What money is fair game for financial aid?

[Anonymous]

16:52 here. I remember guidance counselors at my high school saying, "if you can get in, there will be ways to afford it."

At the time, that was true. It is no longer the case today.

[Anonymous]

When people on DCUM say second-tier colleges/LACs that give a big merit scholarship, in general do you mean top 100-200 colleges? Or top 50-100?

[Anonymous]

Anonymous wrote:The colleges assume that relatively more of the tuition money is coming from your income rather than assets. So, for example, if you have 100K in savings, they may say that about $10K of that should be used toward tuition. You can play with a net price calculator for a specific college and see how they assess income vs assets.

Re: the pellionaires. The AGI to avoid declaring assets for Pell grant is very low, like $25K. This works for some FIRE crowd who tend to move to areas with low cost of living, but for most other people, even minimal living expenses will trigger revealing their assets. Also, the majority of at least somewhat competitive schools, including the publics, require CSS. If you are considering the kind of school that looks at FAFSA only, you'll likely end up at the same place with merit aid they offer.

As someone who has retired to a low cost area with substantial assets and a college-bound kid, I can’t imagine restructuring my life to live on less than $25k AGI. Maybe they do figure out how to have the S Corp pay all of their expenses, but I would think the IRS would catch on at some point. We spend more than $25k a year on travel alone. If you have that much $$, it’s really not that big of a deal to set aside $300k to pay your kid’s tuition. My kid has great stats, so we’re hoping for merit aid so some of his fund can go to graduate school, but we could afford to pay out of pocket for that, if necessary.

I do feel for people who are right over the threshold for no financial aid, but not too much — we saved most of DC’s college fund when he was young and we were making far less $$. If you save early, the power of compounding will do a lot of the work for you. I do think the people who get stretched the most are those who only recently started making higher salaries, since salary counts for more than savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DCUM parents are so funny. They legit feel entitled to send their kid to the best school they can get into at a price they find affordable.

I grew up in a part of the country where kids understood there were schools they might get into but wouldn’t be able to pay for, so they didn’t even apply and just went to state flagships. I don’t know why this comes as such a shock to people in this area but it sure does.

Your old-timey yarns mean nothing today.

DP. I live in an a relatively wealthy part of a rural area now, and I was struck by how many highly qualified kids from DC’s school go to the state flagships, or even lesser known state colleges, even after being accepted to more “elite” private schools. It’s money. Many kids can’t afford to travel back and forth to a distant school, even if they could get in and get aid. This idea that everyone is entitled to go to every college they can get admitted to for a price they find acceptable is a big city phenomenon.

[Anonymous]

Anonymous wrote:I don't understand the reasoning behind using home value. Is the idea that the parents should remortgage the house to pay for school? For many people living in high COL places, house equity is part of their retirement nest egg. I'd love to have enough money to both pay a ridiculously high mortgage payment AND max out my retirement savings, but I can't. I plan to retire to my hometown where I can easily buy a low cost house there with the equity I'll walk away with after I sell my DC house. If I have to remortgage it, then I won't be able to buy a house when I retire. From what I understand, if that money were tied up in a retirement account, it would be untouchable and schools wouldn't consider it as available for college expenses. Is that right?

And what about savings accounts? Aren't we supposed to have three months of living expenses sitting in a savings account? That's a lot of money for people with high mortgages like many of us in DC or for those of us with medical issues. Is the fact that we squirreled those funds away in case of job loss (single mom here) going to be used against us for need-based financial aid?

This topic always generates some tone-deaf and outright asinine posts, but this may take the cake. You don't think that (i) home equity in an expensive home, or (ii) *cash* should be used when determining availability of aid?

(For avoidance of doubt, the home equity point is tone deaf; the cash point asinine.)

"Hello, Mr. Financial Aid Officer. Yes, I know I have a huge pile of cash sitting here, but I think you should give me aid anyway. Why? Well, I don't want to use it for college. What do I intend on using it for? Well, nothing really, I'll just feel better if I hold onto it in case I *might* need it someday. So, when can I expect my aid check?"

Un-effing-believable.

[Anonymous]

One reason home equity is included by many private schools is that it is not fair to renters not to include it. If Family A has $500,000 in a retirement account and Family B has the same amount PLUS $1million in equity in their home they really aren't in the same financial situation. When the kids finish college and parents finish working, Family A can sell their home.The renter doesn't have this capital for retirement.

Second, in my neighborhood, a divorcing couple--especially one with an only child-- does this: high earner H gives up all rights to the family home, which is usually worth well over $2 million. He may also agree to put other assets in W's name. In exchange, he pays no alimony.

