High earners: thoughts on college and aid

[Admiral]

I'm curious to hear from those who are in higher-earning families (say 200k and over) what your experience has been with financial aid for college.

I am assuming that need-based aid will not be available to us due to income. However, if there was a chance that it might be, I would be in a position where I had to reduce or eliminate current savings in a taxable account over the next 3 years.

Has anyone with high incomes received need-based (not merit-based) aid and, if so, did you have taxable savings at the time?

[livesoft]

My oldest got an offer for 100% loans for a university she was accepted to, but did not attend. Our EFC was $99,999 despite taxable income in the mid-5-figures. No other university offered any financial aid at all.

[Minty]

We are in that position, and our children were offered token amounts of need-based gift aid (< 10% of tuition) and work-study for periods when two would simultaneously attend ultra high cost colleges. With just one in school, aid was loan-only. We also had substantial taxable savings in this period, mostly in the form of 529 plans. The children were also offered substantial merit-based aid at schools they did not attend.

[TomatoTomahto]

If your kids are admitted to one of the generous private colleges (HYPMS, for exsmple), you might still get some aid up to around $250k, especially if you have more than one in college at the same time. However, that’s a big IF; acceptance rates are single digit percent even for qualified applicants.

In that case, I wouldn’t try to game income or assets; it seldom pays. There are threads about 529s, home equity, etc.

[MathWizard]

The most my kids got were subsidized loans (state schools). We were
making less than $100K.

There are EFC calculators online. You could just try one.

[NotWhoYouThink]

Rather than the EFC calculators you need to use the Net Price Calculators for the schools your kids will apply to. Some schools give great aid, some give very little.

So all you have to know is what schools your kids will apply to, and whether they will be accepted, and what that school's rules will be in a couple of years. And if you don't get aid, you have to have a plan on how much you are willing to pay to send your kids to school, and what accounts that money will come from.

You know more when they are 15 than you know when they are 5 about all of that, but you don't always really know until April of their senior year in high school, by which time your options will be limited if you don't have funds you can get to without penalty.

[J295]

Never filled out the (long) forms, but friends in similar situations received zero need based aid. Loans were readily available.

[Thecallofduty]

I am planning kids future with assumption they will recieve 0 aid.

[Minty]

If your kids are admitted to one of the generous private colleges (HYPMS, for exsmple), you might still get some aid up to around $250k, especially if you have more than one in college at the same time. However, that’s a big IF; acceptance rates are single digit percent even for qualified applicants.

In that case, I wouldn’t try to game income or assets; it seldom pays. There are threads about 529s, home equity, etc.

The schools at issue for us are ranked a notch below that, and our income a notch above, and we still got a little need-based aid with two in school. But not gaming income or assets is basically right; we assumed we would have to pay full sticker for a top 30ish private university or liberal arts college.

[TomatoTomahto]

Rather than the EFC calculators you need to use the Net Price Calculators for the schools your kids will apply to. Some schools give great aid, some give very little.
So all you have to know is what schools your kids will apply to, and whether they will be accepted, and what that school's rules will be in a couple of years. And if you don't get aid, you have to have a plan on how much you are willing to pay to send your kids to school, and what accounts that money will come from.
You know more when they are 15 than you know when they are 5 about all of that, but you don't always really know until April of their senior year in high school, by which time your options will be limited if you don't have funds you can get to without penalty.

Both of my sons were “late bloomers,” and I would have given pretty good odds against where they were accepted.

Something you can do ahead of time, if your kids are high achievers, is to do the mind experiment of: they got in A (eg, HYPMS) with limited or no financial aid (btw, to me, financial aid means grants, not loans). School B, for example a well-rated public, would give moderate merit scholarships. School C, a measure lower than B, and a lot lower than A, would be a full scholarship. School D, would be a free ride.

If your kids, as you think you know them, would not get into A, then you do the same experiment by sliding the scale one to the left (ie, the B school is with limited financial aid or merit scholarships).

