Kids in college after retirement (lower income version)

[daylatedollarshort]

A $250K degree from Villanova to teach at the local high school ..starting at $45K? Me i just cant rationalize that.

Many of the people we know seem to feel those kinds of number are worth it for their kids. We're more in the good value college / degree type camp. Our oldest's pay back period for college, at least our out of pocket cost portion, was 6 months.

 

[43210]

I hate to tell you this, but financial planning is easier when you're still working in that your income is mostly a variable you just want to maximize.

Not in my case. My income is basically a constant. I've literally had 5 years in a row where my gross income was the exact same amount to the penny.

 

[43210]

Seems to me there's a whole bunch of cliffs in FAFSA-land....anything that would force you to file a 1040, like $1 of capital gain, would take you from $0 EFC to who knows where.

Or if you get called for Jury Duty and get paid anything you have to report it on Line 21 of Form 1040, and so would forfeit eligibility for the Simplified Needs Test.

 

[Texas Proud]

Seems to me there's a whole bunch of cliffs in FAFSA-land....anything that would force you to file a 1040, like $1 of capital gain, would take you from $0 EFC to who knows where.

Yea, that is one that I lose on... plus the K-1 and rental property...

 

[Texas Proud]

Or if you get called for Jury Duty and get paid anything you have to report it on Line 21 of Form 1040, and so would forfeit eligibility for the Simplified Needs Test.

Nobody I know actually reports this income.... I was on a couple of week trial and did not report the income...

 

[NanoSour]

@NanoSour (and others)


When you say "so the whole plan went completely out the window"

are you just referring to the fact that Simplified Needs Test is irrelevant to CSS/Profile. Or did you have some insight into details how CSS/Profile calculated you EFC from your kinds of income and assets.

Our oldest could conceivable get into a place like MIT, and I've played a bit with Net Price Calculators for these places, but I don't know how accurate they are, or if there are exceptional cases where the results are much different (though I don't think we have any "exceptional " finances). I could try and reverse engineer the Net Price Calculators, but that would at best tell me the formula for that Net Price Calculator, rather than really knowing how CSS/Profile works.

You are right that many of these elite schools really do charge a means tested fee, so if you can get in, and the price is reasonable, you've hit the jackpot.

Yes, the CSS/Profile application wants to know much more detailed information about your financial situation; to include, retirement assets, real estate assets, cars you drive, private school tuition, medical bills, etc. There is no simplified means test and each college has their own formula for the information provided. So there's no way to reverse engineer the CSS per se.

I will note that the NPC for the college DD went to was very accurate based on the offered financial aid package.

 

[43210]

^ Thanks. Was it also in the same ballpark as FAFSA would have been (without Simplified Needs Test)?

 

[SecondCor521]

Not in my case. My income is basically a constant. I've literally had 5 years in a row where my gross income was the exact same amount to the penny.

Sorry, I was sloppy in my language.

What I meant was, when I was working, the main decision points about my income were (a) how do I make as much as possible, and (b) how do I shelter as much as possible. This is a well known situation with well known answers - HSA, 401k to the match, Roth/traditional IRA, etc. Also, since I made more than I spent, it was pretty easy from a cash flow angle: make as much as possible, spend what I need, and save the rest.

Now that I'm FI, beyond some dividends and gig income which is minimal, my options are wider. I can have an AGI from near zero to the entire value of my IRA, and I get to pick any number in that wide range. I can even pick an AGI which is less than my cash flow needs over the long term average if I think it is wise, but doing so adds complexity.

More choices, which is nice, but it also makes for more complicated decision making IMHO.

 

[NanoSour]

^ Thanks. Was it also in the same ballpark as FAFSA would have been (without Simplified Needs Test)?

To be honest, the CSS profile worked in our favor as compared to the FAFSA numbers.

