Using AI to Help Pay for College

Last week, our son graduated from middle school. He will start high school in a few months. Wow, where did the time go? It feels like he just started preschool a few years ago! RB40Jr is a teenager now and he’s taller than I am. That’s nuts. Parents, enjoy your kiddos while they’re small. They’ll go off to college before you know it.

Talking about college, it’s time to investigate FAFSA. We plan to help pay for college, but some financial assistance would be awesome. The estimated cost for four years of attending an in-state public college in 2029, including tuition, fees, room, and board, is approximately $140,000. Yowza! We saved for college in a 529 plan, but we don’t have that much.

Today, I’m using the Google AI to help figure out FAFSA. The formula is now more complicated than ever following the 2024 rework. I found the Student Aid Index (SAI) and Pell Grant Eligibility Guide online. It has all the details, but it is 60 pages long. You can take a look if you would like to see the innards of FAFSA. However, it is much easier to use AI to figure out your personal situation. Finally, AI impressed me. As a parent, the AI was way better than the internet for this job. I browsed through many sites, but they weren’t helpful. FAFSA is difficult to summarize because there are so many cases and exceptions. The AI could answer back as I narrow down our financial situation. It was extremely helpful. As a blogger, what can I say? This is why blogs are obsolete. The only thing I can add is the human element. Okay, let’s wrap this up quickly.

FAFSA

FAFSA stands for Free Application for Federal Student Aid. Students use this form to apply for financial aid to help pay for college or career school. If you haven’t looked at FAFSA for a few years, you will be surprised at how complicated it is now.

First, I went to fill out the Federal Student Aid Estimator at studentaid.gov. It was good, but there was no detail on how it got the result or what I can do to maximize student financial aid. The important number I got back is the SAI. The SAI estimate is 0 for RB40Jr. Apparently, 0 is very good. It was unexpected, and I’d like to know why. This is where the AI came in handy.

SAI (Student Aid Index)

SAI is an index number used by financial aid professionals when creating an aid offer. This was one of the changes made in 2024. SAI is similar to the old EFC (expected family contribution), but not exactly. It can range from -1,500 to 999999. A negative SAI indicates the highest level of financial need. Zero indicates a strong chance of getting student financial assistance.

Formula: Cost of Attendance (COA) – Student Aid Index (SAI) = Financial Need

Since RB40Jr’s SAI is $0, his Financial Need will be equal to the school’s full Cost of Attendance.

AI was helpful

I went to Google Gemini and asked about FAFSA. Here are my questions. Each time I typed something, the AI gave a detailed answer. I’ll put a small summary at the end. We got there pretty quickly.

>I’m researching FAFSA

>I have $1,000,000 in a taxable account. Can I get student aid?

>My agi is about $25,000

>Taxable account is parent’s asset. Family size is 3.

>Married parents. Live in Oregon

Answer summary

For married parents with a family size of 3, using the 2023 poverty levels (which apply to the 2025-2026 FAFSA):

• The AGI threshold for a Maximum Pell Grant (and therefore an SAI of $0 and asset exclusion) is $43,505 (175% of the 2023 federal poverty level for a family of 3).

Your AGI of approximately $25,000 falls well below this threshold.

Therefore, for federal financial aid (Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Direct Subsidized Loans, Federal Work-Study), your parents’ $1,000,000 taxable account should not impact your eligibility, and you should be assigned an SAI of $0. This is excellent news for federal need-based aid.

The key piece of the answer is the AGI threshold. Now that Mrs. RB40 is retired, we can fine-tune our AGI during the college years. FAFSA disregards assets if your AGI is below 175% of the poverty level. This is why RB40Jr’s SAI is 0.

What if our AGI is $45,000, just above 175% of the poverty level? In that case, the AI said we would be expected to contribute around $65,000 per year to college based on assets. The AGI threshold makes a huge difference.  

Mrs. RB40 should stay retired

In conclusion, Mrs. RB40 should stay retired while our son is in college. We can control our AGI to keep it below the crucial 175% level. To prepare for college, we should move some of our investments to cash to minimize capital gains during those years. That’s pretty much it. The AI was very helpful here. If you’re looking at FAFSA and trying to figure out different scenarios, try the Google AI. This is a good use case.   

Have you tried AI? This was the first time it proved itself for me. This is why many entry-level white collar jobs are disappearing. Good luck, young people. I’m sure you’ll adapt to the new world better than we old folks.

Image credit: The AI overlord.

Please follow and like us:

The following two tabs change content below.

Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.