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Old 02-25-2008, 12:46 PM   #41
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Roth's weren't around back then.
As a fellow geezer, I fully understand that concept!
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Old 02-25-2008, 02:50 PM   #42
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To open and contribute to a Roth for a child, the child must have earned income.

But there ARE ways to do that, as Nords can attest.
Doesn't Nords pay minimum wage, less an alllowance for room and board??
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Old 02-25-2008, 02:53 PM   #43
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To open and contribute to a Roth for a child, the child must have earned income.

But there ARE ways to do that, as Nords can attest.
For an infant?
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Old 02-25-2008, 03:19 PM   #44
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You can pay your kids for chores and whatnot, but I thought you had to file a tax form then on them?
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Old 02-25-2008, 04:30 PM   #45
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I dont believe paying for chores around the house fits the bill.

You ever see an infant get paid for modeling/photo shoots/advertising purposes?
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Old 02-25-2008, 04:43 PM   #46
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If you are early retired, is their any way your children could possibly qualify for any of the need based loans (such as Subsidized Loans). From what I recall (as a subsidized loan recipient), is they look at income AND assets owned by the parents. I could be wrong, but it feels most of the people who are capable of retiring, are probably not within federal "needy" standards.

Lastly, when I went to college, the 5k or so stafford + the 2k perkins loans pretty much covered board/tuition/books. Fast forward 10 years later, and at my college (state school), you get basically the same aid amount from loans, but it now costs twice as much to go to school. Thus even if you qualify for aid, it may not cover everything.

Isn't the worst case for a 529 is that you withdraw the money for non-education expenses? So you're paying taxes, but it compounded tax free for all those years, so was still better than a standard investment vehicle. I've heard anecdotes of people who have maxed out their retirement contributions, stuffing money into 529's with no expectation of ever using the money for education.

It would seem, from the feedback of those more recently involved in security student loans, that my assumptions are off.

As I admitted, I don't have much recent experience with student loans - I do recall that when I was in school some 20 years ago, I had friends that got loans based on their own financial situation (i.e. didn't even consider parent's income/assets). These were usually around 5-ish percent, and usually didn't require payment until sometime after graduation.

Sounds like I need to do some more digging around to figure out what the situation is like now (and try to extrapolate what it'll be like in another 15 years).

Anyone else out there have recent college loan data they can share?
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Old 02-25-2008, 05:11 PM   #47
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I'd really like to hear from someone who has faced the college issue recently, (ideally a state school), and what are the finance "traps" that you can be hit with. I've heard student's personal wealth is used for need based items, but also scholarships as well. And my experience has been that the parents wealth affects certain items as well, but not to what extent.

I just want to try making sure I don't spend the next 18 years pumping money into what turns out to be the completlely wrong vehicle and wind up ineligble for items I would have if I had chosen option B.
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Old 02-25-2008, 05:20 PM   #48
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I'd really like to hear from someone who has faced the college issue recently, (ideally a state school), and what are the finance "traps" that you can be hit with. I've heard student's personal wealth is used for need based items, but also scholarships as well. And my experience has been that the parents wealth affects certain items as well, but not to what extent.

I just want to try making sure I don't spend the next 18 years pumping money into what turns out to be the completlely wrong vehicle and wind up ineligble for items I would have if I had chosen option B.
I'm dealing with it currently. I've got income, I've got savings, I've got a house paid for, I've got 529 plans and 401k's....I got two academic scholarships for my daughter, and was offered two loans. One interest free until she graduates, and the other interest accruing immediately (which I turned down). It may get more difficult in the very near future, but thus far I haven't seen the traps.
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Old 02-25-2008, 05:51 PM   #49
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I'd really like to hear from someone who has faced the college issue recently, (ideally a state school), and what are the finance "traps" that you can be hit with. I've heard student's personal wealth is used for need based items, but also scholarships as well. And my experience has been that the parents wealth affects certain items as well, but not to what extent.

I just want to try making sure I don't spend the next 18 years pumping money into what turns out to be the completlely wrong vehicle and wind up ineligble for items I would have if I had chosen option B.
Our #1 Daughter just graduated June'07 and #2 started in Sept'07. Here are just a few highlights of my experience:


FAFSA is more or less mandatory for any need based aid. The formula for Need= Cost Of Attendance (minus) Expected Family Contribution (minus) Scholarships. Scholarships offered by the school are usually not taxable. The EFC is a formula comprised of Family Income & Assets and Student Income & Assets. Primary Residence and Retirement assets like IRA's, 401k's, etc are not included in the formula. Student assets like 529's are heavily weighted. When FAFSA calculates income, it ferrets out untaxed income like 401k contributions. When they calculate NEED, most schools consider loans on par with scholarships, which is what trips up most parents. Loans are extremely easy to get, but currently run in the 6.6-8.5% range. There is an array of Federal Loan programs, but they are oriented to low income families. Do a search for 'efc estimator' and run some numbers.

