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Re: Stop working = More college financial aid?
Old 11-11-2006, 09:50 PM   #41
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by 2B
I've heard that LSU is very aggressive in trying to recuit non-Louisiana students. It's a "given" that almost anyone can get in state tuition and I've heard they will give other aid for "good" candidates.

It used to be a top tier engineering school but I'd now consider it good but not exceptional. It does have a good reputation and I've run across a number of good engineers that graduated from there.
Thanks 2B After I read dt123's post, I was just wondering what kind and quality of schools are giving out merit based schlorships to average students. That is, which ones are struggling to get the "everyday folks" of the high school graduates?

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Re: Stop working = More college financial aid?
Old 11-11-2006, 09:59 PM   #42
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by youbet
Everyone wants their own slice of bread to get the butter Spanky!

You sound anxious and concerned about DD's college search and, frankly, you and DD have it made by comparison to most. She's going to get a nice schlorship to a good school AND you could afford to send her to a good school even without the schlorship due to your upper middle class financial standing.

I truly wish you and DD all the best in your college search and in her college career. You should enjoy this time since you are extremely fortunate.
Thanks. I do feel fortunate. She will do fine.
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Re: Stop working = More college financial aid?
Old 11-11-2006, 10:28 PM   #43
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Re: Stop working = More college financial aid?

I went on another campus tour today and listened to the Director of Financial Aid misguide a room full of terrified propective parents. It got me thinking more about the mechanics of FAFSA:

As I stated before, FAFSA includes deferred comp INCOME like IRAs, 401ks, etc. that are outside AGI. FAFSA ignores deferred comp plan assets and discounts personal savings assets (i.e. your EFC is less affected by personal savings than by income). Home equity is also ignored. It's worth having a personal discussion with a Financial Aid officer as I am convinced that many "special circumstances" could be used to appeal the FAFSA formula. I think things like debt burden ( from other dependent student loans), extraordinary medical expenses, etc. could be considered at Financial Aid officer "professional discretion". This may only help if the school has deep pockets and they think your kid is a "good fit". Another huge loophole in FAFSA is that apparently non-custodial parents can choose to not participate, thereby reducing the EFC.
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Re: Stop working = More college financial aid?
Old 11-12-2006, 08:26 AM   #44
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Re: Stop working = More college financial aid?

Jeez, your'e all making me thinks I should sell my 529 assests, even with 10% penalty! I assume financial aid would figure that if you could afford to save a chunk in these plans, you probably don't need aid for the rest?
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Re: Stop working = More college financial aid?
Old 11-12-2006, 09:28 AM   #45
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Re: Stop working = More college financial aid?

The FAFSA game is very simple.

Here are some of my thoughts (not sure they are feasible):

-- transfer all your assets from all taxable accounts to someone you can trust.

-- liquidate all taxable accounts and pay down your mortgage. If you do not have a mortgage or the mortgage is too small, sell the house and use all proceeds to purchase another house. The drawbacks of this approach are: taxes from the sales of assets, increased property tax, increased utility bills, increased maintenance costs, and decreased diversification.

-- stop working

--
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Re: Stop working = More college financial aid?
Old 11-12-2006, 09:52 AM   #46
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Re: Stop working = More college financial aid?

Youbet, I think you are moving the target of "average" around, or else we are talking about different average kids. Let's be clear. An average kid from a wealthy family would have pretty good stats. A kid with lackluster stats, even at Local State, is going to have to pay sticker unless he can get need-based aid. The concept of merit-based aid applies to a student that has stats that place him in the upper strata of applicants at some college that offers merit aid, wealthy or not.
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Re: Stop working = More college financial aid?
Old 11-12-2006, 10:49 AM   #47
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by dt123
Youbet, I think you are moving the target of "average" around, or else we are talking about different average kids. Let's be clear. An average kid from a wealthy family would have pretty good stats. A kid with lackluster stats, even at Local State, is going to have to pay sticker unless he can get need-based aid. The concept of merit-based aid applies to a student that has stats that place him in the upper strata of applicants at some college that offers merit aid, wealthy or not.
No, that's wrong dt123. I posted "average" consistently. You changed the definition to "lackluster." Terminology misconnect I guess.
Quote:
Originally Posted by dt123
There are many perfectly legit ways to game the system
I think what you've said so far is that if your income and assets are low enough, you can qualify for financial need-based aid, or.........

