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.