How much of your savings to they expect you to contribute

[CantFigure1Out]

So, I have a few thousand dollars saved up. What portion of this will I be expected to contribute to med school costs? Thanks.

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[TMP-SMX]

Are you talking about for FAFSA purposes? If it is in a liquid bank account it will be included in your EFC and will reduce your chances for need based aid. However, most people can get the full 8500 in subsidized stafford loans no matter what. (Unless they came from a previous job making a lot of money).

Your Cost of Attendance-EFC = The amount of subsidized stafford loans you are eligible for up to $8500.

 

[dragonfly99]

Well unless you've got a lot of money, you're going to end up spending it all on med school, and going in to debt. Which is OK, as long as you are wise about it (i.e. live like a student and don't go in to credit card debt no matter what you do).

I thought they used to count 80% of the student's savings, and 20% of the parents' savings, or something like that, in the FAFSA, but it's been a while since I had to do this. Most med schools will count your parents' income against you, so this also ends up decreasing your financial aid. Mostly it doesn't matter for med school (or other grad school) as much as for undergrad, because your aid is usually 100% loans anyhow (so there's not much if any grant/free money up for grabs anyway).

 

[skijumpbump]

So, I have a few thousand dollars saved up. What portion of this will I be expected to contribute to med school costs? Thanks.

I have the same question; do schools expect you to contribute all of your savings to paying for school (I don't have that much, ~$4000)? I would like to have some money in the bank as a financial safety blanket so that if something happens and I need a lot of money I won't have to turn to a credit card. I am wondering if I should do something with my savings before I file my FAFSA, so that I can have this money in case of an emergency.

 

[TMP-SMX]

I have the same question; do schools expect you to contribute all of your savings to paying for school (I don't have that much, ~$4000)? I would like to have some money in the bank as a financial safety blanket so that if something happens and I need a lot of money I won't have to turn to a credit card. I am wondering if I should do something with my savings before I file my FAFSA, so that I can have this money in case of an emergency.

They don't really expect you to have any money. You could keep the money, but keep in mind 4k in loans in your bank account is the same in 4k in your savings in your bank account. I would recommend putting the money in a family member's bank account rather than keeping it in yours for the FAFSA but it likely won't make any difference as your personal EFC Will probably be low. If you have any outstanding credit card debt, that would be an even better option to pay off before the FAFSA. As for need-based aid, which includes your parental information it will also depend on your parental income/savings also.

 

[jymezg]

If you have any outstanding credit card debt, that would be an even better option to pay off before the FAFSA.

What is the advantage of paying this debt off before the FAFSA. Does it factor in? I'm Planning on getting rid of my CC debt before school starts in the fall but I won't be able to do it before the FAFSA deadline....

 

[TMP-SMX]

What is the advantage of paying this debt off before the FAFSA. Does it factor in? I'm Planning on getting rid of my CC debt before school starts in the fall but I won't be able to do it before the FAFSA deadline....

It's never a good idea to have CC debt. If you have the money in savings and you have CC debt why wouldn't you use the savings money on it? Not only that, but your savings counts against you on the FAFSA. If you have no money to pay off your CC debt then there isn't much you can do anyway.

 

[Habeed]

Or you could just withdraw all the money and hide it under the mattress... The FAFSA doesn't appear to ask about that...


kidding: actually, the FAFSA asks about 'assets'. It is perfectly legal to have your money as cash under the mattress, but that cash is an asset and has to be counted to comply with the FAFSA. (although, yes, it is unlikely the government is going to send agents to count the cash under your mattress)

 

[linguini]

I have a question pertaining to this. For example, say I am paying for medical school solely with loans and I have $5000 in a savings account. I write a check to the med school for the $5000. Which loan (subsidized stafford, unsubsidized stafford, or grad plus) does the $5000 get subtracted from? To reduce amount of accruing interest, wouldn't it be smartest to put the $5000 directly towards COA instead of keeping it in savings? With the exception of an unexpected situation in which I'd need the $5000 (e.g. unexpected health bills) is there any reason to keep the 5K in savings instead of spending it all on COA?

 

[TMP-SMX]

I have a question pertaining to this. For example, say I am paying for medical school solely with loans and I have $5000 in a savings account. I write a check to the med school for the $5000. Which loan (subsidized stafford, unsubsidized stafford, or grad plus) does the $5000 get subtracted from? To reduce amount of accruing interest, wouldn't it be smartest to put the $5000 directly towards COA instead of keeping it in savings? With the exception of an unexpected situation in which I'd need the $5000 (e.g. unexpected health bills) is there any reason to keep the 5K in savings instead of spending it all on COA?

Once your loan disbursements are in your bank account cash is cash. (Though you wouldn't report the totals of your savings in next year's FAFSA if it is all loan money). If you have 5k in savings you have a couple options. You can figure your budget and take out 5k less in loans or you can pay off any current debt you have. If you want to keep the 5k as an emergency fund then fine it doesn't make a difference but if you don't need the money then you are taking out more loans than you need. If you don't have debt, then take out 5k less. That way you avoid private loans and grad plus if possible which is a good thing.

 

[Habeed]

5k isn't much money, and taking out 5k extra loans on top of 200+ most of us end up with is a small thing. (I'm going Texas state school, but I'll break the 200,000 mark after including my undergrad and post-bacc loans)

But, the loan limits are often pretty low, and that 5k could come in handy. What if your car dies on you unexpectedly? 5k could repair it or be used to buy a new one off the used market.

 

[linguini]

Thanks for your responses. Very helpful!

 

[anoncurious]

Do we have to report everything in our bank accounts? Can we estimate how much will be in our bank accounts at time of matriculation? There's no way to verify the info anyway, correct?

 

[Habeed]

Can we estimate how much will be in our bank accounts at time of matriculation? There's no way to verify the info anyway, correct?

The rule is that you report what is in your bank account at that instant in time. Records do exist, and I'm sure the government has the power to check a record somewhere tracking exactly how much money was in your bank account on the day their server says you submitted the FAFSA.

In practice, though, I wouldn't sweat it. You can have up to 10k, I think, in an account and it will not effect your COA.

And in practice, I doubt they ever check bank accounts. When a FAFSA gets audited, I think they just check your tax return.

 

[LoyolaGrad05]

The rule is that you report what is in your bank account at that instant in time. Records do exist, and I'm sure the government has the power to check a record somewhere tracking exactly how much money was in your bank account on the day their server says you submitted the FAFSA.

In practice, though, I wouldn't sweat it. You can have up to 10k, I think, in an account and it will not effect your COA.

And in practice, I doubt they ever check bank accounts. When a FAFSA gets audited, I think they just check your tax return.

This was excactly what I was told, off the record, by a the FAO at a major school..if asked for "verification" as they call it, they ask for your tax return, nothing about saving or bank accounts.. the school can do that if they wish but it is only done in rare cases..(ie. never)

so if you are smart, i'd leave money for a "safety blanket" as someone called it bc I certainly didnt build my savings just so it could be used against what I will "need" for school.. emergencies do happen

Anyone else like to add..
thanks

 

[Mazz]

If you REALLY want to get around it. Find a person you REALLY trust and open an account with them. Make them the primary account holder and just give yourself access to the account.

Make sure you pay them at the end of the year for the taxes they will have to pay on your money though.