Best financial planning tip for donut hole families

[Anonymous]

Graduate in 3 years. It’s totally doable

[Anonymous]

we didn't really have it laying around. we lost our two remaining parents. so all 4 parents gone and we had some inheritance.

we've never made 250k. our HHI is about 140k. we do have two 529s that are about 100k each do to great returns over last 15 years. so I guess we saved more on less income than you did.

if you make 250k, you can afford a new roof

[Anonymous]

Anonymous wrote:

Anonymous wrote:we shifted 600k of assets into non reportable. mostly paying down our mortgage, but also wrapping up a long list of needs: new roof, added an ADU, did dental work, redid driveway, maxed retirement, updated a bunch of legal work like trusts, etc.

So this is what I don’t understand. If you have enough money laying around to pay down the mortgage, redo the driveway, new roof, and an ADU (!) how can you possibly qualify for financial aid? We don’t qualify for financial aid. We are a donut hole - HHI about $250, $100k in a 529, and we’ll be full pay. We could use a new roof and all sorts of house repairs, but we don’t have that kind of money laying around. If you’ve got that kind of money what is the point of rearranging your finances? You won’t qualify.

Seriously, this person doesn't need financial aid they can completely afford to be full pay, just don't want to pay for college. That's not a "donut hole" family. But aid is mostly based on income, not assets, and most colleges consider home equity so I doubt it will work out the way they want. Unless they actually have moderate income and the assets were from something like an inheritance. Still, most colleges don't meet "need" so it's stupid to spend down the assets you could use for college just on the slight chance you get into one of the very few schools that are really generous.

[Anonymous]

we had an inheritance hit right then. it's pretty painful. I get it. you can look a lot richer than you are - which is why I wish they'd look at retirement and home equity. My house is cheap and my retirement is terrible, but year, my FIL died and it looks like we have money when .. our net worth is not much

[Anonymous]

Anonymous wrote:

Anonymous wrote:we shifted 600k of assets into non reportable. mostly paying down our mortgage, but also wrapping up a long list of needs: new roof, added an ADU, did dental work, redid driveway, maxed retirement, updated a bunch of legal work like trusts, etc.

If you had $600k of assets to "shift", it's an absolute joke to call yourself a donut hole family. You could have paid cash for the most expensive private college in the US and walked away whistling.

Donut hole is not supposed to mean "I don't want to pay for college even though the money is sitting in my accounts" it's supposed to mean "I need financial aid to make college possible but am above the cut-off for recieving financial aid."

right come on. 6ook? come on. plenty are full pay on 250k per year with no assets

[Anonymous]

Anonymous wrote:we had an inheritance hit right then. it's pretty painful. I get it. you can look a lot richer than you are - which is why I wish they'd look at retirement and home equity. My house is cheap and my retirement is terrible, but year, my FIL died and it looks like we have money when .. our net worth is not much

use the inheritance to pay for college! or restrict your kid to a cheaper one. but cash is cash--if you have it, you do not qualify as Needyper CSS or fafsa. pay up or chase merit

[Anonymous]

Anonymous wrote:we had an inheritance hit right then. it's pretty painful. I get it. you can look a lot richer than you are - which is why I wish they'd look at retirement and home equity. My house is cheap and my retirement is terrible, but year, my FIL died and it looks like we have money when .. our net worth is not much

I’m sure it was painful to lose your loved one. But you are looking at the timing strangely - it was just in time. Your kid was ready for college, and now you can pay. That’s a gift!

[Anonymous]

Anonymous wrote:we didn't really have it laying around. we lost our two remaining parents. so all 4 parents gone and we had some inheritance.

we've never made 250k. our HHI is about 140k. we do have two 529s that are about 100k each do to great returns over last 15 years. so I guess we saved more on less income than you did.

if you make 250k, you can afford a new roof

That doesn't make you any more a donut hole family than a family making $140k with grandparents willing to pay out of pocket for college or a family making $140k who unexpectedly hit the Powerball when their kid was in high school. Stop calling yourself a donut hole family when you were hiding assets that could have easily paid for college.

[Anonymous]

Anonymous wrote:We paid off our mortgage.

This is sound advice, OP! You can pay off the mortgage and also when the time comes, see if you can get merit at private universities

[Anonymous]

Anonymous wrote:

Anonymous wrote:we had an inheritance hit right then. it's pretty painful. I get it. you can look a lot richer than you are - which is why I wish they'd look at retirement and home equity. My house is cheap and my retirement is terrible, but year, my FIL died and it looks like we have money when .. our net worth is not much

I’m sure it was painful to lose your loved one. But you are looking at the timing strangely - it was just in time. Your kid was ready for college, and now you can pay. That’s a gift!

Disagree. Just because you got a one-time windfall doesn’t mean who you spend it on college. Cheaper college or shift it somehow (like pay down the mortgage)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:we had an inheritance hit right then. it's pretty painful. I get it. you can look a lot richer than you are - which is why I wish they'd look at retirement and home equity. My house is cheap and my retirement is terrible, but year, my FIL died and it looks like we have money when .. our net worth is not much

I’m sure it was painful to lose your loved one. But you are looking at the timing strangely - it was just in time. Your kid was ready for college, and now you can pay. That’s a gift!

Disagree. Just because you got a one-time windfall doesn’t mean who you spend it on college. Cheaper college or shift it somehow (like pay down the mortgage)

Sure, you should spend it how you want to! And a cheaper college is a wise option. But the windfall is a windfall - it is enough money to pay for college falling in your lap. You could feel victimized and cranky by having to use it to educate your children, or you could be grateful you have the means to give those children choices.

One of those paths leads to happiness and contentment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We paid off our mortgage.

This is sound advice, OP! You can pay off the mortgage and also when the time comes, see if you can get merit at private universities

Seems short-sighted to do that when most expensive schools will expect you to tap home equity to help pay for college. Now you'll just be taking out a home equity loan, probably at a higher interest rate than your mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We paid off our mortgage.

This is sound advice, OP! You can pay off the mortgage and also when the time comes, see if you can get merit at private universities

Seems short-sighted to do that when most expensive schools will expect you to tap home equity to help pay for college. Now you'll just be taking out a home equity loan, probably at a higher interest rate than your mortgage.

This- if you have a good mortgage rate, paying it down is the wrong decision.

[Anonymous]

Anonymous wrote:Lowest paid parent quits working for four years. Will make a huge difference in the net price calculation!

Unless the coa is way more than that parent's income, this doesn't make that much sense, IMO. You are losing out on that extra income, plus it will be harder for that parent to go back into the workplace.

[Anonymous]

Obviously you’re considering what the colleges your kid is applying to. My kid was applying to schools that didn’t consider primary home.

And no, a one time powerball event should not be used for college if retirement is low and home isn’t paid off. Having a retirement fund at 700k instead of a pre-powerball 200k won’t sink FA chances.