If your test scores, grades and recommendations are good enough, you can qualify for merit-based aid. Choosing a school where they are trying to attract students with higher stats to improve the school's numbers can help get merit-based aid.

But, these don't sound like "gaming the system." It sounds more like followng the rules. Perhaps we just have a different understanding of "gaming the system."
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Re: Stop working = More college financial aid?
Old 11-12-2006, 12:12 PM   #48
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by jazz4cash
As I stated before, FAFSA includes deferred comp INCOME like IRAs, 401ks, etc. that are outside AGI. FAFSA ignores deferred comp plan assets and discounts personal savings assets (i.e. your EFC is less affected by personal savings than by income). Home equity is also ignored.
How are fixed-rate annuities (i.e. 'cd-like', not the immediate that pay you annual income for x years or for life) handled, since you technically can't withdraw them until your 59 1/2 without penalty? Are they considered 'deferred compensation', or are they included in the FAFSA forms as assets that parents are expected to use before need-based aid?

Perhaps I was too forward looking when I plowed $15k into 529 plans, thinking only of the 6% State tax deduction I was getting... Of course, I was also contemplating going to B-school, so it wasn't a complete long-term gamble...
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Re: Stop working = More college financial aid?
Old 11-12-2006, 12:54 PM   #49
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Re: Stop working = More college financial aid?

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How are fixed-rate annuities (i.e. 'cd-like', not the immediate that pay you annual income for x years or for life) handled, since you technically can't withdraw them until your 59 1/2 without penalty? .......................
Perhaps I was too forward looking when I plowed $15k into 529 plans, thinking only of the 6% State tax deduction I was getting... Of course, I was also contemplating going to B-school, so it wasn't a complete long-term gamble...
The 529 plans don't help you with regard to FAFSA. FAFSA looks at all income, non-retirement assets and investment property including, I think a second home.


The form says "Investments include real estate (do not include the home you live in), trust funds, money market funds, mutual funds, DCs, stocks, stock options, bonds, other securities, education IRAs, college savings plans, installment and land sale contracts (including mortgages held), commodities, etc.

Investments do not include the home you live in, cash, savings, checking accounts, the value of life insureance and retirement plans (pension funds, annuities, noneducation IRAs, Keogh plans, etc.) or the value of prepaid tuition plans."


Cash, savings and checking account balance ARE counted elsewhere on the form.

I got lucky when I used my 401k plan for both retirement and college savings. I can roll funds to an IRA and then withdraw without penalty. Now I am thinking maybe I could withdraw in alternating years to reduce FAFSA impact since the withdrawals will show up as income
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Re: Stop working = More college financial aid?
Old 11-12-2006, 03:49 PM   #50
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Re: Stop working = More college financial aid?

So, it seems that one legit way to shelter a taxable account would be to buy an annuity or a lump sum life insurance policy with it? Or pay down the mortgage as Spenky suggested? This would move it to the 'not included' category?

It might be worth the negatives of these two types of 'investments' - just liquidate them after the kids are ou of school?

Quote:
Originally Posted by Spanky
-- transfer all your assets from all taxable accounts to someone you can trust.
I'm pretty sure that 'giving' somebody your taxable account money would be fraud and would need to be listed under the gift tax forms.

The two options may be equal in terms of 'ethics', but I think one is legal and one is not.

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Re: Stop working = More college financial aid?
Old 11-12-2006, 04:29 PM   #51
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Re: Stop working = More college financial aid?