IRA withdrawals prior to 59.5 are excepted from the 10% penalty when used for education (tuition) expenses for the taxpayer or thier dependents (and bypass the EFC calculation*). A diversified portfolio of education assets (i.e. 529, IRA, taxable, loans) would probably be flexible and meet any needs the best.
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Old 02-25-2008, 07:35 PM   #50
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To open and contribute to a Roth for a child, the child must have earned income.
But there ARE ways to do that, as Nords can attest.
Painfully:
http://www.early-retirement.org/foru...ras-30729.html

But she's in her third year of contributions and should soon be above T. Rowe Price's nuisance fees.

When she turns 18 we'll roll it over to Fidelity, where as a "family member" she'll enjoy the same hypercaffeinated day-trading bunny low fees as we parents.
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Old 02-26-2008, 08:06 AM   #51
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I'd really like to hear from someone who has faced the college issue recently, (ideally a state school), and what are the finance "traps" that you can be hit with. I've heard student's personal wealth is used for need based items, but also scholarships as well. And my experience has been that the parents wealth affects certain items as well, but not to what extent.

I just want to try making sure I don't spend the next 18 years pumping money into what turns out to be the completlely wrong vehicle and wind up ineligble for items I would have if I had chosen option B.
I've had three kids go through this cycle, with the last one about to graduate this Spring. Here are a few points to keep in mind. First of all, FAFSA is not the only needs-based assessment tool that colleges use. While FAFSA is the determinant assessment for Federal financial student assistance, private colleges also use the College Profile system generated by the College Board to determine awards of financial assistance from their own resources, which could be quite substantial. And you might be surprised that in some instances, it might actually be cheaper for parents and students to attend a high school private college (supplemented by generous student financial assistance) than a low cost public college. Thus, one should not look solely at state colleges as the cheapest deal in town. There are major differences in how FAFSA and College Profile determine expected family contributions or need, but as I recall some of the salient differences are in the area of how the systems treat home equity and retirement accounts. Secondly, if the parents' income or resource levels are very high, FAFSA will likely result in an extremely high EFC and little or any federal assistance except for modest parent loans. Accordingly, if you make too much income -- fagedbout need-based student aid, unless you have more than one child attending college at the same time. Thirdly, if you title assets in your child's name, like those savings bonds, expect them to count more in the assessment of need, than if the assets were titled in your name. Fourthly, these 529 plans, especially those that lock-in state tuition, are pretty good deals -- at least that's been my experience for the state-sponsored plans in Virginia. I purchased one of these plans for my middle child who didn't need the plan and later dropped the plan to the youngest one. I think my rate of return has been around 8.5 percent and it covered 4 years of tuition at a state school. Finally, there's a lot of merit-based aid in both private and public colleges. One can really negotiate appropriate assistance for schools that have generous aid programs.
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Old 02-26-2008, 09:17 AM   #52
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From what I found, it seemed to me that the more expensive schools were so, merely so they could be more selective. If the school wants your child, they will help find the funding for you. The schools that we applied to that advertised $20k more than the others, ended up being almost the same in cost after they "offered" us assistance.
My biggest mistake was in not applying to a couple Ivy League schools because of all the information I had read about how competitive they were. Most schools charge about $250 to apply, so you try to be more selective in your choices, however, if I could do it again (actually I'll have to in a couple years), I'll do it differently.
I'd suggest picking one "reach school" when you apply.
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Old 02-26-2008, 10:35 AM   #53
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My biggest mistake was in not applying to a couple Ivy League schools because of all the information I had read about how competitive they were. Most schools charge about $250 to apply, so you try to be more selective in your choices, however, if I could do it again (actually I'll have to in a couple years), I'll do it differently.
I'd suggest picking one "reach school" when you apply.
Very selective schools are very selective and competitive, whether Ivy or state schools. One of the best deals on in-state tuition (as well as non-resident tuition) is UNC-Chapel Hill. However, out-of-state admission into UNC-Chapel Hill is just about as tough as any Ivy League college, especially since UNC-Chapel Hill restricts the number of out-of-state students. And I'm sure the same might be true for UC-Berkeley or UCLA. I know that UVa and William & Mary in Virginia are also tough schools for non-residents, though the tuition for these schools for non-residents is very high.

$250 for an application! That seems very high.

The conventional wisdom is that you apply to 6 schools; 2 reach schools; 2 within my range schools; and 2 safe schools. However, I've known people whose children sent in a dozen applications (they didn't appear to have any discerning scheme to the madness) and people whose children were extremely focused and sent in 1 or 2 applications (and early admissions procedures have now changed since when my kids first applied). I think you take the conventional wisdom with a grain of salt. However, if I had to pay $250 per application, I'd probably restrict the process to no more than 2 schools!
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Old 02-26-2008, 10:39 AM   #54
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Painfully:
http://www.early-retirement.org/foru...ras-30729.html

But she's in her third year of contributions and should soon be above T. Rowe Price's nuisance fees.

