Spendthrifts Get Financial Aid

[TromboneAl]

Had awards night at the high school, at which they announced awards and scholarships. It really demonstrated the problems in the financial aid system.

Looking at the top kids in the class:

One girl is from a family that doesn't make much money, and reportedly spends a lot. This girl has already gotten more scholarship money than she will need for college. That is, she is making a profit. Her brother also made a profit -- that is, got more money in aid than he spent.

Another girl is from a family that makes a lot but spends more. She told my daughter that she wouldn't be able to go to college unless she gets financial aid. Her family of six goes to Hawaii every year, they spend $1,000 on fireworks every July 4, and her dad just bought a new Porshe. She also got a lot of financial aid.

We've been saving for our daughter's college since she was born. We've saved enough to pay on our own, but only because we've always been frugal. So our daughter got certificates and awards (e.g. award for having the #1 GPA in math and science), but not so much in scholarships.

Just venting here, but the system really doesn't work right.

 

[cute fuzzy bunny]

Nope, there are a lot of systems to help out fools and bad planners, but few to help those who help themselves.

 

[haha]

One girl is from a family that doesn't make much money, and reportedly spends a lot. 

How do they do this? Please advise, because I would like to do it too.

Ha

 

[MNMax]

Two sons in college now. Have done the FAFSA's, etc. Here's the deal. Need-based financial aid is nearly, solely based on your family's non-retirement savings, excluding your residence. Make big bucks, spend it all, and you will have little savings and your kids will get the scholarships and grants. Make big or little bucks, spend little and save, and your kid will get diddly-squat. Savers are severely punished in getting college scholarships and grants. Student and parental loans are available to allmost everyone.

Merit and athletic based aid are a totally different can of worms.

 

[Mr._johngalt]

Had awards night at the high school, at which they announced awards and scholarships.  It really demonstrated the problems in the financial aid system.

Looking at the top kids in the class:

One girl is from a family that doesn't make much money, and reportedly spends a lot.  This girl has already gotten more scholarship money than she will need for college.  That is, she is making a profit.  Her brother also made a profit -- that is, got more money in aid than he spent.

Another girl is from a family that makes a lot but spends more.  She told my daughter that she wouldn't be able to go to college unless she gets financial aid.  Her family of six goes to Hawaii every year, they spend $1,000 on fireworks every July 4, and her dad just bought a new Porshe.  She also got a lot of financial aid.

We've been saving for our daughter's college since she was born.   We've saved enough to pay on our own, but only because we've always been frugal.  So our daughter got certificates and awards (e.g. award for having the #1 GPA in math and science), but not so much in scholarships.

Just venting here, but the system really doesn't work right. 

The "system" is nuts. The key is........figure out how to work around it.
Don't try to conform. In that way lies madness.

JG

 

[dm]

All my sons qualified for was a $1000 usubsidized loan. By saving my money it cost me around $40,000 per year. I have a relative that has been divorced around 5 times and has always spent every dime she had even got a living allowance to go back to school. And of coarse her kids will pay nothing either.

 

[kz]

"We've saved enough to pay on our own, but only because we've always been frugal"

Personally, I think that statement says it all. And you should be proud of it and what you've accomplished!

Years ago I had a conversation with a co-worker who had two kids the same ages as our two sons. At that time hubby and I were setting money aside for college educations for our boys. The co-worker commented that he and his wife were spending their money so they could qualify for scholarships, etc. Truth is, they couldn't save money with their lifestyle since their motto was "he with the most toys win". (straight from his mouth)

Fast forward to this year. Both our sons are graduated with no loans either on their part or ours. (we paid tuition, rent, food, with a little spending money...they paid books, cell phones, pizza & beer, etc.) Their kids are on the 6-year plan and are maxed out on loans both for the parents and the kids. (the kids complain all the time about how much money they will owe once out of college)

The other family won, though, since they have lots more toys than us. And we heard about it yet again at a party just last week. When a friend was commenting on our ATVs the other guy said "But do you have a boat"? (we don't) Of course they have loans on every single item and we paid cash for our toys. (once we had enough put away for college we splurged and bought a few toys for hubby and I with cold hard cash)

By living frugally (which is a lifestyle now) we paid for college, paid for toys, and probably still have a net worth 5x the other family. And hubby retired at age 53.

