S/o don't financial aid offices penalize families who are capable of saving but who choose not to?

[Anonymous]

A few posters on the long thread about college savings seem to think that if one is capable of saving for college but chooses not to, then this puts them in a great position for living the good life but still getting loads of money in financial aid. For example: I'm going to quit my job, renovate my entire house, take expensive vacations, etc., and then when my kids go to college they'll be eligible for tons of financial aid on account of the fact that I've spent all the money that we could have used for college.

Would someone with actual knowledge of the process please tell me that this is a myth? I mean, don't financial aid offices have processes in place for imputing what a family *shoukd* have saved, or what a a SAP *shoukd* have earned - and don't they factor this into the FA calculation? Of course, I'm not talking about families with extenuating circumstances, like those with high medical expenses or a parent who is unable to work.

[Anonymous]

First of all, students go to school, not families.

My parents made $300k/yr. They saved nothing for me. They could not budget well enough to pay out of pocket. I did not get any aid unless my parents would co-sign. I barely made it to graduation, working as a nanny and living with roommates in a 1 br.

So yes, I was “penalized” for my parents’ choices.

[Anonymous]

The problem is that you don't know why families did not save. Was it because a family member had an illness and there were lots of out of pocket medical expenses? Or was it, as you say, expensive vacations, cars, and remodels. We were not the best savers, but my husband was fortunate enough to climb the corporate ladder quickly and now we make over $700K a year. Still, our savings were abysmal...until we had an inheritance from my side of the family, which paid for both kids' college. Had it not been for those two things, we would be screwed.

[Anonymous]

My sister sent her kids to private schools and 8 weeks of sleep over camp. They live in a home that costs 2x what ours does. We have similar income. They are qualified for considerably more aid then we are. They also got aid for the private schools and (religious) camps.

[Anonymous]

Anonymous wrote:A few posters on the long thread about college savings seem to think that if one is capable of saving for college but chooses not to, then this puts them in a great position for living the good life but still getting loads of money in financial aid. For example: I'm going to quit my job, renovate my entire house, take expensive vacations, etc., and then when my kids go to college they'll be eligible for tons of financial aid on account of the fact that I've spent all the money that we could have used for college.

Would someone with actual knowledge of the process please tell me that this is a myth? I mean, don't financial aid offices have processes in place for imputing what a family *shoukd* have saved, or what a a SAP *shoukd* have earned - and don't they factor this into the FA calculation? Of course, I'm not talking about families with extenuating circumstances, like those with high medical expenses or a parent who is unable to work.

Of course. They do not just look at current income and have formulas for what they expect a family to have been able to save over many years. If colleges met everyone’s financial need there would be no need for student loans, no kids with $100K loan balances, no PLUS loans.

Do a few people game the system and come out ahead? Sure. But it isn’t common.

[Anonymous]

Anonymous wrote:A few posters on the long thread about college savings seem to think that if one is capable of saving for college but chooses not to, then this puts them in a great position for living the good life but still getting loads of money in financial aid. For example: I'm going to quit my job, renovate my entire house, take expensive vacations, etc., and then when my kids go to college they'll be eligible for tons of financial aid on account of the fact that I've spent all the money that we could have used for college.

Would someone with actual knowledge of the process please tell me that this is a myth? I mean, don't financial aid offices have processes in place for imputing what a family *shoukd* have saved, or what a a SAP *shoukd* have earned - and don't they factor this into the FA calculation? Of course, I'm not talking about families with extenuating circumstances, like those with high medical expenses or a parent who is unable to work.

OP when you apply for financial aid, you provide financial information for a particular point in time.. each college has it's own algorithms to determine aid. I am not speaking on merit aid which is totally different. Some schools include home equity, others do not. Some schools consider cost of living for your city, others do not. Number if kids, age of parents, all of these things factor in and you can get radically different financial aid packages from schools, as we did two years ago.

Also you have to keep in mind the variation among schools in providing financial aid. Schools that meet full need are usually more generous. So you do have families in the 180-200k range that get aid. This may have nothing to do with how much they saved or not but more to do with the generosity of the school.

Based on our situation and the school my DC attends I found the process and the price we pay to be fair.

[Anonymous]

There’s no way they could calculate what you should have saved over the last 15 years. How would you standardize that across metro areas and circumstances? It’s impossible. You can help your calculation by putting assets into retirement accounts or your home in some cases, but people with a truly high income are not going to be able to game themselves into appearing poor.

[Anonymous]

I think this sort of depends on how you view the value of saving for college vs other ways of spending your money. The way this question is framed makes it sound like valuing what you can buy over your kid's education is a good thing...not sure I'd agree, but i may just be a very naive middle class person.

I also think it's right there in the formulas though. You are going to have the same EFC based on income no matter how much you saved. The percentage of savings you are expected to spend each year is lower than the percentage of income. So you get better value for your money with savings, and it won't destroy your chance of getting financial aid (college is so expensive these days, a lot of people can save HARD and still not come up with enough).

[Anonymous]

The calculations aren't a moral judgement, there's no should have about it, it's just squeezing blood from turnips. The colleges are pretty good at that, seems everyone ends up paying more than they'd like.

[Anonymous]

I was saving for my kids schooling until 2011 when I was diagnosed with stage 4 cancer. That 10K a year I was saving has gone to medical expenses since then.

Oh, and my 200K HHI is not getting DD Any aid. We have about 40K saved, that will cover the first year at a state school. I

[Anonymous]

Anonymous wrote:I was saving for my kids schooling until 2011 when I was diagnosed with stage 4 cancer. That 10K a year I was saving has gone to medical expenses since then.

Oh, and my 200K HHI is not getting DD Any aid. We have about 40K saved, that will cover the first year at a state school. I

Is your kid going to college in the Fall or are you just assuming. Again financial aid can vary widely. Algorithms for this are different at every school. Also you can appeal financial aid awards. If you have high medical expenses that should be flagged in your application.

Also wouldn't you cash flow some of the college expenses? We are a 200k family and pay 35k using a combo of cash flow and 529.

From my experience, state schools can be less generous. I'd highly recommend the Facebook group Paying for College. There are lots savvy people out there that identify schools with merit and generous financial aid and only allow their kids to apply with that in mind.

[Anonymous]

Probably changed, but I had one living parent when I went to a cheap oos school. No financial aid, but student loans. Parent worked and saved. Saw families with 2 homes, ski vacations, etc get aid. Hoping they got better at this.

[Anonymous]

If you read the FAFSA and the other paperwork we have the opportunity to contribute to get aid, you will see that they really aren't exhaustive.

The schools don't do personal evaluations of our moral worthiness, but choose rules of thumb. Sometimes they miss and some people have no scruples.

It is a really dumb idea to live the high life to insure you have no savings so the kids can get aid. Then what? Kid grows up with bad habits, no money sense, and retirement is looming.

[Anonymous]

Anonymous wrote:First of all, students go to school, not families.

My parents made $300k/yr. They saved nothing for me. They could not budget well enough to pay out of pocket. I did not get any aid unless my parents would co-sign. I barely made it to graduation, working as a nanny and living with roommates in a 1 br.

So yes, I was “penalized” for my parents’ choices.

I know a few people like this. I’m not sure why students need co-signers? My ex had to drop out of college because he ran out of money. Neither parent would co-sign and they were divorced so both said he was the others problem.

[Anonymous]

If you have had truly special circumstances (medical expenses, caring for a sick parent--not vacation home needs a new roof)...the FA office will take that into account (in a limited way) .

It is mostly income-based though, so if you have been living extravagantly hoping to "cash in" on financial aid, your child will suffer.