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[quote=Anonymous]OP, merit scholarships don't have anything to do with your income or assets, of course.

Savings are savings, for financial aid. Whether a 529, or a savings account, or a brokerage account... all your assets (except for retirement i.e. tax deferred 401k, 403b) will be considered as part of your financial strength in paying for college.  Parents are expected to be able to contribute 5% of their savings per year towards college. Which, if you are getting about 5% interest on the account, seems fair?

If the inheritance is in the form of a retirement account it might not be looked at; I don't know.  But yes, either put it into your own retirement accounts every year, or use it to pay down your mortgage I suppose.  Some colleges do consider home equity in determining financial aid.

Generally speaking, private colleges with good endowments and the ability to offer financial aid to many, will look at your income and expect you will be able to contribute a good portion of it to college.  I think it's about 25% of your income... because they are expecting that you should have been able to save some, cash flow lots, and even borrow if need be.  So looking at that $225K annual income?    That is where you are not going to be offered any financial aid at most school.  They are going to expect you to be abole to cough up $56K annually for college + another $10k from savings + whatever else from equity in your house... you are not going to qualify for need based financial aid at most schools.

So either save up $80K per year to cover the cost of an expensive private school, or tell your kids to set her sights on a reasonable $34K school and start saving to cover it.[/quote]

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