Stop working = More college financial aid?

[astromeria]

There must be info avialable somehwhere on which schools are typically more generous(?). My daughter got some aid (but yes, mostly loans) to go to Rice U--being from Massachusetts and applying early decision may have helped. Oddly, there's a LOT more money available for sports scholarships than for scholar's scholarships--maybe they should call them "athleteships"

[LOL!]

Of course with $100K income one should have difficulty getting financial aide.
I'm talking about income less than $20K. We could even make it less than $15K a year income while spending down non-retirement accounts in early retirement.

[2B]

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Originally Posted by LOL! Of course with $100K income one should have difficulty getting financial aide. I'm talking about income less than $20K. We could even make it less than $15K a year income while spending down non-retirement accounts in early retirement.

That's a good approach. Typically, Texas public colleges look at 1040 net income and non-retirement assets. If you don't have much in the way of income, your chances go up. I think I remember that when my son looked at Rice I saw that they wanted to know about home equity and retirement assets.

Except for MIT, I think most private colleges are trying to extract as much cash as possible out of the student's families. If you are "poor" (blew all your income and didn't save anything) and/or the right "flavor," scholarships will come in large amounts. If you have significant assets, you pay the full fare and support those that don't. The right "flavor" means athletic ability, ethnicity, sex, region of the world (diversity) and anything else they are looking for. State schools do the same thing but not as extensive.

The company I worked for hired a couple of MIT engineering graduates. They both said that MIT "prided themselves in not giving scholarships but loans are readily available." A year's tuition was almost $40K! They also said that there were good summer jobs generally available that paid well. 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.

BTW- Lousiana has a lot of great scholarships at LSU for out of state students with good academics. It's also easy to get in-state tuition. Texas public colleges give in-state tuition to any student with any scholarship and many departments give out $1000 scholarships to almost any B+ student that applies. That gives the student (or parent) the lower tuition which is much lower than most eastern public universities.

[astromeria]

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Originally Posted by 2B If you have significant assets, you pay the full fare and support those that don't.

Not so. A college education costs more than even the full freight, so people aren't paying "extra" for other students. The difference is subsidized by the college's endowment (in the cases I'm familiar with) or, with public colleges, by state taxes.

[youbet]

Quote:

author=astromeria link=topic=10482.msg191634#msg191634 date=1163254972 Oddly, there's a LOT more money available for sports scholarships than for scholar's scholarships--maybe they should call them "athleteships"

Well, in some cases. But, I stopped and thought about it and quickly named a few dozen colleges that give zero athletic schlorships and lots of need-based aid. Of course, I'm referring to schools whose athletics are incorporated with NCAA Div III or NAIA.

As far as the larger schools, I wonder how much of the huge profits they make from football and basketball go to academic or need-based schlorships? For example, would Notre Dame have nearly as much money for academic schlorships if the huge revenue from football was to be dramatically reduced or even eliminated?

[youbet]

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Originally Posted by Callie Let me just say that there is very little financial aid these days. Do not get your hopes up on this. Have your kid apply for lots of the little scholarships - like in your town. Our daughter got 5 of these at 1K each. You pretty much have to be very low income/assets and have an exceptional student to get much.

Personally, I have absolutely no problem with the concept that need should be an important factor in deciding who gets grants. Why should the child of a wealthy family, who got lucky and was born with lots of brains, get a full ride while the "B student" child of a single parent stays home?

Our son was a National Merit Finalist with good grades and all that stuff (obviously took after his Mom in that regard ) and received $2K annually for that plus a few small schlorships from local civic groups. We paid the remaining 90% of the cost for him to attend an out-of-state top ten engineering school. He met other students, one his freshman roommate, who received more from the school, based on need, than he did based on schlorship. Sometimes much more. No complaints here. We weren't "stinky rich" and were trying to save for RE, so it was a burden. But we just buckled down and did it.

All of this trying to game the system, especially by folks who openly identify themselves as liberal, seems like an oxymoron. Perhaps some folks talk a different game than they actually play?

Callie - this rant not directed at you despite the fact I began with a quote from your post!

[2B]

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Originally Posted by astromeria Not so. A college education costs more than even the full freight, so people aren't paying "extra" for other students. The difference is subsidized by the college's endowment (in the cases I'm familiar with) or, with public colleges, by state taxes.

I remember something that I read that said 90% of Harvard undergrads get some form of financial aid. I don't know what the "full freight" is at any school but Harvard clearly has a sliding scale of the actual out of pocket cost based on family income/assets. I also don't know if the scholarships are out of their massive endowment but the endowment grows bigger every year.

I've seen kids of people we know get "great" financial aid to a private school but still paid significantly over what a good Texas private college cost.

I get the feeling that many schools charge what they can get away with and still fill up the seats. Financial aid is part of the game.

[Corporateburnout]

We put two kids through private schools and paid 80% of the tuition while the school paid 10% in merit scholarships and they paid and are still paying for the other 10%. That was our choice. I have no problems with schools providing aid for the needy as opposed to the middle class and wealthy folks. I do know of upper middle class folks who hired financial aid gurus to structure their incomes to gain maximum aid so they can send their kids to a prestigious 40K a year school.

If I couldn't afford to pay for private school education for my kids they would have gone to public schools. This is wiser than being saddled with 80K in loans for an undergraduate degree.

[2B]

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Originally Posted by youbet Personally, I have absolutely no problem with the concept that need should be an important factor in deciding who gets grants. Why should the child of a wealthy family, who got lucky and was born with lots of brains, get a full ride while the "B student" child of a single parent stays home?

I agree but the financial aid I've experienced is first based on ethnicity (race) and then on financial need (other than the rare super-jock). My oldest daughter graduated with the son of a very well off black doctor. The kid was smart and had good grades. He was offerred multiple full rides. My daughter was higher in the class standings than he was. One can only assume he wrote an excellent essay with his scholarship application. My two oldest kids got what I consider token $1000 scholarships from TAMU because of their excellent grades and test scores until my son profited by my job loss. I personally went through college with 50% in Pell grants and 50% in student low interest loans.

I favor a scholarship system that rewards good students with low income parent(s). Unfortunately, colleges are willing to compete financially for well qualified minorities without regard for financial need. Also unfortunately, those of us who have LBOM and saved are punished versus our coworkers who blow every cent they make in any needs based system.

[Callie]

I hope everyone knows I was not complaining about the lack of aid, just trying to impart realistic expectations. We can afford to send our kids to tier 1 schools and we are. We did not even apply for financial aid because we knew they would not offer any to us.

Schools are very stingy with money these days. They give it to those who need it most. This is fair.

One other comment - a friend of my son's had incredible SAT scores, they were almost perfect. Instead of going to a high profile college, he went to a school that was trying to raise it's profile. since he was hightly disireable, they offered him all 4 years free. He does have to work at the school during the summer for free though.

This is another option.

PS Personally I think paying 50K for college for an English major is a huge waste, but my husband comes from a family that did this for all their kids. I sent my kid to state school (14K per year room and board). I lost this argument with him. We are paying 50K per year for his first one, and I am sure we will pay the same for the next one when she is ready.

[yakers]

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Originally Posted by 2B I get the feeling that many schools charge what they can get away with and still fill up the seats. Financial aid is part of the game.

Really elite schools like CALTECH have such large endowments that they could give 100% financial aid to every student. The tuition is set high for "show', to show what they are worth and to charge those who really have a lot of money. Their 'return on investment" comes from donations of successful grads.

[dt123]

Financial aid is a subject I am very familiar with. I was wondering when the retire early and financial aid worlds would collide. Here we go.

There are many perfectly legit ways to game the system to maximize the amount of aid. Those who like to pay more than they have to for things should stop reading now. A lot of people seem to take pride in how much they pay and how much they sacrifice to educate their children, and tend not to want to hear that they can lessen that sacrifice by paying attention to a few details. Paying the quoted tuition, room and board is like paying the asking or sticker price at a car dealership. It can be done, but it is not necessary to do so. In the financial aid world we call the quoted tuition, room and board "sticker price" or "full retail."

There are two types of aid given, need-based and merit-based. These two systems are completely different. Awards from each category can be combined.

Need-based aid is intended to allow kids to attend schools where they can be admitted but not afford the sticker price. It is a form of welfare, but a form not addressed to poverty but rather to working and middle class families. Need-based aid allows the working class kid to attend public and private schools, and middle class kids to attend private schools. Upper middle-class kids are not going to get need-based aid.

Merit-based aid is designed to induce smart kids to attend schools lesser in rank than the highest-ranked schools where they would be admitted. At the extremes, merit-based aid is not available. Harvard and MIT do not give any merit-based aid, because they do not need to to fill their classrooms with the smartest kids on the planet. There are about 20 schools at the top like this. At the other extreme, community colleges do not give merit-based aid, because they do not really care how smart their students are. Their students must have a pulse to qualify for admission.

Where merit aid comes into play is in the middle, where schools are ranked against each other by student statistics and in a death struggle to offer the best deals to relatively smart students. Your Harvard-class kid can pay sticker price at Harvard or get at least half-off, or even a free ride, further down the hierarchy, say, at Notre Dame. A kid that would be average at Notre Dame can pay full price there, or get a half-off or free ride further down the pecking order. It is no different than getting a football scholarship. When you accept a merit-based scholarship, you become part of the "talent." You are there free, so that the parents of average students will be willing to pay full retail for their kids to go to school with you.

People who are FIRE'd are presented with the opportunity to get need-based financial aid that they would not have qualified for when they were still working. This is because, to keep things simple, the financial aid forms designed to determine how much you should pay assume that you are earning as much as you possibly can, and do not try to evaluate whether you could be making more. So, to answer the Subject question, Yes, you can have the government and universities subsidize your early retirement by rewarding you for working less. If you choose to have a middle class income, instead of an upper middle-class income, you can get need-based aid to send your kid to a private university.

