Student Loan Advice

Student Loan Advice

Student Loan Advice and Aid?

My husband has recently decided to go back to school and I was wondering if my salary would hinder his amount by a lot? I've been speaking to The Student Loan office and they cannot tell me any information until an assessor looks at the file. I just would like to know if $46000/year is too much for him to qualify? When I use the online calculators (someone at the student aid office mentioned that the calculation is similar to that of the parental contributions), it appears that I would only contribute $10 a week to his studies, but definite answers would help. He hasn't worked all year, so it's only been my salary that's paying the bills, and it would ease my mind about another large bill if anyone can help out there.
Thanks!

Okay, let's take a look at the formula and see what we can come up with:

As another respondent asked - it makes a big difference if you and your husband have children - the size of your household is a large factor in determining your EFC. You didn't mention kids, so I'll work with the assumption that it's just the two of you.

One thing to keep in mind about this calculation is that your EFC will always be based on last year's income - so if your husband is going to complete the FAFSA now, it will ask him about the income he reported on his 2007 tax return. If he completes the 2009-2010 FAFSA in order to apply for aid beginning in the fall semester of next year (September 2009), the questions will be about his income for 2008.

Let's assume he wants to fill out the current FAFSA, in order to apply for aid either this fall, this spring, or this summer...

Start with the adjusted gross income that you both reported (in total) on your 2007 tax return.

Add any untaxed income and benefits (social security, veterans benefits, money earned "under the table", etc.)

Now subtract any education credits claimed on your tax return (HOPE or Lifetime Learning). Subtract any child support payments made.

This is your total income.

Now subtract the taxes you both paid last year - income taxes and social security taxes.

If your husband is the only one who will be attending school (and he attends at least half time), subtract $9,970 (this is something called an 'income protection allowance') If you're in school at least half time, subtract $6220, instead of $9970 (Subtract one, but not both)

If you're both working (you will be for this year), subtract the lesser of $3300 or 35% of the smaller income.

This is your "available income".

Now divide this number in half. This is your income contribution to the Expected Family Contribution.

Now we look at your assets:

Add the amount in your savings and checking accounts.

Add the net worth value of any investments you own. (Do not include the value of your primary residence. If you own more than one property, you must include the fair market values of any properties other than the primary residence.)

Add the net worth of any business that either of you own.

At this point, you need to subtract an "asset protection allowance", but that's based on your husband's age - you didn't mention that, so I can't predict it.

A few examples:

If he's 25 years or less: $0
If he's 26: $2600
If he's 27: $5100
If he's 28: $7700
If he's 29: $10,200
If he's 30: $12,800

Now take 1/5 of the remaining amount - that's your contribution from assets.

Add your contribution from income and your contribution from assets - now divide by the number of students in College. (if it's just your husband, that's 1 - if you both go, that's 2)

That's your EFC.

Now let's make a total guess and see what happens...

Let's assume that you and your husband made just $46,000 last year. Your tax bracket would have been about 15%, so we'll take a wild, wild guess and assume you paid about $5200 in taxes. You didn't mention where you live, so it's hard to guess your state tax rate - let's say it's 3% - that's another $1000. We'll subtract $9970, assuming your husband is the only one in college, but since we assumed he had no income, we won't subtract the $3300 or the 35%. Divide in half - let's see:

That's a little less than $15,000, if my rough calculations are right.

I'll assume you have minimal assets - after all, you did say that he didn't work, so it's unlikely that you're a major investor or that your bank account is all that flush.

Bottom line - if he's the only student that will be attending school this year, you're looking at an EFC somewhere around 12000 to 15000. Remember, these are all rough estimates, and I had to do a lot of guessing about your situation.

An EFC of 12000 is relatively high - you're not going to qualify for federal need-based assistance with an EFC that high. This year, the maximum EFC that qualifies for need-based assistance is 4731.

Keep in mind that these figures all change dramatically if you have children, or other dependents living in your household - the more people you're supporting with your income, the less you are expected to contribute towards any one person's educational costs.

Despite the fact that you are unlikely to qualify for need-based aid, your husband will qualify to borrow from the government's Stafford lending program, which is the best and cheapest educational loan available anywhere. The interest rates are low and fixed, and you don't need a credit check or a cosigner to qualify. As an independent student, he will eligible to borrow from $9500 to $12500 each year, depending on his class standing (freshman, sophomore, etc) in school.

I hope that helped and that it wasn't too complicated. Good luck to you both!

Student Loan Naperville Advice - When To Look For College with Ken Schreiber

 

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