Inheritance and College Financial Aid

[Anonymous]

Rule: you can get a loan for college but not for retirement.

You are 56 and behind on your retirement. Focus on that. Also talk to a professional. Your sentence about not opening a 529 and your lack of retirement savings show a true lack of financial planning for a long time.

[Anonymous]

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

[Anonymous]

This doesn’t are sense at all. OP you will not receive financial aid. In addition, very few get full scholarships, so you will need money for college and you should have opened a 529, the Tex free growth is a no brainer.

[Anonymous]

It was dumb not to open a 529 because it has tax advantages.

At 225 HHI, you aren't getting need based financial aid anyway.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

+1. This is OP. DD has a desireable talent (not a made up one as implied by the quotation marks up thread). She intends to pursue her passion in college and beyond while adding a second degree. She’s only applying to schools that value her art and offer generous scholarships. She’s been encouraged to apply by the schools themselves, but that is of course no guarantee.

And for those who say it was “dumb” not to start a 529, maybe. But we were only in a position to do so in the past 10 years while maxing our retirement for the first time. We can second guess our choices to pursue graduate degrees to work in nonprofits another time. This newfound wealth is a recent development and we’re still learning how it changes our financial outlook. Plus, my brother is sitting on $300k in his kids’ 529 because one kid got an athletic scholarship and the other chose a trade instead of college. Neither want kids. We have an only.

Clearly this decision is bigger than college financial aid, which is why I posted in this forum instead of the College one. But I appreciate the subject line and my OP missed the forest for the trees. It seems we need a financial advisor stat and to focus on retirement. And we need to come to terms with the fact that we have money now, when we didn’t before, and it’s time to learn how to manage it moving forward.

I appreciate those who offered advice instead of judgement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

WTH?!?!?! So my kid should not get a merit award (total Merit, based on their skills and what they bring as an applicant) because we have money? Not how it works

We had enough saved for college (and then some on our own) we didn't fill out fafsa or any CSS. Both kids got good merit. One got $42K/year at a school that cost $85 their freshman year (merit continues for all 4 years). The other got $18K at a school that cost $55-60K.

Just because you choose not to save doesn't mean other kids have to be penalized for merit awards.

Stick to your financial aid package and consider all your in-state schools and CC if needed to afford school. Nobody is entitled to an "elite education" for free.

[Anonymous]

Two things:
1. $225k is definitely in the territory for aid. We make more and get aid. The cost of the school is a factor.
2. Not doing a 529 was dumb. I am pretty sure 529s and brokerage accounts are reported on the same line on the FAFSA.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

So instead of saving, all parents should make sure to blow their money on fancy vacations, luxury cars, and whatever other non-necessities they want?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

So instead of saving, all parents should make sure to blow their money on fancy vacations, luxury cars, and whatever other non-necessities they want?

The PP is not very bright. Wanting nobody who has saved for college to get any merit. That's not how life works. Anyone who works hard and does well academically (or in an area that colleges give scholarships for) can get a merit award. That's how life works.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

+1. This is OP. DD has a desireable talent (not a made up one as implied by the quotation marks up thread). She intends to pursue her passion in college and beyond while adding a second degree. She’s only applying to schools that value her art and offer generous scholarships. She’s been encouraged to apply by the schools themselves, but that is of course no guarantee.

And for those who say it was “dumb” not to start a 529, maybe. But we were only in a position to do so in the past 10 years while maxing our retirement for the first time. We can second guess our choices to pursue graduate degrees to work in nonprofits another time. This newfound wealth is a recent development and we’re still learning how it changes our financial outlook. Plus, my brother is sitting on $300k in his kids’ 529 because one kid got an athletic scholarship and the other chose a trade instead of college. Neither want kids. We have an only.

Clearly this decision is bigger than college financial aid, which is why I posted in this forum instead of the College one. But I appreciate the subject line and my OP missed the forest for the trees. It seems we need a financial advisor stat and to focus on retirement. And we need to come to terms with the fact that we have money now, when we didn’t before, and it’s time to learn how to manage it moving forward.

I appreciate those who offered advice instead of judgement.

Your brother could have withdrawn without penalty the amount that his child received in scholarships. (Maybe he did that).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

+1. This is OP. DD has a desireable talent (not a made up one as implied by the quotation marks up thread). She intends to pursue her passion in college and beyond while adding a second degree. She’s only applying to schools that value her art and offer generous scholarships. She’s been encouraged to apply by the schools themselves, but that is of course no guarantee.

And for those who say it was “dumb” not to start a 529, maybe. But we were only in a position to do so in the past 10 years while maxing our retirement for the first time. We can second guess our choices to pursue graduate degrees to work in nonprofits another time. This newfound wealth is a recent development and we’re still learning how it changes our financial outlook. Plus, my brother is sitting on $300k in his kids’ 529 because one kid got an athletic scholarship and the other chose a trade instead of college. Neither want kids. We have an only.

Clearly this decision is bigger than college financial aid, which is why I posted in this forum instead of the College one. But I appreciate the subject line and my OP missed the forest for the trees. It seems we need a financial advisor stat and to focus on retirement. And we need to come to terms with the fact that we have money now, when we didn’t before, and it’s time to learn how to manage it moving forward.

I appreciate those who offered advice instead of judgement.

Your brother could have withdrawn without penalty the amount that his child received in scholarships. (Maybe he did that).

he can also pass the money to your child (his niece) without penalty via a 529 transfer.
You could then gift him back the money over the coming years so nobody pays a penalty.

