thoughts after first FAFSA

My thoughts about FAFSA after my first filing.

Results for FAFSA #1.

  • Completed Oct 2016.
  • Used 2015 taxes.
  • Applies to the 2017/18 school year.
  • My son JumpStart Jack’s freshman year.
  • Year 1 of 7 with a kid in college.

I filled out all the requested questions to the best of my ability, and the website automagically spit out my expected family contribution (EFC) at $22,300.  I was like most people, and didn’t have any thoughts about FAFSA until my oldest kid was a senior in high school.

$22,300 is almost a fourth of our income after taxes.  I do feel like complaining about the cost of college, and complaining about how high my EFC is, but I will try to minimize that, because it is just plain boring, and it doesn’t help.   I can’t fix the price of college.

Everyone else’s EFC is calculated the same way.  Some people will say I am lucky to have that much in savings, and that I am lucky my mother set up UGMAs for my children.  People will say I am lucky to make that much money, and be part of a two income family.  Those people will say I am lucky to have children on the college track.  Frankly all those people are right, and I am blessed, but the cost of college still freaks me the #$@&%*! out.

I did a few proactive things to influence My FAFSA.  FAFSA uses assets on the date of filing to calculate the EFC.  I paid down the loan on our Lexus in order to create a very low balance in my checking accounts.  I transferred the max yearly contribution from our investment account into our Roth IRA’s.

The new October timing of the FAFSA was actually great for our dual teacher family.  There’s frequently a 20k$ dollar swing in my bank account between Late august and mid-June.  In the summer, we don’t get a pay check and no Beach townhouse rent.  Free time to waste/spend money in the summer doesn’t help, and  I typically build and renovate transferring lots of money to Lowes and Home Depot.

 

My thoughts about FAFSA include lots of ideas about how the numbers can be manipulated.

My list of ideas.

Idea #1 (Nothing I can do about this now.)  My son had money in an UGMA, and the parent’s savings and the student’s savings are treated differently.  It would be better for my son’s savings to be in my name instead of his.

Idea #2 (Nothing I can do about this either.)  I should I have transferred money from my investment account to the Roth IRA’s over the last several years. Retirement accounts do not count against you.

Idea #3 (I am actually considering.)  Move 80k$ from my investment account and pay down my mortgage. Instead of stocks I have home equity.  Home equity does not count against you.  Stocks count against you on the FAFSA.

Idea #4 (Cool idea.)  Pull 80k$ from the investment account and by a red 1966 Corvette Coupe. Put it in the garage, and keep it clean. Run the engine enough to keep it good shape.  Don’t drive it anywhere, and try to avoid insurance/registration/license plate fees.  Wash my vet in the driveway with no shirt and Prince music blasting.  Sell it in 7 years later, hopefully for a profit.  Awesome classic cars do not count against you on the FAFSA.

Idea #5 (Nerdy idea.)  Buy 80k$ worth of toys like legos or pokemon cards.  Keep 7 years, try not to let a bully steal them, and hopefully sell for a profit.  Mythical Japanese monsters do not count against you on the FAFSA.

Idea #6 (Pirate idea.)  Buy an 80k$ dollar boat.  Doh! Pirates don’t buy boats, they steal boats.  OK, instead cash out the 80k$ and I mean actual cash, like dimes.  Use my stolen boat to hide 800,000 dimes in a cave, only accessible at low tide.  This idea is probably considered fraud and illegal, because you are expected to report cash on the FAFSA.  I am pretty sure there is also a law against stealing boats. However pirates steal, plunder, and lie, so it fits the pirate theme.

Idea #7 (Stupid idea.)  Go buy 80k$ worth of stuff that will be worth nothing in a year.  I could buy steaks, rounds of drinks for the guys at the Village Grill, clothes, or anything made by Apple.  Being stupid actually counts in your favor on the FAFSA.

I made 2 hypothetical changes, and plugged them into a FAFSA calculator.

*Change the UGMA to my asset instead of my sons.

*Not have 80k$ in an investment account.  I could accomplish this by never investing 80k$, or making Roth IRA contributions over last 8 years.   I could convert the cash into a corvette, boat, Pikachu’s, buried dimes, or by buying Mrs. JumpStart some shoes and handbags.

According to a FAFSA calculator, with these 2 changes, my EFC would be reduced from 22300$ to 16200$.

Those 2 changes reduced my EFC by a little over 6000$.

I have had an auto withdrawal from my bank account to an investment firm since I started teaching, and the monthly amount has increased.  My only withdrawals coincided with real estate purchases. Anyway, the number 6000$ is weird to me. My current monthly withdrawal is 500$ a month or 6000$ per year.  So according to government calculators, saving 6000$ per year has put me in such great shape that I can afford 6000$ extra per year for college.

Another current post: My second FAFSA.

Posted in FAFSA, Family finances.

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