Reply to Harvard Will Make Tuition Free for Students of Families Making Less Than 200K

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]What happens if your income increases for the next school year FAFSA application? Do they decrease your aid? [/quote]
Of course.[/quote]

This incentivizes people to keep their income low and/or be dishonest about assets. If you think CSS catches everything you’re wrong. People are very clever when it comes to qualifying for this kind of aid.  I’ll also add the IRS does not routinely audit low income to moderate income families. All of this is to say, the system is rife with abuse. For those of you who dismiss this claim, I know multiple people hiding assets to get aid!! [/quote]

Considering how assets calculate into aid, I find this hard to believe.

Colleges generally expect 5% of non-retirement assets over a threshold amount (like a million or so) to be spent on college costs.

On the other hand, they expect parents to pay something like 30% of income over a threshold amount to be spent on college costs.

Assets are not a big driver of financial aid unless you have over a threshold amount in non-retirement assets.

They usually don't expect you to take out a second mortgage and they don't expect you to sell your small business.

You can optimize around the edges by doing things like some roth conversions to move non-retirement assets into retirement assets but that only works if your income is somewhat low.

I guess you can buy physical gold or things like that, the round trip bid ask spread is probably more than 5% but you would only pay it once I suppose, seems like a lot of trouble to hide assets from a financial aid office for 4 years.

Ultimately what drives parental contribution is income.  If your income is 300K, you are probably close enough to full pay that it's just not worth the trouble.

If your non-retirement assets aren't at least 250K, it's probably not going to affect your financial aid.[/quote]

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