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FAFSA Strategies

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New post 30 Jan 2009, 07:59
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solaris1 wrote:
For the most part, most of us are only going to be offered unsubsidized Stafford loans, and since they're NOT need-based it doesn't quite matter if you "shield" a few thousand bucks in an IRA or in your Mom's checking account or wherever. I personally find all this strategizing to be an ethical grey area.


I'm in agreement with solaris1 and a little confused as to why people are doing all this strategery (as W would put it). You're not going to get free money like undergrad. The only purpose of filling out the fafsa is for the unsubsidized loans which aren't need based. Why on earth would anybody be feel they needed money from the government for a graduate degree???

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New post 30 Jan 2009, 10:47
cpgmba wrote:
falibay wrote:
Don't we have to file our 2008 Tax returns first? I still don't have my W2 from my bankrupt employer... :lol:


Same here! (except for the bankrupt part) And yes, you have to file your 2008 taxes before submitting for FASFA.


Do you have to file/submit or just complete the forms?

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New post 17 Feb 2009, 06:05
solaris1 wrote:
Play around with various scenarios and see how they affect financial aid eligibility before you submit your FAFSA through the FAFSA4Caster.

http://www.fafsa4caster.ed.gov/

For the most part, most of us are only going to be offered unsubsidized Stafford loans, and since they're NOT need-based it doesn't quite matter if you "shield" a few thousand bucks in an IRA or in your Mom's checking account or wherever. I personally find all this strategizing to be an ethical grey area.

ryguy904's suggestion on the Roth IRAs is a good one though. You can technically withdraw principal without penalty and additional taxes at any time, and withdraw earnings for educational expenses without penalty, too.


So what does it take to qualify for the subsidized Stafford loan ($8500)? Do MBA students ever qualify for that portion or is it mostly for undergrads? I played around with the fafsa4caster last night, and even with very little savings it looks like I only qualify for the unsubsidized portion ($20,500).

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New post 17 Feb 2009, 06:26
if your unsubisidized portion is only $20,500, where do you go for the remainder of the funds?

Have any of the international students identified resourses for loans yet? All the schools say they're confident the loans will be available but I haven't seen any programs yet.

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New post 17 Feb 2009, 06:41
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pguard wrote:
if your unsubisidized portion is only $20,500, where do you go for the remainder of the funds?

Have any of the international students identified resourses for loans yet? All the schools say they're confident the loans will be available but I haven't seen any programs yet.


The way I understand it these are the loan options, in order of most to least attractive:

1. subsidized Stafford - subsidized (interest doesn't accrue until you graduate), low interest rate, max amount of $8,500
2. unsubsidized Stafford - unsubsidized, low interest rate, max amount of $20,500
3. federal Grad PLUS loans - higher interest rate, no maximum amount. See the following:

http://www.salliemae.com/get_student_lo ... grad_plus/

4. Miscellaneous - some schools offer other funding options. For example, Kellogg allows you to apply for Northwestern student loans. I don't think everyone qualifies, but I don't know much about that though.
5. Outside sources - private lenders that you find on your own.

I don't think you have to start paying on any of these options until you graduate.

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New post 17 Feb 2009, 07:17
maverick2011 wrote:
pguard wrote:
if your unsubisidized portion is only $20,500, where do you go for the remainder of the funds?

Have any of the international students identified resourses for loans yet? All the schools say they're confident the loans will be available but I haven't seen any programs yet.


The way I understand it these are the loan options, in order of most to least attractive:

1. subsidized Stafford - subsidized (interest doesn't accrue until you graduate), low interest rate, max amount of $8,500
2. unsubsidized Stafford - unsubsidized, low interest rate, max amount of $20,500
3. federal Grad PLUS loans - higher interest rate, no maximum amount. See the following:

http://www.salliemae.com/get_student_lo ... grad_plus/

4. Miscellaneous - some schools offer other funding options. For example, Kellogg allows you to apply for Northwestern student loans. I don't think everyone qualifies, but I don't know much about that though.
5. Outside sources - private lenders that you find on your own.

