Do you need to worry about receiving college financial aid in 15 years if...

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
justsomeguy2018
Posts: 1188
Joined: Wed Oct 03, 2018 8:11 pm

Do you need to worry about receiving college financial aid in 15 years if...

Post by justsomeguy2018 »

you expect to have fairly substantial income and assets at that time?

in other words - how much should expected college financial aid plan factor into your planning, if you have a lot of income/assets (e.g. choosing between UTMA vs 529 vs taxable money, retirement accounts/home value counting towards aid, etc.)

or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
User avatar
FiveK
Posts: 10306
Joined: Sun Mar 16, 2014 2:43 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by FiveK »

justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Yes, unless your child gets merit-based awards - at least in our experience. ;)
User avatar
mmmodem
Posts: 2265
Joined: Thu May 20, 2010 1:22 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by mmmodem »

Yes, because what you expect can be wrong.

I expect my children to receive zero financial aid other than loans. I prepare for this by NOT investing in a 529 or similar until retirement accounts are maxed out.

If I am right, I will be well off. I will have to pay their tuition out of pocket, stop savings, and take out from retirement accounts as needed.

If I am wrong. I have no 529 and none of my retirement accounts will count against expected family contribution for financial aid. My children will be able to maximize the financial aid they qualify for. Same as above, I will take out from retirement accounts as needed.
User avatar
Harry Livermore
Posts: 497
Joined: Thu Apr 04, 2019 5:32 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Harry Livermore »

Under the current scheme, almost anyone who has assets beyond their home, or would be marginally upper middle class, gets zero in federal financial aid. I would not expect that to change for the better over the next 15 years.
I have noticed a debate on BH that revolves around 529 versus no 529 and maxed retirement. We were lucky to have been able to save a substantial amount in retirement funds, 529s, and taxable as well. The taxable hurts us in the finaid calculation, but so does our rental real estate and high income, none of which I would trade for federal financial aid. I would rather be somewhat self-reliant, and try for financial independence, than arrange my affairs to seek aid that may not be there when the time comes.
I think you can count on a couple of things: college costs will continue to go up well above the inflation rate, and colleges, the college board, and the federal government will all continue to move the goal posts around.
And you can count on my inability to predict the future.
Cheers
NotWhoYouThink
Posts: 3174
Joined: Fri Dec 26, 2014 4:19 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by NotWhoYouThink »

Since financial aid is highly dependent on income but only slightly dependent on assets, assume you will get none if you have high income.

And if you do have high income and expect to have high income when college years start, you might as well put some of the money in a 529, since you won't be getting financial aid anyway so the amount you have in the 529 will not matter in any formulas. It will however give you a tax break (maybe) on college costs. You won't be taxed on gains, but you won't be able to deduct losses.

People on this board tend to focus way to hard on financial aid. There is a small demographic that gets it - low income families with exceptionally high achievement kids. Not BWRK (bright well-rounded kids), but exceptional kids. Because only the top schools can afford to provide grant aid as opposed to loans.

The good news is you can get on with planning your family's financial and educational future without having to twist yourself into a pretzel to meet some formula that might change before your kid graduates from high school. It's very empowering.
User avatar
mmmodem
Posts: 2265
Joined: Thu May 20, 2010 1:22 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by mmmodem »

NotWhoYouThink wrote: Sat May 16, 2020 12:14 pm the amount you have in the 529 will not matter in any formulas. It will however give you a tax break (maybe) on college costs. You won't be taxed on gains, but you won't be able to deduct losses.

People on this board tend to focus way to hard on financial aid. There is a small demographic that gets it - low income families with exceptionally high achievement kids. Not BWRK (bright well-rounded kids), but exceptional kids. Because only the top schools can afford to provide grant aid as opposed to loans.
A 529 in the child's name does matter for FAFSA. Thats why it's advantageous to use it after maxing retirement accounts which is not counted and for sure gets tax breaks.

A few of my peers may be bright but by and large we mostly received financial aid because we were poor. The only requirement to continue receiving financial aid was a passing grade.
delamer
Posts: 10519
Joined: Tue Feb 08, 2011 6:13 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by delamer »

It depends on what you mean by “aid.”

Some federal loans (which need to be repaid) are available at any income/asset level.

If you mean federal grants (no repayment), then you’ll probably be out of luck.

Merit scholarships are available at some colleges at any income/asset level if your child is an attractive enough candidate (both my kids got offered merit scholarships at small, private schools).
Broken Man 1999
Posts: 5029
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, inland on high ground!