One of our kids went to school A, absolutely no regrets on anyone’s part and has graduated and launched. Another applied to and got into B, but no scholarships, is still attending.

[MikeWillRetire]

Our household income is around 200k, and we had 2 children in college last year. We did not receive any need-based financial aid from the local state universities.

[Admiral]

Thanks all for these helpful replies.

[Misenplace]

A friend of mine's daughter matriculated at Princeton because they gave her the best need-based financial aid package by far of any other school. In fact, it was cheaper for her to go there than their state schools. They are decidedly middle income (I would guess living comfortably on 150-200K in a LCOL area). He told me that a few years ago Princeton realized that they had students from a lot of high income families and many low income families, but the middle class was underrepresented. So they decided to put more of their considerable endowment towards assisting middle income families.
https://www.princeton.edu/news/2018/11/ ... -princeton

[HoosierJim]

Had to write a check for our "full pay" student to attend and to subsidize the other students. My observations: Most non full pay students didn't have part time jobs in the summer. Found the that most of the "full-pay" worked in the summer. Also observed that more of the full pay student worked harder during recruitment and got better jobs. Many subsidized students took longer to find jobs if they wanted to work at all. Just anecdotal.

[Tycoon]

The more you make the more they take. Some colleges recognize merit.

[Minty]

Our household income is around 200k, and we had 2 children in college last year. We did not receive any need-based financial aid from the local state universities.

Yes, this is an important point. At around $200K or above, there will be little hope of need-based financial aid from any but the wealthiest and most expensive privates. For example, my state, California, has expensive public universities, and a reasonably generous need-based financial aid program that ends at $171K in family income and assets. I guess they figure families can just pay it, but some will pursue alternatives.

[smitcat]

Had to write a check for our "full pay" student to attend and to subsidize the other students. My observations: Most non full pay students didn't have part time jobs in the summer. Found the that most of the "full-pay" worked in the summer. Also observed that more of the full pay student worked harder during recruitment and got better jobs. Many subsidized students took longer to find jobs if they wanted to work at all. Just anecdotal.

As one other data point our non full pay student received a bunch of incentives but they were not due to needs based criteria.
Incentives for grades, athletics , leadership and location, etc totaled just shy of $20K per year of undergrad attendance back about 7 years now (2011).
During those years she also worked at various jobs both on and off campus including on campus jobs of admissions ambassador, tutor, RA, athletic administrator assistant, and off campus jobs including dockmaster, tutor, boat delivery, tradesy vendor, wine server and athletic training aid.
She has continued some of these jobs part time after graduation.

[HIinvestor]

It can be useful to be able to pay in monthly installments instead of a huge lump sum every term--for our kids' U, it was only a small extra charge to be able to have installment payments and allowed us to pay out of salary instead of taking out huge loans. Double-check with your kid's U as to whether there is an option for installment payment. Also check to see whether there is any extra charge for using CCards instead of paying cash--why not get % cashback if there's no extra charge?

[an_asker]

If your kids are admitted to one of the generous private colleges (HYPMS, for exsmple), you might still get some aid up to around $250k, especially if you have more than one in college at the same time. However, that’s a big IF; acceptance rates are single digit percent even for qualified applicants.

In that case, I wouldn’t try to game income or assets; it seldom pays. There are threads about 529s, home equity, etc.

Why or how is it that on a financial forum, when I type in the ticker of Vanguard's S&P 500 fund, I have to spell it out to cater to the lowest denominator, but you can get away with the alphabet soup of HYPMS? I have heard of PMS; HY on taxes is Half Year. But I doubt that's what you are saying

[TomatoTomahto]

If your kids are admitted to one of the generous private colleges (HYPMS, for exsmple), you might still get some aid up to around $250k, especially if you have more than one in college at the same time. However, that’s a big IF; acceptance rates are single digit percent even for qualified applicants.

In that case, I wouldn’t try to game income or assets; it seldom pays. There are threads about 529s, home equity, etc.

