Any advice on college aid with substantial assets?

[Potstickers]

Quote:

Originally Posted by aida2003 @ Potstickers, Thanks for posting. Welcome to ER forum! I kind of suspect you've known this forum for a while...a lurker? So, as I'm still curious how this college thing works in this country, could you share some more with me (us): - It sounds that you say it's better to meet a college consultant before a HS-er starts applying for various colleges to prevent later 'tear'. In which grade would such a HS-er approach the consultant? - How to find a competent college consultant? What questions to ask? - What's the cost to hire him/her? - What volunteer and extracurricular activities are very important for the US colleges? This is not required in other countries, BTW, though yes, athletes get more favorable treatment, but they still must show academic achievements before college. - Any websites/books that are not misguided that you'd recommend to read? Thank you.

Thanks for the welcome! Yes, I've been lurking for a while. Lots of good info on the site. One of these days I will retire, but for now I'm having too much fun.

Most students do just fine without a college consultant. The entire college process is not like mounting an Everest expedition. Most colleges are not especially selective, and many public universities use simple tables or charts incorporating GPA and SAT/ACT scores for most admissions.

However, paying for college is a real issue for a lot of families. I particularly like to work with high school juniors and their families before the list gets firm and while there is still plenty of time to prepare for ACT/SAT tests in order to earn scores that may qualify for significant merit scholarships or admission to highly selective schools. In turn, many parents have no idea what they can afford for college. Money comes in and money goes out. Grandma/Grandpa said that they'd help with college costs. Parents assume kids can sign up for huge loans. How to Pay for College without Going Broke is a good book for those who want to understand how the formulas work; Lynn O'Shaughessy's The College Solution: A Guide for Everyone Looking for the Right School at the Right Price is very close to the way I think about matching up students with colleges their families can afford, without a lot of debt.

We help younger students (9th,10th, sometimes 11th) figure out how to explore and deepen involvement in activities that interest them. (Selective colleges tend to like students who have demonstrated increased involvement in fewer activities), help with course selection (yes, even though your high school graduation requirements may only include 2 years of math we still want you to take math every single year) and learn how to explore different types of colleges -- big, medium, small, engineering/art/specialized, and different possible majors. In my era students could afford to go to school and find themselves. At what college costs today, most students need to graduate in four years and need to do more prep before college to make that happen.

We tell people that those expensive service trips to Asia aren't really impressive to college admissions offices, and help students and parents understand how many private colleges actively mine all the data to evaluate a student's level of interest before making an admissions decision. Service hours -- especially a lot of random service hours -- aren't especially helpful or important, and focused volunteering often says a lot more about a student. (That student with four years of volunteer experience at the Humane Society who also runs a pet sitting business on the side looks a lot more coherent than does the student who simply did a lot of random, one-time volunteer activities.)

We help student athletes understand the reality of college athletic admissions and scholarships, and help students with learning disabilities evaluate services available at different schools.

We also visit a lot of colleges every year, and attend professional conferences. And I spend a lot of time reading technical materials from financial aid resources and participating in webinars and seminars related to financial aid. Good times.

And year, the US system is really different than the Canadian or British admissions. We help with those, too.

[duckcalldan]

Our substantial assets mean no FAFSA-related aid.

We have a daughter in her sophomore year in college. She stayed in state at a great school for her field, top 5% of her HS class. Received merit award that covers about 30% of her tuition.

Our second and last daughter is a HS junior. VERY smart and hard-working. Hasn't taken SAT or ACT but scores should be very high. She's taking almost exclusively AP classes (her choice, not ours) and will be in top 1% of her class.

We are likely to downsize and move out of state while she's in college, so we are helping her identify private and out of state public universities that are highly regarded and are also quite generous with merit aid. We're able to afford a slightly higher cost than if she was staying in state, but not by much. She's interested in political science, public policy, economics, that sort of thing. A smaller liberal arts college might be a good match.

She would prefer an urban college environment. A rural, bucolic campus...not so much.

Any possibilities?




