Reply to Did you folks not do ANY saving?

Forum Index » College and University Discussion

Reply to "Did you folks not do ANY saving?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Notice how this post was not answered, nor are any of the other people complaining about "the lucky poors who get financial aid".[/quote]
I have $300k saved across 529 and other nonretirement assets.  Based on the 5% formula, this would increase my EFC by $15k per year, so I would be paying $60k more than if I hadn't saved.[/quote]

Thanks for answering, and congrats for being a diligent and responsible parent.

I do not know if you were one of the previous posters, but are you saying you’d be better off with $60K more of financial aid and no savings  to pay for college?  Probably not, right?
[/quote]
I think there's an arithmetic mistake. If a child were to attend a $65k/year college, then in Year 1 the added cost is $15k. In year 2, however, the penalty goes down to $11.75k since $65k will be spent. Year 3 is $8.5k, and year 4 is $5.25k, for a total penalty of "only" $40.5k.

Is this better than not having saved?  That depends on where the money is coming from you'll use to pay. You'll have to look at loan options, calculate the amount you need to borrow, terms of the loan, and then adjust for inflation.  At today's rate, you can borrow a fair amount for $40.5k in interest. [/quote]

Yes I thought of that but was too lazy to do the math.  Thanks!  My main point, which I think is even more valid after your adjustment, is that nearly everyone would be way worse off if they had not saved.

It's kinda like saying you want to make less money so your top marginal rate is less.  It makes no sense, but is often claimed by people.[/quote]

It's not like that at all. In the tax realm, you get a monotonic return/reward.  Even if you make more, you pay more in taxes, but your net remains more (ignoring historic anomalies where this wasn't true.)
Here, with the combined consideration of assets and income, the curve is not monotonic.

Specifically, I don't ask if I'm worse off than my alter ego who didn't save.  I ask if it's fair that colleges charge me more because I was frugal than if I hadn't been.

To keep things in perspective, in my case ($180k HHI) it probably won't matter since by income and home equity ($425k) alone I'm maxed out at full tuition, so any additional assets won't increase EFC further (at least that's what I assume - someone correct if I'm wrong).  So, let's compare to the person who makes only $90k HHI, scrimped the last 18 years to accumulate $200k.  Their tuition would not have been maxed out had it not been for their frugality.  They might even have qualified for actual discounts rather than loans. You don't have to be a SJW to recognize this as unfair.

Now mind you, any algorithm that wouldn't take assets into account can be gamed by hedge fund type people who routinely report zero income.  But I don't see how the current formula is fair for anyone in the top-50% income bracket.

There are, btw, very few instances in American society where pricing is based on perceived ability to pay, and they are usually treated with contempt (for instance, if your mortgage broker sells you a mortgage at a higher rate because they think you can afford it). [/quote]

Everything you are saying is wrong -- starting with your perspective.

You are viewing as and comparing a college admissions transaction to a commodity.  That's not what's going on here.

Colleges are not "charging you more" -- they are offering a discount to a student because if they don't, they can't get him, and they want him.  You are saying "I should pay the same as those less fortunate, and if the less fortunate can't attend the college, then so be it."

The good news is the colleges get to decide what they do.  If you don't like they way they do it, don't attend.  There are plenty of colleges that offer no or little financial aid.  Attend one of those if you insist everyone pay the same.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics