Spendthrifts Get Financial Aid

[VoyT]

     I pretty much got a free ride through college ... my mom was widowed, probably never made more than $10,000 a year. (and believe, me, the old man left nothing to work with).
     I'm grateful the aid was out there, though more than once I've had the thought that the state paid for my education so I could pay for my kids. (though right now, that's a moot point, as I don't have any )

 

[Art]

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...

I've heard that if people move assets (temporarily- starting the year before the child's freshman year) into fixed or variable annuities, or life insurance, these assets are considered to be retirement assets and "exempt" from financial aid considerations.

This seems to be the strategy of many college financial aid "planners".

Is this true or false?

Also, at what level of minimal savings (assume a low income as well) would parents not be required to contribute towards any EFC at all? $30,000? More? Less?

 

[Spanky]

Why not simply provide free college education regardless of income?

Scholarship or grant should be based solely on merits. It should not be based on income otherwise it is called financial aid or assitance.

 

[haha]

Why not simply provide free college education regardless of income?

In a nutshell- you have a bright likeable kid, but unfortunately he is white, non-Hispanic and male. Thanks to affirmative action (maybe undercover at this time) your kid goes to Cal Poly, the "minority" from down the block goes to Berkeley. At least if you pay directly and not through taxes, you pay only for your kid, not someone who bumped him on preferences.

USA is more and more like Brazil or other multicultural societies. If you want to see where we are going, look there.

haha

 

[Spanky]

HAHA,

You have touched on a different issue - college admission. What about Asians? Some cannot get into Cal Berkeley despite excellent grades and SAT/ACT scores because they are "over represented" in the U of Cal system. I agree with you that admission should be based purely on merits and no preference to any group.

Spanky

 

[bamboogrrrl]

FarmerEd: It really wouldn't matter if the $500k was sitting in a second home or in the bank.  They would both be considered an asset.  I wonder if one could start a business and park a good chunk o'change in a Keogh or SEP to squirrel away additional retirement assets.  Or stick that $$ in your freezer!

Art: It's difficult to say at what point one's EFC would be considered zero because the formulas are so intricate.  But the basic idea is to not have cash/assets hanging around.  They are looking at income AND dependents.

Oh, one other thing that can help people qualify for more aid is to show as many householders in college as possible.  I'm not sure how many credits you need to be enrolled for (it might even be three), but showing that you have several family members in college can change the financial aid picture.

 

[ESRBob]

Bamboogrrl, the Keogh idea is good, but you cannot contribute more than you make in earned income (which also has to be taxed with self-employment tax -- a double dose of Social Security and Medicare).

I went to Berkeley in the late 70s when in-state tuition cost me $212 per quarter. Things have changed a lot since then.

I am still confused - some people say income matters the most in your Financial Aid profile, others say assets . Is there any guidance on the actual weighting? ERs are likely to have lots of the latter, and little of the fomer.

Trombone Al -- how representative do you think your daughter's situation was? Did you try hard to find scholarships and grants or were there unique circumstances in her case?

Martha, would have loved to hear that commencement exercise speech. Must have been a lot of nervous laughter at Al Franken's quip!

 

[Spanky]

I went to Berkeley in the late 70s when in-state tuition cost me $212 per quarter. Things have changed a lot since then.

I went in 72. Tuition was about $600 per year. Now it is $7433.9. If we assume 5% inflation rate, the adjusted value of $600 would be $3,000. That means that tuition and fee has increased more than 2 times.

 

[azanon]

Education is big business. From their perspective, its strictly a money-making deal.

 

[jefipius]

What do you mean by this?

USA is more and more like Brazil or other multicultural societies. If you want to see where we are going, look there.

haha

 

[cute fuzzy bunny]

As with anything, if you apply any sort of protectionism (who goes to school, who you hire, who gets money and who doesnt) it'll get screwed up, protect nobody, and somebody (probably the wrong person) will get the short end of the stick eventually.

All things should be allowed to reach their own tide level.

 

[farmerEd]

>>FarmerEd: It really wouldn't matter if the $500k was sitting in a second home or in the bank.

How about parking the money in hard (but hopefully appreciating) assets. I could see where you would need to disclose a second home, but who's to know if you choose to furnish your house with really expensive art and antiques?

 

[newellcr]

Hello Folks,

A previous poster turned me onto this site, http://www.finaid.org/calculators/.  I've found it quite useful.  On this page there are a couple of useful calculators that can show approximate EFC. 

Cheers,

Chris

 

[ESRBob]

Chris,
Thanks for the link.
Now I see why I won't get any finaid for the kids.
12% of net worth each year gets thrown into the hopper, even though most of the annual income is 'protected'.

Oh well. I'd rather be a saver and ER forever than the recipient of bonus awards from schools for 4 years.