Isles1,

Thanks for the bode of confidence. From what I understand, you can only register for the Selective Service (I almost put register for the SS, but just didn't like how that looked) from the age of 18 to 26, so I can't register now to process the application.

Financial Aid at NYU said that I can make a case, and they can see about getting the funds regardless. I don't have much in my defense. When I was 18, I scoffed at the idea of registering, and later on just forgot about it. Plus I spent more than half the time between 18 and 26 oversees.

So, I'll give that a shot, but I was hoping someone has been a similar predicament. I can pay out of pocket for a good portion of the program, well over half, but I'm going to need some loans for a good portion of the tuition.

My other plan is to go to career services once the semester starts and see about jumping ship to another company with a more generous reimbursement policy. I've been thinking of getting out of IT anyway.

-Skeet

gkrykewy said:My wife has decided to apply for professional (veterinary) school for Fall 2007 admission. Assuming she is accepted, I know that we won't need to fill out the FAFSA until January. However, I was hoping that someone might have some general thoughts on strategy. Obviously loans will make up the vast majority of the aid package. That being said, I know that veterinary programs also offer a number of merit and need-based grants, to the degree that the average debt burden for graduating students is less than (4 x annual tuition), let alone (4 x annual tuition + 4 x annual living expenses).

I will continue working at my present job while she attends school, which pays reasonably well, so I know that our EFC will be higher than the average student with no third-party support. My question centers on our savings, which are roughly 20k (we had been saving for a home down payment, but will likely continue renting given inflated property values and the return-to-school decision). I (myself) have roughly 10k in student loans that were consolidated with the old (good) UHEAA deal.

Basically, I'm afraid that 20k in savings will just turn into 20k less in aid grants. I'm reticent to 'hide' it (grandma, etc), so I'm wondering how best to protect our interests. Should I pay off my own student loans in their entirety? Should I keep the savings as-is to make them available for a possible down payment or just for general flexibility? Advice would be appreciated.

First off, start talking (anonymously, call up w/o giving name) or looking at websites of the financial aid offices of the schools she's applying to. See what their practices are. Some schools may shield retirement accounts. Some might not expect you to dip into savings, or may exempt a certain amount depending how long she's been out of college.

If retirement plans are exempted, you might want to think about socking some of that money into IRAs - it'll be there when you want to buy a home (see here). Be careful, though, and make sure to leave yourself enough savings in case something happens. You don't want to be stuck taking a 10% penalty hit if you get laid off and need to find a new job.

gkrykewy said:JeebusSaves said: First off, start talking (anonymously, call up w/o giving name) or looking at websites of the financial aid offices of the schools she's applying to. See what their practices are. Some schools may shield retirement accounts. Some might not expect you to dip into savings, or may exempt a certain amount depending how long she's been out of college.

If retirement plans are exempted, you might want to think about socking some of that money into IRAs - it'll be there when you want to buy a home (see here). Be careful, though, and make sure to leave yourself enough savings in case something happens. You don't want to be stuck taking a 10% penalty hit if you get laid off and need to find a new job.

Thanks. She's only looking at one school (we're fairly tied down location-wise, and vet schools are much more difficult to get into out-of-state), and I've looked at the aid policies on the web site. Unfortunately, the aid form does request IRA values. Further, it looks like the vet school requires parent asset information even for married applicants, which is just weird. And it appears from the language written that they take the value of your assets (savings, equity, etc), divide it by four, and expect one fourth to be contributed each year.

That's obnoxious but not that unusual, or even specific to vet schools. I know law and med school operate the same way with respect to using parents and spouses for financial support. However, unless the school is so stubborn that they'll refuse to certify loans, your wife can take out GradPLUS loans at 3% up front plus 6.8% (National City) or 6.5% with a hint of sketchiness (EFSI) to make up the expected asset contribution. And that's after the Stafford loans (she should be eligible at least for unsubsidized Staffords on the same basis). Unsubsidized Staffords and GradPLUS loans are based on total cost of enrollment, not EFC. So you're not locked into giving up all your assets.