Ive spent some time today looking at various fafsa calculators........here is one of the more "transparent" ones that I have found. I learned, for example that a certain level of taxable savings are "protected" i.e. considered not available for college expenses..........have a look:

http://www.smartmoney.com/college/fi...cfm?story=need
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Re: Stop working = More college financial aid?
Old 11-12-2006, 09:51 PM   #52
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by youbet
How common is it for a school offering need-based financial aid to insist that the student accept a campus job as part of that aid? For example, the school offers a total of $15K. $10K as a grant and $5K as a campus job.
DW said that it would be a very uncommon situation for an undergrad student, but quite normal for a graduate one.
She said she would need to know way more details to give you any meaningful comments.
If you want to pursue it further you can PM me.
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Re: Stop working = More college financial aid?
Old 11-14-2006, 06:26 AM   #53
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by youbet
But, these don't sound like "gaming the system." It sounds more like followng the rules. Perhaps we just have a different understanding of "gaming the system."
Well, in the ER world "gaming the system" is probably a pretty high bar.

I will tell you that in higher education circles (where I hang out in my alternate universe) there are plenty of Crunchy Granola types who will tell you it is wrong, and gaming the system, to do the following: 1. save up $200K for Jr.'s education, 2. when Jr. is a HS senior, pay off your $200K mortgage, so that 3. the $200K is not counted as an asset for financial aid. (Money in the bank counts, home equity doesn't count.)

And that it is wrong to send Jr. to Flagship State U. for free when he could have gone to Big-Name Private U. for $45K per year. The thinking there is that it is bad parenting to not send Jr. to his "dream" school, regardless of the cost, no sacrifice will be spared, etc.
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Re: Stop working = More college financial aid?
Old 11-14-2006, 09:23 AM   #54
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by sailor
DW said that it would be a very uncommon situation for an undergrad student, but quite normal for a graduate one.
She said she would need to know way more details to give you any meaningful comments.
If you want to pursue it further you can PM me.
Thanks sailor......

No need for further follow-up. I was just curious due to a situation relatives had with their daughter and financial aid. She was going to a small, private college on a combination of a need-based grant, a campus job and their payments which amounted to about half. Her grandfather stepped in and offered to contribute the amount needed so she could give up the job, which she didn't care for. The next year, the college responded by reducing the need-based grant by the amount of the job. Last I heard, they negotiated some arrangement......

This might be very unusual. I know the school has a philosophy of students performing campus work and a high percentage do so....
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Re: Stop working = More college financial aid?
Old 11-15-2006, 02:08 AM   #55
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by jazz4cash
The 529 plans don't help you with regard to FAFSA. FAFSA looks at all income, non-retirement assets and investment property including, I think a second home.


The form says "Investments include real estate (do not include the home you live in), trust funds, money market funds, mutual funds, DCs, stocks, stock options, bonds, other securities, education IRAs, college savings plans, installment and land sale contracts (including mortgages held), commodities, etc.

Investments do not include the home you live in, cash, savings, checking accounts, the value of life insureance and retirement plans (pension funds, annuities, noneducation IRAs, Keogh plans, etc.) or the value of prepaid tuition plans."


Cash, savings and checking account balance ARE counted elsewhere on the form.

I got lucky when I used my 401k plan for both retirement and college savings. I can roll funds to an IRA and then withdraw without penalty. Now I am thinking maybe I could withdraw in alternating years to reduce FAFSA impact since the withdrawals will show up as income
529 plans DO COUNT in the calculator, but nowhere near as much as custodial plans and other investments.........
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Re: Stop working = More college financial aid?
Old 11-17-2006, 06:17 PM   #56
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Re: Stop working = More college financial aid?

I’ve thought about this a great deal recently. I have five children that I hope to eventually send to college, so getting financial aid is a big dollar question for me. I have decided that I won’t qualify for financial aid when the time comes because of my assets, even if I have zero or no income. I would be interested in everyone’s opinions on the conclusions that I have reached. Especially if you have personal experience that contradicts anything I’m saying here I’d be interested to hear about it.

1. Almost everything you read claims that assets don’t matter, and income is what determines your financial aid. This is probably true for most people, but false for ER types. The formulas apply roughly 5-6% of your assets to your child’s tuition – so if you have $1m or more you will not qualify.

2. The federal methodology says that your assets don’t get counted under the simplified means test (income <$50k and 1040A), but what I have read is that this is not the case for the bulk of the financial aid money. So, you might get a Pell grant, but when the financial aid officer sees that big asset balance he’s just not going to give you any institutional money.