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Broken Man 1999 »

Expectations do not always turn into reality. And, in 15 years, college might look totally different. Who knows? Not I, for sure.

I think the best thing any parent can do is to set aside what they can, assuming paying for all/part of college is something they want to do for their child(ren).

If you read past conversations, there are differences of opinion as to whether parents should pay for all/part of college. FWIW, DW and I came down on the side of paying what was needed to get DDs through college debt-free and launched into their careers. So, that is what we did. At the moment, I have turned my attention to doing as much as I can for our grandchildren.

The role state income taxes play in your decision might be large; we pay no state income tax, so it wasn't a factor for us.

When 15 years from now comes knocking, you might have a lot saved, or earmarked for your child(ren)'s college. The students might get aid, might not.

At the worst, if you can afford to set aside funds, and your student receives aid, then you have the ability to enrich their college experiences. Perhaps you could fund an international trip, or help them with fraternity or sorority expenses. Oh my, that was an eye-opener for me!

OP, I hope you continue to do well, and your financial plans work out for you. But, just remember: Man plans, and God laughs!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
NotWhoYouThink
Posts: 3174
Joined: Fri Dec 26, 2014 4:19 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by NotWhoYouThink »

mmmodem wrote: Sat May 16, 2020 12:25 pm
NotWhoYouThink wrote: Sat May 16, 2020 12:14 pm the amount you have in the 529 will not matter in any formulas. It will however give you a tax break (maybe) on college costs. You won't be taxed on gains, but you won't be able to deduct losses.

People on this board tend to focus way to hard on financial aid. There is a small demographic that gets it - low income families with exceptionally high achievement kids. Not BWRK (bright well-rounded kids), but exceptional kids. Because only the top schools can afford to provide grant aid as opposed to loans.
A 529 in the child's name does matter for FAFSA. Thats why it's advantageous to use it after maxing retirement accounts which is not counted and for sure gets tax breaks.

A few of my peers may be bright but by and large we mostly received financial aid because we were poor. The only requirement to continue receiving financial aid was a passing grade.
A 529 owned by the child counts as a parent asset. And if the parent has a high enough income assets don't matter. A UGMA owned by the student counts as a student asset, and colleges expect you to use it to fund your education. But if the parents income is high enough it still doesn't matter because there won't be any financial aid anyway.

To get financial aid be poor. Earn little, own little. I'd rather be rich than get financial aid, but you be you.
User avatar
Nate79
Posts: 6419
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Nate79 »

No, I would not worry about receiving college welfare if you have a decent income and assets. That is for low income families. Save enough money to pay for college since you have so many years to save.
oldfort
Posts: 1739
Joined: Mon Mar 02, 2020 8:45 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by oldfort »

Need based financial aid can be generous up to about $150k family income at schools which meet full need. If your family income is more than $150k, at the time your kids go to college, I would assume any need based financial need will be zero. Looking at your previous posts, you are well over this threshold already.
User avatar
Watty
Posts: 20673
Joined: Wed Oct 10, 2007 3:55 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Watty »

justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
Topic Author
justsomeguy2018
Posts: 1188
Joined: Wed Oct 03, 2018 8:11 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by justsomeguy2018 »

Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
Interesting point...if you got laid off for a year or so before applying and all your assets were in home or retirement thar could help I suppose. Probably a rare scenario but not impossible.

How far back in time do they evaluate your income for financial aid?
Olemiss540
Posts: 1497
Joined: Fri Aug 18, 2017 8:46 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Olemiss540 »

justsomeguy2018 wrote: Sat May 16, 2020 4:35 pm
Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
Interesting point...if you got laid off for a year or so before applying and all your assets were in home or retirement thar could help I suppose. Probably a rare scenario but not impossible.

How far back in time do they evaluate your income for financial aid?
Or if you semi retire/slow your work schedule. Juicing retirement accounts as much as possible is by far the most advantageous thing you can do while you have a high income. Worry about 529s once those are maxed to the fullest extent and if you are lucky enough to maintain a high income during the college years you can slow retirement contributions to help cash flow college.