I don't think you have to start paying on any of these options until you graduate.


You don't have to start paying on the loans, but for some of them (unsubsidized Stafford) the 6.8% interest is accrued day 1 and is capitalized (added to your principal). My question is, can anyone get unsubsidized Stafford loans? regardless of savings?

"You might be able to borrow loan funds beyond your subsidized loan amount even if you don't have demonstrated financial need. In that case, you'd receive an unsubsidized loan. Your school will subtract the total amount of your other financial aid from your cost of attendance to determine whether you're eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay."

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New post 17 Feb 2009, 07:29
@bball, exactly. It probably makes sense to pay the interest each month while in school if you can afford it. My point was that you don't HAVE to (e.g. if you needed the extra money for living expenses, trips, etc).

I think it's pretty easy to get the unsubsidized Stafford. I've been playing around with different savings scenarios on fafsa4caster (I recommend you try it - it's free and easy to use). Even with my maximum savings amount, which is not huge but still substantial, I qualify for the max unsubsidized amount of $20,500. With zero savings or investments, I qualify for a small amount of subsidized, but it is so small that it's not worth the trouble.

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New post 17 Feb 2009, 07:51
hemm maybe I put something wrong in but it looked like I only qualify for 10k

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New post 17 Feb 2009, 08:14
lsuguy7 wrote:
hemm maybe I put something wrong in but it looked like I only qualify for 10k

I think the issue is that the 4caster thing only seems to apply to undergrad. The 10K looks like their annual estimate for the average cost of public undergrads, so they won't say you qualify for more than they expect it to cost you to attend. I don't think the 4caster is very helpful except to determine if you qualify for the subsidized stuff, which it appears you don't (same here), at least based on their inapplicable estimates of average cost. Unless I am mistaken, doing the 4caster is kind of irrelevant for anyone who doesn't match the subsidized criteria because the unsubsidized stuff and grad+ stuff is not need-based.
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New post 17 Feb 2009, 08:27
Good point rca215. I chose 4 year private school and off campus housing. That still only estimates $23,055 annual expenses. I guess I'll have to submit the real FAFSA and financial aid applications to see what I'm really eligible for. Maybe the $8500 subsidized portion will be possible since the estmated cost of MBA programs is around $75000.

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New post 17 Feb 2009, 08:31
maverick2011 wrote:
Good point rca215. I chose 4 year private school and off campus housing. That still only estimates $23,055 annual expenses. I guess I'll have to submit the real FAFSA and financial aid applications to see what I'm really eligible for. Maybe the $8500 subsidized portion will be possible since the estmated cost of MBA programs is around $75000.

I submitted FAFSA officially,but since they don't have any estimated costs for MBA programs they don't give any guidance on whether you are subsidized-eligible. They just provide your expected family contribution. I guess the school then provides the estimated cost after you accept an offer. It's a bit of a buzz kill after submitting because they don't really tell you anything other than that they expect you to use virtually every cent of your savings!
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New post 17 Feb 2009, 09:26
It's up to the schools to determine whether you qualify for need-based assistance, such as subsidized Stafford loans, which is why you don't find out anything when you submit your FAFSA. The school will use the estimated family contribution from the FAFSA, as well as their estimated cost of attendance, to determine the aid package to offer you.
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New post 17 Feb 2009, 22:36
Great thread! I organized info spread across several posts and put it into a mini-guide in the blog to show it off - great reference information.