When she turns 18 we'll roll it over to Fidelity, where as a "family member" she'll enjoy the same hypercaffeinated day-trading bunny low fees as we parents.
Thanks Nords - I missed this discussion and it's very interesting. My kid is only 1 year-old, and while he's cute enough to be a model, I don't have any excuse to model him for anything - so he'll have to wait until he's old enough to actually do some chores for me to earn some income. But I'm sure by age 7 or 8 he'll be old enough to earn any income from helping out around the house. Or if we have a rental property by that point, he could help out with that. Interesting food for thought ...
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Old 02-26-2008, 12:20 PM   #55
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Very selective schools are very selective and competitive, whether Ivy or state schools. One of the best deals on in-state tuition (as well as non-resident tuition) is UNC-Chapel Hill. However, out-of-state admission into UNC-Chapel Hill is just about as tough as any Ivy League college, especially since UNC-Chapel Hill restricts the number of out-of-state students. And I'm sure the same might be true for UC-Berkeley or UCLA. I know that UVa and William & Mary in Virginia are also tough schools for non-residents, though the tuition for these schools for non-residents is very high.

$250 for an application! That seems very high.

The conventional wisdom is that you apply to 6 schools; 2 reach schools; 2 within my range schools; and 2 safe schools. However, I've known people whose children sent in a dozen applications (they didn't appear to have any discerning scheme to the madness) and people whose children were extremely focused and sent in 1 or 2 applications (and early admissions procedures have now changed since when my kids first applied). I think you take the conventional wisdom with a grain of salt. However, if I had to pay $250 per application, I'd probably restrict the process to no more than 2 schools!
These state schools may be more selective, but if they want your kid, they'll make it easier. I found that out of state public schools waived the out of state tuition requirement as long as my daughter would maintain a certain GPA. It seemed to me that schools want to appear diverse and therefore welcome out of state kids. NC doesn't want 100% NC students, they want to attract those worldwide. Again, this was just what I gathered going through the process and talking to many schools.
FWIW, we applied to five schools, one being her "safe" school. One school waived the application fee as well, but called us on the phone first to see if we were serious about the school. The school only took 1200 freshmen per year though.
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Old 02-26-2008, 02:40 PM   #56
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These state schools may be more selective, but if they want your kid, they'll make it easier. I found that out of state public schools waived the out of state tuition requirement as long as my daughter would maintain a certain GPA. It seemed to me that schools want to appear diverse and therefore welcome out of state kids. NC doesn't want 100% NC students, they want to attract those worldwide. Again, this was just what I gathered going through the process and talking to many schools.
FWIW, we applied to five schools, one being her "safe" school. One school waived the application fee as well, but called us on the phone first to see if we were serious about the school. The school only took 1200 freshmen per year though.
Actually, NC wants a bare minimum number of nonresident students -- I think it's capped at 18 percent at UNC-Chapel Hill, the flagship college in the state. And some of the "public Ivy colleges" like William & Mary might even have their own cap, as well. Yep, schools do want a diverse student population but state schools are also under political pressure to ensure that resident students get treated better than nonresident students in the application process as well as in paying for the cost of attendance. Some state schools provide a major cost differential between resident and non-resident tuition. At UVa, in-state tuition is $8690; it's $27,940 for non-residents. And I believe, the average SAT at UVa might be around 1220 for in-state residents, while it hovers around 1400 plus for non-residents.

Yeah, the state schools have lots of resources to attract quality students; for one thing, unlike the Ivy's, they do award merit-based aid, both to in-state and out-of-state residents, but the in-state folks generally have a leg-up. And there are a lot of highly selective private colleges that can dangle lots of merit-based aid before your child's eyes, if you're fortunate to have a very talented and gifted student.
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Old 02-26-2008, 03:02 PM   #57
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College Search - University of North Carolina at Chapel Hill - UNC, - At a Glance

College Search - University of Virginia - UVA - At a Glance

Two pretty solid schools.
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Old 02-26-2008, 04:08 PM   #58
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I am still anxious to hear details of these ridiculously low loan rates! Anybody know about these?
Most of my friends who went to grad school in the 2001-2003 timeframe have consolidated student loans of around 3%. I went to grad school from 2005 to 2007 and my consolidated loan for both years is now 5.62%. Stafford loans are now 6.8%.
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Old 02-26-2008, 09:55 PM   #59
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I have a few years before the kids go to college.
My plan of action boils down to these:

-max out 401k/403b contributions
-max out 529 every year (if my kids don't deserve them, we have plenty of nephews and nieces to help)
-quit working & FIRE a few years prior to first year of college to lower my income profile
-get a job in the college of my kid's choice....both to get employee discounts and to check up on what mischief JR is upto

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Old 02-26-2008, 10:06 PM   #60
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3. Tax-advantaging.
Money withdrawn from 529 to pay for education expenses is tax free. Another positive aspect of 529 is that you can withdraw an amount equaled to the total expenses (tuition, books, fee, room and board) even if they are covered by scholarship without any penalty.
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