My husband and I’ve an age hole of 15 years between us. We have now an 18-year-old daughter on the point of head off to school come September 2022.
My husband might be 63 in that very same month and hoped to retire at 65 like the remainder of his siblings, however we simply received’t have the ability to afford the anticipated household contribution (EFC) dictated by the FAFSA if he stops working earlier than she graduates in 4 years.
This has precipitated many arguments between us. He’s adamant he is not going to work past 65. What recommendation do you will have for us?
-A.
Expensive A.,
For what it’s price, I agree that your husband is being unreasonable. When you will have youngsters later than your friends, that usually means it’s important to work longer. The federal monetary support system expects mother and father to contribute to their baby’s faculty training. After all, what I believe isn’t going to matter to your husband, although.
Because you’re at an deadlock, your daughter must plan for the worst. In no way ought to she select a university after which hope her dad has a change of coronary heart within the subsequent two years. She ought to make faculty plans assuming your loved ones’s earnings will drop considerably across the midway mark.
What isn’t an choice — and that is necessary as a result of misinformation abounds on this matter — is to your daughter to safe extra monetary support by establishing herself as an unbiased scholar. Unbiased scholar standing is simply out there in restricted circumstances, like should you’re no less than 24, you’re married or have youngsters, otherwise you have been an emancipated minor.
A scholar received’t be thought-about unbiased simply because their mother and father don’t declare them as a depending on their tax returns or the coed is self-supporting. So ignore anybody who tells you that there’s a easy approach for you, as mother and father, to keep away from paying for a part of your daughter’s faculty.
The excellent news is that the anticipated household contribution (EFC) you noticed after submitting the FAFSA isn’t essentially the quantity you’re anticipated to pay out of pocket to your daughter’s faculty. So strive to not get sticker shock.
“This quantity is simply an index that we use to find out if a household is eligible for Pell grants, backed loans and different need-based types of monetary support,” mentioned Joshua North, director of monetary support at Bridgewater College in Bridgewater, Virginia. “Don’t let that quantity affect a scholar’s determination whether or not to attend faculty.” (In actual fact, beginning with the 2023-24 educational yr, the Division of Training will substitute the time period “anticipated household contribution” with the extra correct “scholar support index.”)
FAFSA has a two-year lookback interval. So for the 2024-2025 educational yr, which coincides together with your husband’s deliberate retirement date, your daughter’s monetary support can be based mostly in your 2022 earnings. Clearly, loads can occur in two years. That’s why the Division of Training permits a course of known as skilled judgment. Mainly, college directors can regulate FAFSA info on a case-by-case foundation to replicate main life adjustments, like retirement or a job loss, supplied that you’ve supporting documentation.
“Life occasions, similar to unemployment/retirement, might be dealt with in a different way by each college,” North mentioned. “Some colleges might not even provide skilled judgments, so your mileage might differ based mostly on the varsity you’re making use of to.”
Since you recognize your husband plans to retire in two years, you’ll want to contact the monetary support workplace of any college your daughter needs to attend earlier than she decides on a university. And once I say “you,” I imply each you and your husband. He ought to be a part of discovering options right here. In case your daughter’s college of alternative doesn’t provide skilled judgments or has restricted choices for adjusting monetary support, she wants to have a look at Plan B. You additionally have to be clear together with your daughter about what you possibly can afford.
As soon as your daughter has chosen her faculty, be sure to submit the FAFSA as quickly as potential yearly. “The FAFSA is on the market on Oct. 1 yearly, however monetary support awarding cycles might differ from faculty to school,” North mentioned. “By beginning the method early, you’re giving your self loads of time to supply documentation and resolve any points which will come up through the monetary support course of.”
It’s additionally not the tip of the world in case your daughter has to tackle some scholar mortgage debt. The overall rule of thumb is that you just don’t wish to take out greater than your anticipated annual beginning wage. This can be fairly doable, notably in case your daughter solely wants loans for 2 years of faculty vs. 4.
In the meantime, because you and your husband know your earnings will drop when he retires, you can strive residing in your retirement finances for the following two years. Put aside the surplus now so that you’ve funds to dip into to your daughter’s final two years of school. Your daughter also can contribute by working half time.
Your husband’s retirement will definitely complicate your daughter’s plans, however she ought to have choices that received’t require her to graduate with six figures of debt.
Robin Hartill is an authorized monetary planner and a senior author at The PNW. Ship your difficult cash inquiries to [email protected].