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[sengsational]

Quote:

Originally Posted by txdoc One important strategy you can do is to try to qualify for a "simplified needs test." To do that, your AGI needs to be under $50k. If your non-tax-sheltered assets produce low enough income/dividends, you have little earned income, and if you plan ahead, you might be able to accomplish that. That would make your assets "invisible" to FAFSA. More info here: FinAid | FinAid for Educators and FAAs | Simplified Needs Test Chart

Quote:

Originally Posted by panacea I would be careful with this. In my experience, the "games" they play largely involve getting after-tax assets off the FAFSA form... which means investing it in annuities. They make big money on this and the costs often hugely outweigh the benefits.

It's too late for the OP, but if you buy an insurance product that's classified as a retirement asset when the kid is in 10th or 11th grade, it can work.... I'd call that a trick that can work (to counter all the "there are no tricks" posts. variable annuity is a dirty word here, but you can get plain-jane variety from Vanguard. Still has the crummy tax consequences where you must take out , and pay taxes on, all gains before you get your basis back. No need to hire a consultant...just run the fafsa and college board formulas with your non retirement assets and expected income and see where the chips fall.

Even if your efc comes to 5K on a $50K bill, the FA package may or may not fill the void. But many schools try not to load students with too much debt (you can look-up that statistic), so you get "institutional grants" which are just big honkin' discounts. And the loans can be subsidized and not have interest until after graduation.

Another trick is to have more than one active student at a time. Your efc stays essentially the same... it's the best twofer you'll ever get!

BTW, I ended up with simplified needs test, even though I had capital gains. I'm not sure how it happened because they have my tax return. Might be triggered by the low income (mostly just Roth conversion, since I've FIREd).

[Potstickers]

Quote:

Originally Posted by duckcalldan Our substantial assets mean no FAFSA-related aid. We have a daughter in her sophomore year in college. She stayed in state at a great school for her field, top 5% of her HS class. Received merit award that covers about 30% of her tuition. Our second and last daughter is a HS junior. VERY smart and hard-working. Hasn't taken SAT or ACT but scores should be very high. She's taking almost exclusively AP classes (her choice, not ours) and will be in top 1% of her class. We are likely to downsize and move out of state while she's in college, so we are helping her identify private and out of state public universities that are highly regarded and are also quite generous with merit aid. We're able to afford a slightly higher cost than if she was staying in state, but not by much. She's interested in political science, public policy, economics, that sort of thing. A smaller liberal arts college might be a good match. She would prefer an urban college environment. A rural, bucolic campus...not so much. Any possibilities? Sent from my iPad using Early Retirement Forum

Can she study up to try and get a great score on the PSAT this October? There are a number of really lovely, significant scholarships that become possible if she is a National Merit Semifinalist. The required cut score varies by state, but for many states a 218 or higher index score is likely to qualify.

Fordham has a great National Merit scholarship, and also one that can cover up to full tuition for students in the top 1% of their high school class. Villanova has some great scholarships, as do Northeastern, American and Occidental.

Much will come down to her ACT or SAT score. There is s significant difference in major scholarship availability for students who earn a 35/36 on the ACT rather than a 31, even though a 31 is a fine score. If it takes a student 60 hours of concentrated work time to boost a test score in order to yield a $10K/year increase in merit aid, that's a mighty fine payoff.

There are also a number of public universities with great honors programs that can provide a tremendous range of opportunities at lower costs. Students can bloom in a lot of places.

[LOL!]

Quote:

Originally Posted by duckcalldan She's interested in political science, public policy, economics, that sort of thing. A smaller liberal arts college might be a good match. She would prefer an urban college environment. A rural, bucolic campus...not so much. Any possibilities?

Dozens of possibilities. And universities that are not liberal arts colleges have great poli sci /econ/humanities programs. So ... what you have written doesn't really restrict the choices very much. Is there a geographic preference, California? NY? Virginia? North? South? Midwest? Where would her friends attend college?

Nords' daughter went to Rice U in Houston and studied engineering, but it matches your criteria perfectly, too.

[duckcalldan]

Quote:

Originally Posted by LOL! Dozens of possibilities. And universities that are not liberal arts colleges have great poli sci /econ/humanities programs. So ... what you have written doesn't really restrict the choices very much. Is there a geographic preference, California? NY? Virginia? North? South? Midwest? Where would her friends attend college? Nords' daughter went to Rice U in Houston and studied engineering, but it matches your criteria perfectly, too.