At current interest rates, you may lose a little bit if your wife takes out loans instead of paying from your savings (say, roughly 5.5% interest on a Stafford with THE's repayment bonuses vs 5.15% ED savings or 5.5% Citibank 6-month CD), but having that financial flexibility may be worth it, plus student loan interest is tax-deductible (to a point).

gkrykewy said:JeebusSaves said:At current interest rates, you may lose a little bit if your wife takes out loans instead of paying from your savings (say, roughly 5.5% interest on a Stafford with THE's repayment bonuses vs 5.15% ED savings or 5.5% Citibank 6-month CD), but having that financial flexibility may be worth it, plus student loan interest is tax-deductible (to a point).

Thanks again! So in addition to covering any parental contribution the school might expect with loans, are you suggesting that we leave the money where it is, in the savings, and also borrow whatever the school expects us to withdraw from that savings? The flexibility of keeping the savings as is would be attractive, but my root concern remains that showing this savings to the financial aid deptartment may limit grant aid.

That's what I'm suggesting. I don't know what kind of tuition we're talking about here, but I know that some grad/professional schools don't even consider any grant aid until you exhaust all Stafford loans, at least, for which you're eligible. So that's $18,500 in tuition, fees, etc. before you can think about grant aid. Does vet school cost that much? Are their policies different? I don't know that. You mentioned merit-based grants - that won't be affected by your savings.

As for the need-based grants, the only way I see to hang onto your savings is to be a little shady. One such way would be to arrange it so that your money is in transit at the particular moment that your wife submits her FAFSA (in one of those HSBC 3-day ACH's or something).

Another, more clever, way would be to take the savings and buy some sort of property that they don't ask about on the financial aid forms. Stocks, bonds, etc. are probably out, but what about a used car with good resale value? Gold? Jewelry? Really any personal (not land, not a house) non-investment (nothing you have at a bank or a brokerage) property would do as far as I know. Of course, buying and selling a car every year might get tiresome, unless you have the time and/or skill to fix up the car and flip it for profit. Then there's the issue of sales tax, depending what state you're in.

I'm not a lawyer and have no idea if this would work, but if you're that concerned about the grants you could try. Or you could see what you get the first time around and then appeal or amend the FAFSA if you don't like what you get (did I say we have $20000 in the bank? we really have $200...).

MiaFLSurf said:I am thinking the second option makes better sense? Mine as well keep that money in the online savings as long as I can to have it making more interest than I have to pay on it.

Thoughts?

You're half right, in two ways. First, if you're going to hang onto the money you should probably be making more than the 5.05% - you can easily get a short-term CD at 5.5%, and maybe 6% depending where you are.

Second, looking at each loan in isolation is only part of the picture (although a valid way to look at it). At the same time you're making money on your old loans, you're paying interest on your new loans. So on average, you probably won't come out ahead by taking out more loans, although it depends on the relative proportions of last year's loans and this year's loans. It also depends on what kind of incentive you get. If you happen to be from or go to school in the right state, you might get a 2% auto-debit reduction on Staffords with no fees - and then it'd be worth it to max them out. Even if you just have the THE/Northstar 1.3% credit incentive, you're at break-even vs. 6-month CD from Citibank.

There's also some flexibility that having cash in the bank brings. I would personally rather have money and a loan (even if I'm losing a little money on interest) than nothing. As a student, you have the ability to borrow at advantageous rates without putting up anything for collateral. That's hard to do outside the BT game (which I also recommend). So I say borrow, but beware of fees. You can find lenders who don't charge or refund fees.

MiaFLSurf said:JeebusSaves said:MiaFLSurf said:I am thinking the second option makes better sense? Mine as well keep that money in the online savings as long as I can to have it making more interest than I have to pay on it.

Thoughts?

You're half right, in two ways. First, if you're going to hang onto the money you should probably be making more than the 5.05% - you can easily get a short-term CD at 5.5%, and maybe 6% depending where you are.

Second, looking at each loan in isolation is only part of the picture (although a valid way to look at it). At the same time you're making money on your old loans, you're paying interest on your new loans. So on average, you probably won't come out ahead by taking out more loans, although it depends on the relative proportions of last year's loans and this year's loans. It also depends on what kind of incentive you get. If you happen to be from or go to school in the right state, you might get a 2% auto-debit reduction on Staffords with no fees - and then it'd be worth it to max them out. Even if you just have the THE/Northstar 1.3% credit incentive, you're at break-even vs. 6-month CD from Citibank.