No downside to maxing retirement accounts and there could be consequences on the other side if you cut them short while partially funding 529s and see an unexpected income drop prior to college expenses kicking.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
Lars_2013
Posts: 202
Joined: Sun Dec 15, 2013 2:00 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Lars_2013 »

NotWhoYouThink wrote: Sat May 16, 2020 12:14 pm People on this board tend to focus way to hard on financial aid. There is a small demographic that gets it - low income families with exceptionally high achievement kids. Not BWRK (bright well-rounded kids), but exceptional kids. Because only the top schools can afford to provide grant aid as opposed to loans.
This doesn't apply to the OP who expects to have significant income and/or assets in 15 years, but for the record this isn't true. Lots of "average" students from low- and moderate-income families receive grant funds in the form of Pell Grants. For someone attending a community college or comprehensive state university, Pell Grants will often pay all or most of the costs of tuition/fees. Since many of these colleges are non-residential and students are often working their way through (and living with family members), room and board is not as large a consideration.

And some states also have their own income-based grant programs for people attending public colleges and universities.

I just checked and during the 2018-2019 school year (the most recent available data) there were 281K in-state undergraduate students at public colleges/universities in my state (this includes community colleges). Of these, 134K received some form of grant funding. This is larger than the number who received loans (93K), scholarships (30K), workstudy (11K), or other forms of aid (14K).
cshell2
Posts: 444
Joined: Thu May 09, 2019 10:29 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by cshell2 »

Lars_2013 wrote: Sat May 16, 2020 4:51 pm This doesn't apply to the OP who expects to have significant income and/or assets in 15 years, but for the record this isn't true. Lots of "average" students from low- and moderate-income families receive grant funds in the form of Pell Grants.
Agreed. Federal and most state grants have nothing to do with how exceptional of a student they are. They're strictly need-based with no regard to grades or test scores beyond what you need to have to get admitted to the college. My son received Federal, state and institutional grants and while I like to think he's brilliant, he's definitely just in the "bright, well-rounded" category. :happy

OP, I wouldn't worry about saving for college. If you're high income, you're not going to hurt your chances at aid with assets because your income is the biggest factor. I think it's something like 20-30% of annual income goes towards your EFC, but only 5.6% of non-protected assets. But, in 15 years the rules might be completely different.
Dain
Posts: 3
Joined: Thu May 14, 2020 9:15 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Dain »

I completed the FAFSA one time and then did not bother again after that. Plan for no financial aid and you won't be disappointed.
I would definitely look into a 529. In CT for example contributions are deductible up to $10000. Even if you have no state benefit, there are also federal tax benefits.
Jack FFR1846
Posts: 12650
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Jack FFR1846 »

"Aid" is:

Stafford loans. Including the front end load, roughly 6%. In student's name.
PLUS loans. Including the front end load, roughly 7%. In Parent's name.
Merit aid: This is great and depends on student's high school performance vs college average level. The more the student moves down in schools, the more the student might get this grant.
Work-Study: Below the poverty line, you can get this.
Pell grants: Below the poverty line, you can get this.

Some schools will have their own non-federal aid. When my son applied to transfer to Boston University, he received 2 scholarships that sounded like dorm halls. $13k. When full boat is $75k, that's a help.
Our state also pays my younger son's tuition (1/10th the cost at his community college) for being in a program set up by his prior school.
Athletic scholarships may help. Crew (rowing) has been shown to be the easiest to get with prior team experience for schools with a crew team.

Fill out a FAFSA form. Many colleges have practice ones to see what you can expect.
Bogle: Smart Beta is stupid
Pdxnative
Posts: 295
Joined: Sat Nov 07, 2015 2:17 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by Pdxnative »

The schools that give large amounts of need based aid will have their own forms or the CSS profile. The FAFSA isn’t particularly relevant for them. If you want to get an idea of what this looks like, go to the Princeton or Harvard financial aid site and play around with the net price calculator. That’ll give you an idea of how the variables interact and what institutional aid might look like at the most generous schools. The catch is that there aren’t many that generous, and admission rates at all of them are very low. But if the aid numbers at those don’t look good for you, you probably don’t need to worry about optimizing your assets for the FAFSA or CSS.
smitcat
Posts: 6477
Joined: Mon Nov 07, 2016 10:51 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by smitcat »

Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
"Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts."