3. Even retirement assets and home equity are counted by many institutions. So for some institutions it may make a difference to put all your assets in a big house or annuity, but for many it will not matter. I’m not sure how you can find out before making such a dramatic move if it will be effective or not.

4. Some people claim that almost all financial aid is loans anyway. This does not appear to be the case when you look at the stats (when you see that average financial aid is, say, $25k a year for a school, and average loans on graduation are, say $35k in total), but it makes me wonder how much work I should really put into qualifying.

5.
Quote:
Originally Posted by dt123
I will tell you that in higher education circles (where I hang out in my alternate universe) there are plenty of Crunchy Granola types who will tell you it is wrong, and gaming the system, to do the following: 1. save up $200K for Jr.'s education, 2. when Jr. is a HS senior, pay off your $200K mortgage, so that 3. the $200K is not counted as an asset for financial aid. (Money in the bank counts, home equity doesn't count.)
The university tuition system is broken. Anytime you disconnect the people who pay for a service and the people who use it you have a problem. If universities simply charged everyone $40k then there would be an outrage, but because most people pay a fraction of that they can get away with charging anything. The idea that it should legitimately cost $40k to educate a kid is just silly.

Schools feel that they are owed every single penny you have, even over and above the $40k price tag – as you can tell from the constant requests for money even beyond the tuition checks you write. With that in mind, I don’t feel bad working the system to whatever effect I can to qualify for all the aid I can.

6.
Quote:
Originally Posted by 2B
I have always wondered why anyone would pay over 5X the cost of a high quality public college. The "return on investment" in the way of income just isn't there.
I disagree with those who say that the return on investment is not there for the big-name schools. If you look around at the CEOs, investment bankers, lawyers, etc that are making big big money in the world you will see a lot of big name schools. There are a lot of people who didn’t have that background, to be sure, but if you want to maximize your income then a big name school can allow you to skip several years of “proving yourself” at a lesser job or a lesser institution. The value of that over a 20 year career is huge.

Now, with all that said, you have to be the sort of person that is going to persue something that makes big money, and you need to go to a school that offers this sort of opportunity. There are plenty of schools that cost $40k+ and have limited cache.

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Re: Stop working = More college financial aid?
Old 11-18-2006, 12:08 AM   #57
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Re: Stop working = More college financial aid?

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I disagree with those who say that the return on investment is not there for the big-name schools. If you look around at the CEOs, investment bankers, lawyers, etc that are making big big money in the world you will see a lot of big name schools. There are a lot of people who didn’t have that background, to be sure, but if you want to maximize your income then a big name school can allow you to skip several years of “proving yourself” at a lesser job or a lesser institution. The value of that over a 20 year career is huge.
That is true for professional degrees, such as MBA, law, because of name recognition and more importantly - networking.
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Re: Stop working = More college financial aid?
Old 11-18-2006, 06:39 PM   #58
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Re: Stop working = More college financial aid?

Quote:
Originally Posted by FinanceDude
529 plans DO COUNT in the calculator, but nowhere near as much as custodial plans and other investments.........
I think we are saying the same thing....529 plans "Do Count" and thats why they don't help you qualify for financial aid.
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Re: Stop working = More college financial aid?
Old 11-18-2006, 06:57 PM   #59
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Re: Stop working = More college financial aid?

Just to throw out some ballpark figures, here are two scenarios presented by the Director of Financial aid at a recent open house:

1. Family of 4 with 1 in college, income= 60k w/ assets of 35k and student income of 2k.........EFC (expected family contribution)=7k

2. Family of 5 with 1 in college, income=125k w/assets of5k and student income of 900........EFC= 26.5k

Conclusion: The EFC can run 10-35% depending on your circumstances. I think have more than one child in college is a big help in reducing the EFC. (check the calculator in my prior post........it has both Federal and "private" methodology formats). I am looking into that now as I will have 2 yr overlap. Otherwise, this schools indicates 200% of the poverty level is where all needs are met ............thats 38k for a family of
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Re: Stop working = More college financial aid?
Old 11-19-2006, 02:51 AM   #60
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Re: Stop working = More college financial aid?

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Family of 5 with 1 in college, income=125k w/assets of5k
Only $5K of assets?
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