Why or how is it that on a financial forum, when I type in the ticker of Vanguard's S&P 500 fund, I have to spell it out to cater to the lowest denominator, but you can get away with the alphabet soup of HYPMS? I have heard of PMS; HY on taxes is Half Year. But I doubt that's what you are saying

Sorry, you are right. It’s a common acronym on College Confidential, just as FIRE is here.

It stands for Harvard, Yale, Princeton, MIT, Stanford.

[TomatoTomahto]

Our household income is around 200k, and we had 2 children in college last year. We did not receive any need-based financial aid from the local state universities.

Local state Unis typically don’t give need-based aid; if they do give aid, it’s usually in the form of a merit-based scholarship.

[an_asker]

If your kids are admitted to one of the generous private colleges (HYPMS, for exsmple), you might still get some aid up to around $250k, especially if you have more than one in college at the same time. However, that’s a big IF; acceptance rates are single digit percent even for qualified applicants.

In that case, I wouldn’t try to game income or assets; it seldom pays. There are threads about 529s, home equity, etc.

Why or how is it that on a financial forum, when I type in the ticker of Vanguard's S&P 500 fund, I have to spell it out to cater to the lowest denominator, but you can get away with the alphabet soup of HYPMS? I have heard of PMS; HY on taxes is Half Year. But I doubt that's what you are saying

Sorry, you are right. It’s a common acronym on College Confidential, just as FIRE is here.

It stands for Harvard, Yale, Princeton, MIT, Stanford.

Thanks. I did get Harvard, Yale and Princeton after racking my head and taking the context into consideration. But the other two I failed to get

[TomatoTomahto]

Had to write a check for our "full pay" student to attend and to subsidize the other students. My observations: Most non full pay students didn't have part time jobs in the summer. Found the that most of the "full-pay" worked in the summer. Also observed that more of the full pay student worked harder during recruitment and got better jobs. Many subsidized students took longer to find jobs if they wanted to work at all. Just anecdotal.

Just wrote a check myself. I consider it a plus that we are subsidizing other students, because that’s a good part of what benefit my kids get: to be around other high achievers.

Re jobs: my full pay kid worked all summers. Last year he made enough to provide > 50% of his support. But, all of his friends, from full pay to full ride had jobs also, so I can’t agree with your premise. Some jobs paid well, others paid poorly.

Of the kids I know, across the spectrum of financial means, they all had jobs before the summer ended. The vast majority of the jobs were good; some were exceptional.

[TomatoTomahto]

Thanks. I did get Harvard, Yale and Princeton after racking my head and taking the context into consideration. But the other two I failed to get

When I first read FIRE, I thought Fixed Income Real Estate???????

[SchruteB&B]

Second the recommendation to run the Net Price Calculators. Oldest child is at a lower tier /not elite school and the NPCs indicated “merit” around 15-20% off of list price, which is in fact what we received.

[SimonJester]

Survey say: Parent Plus Loan

Oldest received a little bit of merit based scholarship, youngest nothing yet

I should add, both are attending in state schools...

[NJdad6]

Went through this recently with my oldest. Most likely you will not qualify for financial aid (meaning a reduction in cost, not loans). As others have mentioned there is a lot of merit money available at top tier schools (flagship state and private) if your student is in the top percentile. This means 4.0+ GPA, 1500+ SAT/34+ ACT.

If not, there might be some small awards available. Research the school and requirements for merit. Some big state schools have this information available on their website.

Best bet is to save as much as you can in a 529 and help your student get the best test scores they can.

[NYGiantsFan]

Our kids (both) received scholarships from State University. One received full and second received about more than half. Both also received scholarship from second public college in the state. Both decided to attend private top 10 schools. I had submitted FAFSA and tax return afterwards. During school visit (right after admission confirmation), I met financial aid department adviser in person. I asked question to see if updated tax return will make any difference. He laughed at the question (Short answer No). Be aware most of private top schools will ask you to fill out CSS profile which focuses more on assets than income. Many private schools had asked upfront 529 plans balance in CSS profile.

