Saving Money Is Bad

[brickmanli]

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I don't know if there are others like me, but my parents put all of their money into savings and checking accounts. We're not rich and have no home of our own. We still have a ten year old car, and they never had a vacation. But just because they have over 100 grand in the bank, they are perceived as rich and able to contribute to my education. The FAFSA doesn't even ask if they own or rent.

I'm not ranting, but I am wondering if it would be possible to contact Financial Aid and tell them of my circumstances. Is saving accounts a major factor in the calculations of aid?

Also, this is probably too late, but what can my parents do right now to decrease the expected family contribution? Would it matter if they buy a house or a new car now?

 

[SMW]

The EFC will be computed by the feds (for federal Stafford loans) based on your income and assets, not theirs. Their info will affect only individual institutional loans/grants/aid.

There is a space on FAFSA to explain special circumstances.

As long as your parents get rid of some cash before you file FAFSA (i.e. buy a house or a car, or put some money into an IRA), then that could increase your chances of getting institutional aid. It's pretty hard to buy a house quickly, though.

Also, apparently schools take into acount the age of your oldest parent, as they know the older folks will be needing their money for retirement soon.

Hope this helps. 🙂 Oh, and yes, it's bad to save money if you're the student, as they'll take more of your assets than they will the parents'. Put whatever you can into an IRA before you file.

 

[DarksideAllstar]

Thats why I spend every dime I make. 😀

 

[megkudos]

As a gradutate student you are considered indpedendent no matter how much your parents make. Are you apply to graduate school? Because then it won't matter how much they make only how much you make. In the case of undergrad you are right though, it can definately screw you over.

 

[Homer J. Simpson]

Do your parents claim you as a dependent on their taxes?

If not, you should be able to claim independence from them.

 

[SMW]

•••quote:•••Originally posted by Homer J. Simpson:
•Do your parents claim you as a dependent on their taxes?

If not, you should be able to claim independence from them.•••••This is totally irrelevant when you are applying to med school. You will be considered independant for the purpose of med school financial aid.

 

[simpleton]

If family income is irrelevant for medical school then why the bother with your parents in the first place. Take student a: parents income of $25k and student b: family income of $90K. You are saying then that students a and b will receive the same loans, grants, scholorships etc...??!!

 

[Scooby Doo]

•••quote:•••Originally posted by UCSFreak:
•Thats why I spend every dime I make. 😀 •••••That's why I go to strip clubs every night

 

[SMW]

•••quote:•••Originally posted by simpleton:
•If family income is irrelevant for medical school then why the bother with your parents in the first place. Take student a: parents income of $25k and student b: family income of $90K. You are saying then that students a and b will receive the same loans, grants, scholorships etc...??!!•••••Parental info is not even required on FAFSA for professional degree students, as all grad students are considered independant. However, some schools require it to assess eligibility for their own institutional loans/grants/aid. (Some want it on FAFSA, some on their own or some other form.) So if you want to be considered for both their need and non-need based aid, you have to give them the parental info. In no case does it hurt you. If their income is too high, then you won't be eligible for their need-based grants/loans. etc. But if you don't put it down you won't be considered at all. If the school doesn't want the info, they'll just ignore it, which is why it's OK to put it on FAFSA, even if a school doesn't require it (you pretty much have to put it on, unless by some miracle, none of your particular schools require it on there. But rest assured, they'll ask for it somewhere else). There have been exhaustive discussions of this recently. Do a search for FAFSA and read the recent threads. Med school financial aid applications are a whole different ball-game from undergrad.

 

[Doctora Foxy]

I have two things to say:

1) I love SDN! If it weren't for you guys, I would have never known to do my FAFSA.