[Anonymous]

OP, merit scholarships don't have anything to do with your income or assets, of course.

Savings are savings, for financial aid. Whether a 529, or a savings account, or a brokerage account... all your assets (except for retirement i.e. tax deferred 401k, 403b) will be considered as part of your financial strength in paying for college. Parents are expected to be able to contribute 5% of their savings per year towards college. Which, if you are getting about 5% interest on the account, seems fair?

If the inheritance is in the form of a retirement account it might not be looked at; I don't know. But yes, either put it into your own retirement accounts every year, or use it to pay down your mortgage I suppose. Some colleges do consider home equity in determining financial aid.

Generally speaking, private colleges with good endowments and the ability to offer financial aid to many, will look at your income and expect you will be able to contribute a good portion of it to college. I think it's about 25% of your income... because they are expecting that you should have been able to save some, cash flow lots, and even borrow if need be. So looking at that $225K annual income? That is where you are not going to be offered any financial aid at most school. They are going to expect you to be abole to cough up $56K annually for college + another $10k from savings + whatever else from equity in your house... you are not going to qualify for need based financial aid at most schools.

So either save up $80K per year to cover the cost of an expensive private school, or tell your kids to set her sights on a reasonable $34K school and start saving to cover it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

+1. This is OP. DD has a desireable talent (not a made up one as implied by the quotation marks up thread). She intends to pursue her passion in college and beyond while adding a second degree. She’s only applying to schools that value her art and offer generous scholarships. She’s been encouraged to apply by the schools themselves, but that is of course no guarantee.

And for those who say it was “dumb” not to start a 529, maybe. But we were only in a position to do so in the past 10 years while maxing our retirement for the first time. We can second guess our choices to pursue graduate degrees to work in nonprofits another time. This newfound wealth is a recent development and we’re still learning how it changes our financial outlook. Plus, my brother is sitting on $300k in his kids’ 529 because one kid got an athletic scholarship and the other chose a trade instead of college. Neither want kids. We have an only.

Clearly this decision is bigger than college financial aid, which is why I posted in this forum instead of the College one. But I appreciate the subject line and my OP missed the forest for the trees. It seems we need a financial advisor stat and to focus on retirement. And we need to come to terms with the fact that we have money now, when we didn’t before, and it’s time to learn how to manage it moving forward.

I appreciate those who offered advice instead of judgement.

Your brother could have withdrawn without penalty the amount that his child received in scholarships. (Maybe he did that).

No penalty be he will
Owe taxes on the growth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My mother passed away two years ago and left me a Designated Beneficiary Account worth about $500K. This is not a marital asset but is intended to partially fund DH’s and my retirement. Our HHI is $225K and our retirement savings are behind schedule due to graduate school loans, periods of unemployment, medical expenses, etc. We’re both 56.

We’ve saved enough in a brokerage account for an instate public college education for senior DD - $130K. I was reluctant to open a 529 years ago because we’re hoping DD will get a talent scholarship (this may happen) and she’s an only child. Of course, we’re not counting on a scholarship but wanted flexibility to use the funds for retirement or help her with a house downpayment someday if we can.

Now that we’re about to fill out financial aid forms, and considering a few OOS options, I’m wondering if we should do something smarter with this designated beneficiary account and brokerage account that will afford flexibility and minimize the negative impact this will have on college financial aid.

Should we open a 529 now? Would that make a difference in financial aid calculations? Or should we wait to find out where DD lands since we’ve waited this long to preserve flexibility?

This is precisely why we have so much wealth disparity in this country. This couples daughter I don't care how smart she is, she shouldn't get a "talent" scholarship because her parents clearly have enough saved.

Look at it this way: kid is an excellent flutist. School 1 needs an incoming freshman excellent flutist. Kid is accepted to School 1 (her dream school) and School 2 (which is affordable). If School 1 offers money to entice a student needed to round out and diversify their student body, of course offering talent, merit, sports money makes sense.

+1. This is OP. DD has a desireable talent (not a made up one as implied by the quotation marks up thread). She intends to pursue her passion in college and beyond while adding a second degree. She’s only applying to schools that value her art and offer generous scholarships. She’s been encouraged to apply by the schools themselves, but that is of course no guarantee.

And for those who say it was “dumb” not to start a 529, maybe. But we were only in a position to do so in the past 10 years while maxing our retirement for the first time. We can second guess our choices to pursue graduate degrees to work in nonprofits another time. This newfound wealth is a recent development and we’re still learning how it changes our financial outlook. Plus, my brother is sitting on $300k in his kids’ 529 because one kid got an athletic scholarship and the other chose a trade instead of college. Neither want kids. We have an only.

Clearly this decision is bigger than college financial aid, which is why I posted in this forum instead of the College one. But I appreciate the subject line and my OP missed the forest for the trees. It seems we need a financial advisor stat and to focus on retirement. And we need to come to terms with the fact that we have money now, when we didn’t before, and it’s time to learn how to manage it moving forward.

I appreciate those who offered advice instead of judgement.

Your brother could have withdrawn without penalty the amount that his child received in scholarships. (Maybe he did that).

No penalty be he will
Owe taxes on the growth.

Yes, just like you'd owe taxes on the growth if you withdrew it from a brokerage. The idea that this is a mark against 529s makes no sense. It's all upside if you use it for education, and no downside if you don't.