[Wellfleet]

Had to write a check for our "full pay" student to attend and to subsidize the other students. My observations: Most non full pay students didn't have part time jobs in the summer. Found the that most of the "full-pay" worked in the summer. Also observed that more of the full pay student worked harder during recruitment and got better jobs. Many subsidized students took longer to find jobs if they wanted to work at all. Just anecdotal.

I worked 2 summer jobs, gratefully received scholarships and had offers in hand prior to graduation. My children will probably be full pay. Thanks for your anecdote though.

[viewer0]

My daughter did get significant merit aid from universities like Case Western and others , but she had to withdraw applications from all universities. So, merit aid is highly possible. My daughter will end up going to her ED school which is binding and would not offer any money. We are in very high income tax bracket. So, my advice is do not ED ( binding) into any school.

[Atilla]

In-state tuition at a flagship public university. You can cash flow that at a $200K+ family income.
No aid, no loans needed.

[thx1138]

So, my advice is do not ED ( binding) into any school.

And not just for financial reasons. I remember being 100% certain of where I was going to college as early as freshman in high school. Fortunately they only did EA (non-binding) which I did and was accepted early. But after visiting schools I quickly realized it was definitely not my first choice. Got into my new first choice after visiting and went there instead.

Obviously I probably would have done great either place but if I had been “forced” into ED that would have probably been a regret that colored my teenage perception of things negatively.

As to the OP we are a decade out from worrying about it but we expect no aid and are planning for none. Especially schools that would examine assets. There is a very small chance if we retired early and tucked everything in just the right places and controlled income we might game FAFSA in its current form. Doesn’t seem likely or worth it though.

[johnny]

Our experience - currently making a bit more than 200k. My son got zero need based aid to the state school. A small private liberal arts college awarded a $5k loan along with a scholarship (assuming $25k/year contribution by the parents).

Both of those made sense to me. Then this week he gets accepted to a rather large private university (top 50) with $13k grant and zero loans. Thus assuming $66k per year contribution by the parents!?! I hate to say, but we don't have anything close to that in college savings. Hard to understand.

College: the great equalizer! :-\

[Pigeye Brewster]

It's been over a decade ago, but I was shocked to find out how high our EFC was.

[ram]

A reasonably good private university was cheaper for our son than the flagship state univ. ( after considering merit scholarship)

viewtopic.php?t=93996

On the other hand a year of Harvard cost about 80K total for my daughter (tuition + living expenses)

[Minty]

So, my advice is do not ED ( binding) into any school.

And not just for financial reasons.

Reasonable points, but my understanding is that elite-ish schools use ED to fill the bottom of their class. Schools want high yield rates, and want people who can/will pay something close to sticker. So if you (or your child) is in the mix at a school but not a lock, and are willing/able to pay, applying ED can be a thumb on the scale that helps get you admitted. My children (and I, now that I think of it) went to college where we applied ED. I would like to think we would have gotten in regular decision, but I don't know. I got full financial aid in the early 1980s, and my kids got very little which is what they expected from any comparable school. I agree due diligence should be done before applying ED; it should be a place the student would be happy to attend. The one acceptable contractual ground for declining an ED offer is dissatisfaction with the financial aid award, so I think of it as something like a free option.

[retired recently]

Son is currently a sophomore and has potential to do well in college admissions given he already has a 1550 SAT, 5's on difficult STEM AP's, USACO Gold, AIME qualifier, good EC's etc. We are under no illusions though that he will be accepted to any of HYPMS given his gender and race and the fact he is not a legacy.

I worked overseas for most of my career and retired to return to the US. I have not worked for 10+ years so am not very employable at this stage. Our income typically hovers around $125k, although 2018 will be significantly higher as I adjusted my asset allocation early in the year. Going forward, I expect my income to be in the $100K-$150K range.

So income should be "low" when our son enters college but assets should stay in the $6-$7 million range. We expect to be full pay but hope to get merit possibly. From what I have seen the best chances for merit will be if he is a National Merit Finalist. He took the PSAT this year and his scores would easily put him as a NMF if he can only repeat these scores next year.

