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How do I know if I should fill out FAFSA?

Discussion in 'Financial Aid' started by SM-UCLA tech, Oct 26, 2002.

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  1. SM-UCLA tech

    SM-UCLA tech CCOM MS4 soon OB/Gyn PGY1

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    I would love some advice.

    I don't know if I would qualify for Financial Aid. Should I fill out a FAFSA anyway?

    I am married with two children, but my combined household income is in the range of 70-80,000/yr.
    I also own property.

    I'm lost!


    Thanks for any help or advice
  2. mpp

    mpp SDN Moderator Moderator Emeritus

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    For most schools it is a requirement that you fill out the FAFSA. Everyone will qualify for some amount of unsubsudized Stafford Loans. I earned more than the income you listed, I have no children, and my school qualified me for $30,000 in unsubsidized Stafford Loans (at the current incredibly low rate of 3.46 percent - practically free money) in addition to $10,000 in fixed rate private school loans in addition to $11,000 in scholarship money. I would have not received any of those opportunities without completing the FAFSA. Apart from wading through the idiotic Password/PIN crap completing the FAFSA is quite painless.
  3. mpp

    mpp SDN Moderator Moderator Emeritus

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    I should add that unless you own investment property, the value of your home is not taken into consideration for FAFSA (hint: this is a good place to "stash" extra savings if you would like to qualify for subsidized loans). Savings in an federally approved retirement plan (e.g., 401(k), IRA, etc.) are also not included on the FAFSA. They'll just want to know last year's income and your investments (savings, securities, investment property, etc.)
  4. lady bug

    lady bug

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    If I fill out FAFSA in January, yet don't know which school I'll be attending next fall, how will they figure out how much money they'll award me? Is this based solely on income and investments, or do they take the school into account too?
  5. SM-UCLA tech

    SM-UCLA tech CCOM MS4 soon OB/Gyn PGY1

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    Thank you.....I appreciate the advice....

    is there a website where I can fill out the FAFSA online?

    and if I have money in an savings account with my brokerage, is that considered investment money?


    Thanks again!
  6. mpp

    mpp SDN Moderator Moderator Emeritus

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    You can begin to fill the FAFSA out in January. They allow six schools to be included on the original FAFSA form. Just pick the six you'd be most likely to attend. You can have the FAFSA sent to any other schools later.

    The financial aid office at a particular school will determine the amount of award in subsidizied/unsubsudized Federal Stafford loans, any state loans, school loans, and school grants/scholarships. They will use the information from FAFSA to determine the amount of each. Everyone will be eligible for some amount of unsubsidized Stafford loans.

    The FAFSA is available at www.fafsa.ed.gov

    The FAFSA for the 2003-2004 school year will be available in January. You will need your 2002 tax return completed or at least estimated (for income earned in the year 2002).

    Yes, money in a savings account at a brokerage is including in your savings/investment money. Unless that money is a federally approved retirement account such as an IRA or Roth-IRA. Likewise you do not have to include equity in your home or money in a 401(k) /403(b) program.
  7. paean

    paean Senior Member

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    Ladybug,

    Schools use the information generated by the FAFSA about how much you and your family theoretically can spend on your education (your estimated family contribution, or EFC), and then they decided based on the differenct between the total cost of attendance and your EFC how much to offer you in loans and possibly grants/scholarships.

    The information collected by the FAFSA isn't dependant on how much your school will cost, just on your available resources on the day you fill it out.

    For anyone with savings or investments planning to liquidate them and move them into 1. your home, or 2. a IRA or 401K, do it before you fill the FAFSA out, so you don't look like you have large available savings. But before you get too excited about having a safe place to store money and still get financial aid, while the federally generated EFC doesn't take home equity into account, many schools do, and will expect you to use that equity to pay for expenses. Same at some places for retirement accounts. But even if you have a million dollars in your checking account, you will still be eligible for unsubsidized Stafford loans, so there will be some money available.
  8. lady bug

    lady bug

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    Thank you mpp and paeann. That definitely helps clarify things. :)
  9. tBw

    tBw totally deluded

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    what do you suggest to do if you have significant savings but do not own a home (and obviously I won't be buying one in the near future as I hope to get in and move for med school next year)?
  10. mpp

    mpp SDN Moderator Moderator Emeritus

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    Hiding money legally can get a little tricky. I don't think the Department of Education is too critical, but the IRS certainly is. You can try giving it to someone (perhaps your parents) for safe-keeping. If it were kept in a checking account that earns no interest then there were be no gains and therefore nowhere to report the gains to. If it were in your parents' savings account earning interest, the IRS might get a big suspicious about where an extra $50,000 or so came from. However, not reporting the "gift" (even if it is placed in a non-interest earning account) to the IRS is illegal but difficult to track.

    Gifting money to people (over $10,000 per year) is a taxable event and the giver would owe taxes on the amount over $10,000. There is a lifetime tax-free gifting available of $1,000,000 (this is the inheritance tax thing...if you leave more than $1,000,000 to someone (actually it's $675,000 right now but will be $1,000,000 by 2006) then that money over the $1,000,000 will be taxed). The IRS is nice enough to keep track of all givfts that you give over $10,000 in your lifetime to be sure that they can get some of your money after you are dead.

    So the moral of the story is, deal with the fact that if you have some substantial savings right now, you will not be eligible for subsidized loans unless you can get that money into a home before you file your FAFSA. But if you plunk that money into a home after you start medical school, then that money won't count as savings for the next year and you might then be eligible for subsidized loans. However, at the current rate of 3.46 percent (and it might even be lower for next year...they'll fix next year's rate in June) it is definitely not worth trying to do anything tricky. With a loan rate of 3.46 percent and an inflation rate of about 1.5 percent, the real cost of the money is less than 2 percent...nothing to get worked up over and probably the cheapest money you'll see in your lifetime.
  11. tBw

    tBw totally deluded

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    Thank for the reply mpp. I had hoped for a legal solution but I guess I have to just go with whatever happens, as - as you said - it's not worth trying to be devious about it. Thanks for taking the time to respond

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