2) SMW: please tell us as soon as you decide what med school you're going to go to. I want to go there too. You are such a big help....you should win an award or something! I speak on behalf of all SDNers when I say THANK YOU 😀

 

[SMW]

Ah, gee, Dr. Foxy, you're embarrassing me! 😳 BTW, at this point, with just 1 acceptance, I have nothing to decide! 😀

 

[matthew0126]

brickmanli... not that i've attempted anything like this :wink: , but just take the 100k, give it to a friend of the families temporarily (i.e. wire it), and voila......................

 

[NE_Cornhusker1]

For undergrads anyway they take about 33% of the students and 6% of the parents assets (excluding retirement savings) into account when figuring the EFC. The point being is to spend down so that you have about nothing left, encourage your parents to shift money towards retirement accounts.

 

[Assassin]

•••quote:•••Originally posted by matthew0126:
•brickmanli... not that i've attempted anything like this :wink: , but just take the 100k, give it to a friend of the families temporarily (i.e. wire it), and voila......................•••••sorry to intrude on the post...but as a good citizen, I just wanted to volunteer as a friend of the family's 🙄

 

[Mutterkuchen]

•••quote:••• brickmanli... not that i've attempted anything like this , but just take the 100k, give it to a friend of the families temporarily (i.e. wire it), and voila......................
••••I realize that this is probably just a joke, but don't do this without examining the tax consequences. You cannot simply give money to someone else without paying income taxes on the money. There is a $10,000-$11,000 limit on the amount you can give someone, even your kids.

 

[DarksideAllstar]

•••quote:•••Originally posted by Scooby Doo:
• •••quote:•••Originally posted by UCSFreak:
•Thats why I spend every dime I make. 😀 •••••That's why I go to strip clubs every night •••••Where I'm from we have a lot of those, and I can't tell you how much time I spent in them when I shoulda been studying for O-chem.

 

[brickmanli]

•••quote:••• As long as your parents get rid of some cash before you file FAFSA (i.e. buy a house or a car, or put some money into an IRA), then that could increase your chances of getting institutional aid. It's pretty hard to buy a house quickly, though.
••••But if I already filed the FAFSA, can they still buy the car and make the changes on the FAFSA?

BTW SMW, you should do an MBA in addition to your MD.

 

[brickmanli]

Another question, if my parents buy a house in the next year, will the EFC for my other three years be decreased? Or does my parents' financial info for this year affect all four years of the med school education?

 

[SMW]

•••quote:•••Originally posted by brickmanli:
•Another question, if my parents buy a house in the next year, will the EFC for my other three years be decreased? Or does my parents' financial info for this year affect all four years of the med school education?•••••You have to file the FAFSA (and, I expect, the school's other financial aid app forms like NeedAccess or whatever they use) every year. So whatever effect your parents' info has on your aid, it can change from year to year. However, I've said it before, and I'll say it again,
your parents' financial info does not effect the FAFSA EFC!!! The "family" as far as the feds are concerned is YOU!!!

•••quote:••• But if I already filed the FAFSA, can they still buy the car and make the changes on the FAFSA?

BTW SMW, you should do an MBA in addition to your MD. ••••I think if you've already filed, you have to go by whatever the correct information was as of the date you filed. The corrections feature on FAFSA is meant for true corrections of a mistake, or putting in more exact numbers if you were only using estimates before.

MBA? NO WAY!!! 😀

 

[k's mom]

brickmanli-

ALWAYS CONTACT THE FINANCIAL AID OFFICE WHERE YOU WILL ATTEND. THEY are the ones who have the real power to adjust your cost of attendance, and deal with any unique situations. The EFC is computer generated and only a starting point for your financial aid office to work with.
Oh, and obviously "giving the money away" is ridiculous. We have set up our son's savings account through my mother, but that is only a few hundred dollars at the moment. YOu are talking about your parents' life savings...a big difference. Have they considered setting up an IRA? Most retirement savings accounts are sheltered from being considered on things like the FAFSA (Yes, I know they ask for that information, but it is my understanding that the formula either discounts this, or only uses it when it is over a certain amount), plus they would get a tax break.
Assuming you will be a health professions graduate student, there are a few loan programs and service commitment scholarships that give PREFERENCE to people considered to be from a "disadvantaged background" or "disadvantaged status". There are often private scholarships at specific schools that stipulate low parental assests as a requirement. That is about it. Parental assests should never restrict you (as an independent student) from securing regular med loans.

