Reply to What is a "donut hole family"?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Could someone please explain, because it sounds like people with nice resources feeling entitled to more than they can afford.[/quote]

No. It is a family that won’t qualify for FA but that doesn’t have the resources to reasonably handle tuition at the priciest/most elite colleges. I don’t know about families feeling entitled, but from the colleges’ standpoint it is a real problem that they are concerned about. They don’t want their student populations to come from two stratified socioeconomic groups.[/quote]

This most closely describes the issue in an unbiased way. While I don’t expect massive FA, we also can’t comfortably pay for expensive private college. The colleges take into account all assets, which is great. No one should get to hide their wealth in a boat purchase. At the same time, we can’t liquidate our retirement savings. We would have to pay penalties. The government has penalties to discourage using your retirement money for non-retirement. So, we find ourselves in a spot where savings that we can’t use without expensive penalties is used to indicate we have “too much” money.

Meanwhile, our cash flow is not high, so it’s hard to swing the full cost.

Before people call me a whiner or tell me how lucky I am, I know I am lucky. I’m not complaining. We could empty our retirement accounts, but it would then lead us into poverty and that doesn’t help society or ourselves. [/quote]

Retirement accounts aren't figured into financial aid assessments.  Some CSS profiles do ask--but they mainly are looking to see that you haven't hidden a ton of extra assets there.  [/quote]

CSS schools expect you to mortgage everything, including retirement.[/quote]

No, not retirement. But earnings you are putting into retirement that tax year are included in earnings. Once it's in the retirement account though, they will not count it as savings. And, many exclude or cap the equity of your primary residence. It's important to pay attention to that. Some cap at 1.2x HHI, some at 2x, some at 3x, some not at all, and some exclude it. Makes a big difference on the expected family contribution. Student earnings/savings impact far more than parent earnings/savings as well.[/quote]

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