There's also some flexibility that having cash in the bank brings. I would personally rather have money and a loan (even if I'm losing a little money on interest) than nothing. As a student, you have the ability to borrow at advantageous rates without putting up anything for collateral. That's hard to do outside the BT game (which I also recommend). So I say borrow, but beware of fees. You can find lenders who don't charge or refund fees.

Well here are more details of the loan if it helps you out in giving me advice:

Its through AES and my school and offers this: No fees, and a 2% rate reduction after 36 on time payments and 0.25% reduction if I pick auto-debit to pay.

Assuming I do all that, I think it means to take the money out this year anyways and keep the money from last year in some sort of CD to max out the interest I can get on it?

That's probably what I would suggest. If you have at least $10,000, I recommend doing the TDAmeritrade promo that's floating around FWF. Get yourself $500 (equivalent to 5% return) and then stick the money into a brokerage CD earning, not top dollar, but a pretty good rate (over 5%) for 9 months.

However, I would consider finding a different lender. 2% after 36 on-time payments means you're paying full interest for 3 years plus (for an unsubsidized loan) however many years you have left in school. According to this site, which knows what it's talking about, a 2% reduction after 48 payments translates to a 0.7% immediate reduction, so 2% after 36 may be equivalent to 1%? THE and EFSI both offer much more attractive, immediate incentives. And I happen to know that THE is really nice (for instance, when a friend of mine was stuck with Sallie Mae, they advised her about how to get a Direct Consolidation - even though it wasn't with them - so she could get away from Sallie Mae).

gkrykewy said:JeebusSaves said:That's what I'm suggesting. I don't know what kind of tuition we're talking about here, but I know that some grad/professional schools don't even consider any grant aid until you exhaust all Stafford loans, at least, for which you're eligible. So that's $18,500 in tuition, fees, etc. before you can think about grant aid. Does vet school cost that much? Are their policies different? I don't know that. You mentioned merit-based grants - that won't be affected by your savings.

The tuition fees are 27k+. The confusing thing is that all the the "scholarships" are listed as merit AND need-based, which necessitates the whole 'minimizing assets' game. Perhaps the best bet (rather than buying/selling used cars repeatedly - creative!) is to do what I'm trying to avoid, and just loan the money to my parents. A related question: my wife is secondary account holder on one of her mother's bank accounts. Is it important to remove her from that status for financial aid purposes?

That might be easiest, although if it's a lot of money there might be tax consequences for you or your parents. (See here for a decent discussion.) As for the secondary account ownership, I would say it probably doesn't matter, since they're not going to actually verify your account amounts with the banks, and as long as she doesn't consider it (and it actually isn't) her money I doubt they would care.

gkrykewy said:JeebusSaves said:As for the secondary account ownership, I would say it probably doesn't matter, since they're not going to actually verify your account amounts with the banks, and as long as she doesn't consider it (and it actually isn't) her money I doubt they would care.

But there's always the possibility they could perform a routine credit check, couldn't they? Otherwise it would be very easy to hide any assets.

When you say "bank account," do you mean a savings account or a credit card? The latter would show up on her credit report, but bank accounts where you deposit money don't show up on any credit report. I've also never heard of a school pulling a credit report on a student, but that doesn't mean it doesn't happen.

It's very easy as a practical matter to hide assets by not reporting them. But as a legal matter, if they get suspicious and catch you somehow (e.g., looking at tax returns), you probably forfeit all your aid and get thrown in jail for fraud if you do that.

Another FAFSA question...

Has anyone played around to see if the EFC changes when you list more money in checking/savings accounts (ING, ED, etc) or in what they consider investments (CDs, IRAs)? I am wondering if moving more money in a less liquid product like a CD would mean less EFC, or if it matters at all.

nikkai said:Question: Do I have the option to choose who I want as a lender? UIC is telling me that they are the lending institution. They are offering a 7.9% interest rate w/ 4% origination fee.Yes, you have many options for new loans. Assuming you qualify for Stafford loans, that's your best bet at 6.8% with many lenders offering 0% origination fees.