Mother's income is lower than it would be if she received alimony. Kid receives financial aid. When the kid finishes college, mom sells the family home and now has a lot of money to support herself in retirement, usually as much as she would have gotten from alimony. Dad thinks it's better for him to give his wife assets than to agree to pay alimony plus his fair share of college costs.

College financial planning advisers actually were publicly recommending this strategy.

[Anonymous]

Anonymous wrote:When people on DCUM say second-tier colleges/LACs that give a big merit scholarship, in general do you mean top 100-200 colleges? Or top 50-100?

Top 50-100 LACs often give strong merit aid.

[Anonymous]

"One reason home equity is included by many private schools is that it is not fair to renters not to include it. If Family A has $500,000 in a retirement account and Family B has the same amount PLUS $1million in equity in their home they really aren't in the same financial situation. When the kids finish college and parents finish working, Family A can sell their home. The renter doesn't have this capital for retirement."

You seem to not realize that many people own a house instead of maxing out their retirement because no matter what, they need a place to live. You can either pay a landlord or buy a house with a mortgage, in which case you might get lucky and build equity. But at least you're guaranteed that you won't get priced out with rent increases. My modest house in PG County is not going to ever have $1M in equity in this century, so let's get real. And I definitely don't have $500K sitting in a retirement account. Do you know of a cheaper place that PG County where I could live and still get to work downtown within an hour?! I'll wait for your answer.

[Anonymous]

"Second, in my neighborhood, a divorcing couple--especially one with an only child-- does this: high earner H gives up all rights to the family home, which is usually worth well over $2 million. He may also agree to put other assets in W's name. In exchange, he pays no alimony.

Mother's income is lower than it would be if she received alimony. Kid receives financial aid. When the kid finishes college, mom sells the family home and now has a lot of money to support herself in retirement, usually as much as she would have gotten from alimony. Dad thinks it's better for him to give his wife assets than to agree to pay alimony plus his fair share of college costs."

This is a joke, right? In what neighborhood does a family with $2M in equity in a house get financial aid? And even if this kid got financial aid, it certainly wouldn't be 100% of the cost, so where is this mom supposed to get that money if not by taking it out of the house? I suppose if the house has such a huge amount of equity in it, there's still plenty left for a very plush retirement. I'm not sure where the mom is supposed to live after she sells the house to cash out the tuition payments since presumably she needs to keep working and isn't yet retirement age. But again, only in some bizarre fantasyland would a family with a school age kid have $2M in equity anywhere in DC.

[Anonymous]

Anonymous wrote:One reason home equity is included by many private schools is that it is not fair to renters not to include it. If Family A has $500,000 in a retirement account and Family B has the same amount PLUS $1million in equity in their home they really aren't in the same financial situation. When the kids finish college and parents finish working, Family A can sell their home.The renter doesn't have this capital for retirement.

Second, in my neighborhood, a divorcing couple--especially one with an only child-- does this: high earner H gives up all rights to the family home, which is usually worth well over $2 million. He may also agree to put other assets in W's name. In exchange, he pays no alimony.

Mother's income is lower than it would be if she received alimony. Kid receives financial aid. When the kid finishes college, mom sells the family home and now has a lot of money to support herself in retirement, usually as much as she would have gotten from alimony. Dad thinks it's better for him to give his wife assets than to agree to pay alimony plus his fair share of college costs.

College financial planning advisers actually were publicly recommending this strategy.

The problem is that most schools in the top 100 will ask for father's income tax return as well.

[Anonymous]

Significant merit is often available for students with stats above the mid-range at LAC's. EX: Wooster, Denison, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:One reason home equity is included by many private schools is that it is not fair to renters not to include it. If Family A has $500,000 in a retirement account and Family B has the same amount PLUS $1million in equity in their home they really aren't in the same financial situation. When the kids finish college and parents finish working, Family A can sell their home.The renter doesn't have this capital for retirement.

Second, in my neighborhood, a divorcing couple--especially one with an only child-- does this: high earner H gives up all rights to the family home, which is usually worth well over $2 million. He may also agree to put other assets in W's name. In exchange, he pays no alimony.

Mother's income is lower than it would be if she received alimony. Kid receives financial aid. When the kid finishes college, mom sells the family home and now has a lot of money to support herself in retirement, usually as much as she would have gotten from alimony. Dad thinks it's better for him to give his wife assets than to agree to pay alimony plus his fair share of college costs.

College financial planning advisers actually were publicly recommending this strategy.

The problem is that most schools in the top 100 will ask for father's income tax return as well.