Current thinking is that if he is undecided as to his desired major we will chase merit money if any available. If he has a clear idea what he thinks he wants to do then we are prepared to pay full freight but will compare offers.

I did not consider it seriously but it looks like we might get financial aid if we plowed a huge chunk of our assets into a home, otherwise I am not aware of any options to reduce the assets the schools will consider.

[TomatoTomahto]

Son is currently a sophomore and has potential to do well in college admissions given he already has a 1550 SAT, 5's on difficult STEM AP's, USACO Gold, AIME qualifier, good EC's etc. We are under no illusions though that he will be accepted to any of HYPMS given his gender and race and the fact he is not a legacy.

I worked overseas for most of my career and retired to return to the US. I have not worked for 10+ years so am not very employable at this stage. Our income typically hovers around $125k, although 2018 will be significantly higher as I adjusted my asset allocation early in the year. Going forward, I expect my income to be in the $100K-$150K range.

So income should be "low" when our son enters college but assets should stay in the $6-$7 million range. We expect to be full pay but hope to get merit possibly. From what I have seen the best chances for merit will be if he is a National Merit Finalist.

I wouldn’t discount his chances as a non-legacy Caucasian male; ours got in even without USACO and AIME. That said, you are wise not to consider it a given.

With your assets, if you’re looking for finaid, I can’t imagine it working at any CSS school. Income isn’t a problem, but frankly, with those assets, “if not you, who?” IME, strong math kids can make a lot of money during summers and the school year; you will have options on what to put the income towards; we opted to use it as a bribe, and let DS keep anything that wasn’t purely and obviously discretionary (eg, trip with GF). I want to emphasize the great chasm between mathy STEMy kids’ earning potential and that of equally smart and industrious non-STEM kids. It is what it is.

I differ with one prolific poster who feels strongly about NMF. Don’t bet too much on one Saturday’s results. Don’t limit your obviously talented kid’s options by looking at schools that care about NMF. Just my 2 cents. Good luck.

[MikeG62]

I'm curious to hear from those who are in higher-earning families (say 200k and over) what your experience has been with financial aid for college.

Yeah, we got nothing.

[viewer0]

The one acceptable contractual ground for declining an ED offer is dissatisfaction with the financial aid award, so I think of it as something like a free option.

Are you sure , this is correct ? Then there will be a lot of ED declinations. The schools know that you are sucked in and do not give any aid to ED kids.

[TomatoTomahto]

The one acceptable contractual ground for declining an ED offer is dissatisfaction with the financial aid award, so I think of it as something like a free option.

Are you sure , this is correct ? Then there will be a lot of ED declinations. The schools know that you are sucked in and do not give any aid to ED kids.

Not to put too fine a point on it, you are wrong.

[psy1]

Full freight minus merit scholarships. State flagships are the obvious bargain for high income families. Check out Alabama and similar state flagships that offer full tuition and room and board for 4 years for high achithigh school grads. Our daughter could have gone there for free (plus transportation) but chose the home state school. Lower tier liberal arts colleges have fairly generous merit aid which can make private school about the same as state schools in many cases.

I should add that you must complete the FFSA even though you won’t get anything. The reason is that most schools require it when filing out merit aid as part of their process.

[ModifiedDuration]

The one acceptable contractual ground for declining an ED offer is dissatisfaction with the financial aid award, so I think of it as something like a free option.

Are you sure , this is correct ? Then there will be a lot of ED declinations. The schools know that you are sucked in and do not give any aid to ED kids.

Yes, this is correct. If you say that the financial aid package does not meet your needs, you can decline the Early Decision offer.

