Reply to Inheritance and College Financial Aid

Forum Index » Money and Finances

Reply to "Inheritance and College Financial Aid"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][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]

+1. OP,  you should assume that every college is going to expect you can contribute **at least** $66k per year. It sounds like you have already set aside about half that for college. Can you finance $3000/month out of cash flow? Are you willing to have DD take out a federal loan? If yes, then you can probably squeak by at many schools without any aid and without dipping further into savings.

The question is whether this is a smart thing to do for a couple in their 50s who is behind on saving for retirement. You really must see a fee-only (very important!) financial advisor.

If I were you, I would be looking at in-state schools and private colleges that offer significant *merit* aid (not financial aid, which is based on need) to students like your DD. This could be for your DD's particular talent and/or for her grades and test scores, depending on what they are. (Note that many elite colleges offer only need-based financial aid, not merit aid, no matter what her talent.) Given her talent and your financial situation, she may need to submit a lot of applications, but also absolutely ensure that she has a few in-state safeties. And then see what happens.

You need to have a very frank conversation with your DD about what you can afford to pay so that she knows the decision about where she goes will be made based on finances, not on what her dream school is.

A tip: Harvard is perhaps the most generous university in the US when it comes to need-based financial aid. They also have a good financial aid estimator on their website. Plug in your details there and see what it says. That's a pretty good estimate of the *most* financial aid your DD could qualify for. Any other assistance would have to come from merit-based scholarships. [/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