Exactly - plus in 15 years from now no one knows what the college costs/financing situation will look like nor what the OP's situation will look like.
Before our daughter went to college we had some financial accounts that would likely have precluded some of the funds she received. By the time we got close to her application dates we had our own business which when combined with the retirement accounts and real estate placed her into a great postion for further funds. 15 years from now you juts never know...
New Providence
Posts: 290
Joined: Fri Mar 27, 2020 7:10 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by New Providence »

Nate79 wrote: Sat May 16, 2020 3:57 pm No, I would not worry about receiving college welfare if you have a decent income and assets. That is for low income families. Save enough money to pay for college since you have so many years to save.
It is similar to other programs like Food Stamps or real estate section 8 which are targeted for the very poorest. You'd have to get rid of all your assets to qualify for it. No free lunch.
StealthRabbit
Posts: 528
Joined: Sat Jun 13, 2009 1:25 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by StealthRabbit »

Expect NO College Financial aid...
I you are:
White
Middle income (even low middle income)
Have Assets amount beyond home
If you have capital assets (apart from a family farm where you also domicile)
Very tough for your student to have accessible assets (best to keep it in 'retirement accts'. Roth works well (Flexibility).

Plan on nothing, can't go wrong. BTW, there are many international and a few USA colleges that are FREE (We visited ind interviewed many students last yr).
https://affordableschools.net/20-tuition-free-colleges/
https://thebestschools.org/magazine/tui ... -colleges/
https://www.valuecolleges.com/internati ... education/
(Living internationally for several yrs (age 7 - age 13) was one of the best things we did for our kids / world perspective and experience of being the minority)

It is VERY cheap for your student to get a deferred loan and you can stay fully invested until they graduate, then offer pay off THEIR loan (if you feel you must)

Some states are VERY inexpensive with excellent U's ($3000 / yr in WY as a resident). Send your student for a 'gap' yr working in WY (high pay) to gain residency. I hire all the UofWY Mech Engineering grads I can find! They are in high demand.

Personally, I feel it was a good option for our kids to fund college and housing 100% post age 18. They grew up a lot and held their profs and colleges to a much higher std than their 'supported' peers.

What we did to help prepare them:
1) Started their Roths at age 12 (made them Bogleheads) and matched their wages 100% until age 18 (They each had over $20k in IRA's by age 18, but didn't touch it for college)
2) Taught them to be self learners and mentor others throughout their edu (They were tutors for ESL and Adult learners during College)
3) Informed them EARLY that college would be self funded.
4) Stressed importance of college for their future options (Exposed them to weekly homeless shelter and annual international mission trip volunteering)
5) Taught them high paying skills from age 12 (apprenticeships)
6) They designed and built their own homes during Jr High ($80k equity gain each home (college money?/ future RE investment props...)) we all helped and parents funded rural acreage lots until home was finished and refinanced. By hammering, wiring, plumbing, and shoveling for a yr they really found out they DIDN'T want to do that for a living. :wink: (thus reinforced college)

What they did for College funding:
1) Worked high skilled / paid jobs during HS to get certs for future high wages (Firefighting & Alaska fishing = $30k - $40k during summer employment))
2) Worked career specific jobs during school (good pay) so they would graduate with relevant experience.
3) Attended FT college INSTEAD of HS starting at age 16. FREE in our state since 1991 and other states are joining. They had their AAS by HS grad and went direct as full Jrs to U's. (no prereq / no dorms / no 'babysitting' or financial assistance required) https://en.wikipedia.org/wiki/Running_Start
4) Became very prudent Bogleheads, equipping them to be very good and diligent investors (pre-college). They continue in high level Financial (analytical) focused careers and have gained national and international certs.
5) Did a level of stock trading (non-boglehead, but wise / educated) that netted them large gains during college (Netflix, Amazon, Google, Apple era)
6) Did RE investing through college (equity gains ~ 10 - 14% / yr, high growth desirable region)
7) Were very frugal and prudent on spending (since they paid for everything... college, books, housing, food, cars, insurance...)


To do it over...
1) Encourage them to go to the BEST college for their chosen field (colleges and results are very different between colleges!!!)
2) Have them consider and pursue international college because they were really disappointed in the caliber of USA students (Coddling of the American Mind). I concur, as I did college (again) the same time they did. I also teach in (3) colleges. SAD what we are delivered for students. Even more sad as an employer what I am delivered as graduates (?). I asked one mechanical engineer new hire... "And did you ever 'Attend' college?, what is it that you learned?" They were ultra poor at application and self starting / recognition of responsibility and contribution.

