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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Address the problem raised by PP, which is the inequity induced by counting assets, which penalizes saving for college, particularly for certain income groups. [b]Why should the scrimping $90k family [u]be worse off[/u] than the $90k who couldn't or chose not to save?  Answer this.[/b]

[/quote]

This is the problem.  This is where you are 100% wrong.  The family who saved is way better off, and the family that didn't probably can't attend the school.

Repeat: This is the gigantic, Texas-sized hole in your logic.[/quote]

Trigger warning upfront: I'll be using math.

First, let's define "better off" and "worse off."  I define it in units of quality-of-life dollar years. Here's an example. If you have $100 during one year and you can spend it to buy, say ice cream, you've benefited from 100 QoL dollar years.  At the end of their lives, those who had more QoL dollar years over their lifetime are said to be better off.  (If you took calculus, the concept may be familiar to you - if not, just think of having ice cream...)

Second, let's look at a tale of 2 families, the Misers and the Spenders.  They both have one child, and let's assume that by happenstance their children are identical in how well they do in school. The Misers and the Spenders also have the same income, year after year.  Now let's track the families from when their children are born to when they turn 18. The Misers save let's say $500/month, the Spenders use the $500 as QoL dollars.  By the time their kids turn 18, the Spenders are $108k QoL ahead of the Misers.
Now both kids decide to go to college. The Misers, having accrued substantial assets, are charged more tuition than the Spenders, significantly more. The Spenders have to take out a loan, but since they don't have to pay as much in tuition as the Misers, they'll stay comfortably ahead of the Misers when QoL dollar years are considered even after repaying the loan (especially when the Spender's lower tuition comes from reduction or subsidized loans which the Spenders are likely to get since they don't have a very high income). This effect is exacerbated by inflation - the Misers saved dollars that were worth more than the dollars the Spenders use to repay their loans.

After 22 years, both kids have a college education.  After 28 years, both families are debt-free.  The Spenders have enjoyed a larger number of QoL dollar years, even taking the hit from having to take out loans into account, because of their much lower EFC resulting from their lower assets.  What's even better, they've enjoyed them while their kids were young.
Now who's made the smarter choice under the system you apparently defend?

What do you think about the alternative to charge the Spenders the same tuition as the Misers, given that they lived under identical circumstances and differed only by their choices?

[/quote]

1. Subsidized loans are very small compared to the price of college tuition. 
2. With the same income, the EFC won't be drastically different for the two families, as assets don't count as much as income, therefore their tuition shouldn't be drastically different. This will be less true for schools that use the CSS profile. 
3. Unless their income is extremely low, neither family will likely get much financial aid at all other than loans. Student loans come with a fairly high interest rate beyond the federal loans which total $27K for four years.[/quote]

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