Answer provided: How will a 529 plan affect my child's chances to qualify for financial aid?
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Anonymous
| We are in an interesting (99 percent good!) situation. My in-laws are putting 10K per year into each of our two children's 529. They (in-laws) are the account owners. Because of this, and because we are not wealthy (making about 125K per year, mostly my salary, until my husband picks up more projects) we are not really in the position of saving for our own retirement and also saving for college, so this pure relief to us. I'm very thankful and we trust them fully. However, if you didn't trust your in-laws' financial decisions, or if they were the type to make strings-attached gifts, this could be a big concern, where you'd basically start an account for a child but maybe not need it all, and then, you get a penalty and taxes on the earnings. I wonder if there are people in this situation, where parents or in-laws are saving, but at the same time, the child's parents are not fully confident that the grandparents won't withdraw for other purposes, etc. I'm glad we are not in that situation, but sometimes, even though I fully trust my in-laws, I think we should also be saving. Unfortunately, we don't have any room to save after our modest mortgage and bills and paying into retirement savings (which we are not close to maxing out - just doing the best we can). So again, huge relief that the grandparents on DH's side are very wealthy and very generous. Wish we had more money, though. (Doesn't everyone?) |
Anonymous
Agreed. I used to work in a Financial Aid office at a top private research university as a graduate student, and I came across dozens of files of deadbeat dads (and yes, sadly, they were always the dads) who refused to submit tax forms and provide data so that their child could obtain financial aid. The child was essentially punished, financially, for the father's refusal to participate/contribute in the college financial aid process. It's not the college's fault--there are pretty strict guidelines dealing with federal loans. There only instance that I saw where an exemption was made was when the father was in prison. |
Anonymous
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This is a great post OP! There are people accustomed to asking for handouts and sneaking them without the institutions doing too much research. Higher education is a WHOLE different ball game, as it is fraud on the FEDERAL level if you lie on a FAFSA. No lawyer in the world is going to help you once they start scrutinizing assets, if it comes to that. Honestly, I would be surprised if anyone I know (middle income) would qualify for one red cent. You definitely don't qualify if you have a criminal record! Don't be stupid, save YESTERDAY, even if it is just a little bit, they will see that you tried and that will count for something, trust me! BTDT! |
Anonymous
| If you are upper middle class, please save for your child's education rather than taking scholarships from kids who really need them. Loans, fine, but save the scholarships. |
Anonymous
I'm the pp, and this is what I'm talking about. You can save for college...what about the bottom half making 40K HHI? You don't need to pay for private school. |
Anonymous
...forgot to bold what my reference was to.... |
Anonymous
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Chances are that a 529 account is going to affetct your aid, but not by as much as you would think
Your kid is not going to get a free ride on aid alone. And if you do not pay, you do not go. So you might as well save |
Anonymous
What are you talking about when you say "this is what I'm talking about?" Are you the PP talking about not taking scholarships from the bottom half? Don't you think maybe you have someone else to pick on when you say I can afford to save for college? In fact, we would really struggle to do so and meet all of our other financial obligations (which, I assure you, are NOT extravagant in the least). I work my ass off, and no, my kids do not go to private school. What an odious prick you are to make such assumptions and to use me to score a point. And how off base. Did you read where I said 125K? Do you seriously think one affords private school in this town making that? Anyway, I was just sharing an observation. Go find another example and another random person to insult. Or rather, don't, and be nice for a change. |
Anonymous
| I get it, we should save. And we are. But how, really, can most people save more than $300K per kid (we have 2)? B/C that's what they're estimating the cost of average private tuition will be in 2027. Is the market is going to have to do A LOT better in a hurry? |
Anonymous
This is not true. All you have to do is give up your child as a dependent on your taxes and have them file their own taxes asan independent. I did it and got maximum state and federal grants, as well as need-based scholarships from my private college. It's not that hard. |
Anonymous
No, FAFSA doesn't work this way. Even if you are declared independent on federal taxes, when you will out the FAFSA, you are essentially assumed to be dependent up to the age of 24 unless you are married, have a kid of your own, or if there are extreme mitigating circumstances. |
Anonymous
I'm actually not an odious prick. With $125K HHI, you are very wealthy. We've discussed this on DCUM ad nauseum, about how that may not feel wealthy, but in comparison it is. And, when I said private school, I meant private college. State colleges are obviously more affordable. But, hopefully you've got it covered with inlaws. However, there are many people in your income bracket (but perhaps not you), who say they can't save for college and don't, and take money from more deserving students. I'm sorry my post was abrupt, but a shift in thinking needs to occur, especially as the income gap widens. |
Anonymous
Are you serious with that, though? 125K is "very" wealthy? I know that it is all relative, and guess what lady, I grew up poor as hell and my single mom collected food stamps, welfare, and we lived in section 8 housing. So don't talk to me about the income gap, because I am pretty damn sure I know as much about it as anyone. I went to a state school (paid my own way with combo of aid, loans, partial scholarship and full time job) Your post was not only abrupt, but you are delusional. You know nothing about me and made several overwhelmingly bad assumptions. Do you want to know what my health care costs are before you talk about how I am "very wealthy?" I'm not bitching because I have no money left over after my 600,000 house mortgage - we have a 450K house, about the most modest home we could find, and we don't have housekeepers, new cars, fancy vacations, none of that. If I'm so rich, why does it HURT to have to pay out of pocket dental costs (we lack dental insurance). Why does it HURT when our car, roof, or other household item breaks? We live in a modest neighborhood in DC in a totally crappy ward for school, and my only hope of a decent education for my child is the OOB lottery game. Our health care costs are incredibly high - I don't have good coverage. What house do you think you find in this city that has a mortgage less than 2K? And if you think I should rent, guess what, a rental is about the same price unless my family of four can squish into a studio apartment somewhere. We do nothing fancy, and while I feel incredibly, incredibly fortunate that we have enough money to pay our mortgage and put food on the table, and beyond thankful that my in-laws are helping with college, you're on another planet if you think 125K is so wealthy that a person can save for college. And you've got NO IDEA what they're talking about when they talk about the income gap. The income gap is between the "rich" and "ordinary people" and that includes my family. (Oh, and for what it's worth, we do manage to put a very modest amount of money aside for charity. While some might say we can't "afford" to do that if we can't afford to save for college, the amount we can donate is unfortunately small enough that it wouldn't be much of a savings fund. And also, I believe we need to teach our kids that no matter how much we might want to have more, we need to make room to help the less fortunate. But as far as forgoing financial aid so that someone else can benefit? That's such a false premise. There should be financial aid for my family AND yours. Seriously, I have never before wanted so badly to know who a poster is. I'd like to sit you down and give you some information about the way the world works. You can come to our house and see how we live because you just don't get it AT ALL. People like me aren't taking any money away from the poor, and I am really offended and angry. You try really, really struggling, and then having some idiot on a forum tell you how your'e selfish and just have bad priorities. And say dumb shit to you about private colleges. You're a grade A asshole, lady. |