She loves the NW. We spent last spring break in Seattle and toured UW. Met with an academic adviser too. Any large city on the west coast would be up for grabs. Claremont McKenna sounds interesting, as does Santa Clara.

Other than out west, the NE is interesting. She loves the idea of NYU or Fordham. We live in VA and doesn't really care for the south (though she spent a week in Nashville and quite liked it there). She is quirky and liberal, and is looking forward to studying in a less conservative place. Regardless of its location, she wants a school that has a strong semester-in-Washington DC program.

Thanks for the ideas.


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[duckcalldan]

Quote:

Originally Posted by Potstickers Can she study up to try and get a great score on the PSAT this October? There are a number of really lovely, significant scholarships that become possible if she is a National Merit Semifinalist. The required cut score varies by state, but for many states a 218 or higher index score is likely to qualify. Fordham has a great National Merit scholarship, and also one that can cover up to full tuition for students in the top 1% of their high school class. Villanova has some great scholarships, as do Northeastern, American and Occidental. Much will come down to her ACT or SAT score. There is s significant difference in major scholarship availability for students who earn a 35/36 on the ACT rather than a 31, even though a 31 is a fine score. If it takes a student 60 hours of concentrated work time to boost a test score in order to yield a $10K/year increase in merit aid, that's a mighty fine payoff. There are also a number of public universities with great honors programs that can provide a tremendous range of opportunities at lower costs. Students can bloom in a lot of places.

Very helpful advice, thanks. She is very interested in Georgetown/GW/American. We've brought up Fordham as a solid alternative to Columbia.


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[aida2003]

Quote:

Originally Posted by Potstickers However, paying for college is a real issue for a lot of families. I particularly like to work with high school juniors and their families before the list gets firm and while there is still plenty of time to prepare for ACT/SAT tests in order to earn scores that may qualify for significant merit scholarships or admission to highly selective schools. In turn, many parents have no idea what they can afford for college. Money comes in and money goes out. Grandma/Grandpa said that they'd help with college costs. Parents assume kids can sign up for huge loans. How to Pay for College without Going Broke is a good book for those who want to understand how the formulas work; Lynn O'Shaughessy's The College Solution: A Guide for Everyone Looking for the Right School at the Right Price is very close to the way I think about matching up students with colleges their families can afford, without a lot of debt. We help younger students (9th,10th, sometimes 11th) figure out how to explore and deepen involvement in activities that interest them. (Selective colleges tend to like students who have demonstrated increased involvement in fewer activities), help with course selection (yes, even though your high school graduation requirements may only include 2 years of math we still want you to take math every single year) and learn how to explore different types of colleges -- big, medium, small, engineering/art/specialized, and different possible majors. In my era students could afford to go to school and find themselves. At what college costs today, most students need to graduate in four years and need to do more prep before college to make that happen. We tell people that those expensive service trips to Asia aren't really impressive to college admissions offices, and help students and parents understand how many private colleges actively mine all the data to evaluate a student's level of interest before making an admissions decision. Service hours -- especially a lot of random service hours -- aren't especially helpful or important, and focused volunteering often says a lot more about a student. (That student with four years of volunteer experience at the Humane Society who also runs a pet sitting business on the side looks a lot more coherent than does the student who simply did a lot of random, one-time volunteer activities.)

Thank you for sharing, Potstickers, some great information. I'll check my library if it has the books you mentioned. I'd like to educate myself slowly how the system works here.

You also made a great point about focused volunteering. This is good to know.
Do activities with Girl Scouts (if the girl stays with them through HS, but doesn't earn a Gold reward) count favorably? I guess volunteering at an animal shelter (if you can find one that takes younger than 18y.o. volunteers) counts more than volunteering at the district library, right?

I chatted with one mom whose daughter earned a GS Gold reward, but she's not sure if it contributed a lot of weight in the acceptance at Georgetown (technology or science program) as the girl's grades were great.

