Tips for reducing EFC for College

My kid will be starting college in 2 years (Y2022). Since they require 1040 from 2 years ago (Y2020) in my case, I have started planning on it right now. Our target college is an Ivy League. They usually do not require a FAFSA, but calculate EFC (Estimated Family Contribution) based on their own calculators, similar to CSS Profile (from college board).
I have a good amount of savings sitting in Amex HSY account. How do I wisely spend it or re-allocate it. I would not like for it to sit there earn 1% interest (shows up in 1040). This would increase our EFC. I max my 401K at work every year and contribute max towards Roth every year. What else can I do? Should I payoff mortgage now that there is no more itemized deduction for us (thanks to increased std ded)? What else can be done to bring down the EFC?

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Are you itemizing now? It has become much more difficult to itemize. I imagine if you can itemize, your income is so high nothing will save you from paying for college.

I’m pretty sure that’s not your problem. As far as I know they look at both income AND assets, except retirement and equity in primary residence. So paying down the mortgage or moving to a more expensive home moves assets into primary residence equity, it has nothing to do with itemizing or interest income. Quit making money is another thing you can do :slight_smile:. Also I thought they looked back 4 or 5 years, but I could be wrong.


Do you make >$100k a year and have over $500k assets?

Figuring out how and what to do with the assets and everything all depends on your income level and asset level and what the assets are in now.

This is more guess than knowledgeable suggestion, but if you’re sure about the look back period, maybe investigate moving assets into a trust. Again, just a guess.

Do you make >$100k a year and have over $500k assets?

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Layperson here, but are there any assets that don’t count that you can easily shift your money into? Of course, if your income already disqualifies you, then why bother?

Did you try a simple calculator to see what the damage is ?

$100k in the bank would cut your financial aid about $5k. Paying down your home loan might work. You’ll have to research the specifics on which assets they count and dont’ count. The calculator there for Harvard doesn’t seem to look at home equity or retirement accounts. They DO apparently consider trusts. (maybe a few Harvard kids have trusts…)

I’d also look at how financial aid works outside of the Ivy league. Just to make sure that tailoring it to the Ivy league won’t somehow backfire if they end up going to another school using different system. I mean maybe they end up at Stanford or MIT which don’t do it like Harvard, etc.

Theres lots of resources on financial aid and how to best prepare for it.

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I think this is the best strategy. Put your money in your mortgage, and once your EFC doesn’t matter, do a cash out to recapture it if you wish. Most schools do not count home equity as an asset.

Or, you could do what a friend recently did. Get divorced, end up laid off, and spend your available cash on living expenses. He looked dirt poor and his daughter got a free ride to the University of Minnesota. Once EFC didn’t matter, he spun up his old consulting side gig and is doing quite well.


Uh, wasn’t @meed18 trying to keep that strategy quiet? Too soon? Oops! If it matters, I speak from experience.

It’s kinda silly to not work just because you don’t want to pay for college. They’re not going to take all of your income, just a part of it. I was joking when I suggested “quit making money” :slight_smile:. So I’m sure your friend had other reasons to not work.


But didn’t whatever money he had before in total end up split between himself and his wife (and their lawyers I guess)? Wouldn’t the college look at both parents income / assets in cases of divorce? I don’t know for sure, but I have heard of cases where a divorced and total out of the picture father’s income was used to justify a high EFC for the family of the student/Mom despite the father not being willing to pay for anything.

Unlike FAFSA, CCS Profile count home equity as part of your assets. Some colleges factor that in differently, some with caps on home equity, some exclude it entirely. You could check Home Equity Calculator to see how your target college factors it in exactly and decide whether to sink money into it will work.

Still income is a huge part. If moving $400k of assets will reduce your EFC from $90k to $70k, it may not be worth all the asset shifting efforts. Especially considering how much more savvy than you the college finaid boards are by now. They’ll take it all into account regardless of whether you took out HELOC to lower your home equity or bought a cash value life insurance policy to lower your assets.

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Lol. My furlough came 14 years too early! Total fail.

My college savings plan for my boys hasn’t really changed. It’s still just a one way bus ticket to Paris Island!

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Good point about home equity. I only happened to check the Harvard calculator (just as an example since he said Ivy league). Harvard doesn’t seem to count any home equity ever.

I checked that for a few and I only found one that counted any equity. THe one was Wake Forest and they only counted $200k of equity with $100k income. half a dozen other colleges counted $0

Dependds on the details I’m sure though. The other colleges might up the home equity if the income is >250k or someting.

Oh, he did for sure… his strategy resulted in less alimony AND less EFC for college. While I think his situation was somewhat unique, he seemed quite happy about how he got to game the system. OTOH, his divorce took like 3-4 years to settle since the tactics used by both sides were borderline scorched Earth…

What if I am already divorced? Ha! And no, I am not going to purposefully lose my job. I need the money.

This is where you buy casino chips and then get paid out in gold bars that you bury, right? :slight_smile:


Presumably the OP is unwilling to commit fraud.

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You’d also have to keep this stuff buried for a while since you need to reapply for finaid each year.