For many high-school seniors, this week isn't just the beginning of the academic year. It's also the start of the college-application season, and that means filling out financial-aid forms. But for many families with hefty incomes or sizable wealth, applying for aid will be a wasted effort. Here's a look at who likely won't qualify.
You can get a handle on your aid eligibility by ... playing with the College Board's Expected Family Contribution, or EFC, calculator. The key concept: If your EFC is below a college's total annual cost, you will get help from the college or the federal government in bridging the gap. ... So will you receive needs-based aid? Imagine you don't own your home, have no savings and just one child.
[How much income takes you out of the college financial aid sweepstakes?
- $90,000, if your child goes to the average in-state public college costing $13,000/year
- $150,000, if your child goes to the average private college charging $30,000/year
- $220,000, if your child goes to the most-expensive private college charging $48,000/year
If you have two kids in college, the amount of income you can have before losing all financial aid increases to:
- $120,000, if your child goes to the average in-state public college costing $13,000/year
- $220,000, if your child goes to the average private college charging $30,000/year
- $300,000, if your child goes to the most-expensive private college charging $48,000/year]
Remember, however, we are talking about income alone. What if you have, say, $500,000 in investments sitting in a regular taxable account? If you had one child in college and your income was $130,000, your EFC might be $47,000, which means you are unlikely to get aid, no matter where your child goes to college. Similarly, at $250,000 in income and with two children in college, your EFC would be some $47,000 per child. Again, you would likely be out of luck.