You have a frugal lifestyle and you know what is most important for you and your children. A college education with as little debt as is feasible. And I'll bet your kids learned lots financially from you.

Congratulations!!



kz

 

[Martha]

Re: graduation

Went to our friends' daughters high school graduation yesterday from St. Paul Academy in St. Paul, Minnesota. This is an elite private school that costs a pretty penny. Our friends' daughter got in on merit and gets a fair amount of financial aid. She is going to Yale next year with fine financial aid packages. Her parents make a middle class income, live within their means, are frugal, and were able to qualify for good financial aid for their daughter. Sometimes things do work out right.

The graduation was kind of fun because they had Al Franken as the speaker. Very funny. At one point in his speech he talked about Bush cutting educational aid for the disadvantaged so that the rich parents of the graduates of St. Paul Academy could get a tax cut.

 

[bamboogrrrl]

Trombone, your example is exasperating, but it may not reflect the entire picture.  I work in financial aid (default management and loan counseling) in a mid-sized (8,000 students) state university.  If you look at the FAFSAs for new applicants, there is the disturbing trend of high incomes with no savings.  So families make tons of $$$, and this makes them qualify for the unsubsidized Stafford loans because of their high incomes.  These parents also have bad credit so they don't qualify for the parent Plus loans.  Thus students are being roped into taking out "Alternative Loans" which are high interest rate loans with no grace periods to make up the difference between their paltry Stafford loan and their actual bill.  These are all technically forms of financial aid.  You could look at these families and complain about all the financial aid they're receiving.  But you wouldn't want to rely on these types of funds to pay for education. 

If you want to make your EFC (estimated family contribution) look to be less, put any available funds into either paying off your primary residence or into retirement, because the FAFSA doesn't consider these two things to be assets for financial aid purposes...

 

[P.S.]

You have a frugal lifestyle and you know what is most important for you and your children. A college education with as little debt as is feasible. And I'll bet your kids learned lots financially from you.

Congratulations!!



kz

kz, you got it absolutely right. Trombone Al, the other kids may have got the loans, but what your daughter got is priceless. I speak from similar experience and I'm sure my siblings think the same of our parents.

 

[FlowGirl]

I would be wary of being too judgemental about other people's circumstances. I grew up welfare poor until about age 12, at which time my father, who had been going to night school for years while working crap jobs, managed to get his college degree. Things accelerated from there and by age 18 my family was solidly middle class, but I obviously had no college savings. Without knowing our family history and my Dad's slow climb from migrant farmer to engineer, people probably wondered why we weren't further along the road to financial prosperity. I know this isn't everyone's situation but I find it hard to *tsk,tsk* the people who haven't saved (especially if I don't know them).

By the way, I was a straight-A student and got a few merit scholarships, some need based grants (from private schools), and lots and lots of loans - not bad, but not the sweet deal people probably assumed I had.

 

[Spanky]

One girl is from a family that doesn't make much money, and reportedly spends a lot. This girl has already gotten more scholarship money than she will need for college.

The amount of grant or scholarship in the U.S. is mostly based on income. I personally know a family of four with a "reportable" income of $25,000 was able to send their two kids through college without paying a dime. All expenses (tuition, room and board) are paid by the government. Their grades and SAT scores were above average but not spectacular.

I have one wild idea for a couple with only only one income - get a divorce with no alimony or settlement. The spouse who has no income can apply for grants for the kids.

Spanky

 

[azanon]

When i think of the financial aid for college i'm envious of (as a parents) its grants/scholarships.  And my understanding is what sparky said;  that this is based off your income, not your assets.

To just speak of someone getting "financial aid" that might not have deserved it, is no big deal cause that's going to naturally include loans.   Anyone can get a loan these days for just about anything.   But I dont envy, in any way, people that get loans.  If anything, I pity them.   Big deal if someone lets any of these big spenders borrow money;  its just going to dig their grave even deeper.   Granted, its the child that will have to suffer with the loan (unless the parent signs/cosigns for it on their behalf).