 

[NW-Reader]

There is a way to qualify for the Simplified Needs Test even if you are required to file Form 1040. If anyone in your family receives "certain means tested benefits" including free or reduced lunch, and you are under the required income level, you qualify. Medicaid was recently added to the list of benefit programs. https://www.clasp.org/blog/2017-18-fafsa-proposes-significant-change-low-income-students https://www.cappex.com/hq/articles-...fafsa/Simplified-Needs-Test-and-Auto-Zero-EFC

We have a rental property and capital gains, so can't file 1040A. But our income, even before FIRE, was low enough that our son qualified for reduced lunch benefits in our school district. We never applied for them, because we didn't need them (and our son hated school lunch anyway ). But fortunately I read about this rule on College Confidential in time to get him on free lunch in his senior year.

As it turned out, he did really well on the PSAT and was a National Merit Semifinalist, which got him automatic free tuition at Washington State University. His room and board are covered by need-based aid and some private merit scholarships. There is a list of schools that provide free rides for National Merit here: 53 Colleges Offering Full Tuition Scholarships for National Merit Finalists - The College Matchmaker

WSU is not a top tier school by any means, but our son is majoring in environmental science and will probably have a low paying job in the nonprofit sector. He wants to join the Peace Corps after graduation. So for him, a "name" school was not important compared to graduating with no debt. We are constantly fascinated by how much he has inherited our LBYM tendencies.

 

[SecondCor521]

^ Congratulations to your son on the National Merit Semifinalist achievement! Sounds like he is making some good college and career choices!

The means tested benefit approach also works for auto zero EFC. My daughter qualified for reduced price lunch benefits as well, so that is the approach I am going to try to use.

 

[NW-Reader]

Thanks! I just wanted to point out that alternate way of getting Simplified Needs/Auto Zero, because lots of folks in this thread were getting hung up on the 1040 issue.

 

[SecondCor521]

^ Yup, totally understand. The alternate way may even be a big help to those who might have filed a 1040A or 1040EZ and given up tax breaks (capital gains losses or whatever) to preserve SNT. Perhaps they use the alternate way, file a 1040, get the tax breaks, and also get SNT.

 

[ncbill]

Yes, the CSS/Profile application wants to know much more detailed information about your financial situation; to include, retirement assets, real estate assets, cars you drive, private school tuition, medical bills, etc. There is no simplified means test and each college has their own formula for the information provided. So there's no way to reverse engineer the CSS per se.

I will note that the NPC for the college DD went to was very accurate based on the offered financial aid package.

The NPC for our kid's top choice of private schools over-estimated the merit aid (not eligible for need-based aid) they received after acceptance.

Perusing other online forums, that school offers three common discounts I'll call bronze, silver, & gold (~$5k, ~$10k, & ~$15k off "list price")

The NPC estimated they'd get the gold but were instead offered the silver.

Still, it's top choice for them, though at twice the price of the in-state schools where they've already been accepted.

Fortunately, we have until May 1 to see what else comes along...

 

[43210]

Thanks again everyone. I will definitely carefully look at all the fine print of the Simplified Needs Test and the Zero EFC, to know all the options (and watch to see if anything changes).

I'll also look into the options for Merit Aid.

^ Thanks. Was it also in the same ballpark as FAFSA would have been (without Simplified Needs Test)?

To be honest, the CSS profile worked in our favor as compared to the FAFSA numbers.

I've wondered about that. I was playing with the Harvard Net Price Calculator
https://college.harvard.edu/financial-aid/net-price-calculator
and it says with zero income and assets the price is $4,600, but with any income less than $70k and assets up to $200k, the price is still $4,600. So that covers a large majority of households in the general population.

I'm sure the FAFSA EFC escalates quite a lot at lower income and assets.

Perhaps many CSS/Profile schools generally cater to much more affluent households, and so they only charge a small fraction of sticker price to even moderately above average income households (that would get charged full price at many state schools).

I need to dig into more examples of CSS/Profile schools (to the extent that Net Price Calculators can be relied upon) to see if it's generally true that even without the (FAFSA only) Simplified Needs Test, the CSS/Profile gives an even lower EFC, or at least something reasonable.

 

[SecondCor521]

^ One thing I did learn about the CSS/profile is that it is a lot more, uh, inquisitive. Even if the end result is reasonable, they ask a bajillion (exaggeration) questions. Compare the NPC for Northwest Nazarene University versus the NPC for Case Western Reserve.