Why don't Peace Corps or other overseas service activities impress admission directors? This would negate what I've read in the articles in the media. Would this mean that the media promotes such volunteer activities upon request of such organizations only?

Thank you.

[TallTim]

Quote:

Originally Posted by RE2Boys Went through this exercise this past year ........waste of my time.

+1 to this. We had a similar experience with DD who just started last week and with DS who is in the application phase now.

If you have substantial assets (and most all here who are RE do), it's a near total waste of time.

What I tell the kids' friends parents is that you have to make a distinction between what you/your family cannot pay and will not pay. FASFA and need-based aid only address the former, and the process is designed IMO pretty well to prevent gaming the system. For the latter, you have to have an upfront discussion w your kids about what you as a family/parents are willing to pay and take that into consideration in selection of a list of schools to which to apply. I've seen what happens in other families when a D or S gets set on a school only to have mom and dad say no at the end, and it's neither pretty nor fair to the child IMO.

Congratulations on getting your kids to college and best of luck with the process.

[sengsational]

Quote:

Originally Posted by TallTim +1 to this. We had a similar experience with DD who just started last week and with DS who is in the application phase now. If you have substantial assets (and most all here who are RE do), it's a near total waste of time.

Maybe a waste of time, but it really doesn't take too much time to figure out if you're in the ballpark or not.

If the kid has assets, 25% of those go to the EFC, so any smooth-move to shift income to your kids' lower tax rate kills you on the FAFSA. Your kids income....I think half of that goes to the EFC or something. My kids didn't make much, so it wasn't a big factor.

To get the EFC for the parents, you calculate "total available" from both income and assets. So their formula decides how much of your assets and income is available to spend on your kid.

You get total available income by starting with your income less federal taxes paid, less SS paid, less state-specific tax offset (smallish number based on how much tax they think you paid to your state), less "income protection allowance" (which is only $25K IIRC). So that's the first total. Hang on to that as your first total.

Then you get total available from assets by taking 12% of your assets (cash, savings, investments, rental property , but not your current home equity in FAFSA), less "asset protection allowance" (which is only $50K or $60K IIRC). BTW, the available from assets calculation does not include retirement assets (IRA, 401k, retirement annuities, cash value of life insurance, etc). Hang on to that second total.

You add the two totals: available from income and total available from assets to get total available (TA). They expect you to spend 27% of that total below a cut-off, and 47% of the amount exceeding the cutoff. The cut-off was $29K a few years back. So for instance 0.27*29K + 0.47*(TA-29K).

Those are old percentages/values I pulled from a spreadsheet of mine. I don't imagine they've changed too much, but it will certainly show you, in like 5 minutes, roughly what they'd expect you to spend for college, per year.

I imagine there are people who are not earning much (FIREd), they have a goodly fraction of their assets in IRA's, 401k's, VA's, or other retirement assets that are ignored by the formulas, and didn't UGMA their kids. Well, I'm not sure how many fit that bill, but I know it's not zero.

[daylatedollarshort]

It is theoretically possible to be a billionaire and get financial aid (grants not just loans and on campus jobs) at a college that uses FAFSA guidelines, as long as your assets are in FAFSA exempt asset classes and your AGI is under the limits. I used to read books on the subject, but really the best source I found was free and online at the Forbes site in articles like this:

Forbes Financial Aid Article

We had our kids look at the payscale reports by college and by major and the Job Outlook Handbook to help pick a cost effective major. We offered to pay for in state public school costs (net of financial aid) or equivalent. Community college and online credits helped bring the costs down further, as did tutoring jobs and internships for spending money.

[duckcalldan]

Quote:

Originally Posted by Potstickers Can she study up to try and get a great score on the PSAT this October? There are a number of really lovely, significant scholarships that become possible if she is a National Merit Semifinalist. The required cut score varies by state, but for many states a 218 or higher index score is likely to qualify. Fordham has a great National Merit scholarship, and also one that can cover up to full tuition for students in the top 1% of their high school class. Villanova has some great scholarships, as do Northeastern, American and Occidental. Much will come down to her ACT or SAT score. There is s significant difference in major scholarship availability for students who earn a 35/36 on the ACT rather than a 31, even though a 31 is a fine score. If it takes a student 60 hours of concentrated work time to boost a test score in order to yield a $10K/year increase in merit aid, that's a mighty fine payoff. There are also a number of public universities with great honors programs that can provide a tremendous range of opportunities at lower costs. Students can bloom in a lot of places.