 

[TromboneAl]

Thanks, you all had good points.  I know I'm probably judging those other families unfairly, but that's what one does when one is "venting."

It would be kind of interesting to set up a $500 "Frugal Saver" scholarship.  Applicants would need to show that they've lived below their means and saved money.  

I'm actually paying tuition today.  I wanted to put it on credit card to get the cash back, but the company that tuition payments are outsourced to wants to charge a "convenience fee" for that.  Mastercard says that's not allowed, so I'm complaining, and trying to eliminate that fee (good luck).

 

[moghopper]

It would be kind of interesting to set up a $500 "Frugal Saver" scholarship. Applicants would need to show that they've lived below their means and saved money.

Hey, I'd donate to it. Assuming it had the appropriate 501c3 status ;-)

 

[Lazarus]

Well, I don't have a college degree and therefore never had college debt. Not saying you shouldn't go but you can succeed without it. I would never have considered borrowing money to go.

 

[haha]

Well, I don't have a college degree and therefore never had college debt. Not saying you shouldn't go but you can succeed without it. I would never have considered borrowing money to go.

Glad it worked well for you. Still, if the student studies something useful, their aren't many things it makes more sense to borrow for than for education. And the loans are usually reasonably priced, with very long amortization schedules.

haha

 

[Lazarus]

Looking back it would have been easy to pay back education loans. I just didn't think like that when I was young. No one around to tell me any different.

 

[TK]

Maybe a slightly different (Pennsylvania Dutch) take to this topic.

Son has two years of college left. I always felt it was my responsibility to pay for it. I don't want anything from the government or anyone else for that matter.

When he was born I bought a duplex rather than put money into a college fund per se. Over the years he has had to work on the duplex. (paint cute grass etc.) It not only gave him responsibility but produced four times the amount needed for his college and is an appreciating asset.

So we been lucky...

When did we (as a society) want to be on a dole.

My philosophy is get the Heck out of my way and we will take care of our own.

Of course I am a 50 year old boring fart too.

 

[TK]

He had to cut the not so cute grass too...LOL duh!

 

[farmerEd]

If you want to make your EFC (estimated family contribution) look to be less, put any available funds into either paying off your primary residence or into retirement, because the FAFSA doesn't consider these two things to be assets for financial aid purposes...

Does the EFC change if, for example, you had a $500K second home, versus $500K sitting in the bank? Seems once you pay off the house, and max your retirement acct savings, there are limited opportunities to "hide" money from the equation, correct? 9 years to go before the first college bill comes due, but never to early to plan..

 

[TromboneAl]

Yes, that's a good perspective TK. I generally feel that way too -- I guess that seeing all the other kids getting free candy made me forget that that's how I feel .

 

[LEX]

I came from a family that was middle class, but had way too many kids. I had help for my frshman year, but after that it was all on my own. Working through college was an education in itself, but compelled me. I went through Soph-Sr. undergrad, graduate school and eventually earned a professional degree on my own earnings. Lived in the low cost dorms at a State University and was happy to have access to three squres at the cafeteria. In a way this is why I am now ER'd...I learned to live on what I earned, and make each coin count.

I have an issue with the Colleges today, as they are awash with cheap money from all these subsidy programs that were originally supposed to help the needy student but end up as a subsidy to an inefficient academic aristocracy. If they had to really compete for customers and judged by the quality of the results they are supposed to deliver most Colleges and Universities would be out of business in a year.

 

[KB]

Al, you're not alone. We were turned down for financial aid. I made too much, I have too many investments and no debt and my kid has Roth IRA and stock from Grandpa.
So we pay as we go.... He's going to community college and his brother joins him in the fall.

 

[uncledrz]

When did we (as a society) want to be on a dole.

Tk
Yeah, we paid for our kids' education as well.  Thought that was our responsibility so planned for it, as you, at birth.

I'd like to know myself when we slid into the dole, but it does seem to be a part of the society now.  Maybe had something to do with such waste at the governmental level while the very well off/well connected reaped the benefits.

Its time for this country to have a real leader.  (Yes, yes, I know, but I've been away for a while and just wanted to stir something up).  

Uncledrz