[youbet]

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Originally Posted by dt123 Paying the quoted tuition, room and board is like paying the asking or sticker price at a car dealership. It can be done, but it is not necessary to do so.

Really? That is great news! Since the wealthy would be among the least likely to pay sticker for their automobile, I assume your statement includes average students from wealthy families, right?

[dt123]

Yes, really! The average kid from a wealthy family can refuse to pay sticker.

To do so he must play the merit-based game, choosing to go to a school where he is well above average. For the truly-wealthy, however, discounts of $20-40 thousand a year are not worth chasing after, being such a hassle and all, and it looking tacky to be sending Jr. to Local State U. on a merit scholarship when he wanted to go to National Big-Name U.

[Spanky]

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Merit-based aid is designed to induce smart kids to attend schools lesser in rank than the highest-ranked schools where they would be admitted. At the extremes, merit-based aid is not available. Harvard and MIT do not give any merit-based aid, because they do not need to to fill their classrooms with the smartest kids on the planet.

It's true that Ivies, Harvard, Duke, U of Penn, Columbia, Brown, Yale, Princeton, Cornell, etc, do not offer merit scholarship. Schools such as Stanford or Cal do not offer merit scholarship either. Some well known universities, such as U of Wisconsin, U of Minnesota, U of Chicago do offer merit scholarship but in small amount, i.e., such as $1000 - $2000 per year. They do, however, offer full-tuition scholarship but only in very limited number, i.e., 20 to 30 awarded per year. So far we have received letters from the following colleges that offer attractive scholarship (full tuition to full ride): Texas A&M, U of Texas -- Austin, Arizona State U (up to $86,000 - wow), U of Alaska - Fairbanks, U of Nebraska, U of Tulsa, U of Oklahoma, U of Kansas, U of Florida, SMU, Washington U - St. Louis, Vanderbilt, and Rice U. They do require my daughter to declare them as first choice for the National Merit Scholarship program. These are all well respected colleges. Some of them have ranking higher than those of the Ivies. Obviously, the ranking varies among different magazines or ranking agencies.

I am tired of articles that criticize the increased number of colleges offering merit scholarship. They claim that the trend puts the poor at a disadvantage. I do not share the rationale that they use. That is, the rich can provide the resources to send their kids to the best high schools, and thus the kids naturally can score better in college entrance exams and get better grades while the poor cannot. That's ridiculous. My parents were poor. We went to public schools. We received good grades and high SAT scores. We were able to attend Cal then. What are the disadvantages? It is sad that the U of California has abandoned the merit program in favor of increased funding for the financial-need program. My daughter goes to a public high school and becomes a national merit semi-finalist. I am glad that "lesser ranked" schools are still offering generous merit scholarships. The colleges in Hong Kong in which I grew up only offered merit scholarships. They may have changed since then. Parents of middle class or lower should feel fortunate that their kids can attend prestigious universities via financial aid. It would cost me $200K to send my daughter to Stanford. I am not rich at all. Our income puts us at the bottom of upper-middle class. So far, she has applied for admission to a couple of local universities (U of Minn. and Wis.) and also plans to submit a couple of applications to those that offer attractive scholarship.

[Spanky]

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People who are FIRE'd are presented with the opportunity to get need-based financial aid that they would not have qualified for when they were still working. This is because, to keep things simple, the financial aid forms designed to determine how much you should pay assume that you are earning as much as you possibly can, and do not try to evaluate whether you could be making more.

According to the calculator at collegeboard.com and Princeton, the parental contribution still exceeds the cost of college expenses even though with very low income but large amount of savings. I think 6% of savings will be used to pay for college expenses. For example, if your have zero income and $1 mil in savings, you are responsible for $60,000.

[youbet]

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Originally Posted by dt123 Yes, really! The average kid from a wealthy family can refuse to pay sticker. To do so he must play the merit-based game, choosing to go to a school where he is well above average.

Hmmmmm.......Can you give a few examples of schools where an average student would be given a merit schlorship?

[2B]

Spanky,

FWIW I was offerred a full tuition scholarship at Washington U but quickly figured out that between higher living costs and transportation it would cost more than the Univ of Washington who also offerred a full tuition scholarship. Long after the fact, I discovered the UW was a much higher ranked Chem Engr school than was Wash U. The point of the comment is to say that the value of a scholarship is relative to the other costs and also dependant on the school. A "name" school may not be worth taking the scholarship from.

I ended up getting all sorts of other scholarships/grants/loans to cover living expenses which I really didn't need since I lived like an animal and worked. I took the money and saved it until I graduated. It was a great help in starting out like a real person.

[2B]

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Originally Posted by youbet Hmmmmm.......Can you give a few examples of schools where an average student would be given a merit schlorship?

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.

[youbet]

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Originally Posted by Spanky I am tired of articles that criticize the increased number of colleges offering merit scholarship.

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.