I tried to give everyone a credit, but forgive me if I missed you :oops: - was not intentional.


http://gmatclub.com/blog/2009/02/guide- ... ss-school/
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New post 23 Feb 2009, 11:06
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FYI, I finally decided to take a look at the EFC (Expected Family Contribution) calculation. Only 20% of the student's assets contribute to total EFC. Therefore, you could only potentially knock $2000 off your EFC by maximizing your Roth IRA ($5K for 2008 and $5K for 2009)...I guess everybody has to make the decision if it is worth it to them personally. See below (page 21 for people with no dependants):

http://studentaid.ed.gov/students/attac ... update.pdf

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bb wrote:
Great thread! I organized info spread across several posts and put it into a mini-guide in the blog to show it off - great reference information.

I tried to give everyone a credit, but forgive me if I missed you :oops: - was not intentional.


http://gmatclub.com/blog/2009/02/guide- ... ss-school/


bb, you may want to modify the financial aid guide slightly. Step 2 should have some sort of disclaimer in it about being set up for undergrad only. Also, I would add the link that I provided in the previous post to Step 2...I think it is more helpful in determining EFC. Then the student can compare that number to projected cost from their respective programs.

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New post 23 Feb 2009, 11:28
maverick2011 wrote:
bb wrote:
Great thread! I organized info spread across several posts and put it into a mini-guide in the blog to show it off - great reference information.

I tried to give everyone a credit, but forgive me if I missed you :oops: - was not intentional.


http://gmatclub.com/blog/2009/02/guide- ... ss-school/


bb, you may want to modify the financial aid guide slightly. Step 2 should have some sort of disclaimer in it about being set up for undergrad only. Also, I would add the link that I provided in the previous post to Step 2...I think it is more helpful in determining EFC. Then the student can compare that number to projected cost from their respective programs.


Thank you - editing it right now
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New post 27 Feb 2009, 08:46
i'm trying to figure out if lowering cash balances really has an impact on expected contribution. to me, it seems like it doesn't and what really matters is your salary and the difference between $10k vs $20k of cash probably won't make much of a difference in EFC. but if it's $10k vs $50k then maybe there will be a big difference in the EFC (assuming the same salary in both scenarios).

what are your thoughts? basically, i'm trying to figure out if it's worth shedding some cash which i can easily do through mortgage payments.

thanks.
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New post 27 Feb 2009, 08:57
peaceyall wrote:
i'm trying to figure out if lowering cash balances really has an impact on expected contribution. to me, it seems like it doesn't and what really matters is your salary and the difference between $10k vs $20k of cash probably won't make much of a difference in EFC. but if it's $10k vs $50k then maybe there will be a big difference in the EFC (assuming the same salary in both scenarios).

what are your thoughts? basically, i'm trying to figure out if it's worth shedding some cash which i can easily do through mortgage payments.

thanks.


I am trying to figure out the same thing....
I find it unfair that it's asking about your current savings, but ignoring stuff like loans & mortgages.
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New post 27 Feb 2009, 09:30
fatb wrote:
peaceyall wrote:
i'm trying to figure out if lowering cash balances really has an impact on expected contribution. to me, it seems like it doesn't and what really matters is your salary and the difference between $10k vs $20k of cash probably won't make much of a difference in EFC. but if it's $10k vs $50k then maybe there will be a big difference in the EFC (assuming the same salary in both scenarios).

what are your thoughts? basically, i'm trying to figure out if it's worth shedding some cash which i can easily do through mortgage payments.

thanks.


I am trying to figure out the same thing....
I find it unfair that it's asking about your current savings, but ignoring stuff like loans & mortgages.


I honestly wouldn't worry all that much about EFC in my opinion. Since fafsa is used through UG and graduate school it doesn't really corrolate all that much into B-school. My thoughts are that unlike undergrad where Need-Based grant are a significant portion, as well as work-study and other perks. Bschool is mostly for the people who are gonna be pretty well off when they graduate.

That's just my opinion.
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New post 27 Feb 2009, 09:56
Sorry for the silly question but is there any benefit in applying for FAFSA if the combination of scholarship and savings may get you through the 2 years?
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Re: FAFSA Strategies   [#permalink] 27 Feb 2009, 09:56

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