A clarification, Potstickers:
She took the PSAT last spring as a sophomore. She scored 1430. She'll take it again in October for ranking and scholarship purposes. Thanks for the info you provided; it's genuinely helpful.


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[LOL!]

Quote:

Originally Posted by duckcalldan She loves the NW. .... She is quirky and liberal, and is looking forward to studying in a less conservative place. Regardless of its location, she wants a school that has a strong semester-in-Washington DC program.

Reed College in Portland, OR
Georgetown U
George Washington U
Hunter College, NYC
and the usual places in Massachusetts

But now it reads like she can figure this out for herself and needs no help.

[sengsational]

Quote:

Originally Posted by duckcalldan A clarification, Potstickers: She took the PSAT last spring as a sophomore. She scored 1430. She'll take it again in October for ranking and scholarship purposes. Thanks for the info you provided; it's genuinely helpful.

In that earlier post, I talked about how little time it takes to figure out if financial aid can kick-in, based on a quick caculation...no significant time wasted there. Concerning merit scholarships...ah, now THAT can be a big time-sink.

Both of my kids got great scores on the PSAT and were in the running for National Merit Scholarship, which can result in a free-ride. There is a lot more to being a national merit scholar than getting excellent grades and getting excellent test scores. After chatting with some parents at the interview (when the first daughter was going for it), I realized that everyone I talked to would be considered a "helicopter parent"; they had been engineering their kids' lives so that the kids' "brag sheet" was hand crafted and tuned to look like they wanted to save the world (or maybe had already saved the world). They also said they'd been doing mock interviews so the kids knew what the interviewers wanted to hear. I knew right then that there was little chance she'd get the free-ride, and she didn't. But then again, we let our kids do whatever they felt like doing, so not a bunch of do-gooder community service and stuff like that on the brag sheet. And we didn't coach her for the interview or anything....it was all her doing, not ours. When the second daughter had the option of going for the interview, she just opted-out.

The best news about having a smart kid is that they can get high school AP credits transferred to college so they can freely drop a course or five along the way, and not get behind on their four year program. And of course, the smart kid has a better shot at their choice of schools. But even then, my experience of having a valedictorian and a kid in the top 1% of her high school class, it's not all about the grades and scores on admissions either...they were both sweating, waiting for the "thick envelope". But both of them got it! Now one has graduated and one is a senior. Glad to have (almost) all of that behind me.

[Texas Proud]

Man, being a National Merit Scholar must have changed over the years...

I was close, but just a couple of points short... but, had a friend who did make it... he got a whopping $2,000 scholarship at the University of Texas... I think he got it for 4 years, but not sure...

[Potstickers]

There are quite a few National Merit awards that aren't directly National Merit Scholarships. In many of those cases, being a National Merit Semi-Finalist and then a Finalist qualify you. (The only students who don't advance from NMSF to finalists are those with a bunch of C, D, and F grades, significant disciplinary violations at schools, or who fail to fill out the finalist paperwork and submit a qualifying SAT score. I think last year more than 90% advanced.)

Fordham's award can cover up to full tuition. I have a student on that right now. U. of Southern Cal covers half tuition. A number of public universities -- especially in the south -- give major awards to students who qualify. None require interviews or tap dancing.

But there are lots of other ways of getting great merit award besides National Merit. A number of Texas public universities have a deal where if a student earns a $2K or more a year scholarship from the university they also qualify for in-state tuition. I have a student at Texas A&M paying $3K less than in-state tuition, and loving it.

You have to look at the right schools. If Bigfuture shows you that the college does not give merit scholarships (non-need based aid average is shown as $0) then it is not going to be a good merit opportunity no matter how smart your kid is. If your student has stats similar to those in the top 25% of students admitted at a college that gives merit money, your student will probably get some decent merit money. If your student is in the top 5-10% by stats, he or she is more likely to be in line for the largest merit awards.