For example, here is how the Univetsity of Pennsylvania words it (Item 1 under Early Decision):

https://admissions.upenn.edu/admissions ... nd-regular

In addition, here is an article from USNews explaining that you can decline an Early Decision offer due to financial reasons:

https://www.usnews.com/education/best-c ... ancial-aid

[fourwheelcycle]

Both of our sons went to private colleges and we never applied for any financial aid. The first college said thank you very much and cheerfully cashed our checks for their full tuition, room and board. The second college, to our great surprise, awarded our son a four year 50% merit-based scholarship and threw in another few thousand dollars per year because his grandfather attended the same school and they said that made our son a legacy.

[index2max]

I remember reading online that when filing a FAFSA form that Roth IRAs are reported, but do not count towards the expected family contribution (EFC) at all. HSA balances don't count towards EFCs either, I believe.

Up to 5% of the money in a 529 plan counts towards EFC, I believe. The biggest thing that contributes to EFCs is the annual income of the parents.

Problem with using a Roth IRA as an investment vehicle for your child's tuition is that once you pull money out of it, those funds you withdraw will count towards your income the following year.

Like everyone else here has been saying, I won't expect my future child's college to give them any need-based financial aid.

https://www.usnews.com/education/best-c ... or-tuition

[LilyFleur]

Had to write a check for our "full pay" student to attend and to subsidize the other students. My observations: Most non full pay students didn't have part time jobs in the summer. Found the that most of the "full-pay" worked in the summer. Also observed that more of the full pay student worked harder during recruitment and got better jobs. Many subsidized students took longer to find jobs if they wanted to work at all. Just anecdotal.

Just wrote a check myself. I consider it a plus that we are subsidizing other students, because that’s a good part of what benefit my kids get: to be around other high achievers.

Re jobs: my full pay kid worked all summers. Last year he made enough to provide > 50% of his support. But, all of his friends, from full pay to full ride had jobs also, so I can’t agree with your premise. Some jobs paid well, others paid poorly.

Of the kids I know, across the spectrum of financial means, they all had jobs before the summer ended. The vast majority of the jobs were good; some were exceptional.

Agree.

[ohai]

From my experience, regardless of financial need, many students will end up pursuing paid summer work anyway, because that work experience is needed to get better job offers when they graduate. If you want to be an engineer at Google, you must first have internship experience at similar companies. The fact that most of these internships offer stipends or hourly wages is advantageous, but is not the main reason why students pursue these opportunities.

[ENT Doc]

I have zero expectations of financial aid. I do not think it’s a good thing that we are subsidizing other people. We already paid more in taxes and then go through the first degree price discrimination gauntlet so we can pay more of that after-tax money for the same product. This is not only de-facto double taxation but if applied more broadly as a concept it creates perverse incentives for working harder as all income is leveled.

Actionable advice: avoid the siren song of the elite schools and the US News & World Report, especially if you are a high earner. Look for value. As a graduate of one of these elite schools I am appalled at their lack of restraint. They cannot make a convincing case that the value of their degree has increased by 50% in real terms since I graduated - and for all majors no less. If you look at the US News & World Report methodologies they incentivize this behavior. It won’t stop until the wealthy refuse to play this game and seek value instead.

[HIinvestor]

There are Us that do not require FAFSA or any financial info to be considered for or awarded merit aid. Our Sconly applied to such Us. We figured we would not receive any FAid so we never applied, even though we earned considerably less than the amount you’re talking about. We preferred not to share info about our finances. Our older child applied to and was accepted with generous merit aid to 3 Us. He chose one of those Us.

I’d recommend considering Us with good merit aid as well.

[Stormbringer]

We didn't even bother trying for aid. We make way too much and our daughter didn't have the sort of GPA in High School that was going to win her any scholarships (most of which are need-based anyway).

We saved enough in a 529 plan so our daughter could attend a state school while living at home and graduate with no debt. We told her that anything else would be an expensive luxury and not worth it. She didn't like that answer at first because her BF was attending a $45K/year school in another state, but after a while she came to realize it was the right thing to do. She lived at home for the first year, and got a job and an apartment after that while she finished school. She was able to get the American Opportunity Tax Credit once she was out of the house.

Overall I think it cost about $55K for her to graduate.