 

[SMW]

•••quote:•••Originally posted by k's mom:
• Have they considered setting up an IRA? Most retirement savings accounts are sheltered from being considered on things like the FAFSA (Yes, I know they ask for that information, but it is my understanding that the formula either discounts this, or only uses it when it is over a certain amount), plus they would get a tax break.
•••••FAFSA and other financial aid forms I have seen specifically exclude IRA's and other specific retirement plans, like 401(k) and Keogh plans (this would not include savings that parents are just planning to use during retirement). You do not even have to list parental (or your own, for that matter) assets in these retirement accounts. There is a limit on how much a person can put into an IRA each year. Last year (tax year 2001) it was $ 2,000. This year (tax year 2002) it went up to $3,000 or $3,500 if over age 50.

 

[FSUMED]

OK, here is something I learned in my past, do what you want with it. I was told this by a quidance councelor as well as a college official in the admissions office. The FAFSA askes for you family's savings and what is in thier checking account. BUT apparently the government doesnt check, and I am not real sure that they can, not that they would if they could. So when I filled out my undergrad FAFSA, I simply wrote 0's in the checking account and saving account boxes as they had said. I have never had any problems at all and I got me the financial aid that I needed. I know it sounds crazy to lie to the gov, but hey, they lie to us all the time. It isnt like it is your taxes anyway.

 

[SMW]

I can't believe you posted advice on SDN to do something so fraudulent, illegal and immoral. FYI, a certain number of FAFSA applications are randomly selected for "verification." Maybe they didn't check in the past, but they do now, no doubt because of people like you. This is a pretty public forum, and you could easily find yourself in some serious trouble, which I think you definitely deserve.

 

[Trek]

•••quote:•••Originally posted by FSUMED:
•OK, here is something I learned in my past, do what you want with it. I was told this by a quidance councelor as well as a college official in the admissions office. The FAFSA askes for you family's savings and what is in thier checking account. BUT apparently the government doesnt check, and I am not real sure that they can, not that they would if they could. So when I filled out my undergrad FAFSA, I simply wrote 0's in the checking account and saving account boxes as they had said. I have never had any problems at all and I got me the financial aid that I needed. I know it sounds crazy to lie to the gov, but hey, they lie to us all the time. It isnt like it is your taxes anyway.•••••You're alter ego wouldn't happen to be named "J.Perlman" now, would it? --Trek

 

[brickmanli]

Actually my parents bought all the IRAs they could possibly buy each year, so that option is out.

Right now I'm considering the service scholarships offered by the govt for rural medicine, because the last thing I'd ever wanted to do is use up my parents' savings, which the only tangible thing they have.

I'm just so bummed because it seems so unfair. If they bought a house a year earlier, perhaps we wouldn't be in this situation right now. And schools should do more, otherwise medical students will be picking specialties just to pay off their debts. I've always wanted to become a doctor serving underserved areas, but now I don't know anymore.

 

[EMDrMoe]

Please re-read the above posts. Amidst the much -needed humor is the fact that the FAFSA EFC does NOT include your parents' money.

Someone correct me if I'm wrong: if your EFC is say, $6000 and you don't have it, you can take additional loans (gov't or private/alternative) to meet that cost (up to the cost of the school's budget). So, depleting the savings of your parents would not be an issue.

 

[SMW]

You are right, ATC2MD. Although it looks like brickmanli might be balking at taking out the huge loans that we are (mostly) all so blithely planning on.

brickmanli, how old are your parents? The closer they are to retirement, the less the schools will factor in their financial status.