Buying an education is like buying anything else. It is completely legitimate for students to ask questions of admissions officers about merit awards and what kinds of test scores and GPA's generally qualify a student. It helps, of course, if the student first checks the college website because many of these criteria are listed right there.

[Potstickers]

Quote:

Originally Posted by aida2003 Thank you for sharing, Potstickers, some great information. I'll check my library if it has the books you mentioned. I'd like to educate myself slowly how the system works here. You also made a great point about focused volunteering. This is good to know. Do activities with Girl Scouts (if the girl stays with them through HS, but doesn't earn a Gold reward) count favorably? I guess volunteering at an animal shelter (if you can find one that takes younger than 18y.o. volunteers) counts more than volunteering at the district library, right? I chatted with one mom whose daughter earned a GS Gold reward, but she's not sure if it contributed a lot of weight in the acceptance at Georgetown (technology or science program) as the girl's grades were great. Why don't Peace Corps or other overseas service activities impress admission directors? This would negate what I've read in the articles in the media. Would this mean that the media promotes such volunteer activities upon request of such organizations only? Thank you.

Overseas volunteer efforts are (correctly) viewed by most admissions officers as an indication that parents had money to spend and that the kid had a nice vacation while putting in a few hours of volunteer work. There are a number that incorporate 20-30 hours of volunteer work over 3 weeks...in Tahiti, Thailand, or Costa Rica. These kids usually then try to write an essay explaining how they now really understand poverty. (Have I mentioned that admissions officers are generally not really well paid?)

Not long ago, Frank Bruni wrote a wonderful column: http://www.nytimes.com/2016/08/14/op...-to-haiti.html

Volunteering at a Humane Society is no better or worse than volunteering any place else. Libraries are great. Random volunteer efforts don't show much; it simply looks like you're trying to build up a certain number of hours and don't particularly have any interest in the actual volunteer work. Admissions officers can tell when you're really engaged with what you do, and they can get a good idea of when you're just doing things to tick off items on a list. They tend to prefer students who are excited and engaged.

[youbet]

Quote:

Originally Posted by Texas Proud Man, being a National Merit Scholar must have changed over the years... I was close, but just a couple of points short... but, had a friend who did make it... he got a whopping $2,000 scholarship at the University of Texas... I think he got it for 4 years, but not sure...

My son was a National Merit Scholar (finalist) and his reward was a one time $2,000 scholarship (which was actually paid by my MegaCorp employer). I'm unaware of any "full rides" given to National Merit Scholars by that organization itself. This was back in '92 and I'm not informed on changes since then. Perhaps if there had been any "need" involved, the award would have been larger. Dunno.

[Potstickers]

Yes, it isn't NMSC awards that are usually huge -- it is the colleges that give huge awards to National Merit Semi-Finalists or Finalists. Some give nothing (or almost nothing) and some give huge amounts.

[aida2003]

Quote:

Originally Posted by Potstickers Overseas volunteer efforts are (correctly) viewed by most admissions officers as an indication that parents had money to spend and that the kid had a nice vacation while putting in a few hours of volunteer work. There are a number that incorporate 20-30 hours of volunteer work over 3 weeks...in Tahiti, Thailand, or Costa Rica. These kids usually then try to write an essay explaining how they now really understand poverty. (Have I mentioned that admissions officers are generally not really well paid?) Not long ago, Frank Bruni wrote a wonderful column: http://www.nytimes.com/2016/08/14/op...-to-haiti.html Volunteering at a Humane Society is no better or worse than volunteering any place else. Libraries are great. Random volunteer efforts don't show much; it simply looks like you're trying to build up a certain number of hours and don't particularly have any interest in the actual volunteer work. Admissions officers can tell when you're really engaged with what you do, and they can get a good idea of when you're just doing things to tick off items on a list. They tend to prefer students who are excited and engaged.

Thank you for a thoughtful response in addition to a great article. Now I've gained better understanding about volunteering. The volunteerism by the rich is similar to the celebrities adopting babies from African countries. Very nice of them but I'm sure you could find plenty of orphans in this country as well.

I'll have to save or make a copy of this l thread for the future when my kids start HS.