My husband never gave his financial information to the colleges for his kids. The kids demanded he send it to them and he said no, I'll send it to the school, provide me the information and they never did. So, his wasn't used. (he also was willing to help pay for college but insisted on paying the school directly vs. the kids or ex-wife)

Its not like schools double check so they probably just lied and said he didn't pay child support or alimony which were both lies and pretended he did not exist.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DCUM parents are so funny. They legit feel entitled to send their kid to the best school they can get into at a price they find affordable.

I grew up in a part of the country where kids understood there were schools they might get into but wouldn’t be able to pay for, so they didn’t even apply and just went to state flagships. I don’t know why this comes as such a shock to people in this area but it sure does.

Your old-timey yarns mean nothing today.

DP. I live in an a relatively wealthy part of a rural area now, and I was struck by how many highly qualified kids from DC’s school go to the state flagships, or even lesser known state colleges, even after being accepted to more “elite” private schools. It’s money. Many kids can’t afford to travel back and forth to a distant school, even if they could get in and get aid. This idea that everyone is entitled to go to every college they can get admitted to for a price they find acceptable is a big city phenomenon.

Absolutely money. We'll steer our kid to what we can afford but we also want to pay for graduate school. We cannot pay for a private and graduate school and to me graduate school is more important. Except if you are a doctor, MBA or lawyer, the school doesn't matter as much as the degree. We can fully pay for a state school and graduate school, so that's what our kids get, except if they get merit aid. We've told them that since they were little. They get it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The colleges assume that relatively more of the tuition money is coming from your income rather than assets. So, for example, if you have 100K in savings, they may say that about $10K of that should be used toward tuition. You can play with a net price calculator for a specific college and see how they assess income vs assets.

Re: the pellionaires. The AGI to avoid declaring assets for Pell grant is very low, like $25K. This works for some FIRE crowd who tend to move to areas with low cost of living, but for most other people, even minimal living expenses will trigger revealing their assets. Also, the majority of at least somewhat competitive schools, including the publics, require CSS. If you are considering the kind of school that looks at FAFSA only, you'll likely end up at the same place with merit aid they offer.

As someone who has retired to a low cost area with substantial assets and a college-bound kid, I can’t imagine restructuring my life to live on less than $25k AGI. Maybe they do figure out how to have the S Corp pay all of their expenses, but I would think the IRS would catch on at some point. We spend more than $25k a year on travel alone. If you have that much $$, it’s really not that big of a deal to set aside $300k to pay your kid’s tuition. My kid has great stats, so we’re hoping for merit aid so some of his fund can go to graduate school, but we could afford to pay out of pocket for that, if necessary.

I do feel for people who are right over the threshold for no financial aid, but not too much — we saved most of DC’s college fund when he was young and we were making far less $$. If you save early, the power of compounding will do a lot of the work for you. I do think the people who get stretched the most are those who only recently started making higher salaries, since salary counts for more than savings.

We haven't had a high income till recently but we managed to save on a low income. It was our priority. We bought a crappy house, only have had a few vacations and nothing lavish and always off season when cheaper, keep our cars till they die, etc. We made college and graduate school a priority.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:One reason home equity is included by many private schools is that it is not fair to renters not to include it. If Family A has $500,000 in a retirement account and Family B has the same amount PLUS $1million in equity in their home they really aren't in the same financial situation. When the kids finish college and parents finish working, Family A can sell their home.The renter doesn't have this capital for retirement.

Second, in my neighborhood, a divorcing couple--especially one with an only child-- does this: high earner H gives up all rights to the family home, which is usually worth well over $2 million. He may also agree to put other assets in W's name. In exchange, he pays no alimony.

Mother's income is lower than it would be if she received alimony. Kid receives financial aid. When the kid finishes college, mom sells the family home and now has a lot of money to support herself in retirement, usually as much as she would have gotten from alimony. Dad thinks it's better for him to give his wife assets than to agree to pay alimony plus his fair share of college costs.

College financial planning advisers actually were publicly recommending this strategy.

The problem is that most schools in the top 100 will ask for father's income tax return as well.

My husband never gave his financial information to the colleges for his kids. The kids demanded he send it to them and he said no, I'll send it to the school, provide me the information and they never did. So, his wasn't used. (he also was willing to help pay for college but insisted on paying the school directly vs. the kids or ex-wife)

Its not like schools double check so they probably just lied and said he didn't pay child support or alimony which were both lies and pretended he did not exist.

As someone who's been through this process, I find it hard to believe. Most likely the kids ended up in schools that did not require your husband's info. The ones that do, go after the non-custodial parent's money like hounds; it's pretty hard to avoid.

However, your husband was absolutely right about the process. He doesn't need to give any info to the kids. They provide him login info, he creates his own account and reports the information, but the kids can't see it.