Quite honestly, the caliber of graduates is curtailing USA innovation and productivity. Companies do not have the time, resources, staff... to train! (how to read a tape measure, how to do simple math, how to respond to customers, how to get along with coworkers...) Hiring internationally (when able) has helped keep engaged minds and customer focused employees. Best to move the company 'off-shore' to get decent employees and gov taxation / credits.
Last edited by StealthRabbit on Sun May 17, 2020 11:37 am, edited 1 time in total.
StealthRabbit
Posts: 528
Joined: Sat Jun 13, 2009 1:25 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by StealthRabbit »

dupl post - deleted
oldfort
Posts: 1739
Joined: Mon Mar 02, 2020 8:45 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by oldfort »

smitcat wrote: Sun May 17, 2020 7:24 am
Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
"Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts."

Exactly - plus in 15 years from now no one knows what the college costs/financing situation will look like nor what the OP's situation will look like.
Before our daughter went to college we had some financial accounts that would likely have precluded some of the funds she received. By the time we got close to her application dates we had our own business which when combined with the retirement accounts and real estate placed her into a great postion for further funds. 15 years from now you juts never know...
The OP's base income is $245k. Absent a dramatic pay cut or unemployment, the OP is not getting any need-based financial aid.
mnnice
Posts: 492
Joined: Sat Aug 11, 2012 5:48 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by mnnice »

Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
Or be retired already and living off Roth IRA funds and looking “poor” on paper (and able to use simplified needs test).
User avatar
greg24
Posts: 3926
Joined: Tue Feb 20, 2007 10:34 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by greg24 »

Don't let the tail wag the dog.
smitcat
Posts: 6477
Joined: Mon Nov 07, 2016 10:51 am

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by smitcat »

oldfort wrote: Sun May 17, 2020 11:38 am
smitcat wrote: Sun May 17, 2020 7:24 am
Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
"Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts."

Exactly - plus in 15 years from now no one knows what the college costs/financing situation will look like nor what the OP's situation will look like.
Before our daughter went to college we had some financial accounts that would likely have precluded some of the funds she received. By the time we got close to her application dates we had our own business which when combined with the retirement accounts and real estate placed her into a great postion for further funds. 15 years from now you juts never know...
The OP's base income is $245k. Absent a dramatic pay cut or unemployment, the OP is not getting any need-based financial aid.
As I posted - I did not think we would get any either. But we did start business's a just prior to the college applications. We found that the rules at the time to receive assistance did not utilize any retirement accounts , real estate or business equity in the tools for qualification. The sum of help they offered ranged from educational grants, geographic scholarships, work opportunities and leadership scholarships. All of these were given for the full 4 years without reapplying and the only constraints were maintaining an acceptable GPA and good standing.
User avatar
teen persuasion
Posts: 1267
Joined: Sun Oct 25, 2015 1:43 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by teen persuasion »

justsomeguy2018 wrote: Sat May 16, 2020 4:35 pm
Watty wrote: Sat May 16, 2020 4:12 pm
justsomeguy2018 wrote: Fri May 15, 2020 10:18 pm or in other, other words - is college financial aid probably a non-starter if you are a high earner/have a lot of assets by the time child applies to college?
Where you have your assets can also matter. Some colleges are getting more sophisticated in looking at a parents assets but when I went through this 10+ years ago many colleges did not count home equity and retirement accounts in the parents financial aid calculations. Putting money in these could make sense instead of having large taxable accounts.

I agree that most people with decent jobs will not qualify for anything other than loans but there is also a chance that even if you are doing well you could be laid off, widowed, or disabled while a kid is in college so I would not totally ignore the chance of financial aid.
Interesting point...if you got laid off for a year or so before applying and all your assets were in home or retirement thar could help I suppose. Probably a rare scenario but not impossible.

How far back in time do they evaluate your income for financial aid?
They now use prior-prior year tax returns for income on the FAFSA. For example, my youngest is a HS freshman right now, will graduate HS 2023 and in theory begin college fall of 2023. We will file the FAFSA Oct 2022 using our 2021 tax return info. So this year is the last one (for a while) where we don't have to worry about the AGI value, and other things. It's a little gap between DS4 and DS5; otherwise, we've filed FAFSA every year from 2008-19.

But the value of assets are reported as of the day you file the FAFSA.
birnhamwood
Posts: 180
Joined: Sat Jan 19, 2019 5:34 pm

Re: Do you need to worry about receiving college financial aid in 15 years if...

Post by birnhamwood »

Stay out of the financial aid office.

Sometimes that's a front for the student loan companies.

(Retired professor, large university).
Post Reply