My husband and I’ve an age hole of 15 years between us. We’ve got an 18-year-old daughter on the brink of head off to school come September 2022.
My husband shall be 63 in that very same month and hoped to retire at 65 like the remainder of his siblings, however we simply received’t be capable of afford the anticipated household contribution (EFC) dictated by the FAFSA if he stops working earlier than she graduates in 4 years.
This has triggered many arguments between us. He’s adamant he won’t work past 65. What recommendation do you’ve for us?
-A.
Pricey A.,
For what it’s value, I agree that your husband is being unreasonable. When you’ve kids later than your friends, that always means it’s important to work longer. The federal monetary support system expects mother and father to contribute to their baby’s faculty schooling. In fact, what I feel isn’t going to matter to your husband, although.
Because you’re at an deadlock, your daughter must plan for the worst. On no account ought to she select a school 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 possibility — and that is essential as a result of misinformation abounds on this subject — is in your daughter to safe extra monetary support by establishing herself as an unbiased scholar. Impartial scholar standing is simply accessible in restricted circumstances, like should you’re not less than 24, you’re married or have kids, 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 scholar is self-supporting. So ignore anybody who tells you that there’s a easy method 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 in 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, sponsored 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.” (Actually, beginning with the 2023-24 educational 12 months, the Division of Training will change 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 12 months, which coincides together with your husband’s deliberate retirement date, your daughter’s monetary support can be primarily based in your 2022 earnings. Clearly, lots can occur in two years. That’s why the Division of Training permits a course of referred to as skilled judgment. Mainly, college directors can modify FAFSA data on a case-by-case foundation to mirror main life adjustments, like retirement or a job loss, supplied that you’ve supporting documentation.
“Life occasions, similar to unemployment/retirement, shall be dealt with otherwise by each college,” North mentioned. “Some faculties could not even supply skilled judgments, so your mileage could range primarily based on the varsity you’re making use of to.”
Since you already know your husband plans to retire in two years, you must contact the monetary support workplace of any college your daughter desires to attend earlier than she decides on a school. And once I say “you,” I imply each you and your husband. He must be a part of discovering options right here. In case your daughter’s college of selection doesn’t supply skilled judgments or has restricted choices for adjusting monetary support, she wants to take a look at Plan B. You additionally must be clear together with your daughter about what you possibly can afford.
As soon as your daughter has chosen her faculty, be sure you submit the FAFSA as quickly as potential yearly. “The FAFSA is offered on Oct. 1 yearly, however monetary support awarding cycles could range from faculty to school,” North mentioned. “By beginning the method early, you’re giving your self loads of time to offer documentation and resolve any points which will come up through the monetary support course of.”
It’s additionally not the top of the world in case your daughter has to tackle some scholar mortgage debt. The final rule of thumb is that you simply don’t need to take out greater than your anticipated annual beginning wage. This can be fairly doable, significantly in case your daughter solely wants loans for 2 years of college 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 funds for the following two years. Put aside the surplus now so that you’ve funds to dip into in your daughter’s final two years of faculty. Your daughter may also 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 Nourishmoney. Ship your difficult cash inquiries to [email protected].