Extended family and friends have no idea what to do or how to do it. Whether you contribute to 529 plan accounts owned by you, or to accounts owned by the parents or someone else, your contributions are a gift from you to the account beneficiary. Exploring how other families tackle paying for college and what you should think about will help bring some clarity to your college contribution dilemma. Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. And seven in 10 parents are actively saving for college costs. Are you sure you want to rest your choices? I have always been a strong proponent of parental involvement — within limits — in the college process. Your children will likely have some financial responsible for their college, either by working or through student loans, if your situation looks like so many others. It also depends on your financial obligations to support your family and how much time you’re dedicating to college. Grandparents say they’re waiting for their kids to ask about 529 contributions. The form filled out by most parents of college-bound students told Julie and Andrew Phipps they should expect to contribute about $14,000 to their daughter’s education. A Final Word on Your College Interview . So, they count for up to 5.6% of assets versus 20% for a student asset, which … For example, in Georgia, which has a $235,000 maximum contribution limit, a set of parents contributing $200,000 for a beneficiary and a set … 2A:34-23(a) to consider all the enumerated factors” and should not base its decision on any single factor. Most people with 529 plans come close to Fidelity's 2K rule. These are very specific to your family’s situation. A new study shows more parents are saving for college than ever before, but they are confused about how 529 plans work. You can still contribute to a 529 while your children are in school. The bottom line - start to contribute early and make room in your budget for college contributions. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Generally speaking, even if a parent is ordered to contribute to college, they will still be required to pay child support. By missing out on these … Williams determines parent contributions using a consistent evaluation of parents’ income and assets, including home equity, family size, number of siblings enrolled as undergraduates in college, and other factors, such as extended unemployment or unusual medical expenses. Looking beyond the pandemic for a few paragraphs, let's see how parents can become a positive element in the college process. With respect to college expenses, the divorce decree contained a standard reservation provision: “The Court expressly reserves the issue of each party’s obligation to contribute to the college or other education expenses of the parties’ children pursuant to Section 513 of the Illinois Marriage and Dissolution [of Marriage] Act.” Id. Larger families and families with more students in college will have smaller EFCs. It depends on how much government money is available for student aid and how much your school will kick in. Contribution by a parent for the post-high school educational expense is dependent upon the ability of the parents to contribute, the desire and ability of the child or children to succeed in their educational and vocational pursuits, and a number of other factors. You can still contribute to a 529 while your children are in school. Amy Fontinelle is a leading personal finance expert with nearly 15 years of experience. The FAFSA determines your EFC is $12,000. Prefer a quick estimate of your EFC instead? Students and their families are expected to contribute to the cost of college to the extent that they’re able. The following equation shows how EFC helps determine your financial need: Cost of Attendance – Expected Family Contribution = Financial Need. Which assets are included and how they are weighted depends on whether the school you’re attending uses the FAFSA (most public schools) or the CSS Profile (many private schools) to determine students’ institutional financial aid. Colleges expect you and your family to contribute a certain amount to college costs according to your financial situation. College confidential is one of my favorite online forums. About half of students … Get answers to common questions about your expected family contribution. Your financial need is $80,000 – $12,000 = $68,000. These figures include your family’s pre-tax income, after-tax income, assets, unemployment benefits and Social Security benefits. But my question is this: Should parents be paying for all of their children's education in the first place? Students and their families are expected to contribute to the cost of college to the extent that they’re able. We say “will be eligible to receive” because you may not receive the full amount you’re eligible for. Many of my preconceived notions about college, and the admissions process, were dashed when, a couple of years ago, I … The federal government calculates your expected family contribution using the figures you provide on your FAFSA. When filling out your free application for federal student aid (FAFSA), your expected family contribution (EFC) is a dollar figure that allows the government to assess how much money you are able to contribute to your child's college education through your own funds. But that will be just one piece of your interview. For parents with total annual income below $65,000 and typical assets for this income range, Stanford will not expect a parent contribution toward educational costs. You’ll have a better idea when your children are high school age about what will motivate them. Here are some scenarios of what colleges could do with this information (EPC = expected (by the college) parent contribution, APC = actual parent contribution that the parents say they will contribute): A. College Is Expensive. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. That’s why you’ll see EFC referred to as a measure of your family’s financial strength or mistakenly written out as “estimated financial contribution.” It’s not the amount you’re going to pay for a year of college. Currently, just 29% of parents plan to fully cover college costs for their kids. Takes Up To 3 Minutes. Expected family contribution consists of your parents’ contribution from their income and certain assets plus your student contribution from your income and certain assets. Students will still be expected to contribute toward their own expenses from their summer income, part-time work during the school year, and their own savings. We use a “Calculated Parent Contribution” which is used to determine your eligibility for school need-based aid. From what I've read, it doesn't matter whether if the parents plan to contribute less than what the college thinks they should be able to contribute. Utah: courts can order college support until the child reaches the age of 21. A college admissions interview doesn’t have to be a nerve-wracking experience. It varies based on income levels, how you want to motivate your children and your family culture. Try Finaid’s Quick EFC Calculator. How Much Will The Next Stimulus Check Be? Many schools, however, do not. Talk with your tax advisor if this strategy is appealing. Parents' income: £ ? © 2020 Forbes Media LLC. Parents tell us they’d love to get help from their family. We use a “Calculated Parent Contribution” which is used to determine your eligibility for school need-based aid. Expected family contribution consists of your parents’ contribution from their income and certain assets plus your student contribution from your income and certain assets. You can also check out “merit-based” scholarships and grants that aren’t awarded based on need, and therefore won’t be impacted by whether your parents contribute to your college education. at 309 (quoting Raynor v. On average, they had enough in income and savings to cover 11% of the cost of college last year, or about $2,600. Try Finaid’s Quick EFC Calculator. You may have the means to pay for college but want your children to pay their way through school, but if you don’t have room in your budget your motivations are moot. On average, parents contribute almost three-quarters of those funds (34% of the total cost of college), while 13% of the total cost of college is the student’s responsibility. For 130 years, individuals and businesses in central and northwestern New Jersey have entrusted their legal concerns to the lawyers at Gebhardt & Kiefer, P.C. If grandparents contribute to the parent’s 529 college savings plan, the money is considered a parental asset when calculating the Expected Family Contribution (EFC) for federal financial aid. Even then, you may be able to successfully appeal for more aid if your family’s financial situation worsened after you filed the FAFSA. College Game Plan . Your willingness to pay is the other factor. Your financial obligations like your mortgage, bills and retirement contributions are going to drive what you can contribute to a 529 before college. 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