personal assets and other ?s

[katem]

hello,

what proportion of an individuals personal assets are expected to go to medical school? 100%?

for instance if i have some money in stocks, etc. is some proportion or the full amount of that included in what i am able to pay per year?

also, while at stanford they said the formula they use to figure out expected parent contribution is (20% of parents' income + 6% of parents' assets) / (# of kids in college or gradschool)

is this approximately the same accross all schools? is home equity included in "parents' assets"? what about partial ownership of a second home?

a thousand thank yous to anyone who can answer any of these questions.

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[mpp]

The best way to figure out what your expected contribution will be is to use one of the EFC estimators available (here is a link to one). EFC is the Expected Family Contribution.

You have to report the full amount of any and all investments including stocks, savings accounts, real estate, etc. They do not expect you to use all of those for medical school...use the EFC to determine how much they expect you to use. Investments that are exempt from being used to calculate your EFC include your primary home and anything in a retirement account including traditional IRAs, Roth IRAs, 401(k) plans, 403(b) plans, etc.

Calculation of the EFC is strictly a federal thing and has nothing to do with each individual school. However, each individual school uses the EFC to determine the amount of financial award (the mix of federal loans (both subsidized and unsubsidized), state loans, private loans, scholarships, grants, etc.).

Equity in your primary home is not considered in calculating the EFC. Equity in other real estate is taken into account when calculating the EFC.

 

[katem]

mpp -

thank you thank you thank you!

 

[paean]

Unfortunately, some schools will expect you to use all your savings over the four years, even though the federal EFC doesn't. That means that while you may be eligible for subsidized loans through the Stafford program, you may not be eligible for institutional aid if you have savings they see as available.

 

[ndn11]

What are the conditions of a loan for medical school - ie when does the loan have to be paid back and is there an interest rate for the length of the loan or does it start at pay back time - what is that rate? Where can I find this info? Thanks

 

[mpp]

It depends on the type of loan. The federal loans are Stafford loans and there are two types: subsidized and unsubsidized. The government pays the interest earned on the subsidized loans while you are in school. Unsubsidized loan accrue interest while you are in school (although the interest is not compounded until you complete school). The interest rate is variable (currently at 3.46 percent). You are expected to begin payback after you complete medical school (although there is several months of grace period). Usually during residency you will qualify for a hardship deferrment and can defer the loans until you complete residency. Typical payback terms are for 10 years but there are variations in payback methods available. Once the loans are in payback you can consolidate them and lock in a rate (those that are just completing school now are loving the current low lock-in rate for sure). Check the Student Guide to Financial Aid put out by the federal government for more information.

Private loans vary. There are fixed rate ones and variable rate ones. The same goes for institutional or state loans.

 

[ndn11]

for a stafford loan they look at what you are making, what is in savings, ect??? OR do they just give you the loan???

 

[mpp]

This is how it works. You fill out the FAFSA form. This form asks for your Adjusted Gross Income from your taxes, and asks about any money in bank accounts, investments, etc. If you are not an independent, it would also have you put in your parents income, savings, investments, etc. (Some schools require you to put in your parental information even if you are independent from them). A formula is used to compute an Expected Family Contribution (EFC) from these numbers. This is the amount of money they expect you to use to contribute to that year's education.

The financial aid office at your school uses that EFC to determine the mix of grants, scholarships, and subsidized/unsubusidized Stafford loans. It is up the school's financial aid office to determine the amount of the total award. There is a federal maximum of $38,500 for Stafford loans, so you'll never get more than that in Stafford loans. However, if your EFC is very high, the school may offer you less in Stafford loans. It all depends on the total school budget. However, once all the awards are made and accepted (some people will accept less than they are offered to limit their total amount of debt), the financial aid office can then offer you more Stafford loans if you need it, but never more than the maximum of $38,500 per year. Private loans can fill the gap between the Stafford loans and the total school budget. If you have good credit, some lenders might loan you money over the school budget.

 

[Dr Chooch]

Hey guys, I was wondering how exactly you determine how much you have in liquid assets. In my case, all of mine would be in savings accounts. But is it just the amount of money you have left at the end of the year?

The thing is, I am planning on buying a car in the spring, and when I do that I will be getting rid of a large amount of the money I have in savings. Now, when I file for financial aid, schools are going to expect me to contribute money from my savings based on an amount I had at the end of 2002. The thing is, after buying a car I won't have that money anymore. What would happen with that, would I just have to take out more loans to cover that expected contribution? I was thinking about just taking the money out of my name before the end of the year to avoid making them think I will still have that kind of money available for med school next year. Is that just shady? What do you think? Thanks for the advice.

 

[DrZippy2b]

What if you are working now and making a GREAT salary and are quitting to go to school (think: zero cash flow)? Does the school adjust for things like that or am I pretty much hosed for my first two years (since I made money last year and and working until September this year)?

Thanks for all the info!

 

[mpp]

The FAFSA will ask for the amount in savings at the time of filling out the FAFSA. You can take the money out of your name if you want (e.g., give it to you parents). If it is over $10,000 you must report that as a gift to the IRS or the recipient will be expected to pay taxes on that money. There is a lifetime gift allowance of $1,000,000.

For the income thing, you can submit a revised FAFSA to reflect no income during school. Check with your financial aid office on what the procedure is for your school. Some schools understand this and take that into account. Other schools will require you to ammend the FAFSA. Fill out the 2003-2004 FAFSA showing your income in 2002. Then check with the school's financial aid office to see if there needs to be any ammendments.

 

[Dr Chooch]

mpp thanks, you are awesome. I'm pretty sure I am just going to take the money out of my name. Seems to be the best solution. But blah, financial aid forms suck anyways.