Reply to What is a "donut hole family"?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]The problem is this describes a bunch of different families. And their situations may be sympathetic or not depending on your viewpoint.

Some people windup in the donut hole because they have more kids. If you have one or two kids, it's easier to sacrifice to get those kids through school than if you have three or four. People with more kids also struggle to save as much for college and feel frustrated when schools won't make up the difference. Personal bias here: I have little sympathy for these parents because I don't understand how you keep having kids without considering how you will pay for their college. But I have a lot of sympathy for these kids because it puts them in a really crappy situation where their existence is itself the thing keeping them from going to a school they got into but can't afford. Parents who have 3+ kids and then complain about how much college costs makes me angry.

But one I have more sympathy for is when one or both parents own a business and financial aid expects them to be willing to borrow against or liquidate business assets in order to pay for school. That seems like such a terrible choice. I know people who have done it and respect how much they are willing to put on the line for their kids education, but I'm not sure if I'd be able to make the same choice. That's a really tough one.

Another one is people who had kids late and are nearing retirement, and get caught two ways. First, they don't save as much for college because they are also saving for retirement (sometimes they are also caring for elderly parents and it's a squeeze). Second, they may have more liquid assets specifically because they are looking to retire soon, and financial aid will lay claim to those. I feel bad for these folks because often being late to parenting is not a choice. However, as someone who had kids late, I also just assumed that meant I'd have to work a little longer to get my kid through school. So again, this is something you can anticipate and should be able to if having kids late because you are old enough to understand how this works.

I also think people who come from modest backgrounds and who went to schools on scholarships sometimes don't understand how to save for college and then are surprised when their income pushes them into the "no aid" position. I have sympathy for this one because it's a knowledge gap -- their parents didn't save for college either and they just didn't know better. Though I do think if you are going to have kids you have to educate yourself. This was my DH and I had to work on him because he was convinced our kid would just qualify for aid. Now he gets that even though we aren't wealthy, we have more resource than our parents and we have to dedicate some of them to college savings if we want to ensure our kid can go to school. If I hadn't worked on him, though, we'd have zero saved.

There are probably others I'm unaware of. But these are the ones I hear the most. I think it's hardest for people who are outliers in their school or social community in terms of money. If everyone else you know can afford to pay out of pocket, and you can't because of the number of kids or your age, you might feel like it's unfair. And likewise, if everyone you know qualifies for aid because you are in a lower-income community, and you don't because you run a business with assets and therefore are actually in a higher bracket, it could feel unfair.

But usually it's not unfair. [b]The actual unfair thing is that money is such a barrier to higher education in general in this country [/b]and having kids pretty much requires you to save for college, while also saving for retirement, while also paying your health insurance premiums. And yet we still have fairly high taxes! It's hard, but if it's "unfair" it's unfair to everyone except the very rich who inherited their wealth. And that's by design.[/quote]
This really is the crux of the matter.[/quote]

I'll add another scenario: parents who graduated from college with loans themselves who don't work in jobs with super high pay.  When I finished graduate school I owed $67K in loans.  My starting salary was $34K a year.  My husband owed $24k and his starting salary was $40k.   2o years later we have paid off our student loans, have a decent amount in 401ks by always contributing at a minimum the match amount for our companies and we have a 529 for each kid with enough to cover a state school.  We each now make around $100k each. Our only debt is our mortgage. Our oldest child is now in college. She ended up choosing an OOS flagship that gave her merit aid (enough that it is well below our state school price) and has a strong program in her major.  She turned down 2 other schools because they did not offer any merit aid. We make a good salary and we are all happy. DD loves the college she is at. We make enough that we do not qualify for financial aid but not enough to pay for those other schools. We are a donut hole family. We are not bitter about it. Our goal is to help our children start their adult life on a better footing than we did. [/quote]

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