn't too bad, all said and done.

Best thing is to talk to a financial advisor. If you are going to med school, believe me, they will WANT to talk to you, and most likely will do so free.

I essentially agree with your advice, and I don't always think putting the money into real estate is better. I do think that spending from liquid cash reserves totally blows and should be avoided if possible. Or, you at least want to have some saving in the bank. Meaning a balance that is left over at the end of the year. Because *just* your COA each year is lean or could leave you in a bad place depending on what woe befalls you.

 

[chooks]

Is there a certain company you'd recommend? How would I find one of these free or low cost advisors?

If your parents are retired, I would ask them if they have any recommendations first. Someone who knows your family would probably talk to you and if they can't help you, would have more insight into who around may. Outside of a personal network, residents get frequent emails for free lunches/seminars on financial planning. Of the ones I have been to, they seem to revolve more around insurance planning (which, at 32, is something you should think of -- I wish I would have gotten my life insurance locked in at a younger age than 40...). Needless to say, not the most helpful though in terms of nuts-and-bolts financial stuff. Even med schools generally have these types floating around. At my med school, a financial service company threw a nice (not overboard, but very good post-match party for the MS4. They, I am sure, would love to talk to you. Again, though, they may be more focused on getting insurance stuff sorted out rather than how to best allocate funds. So tldr: work your parents networks and then talk to any MS1-4 or residents and see if they can forward info to you.

The best person I have talked to lately about this kind of stuff is my CPA. If you don't have a CPA, then again, tap your parents network and see if their CPA (if they have one) has any recommendations. Even if it costs $100-200, it may be worth it in the end (if you are talking about $200k+ in loans).

Good luck.