Paying for [ivy league school]

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TomatoTomahto
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Re: Paying for [ivy league school]

Post by TomatoTomahto »

Watty wrote: Mon Jan 23, 2023 5:17 pm If you spend an extra quarter of a million dollars for this kid to go to an Ivy then some people would consider changing their will so that other siblings would get more from your estate someday to even things out some. That would in effect make the cost of the Ivy more of an early inheritance.
I recommend against this. If Bob got braces, does that change his inheritance? And what about Susie's travel hockey expenses?

It's different with loans for a house down payment, but that's another reason I'm not a fan of them.
I get the FI part but not the RE part of FIRE.
HereToLearn
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Re: Paying for IVY

Post by HereToLearn »

Pdxnative wrote: Mon Jan 23, 2023 4:48 pm
psteinx wrote: Mon Jan 23, 2023 4:28 pm
MMiroir wrote: Mon Jan 23, 2023 4:18 pm You are assuming that $100K represents all of their assets. They could have a couple million in tax sheltered accounts, and a million in home equity, and the only part that the colleges will consider as assets eligible for tuition payments would be the amount in taxable accounts.
This isn't my forte, but my understanding was that the fancy privates (like Ivys) had a more sophisticated financial aid application that was less subject to asset-location games.
You’re correct that they do have their own formulas (and sometimes their own forms) but I don’t think any of them consider retirement accounts, several of them don’t look at primary home equity, and I believe the rest cap the home equity they’ll count. Even the savings allowance (the first X amount of savings they don’t consider) is pretty high at a few of them. But you’re right that they are pretty sophisticated in identifying assets that can be used for college aside from those. For a couple in the 35% bracket and one child in school it’s probably a moot point though because income will likely drive them above the threshold anyway.
The info contained on this page may be out of date, but it illustrates the variety of approaches to considering home equity in determining the financial aid award. Some schools do not consider it at all, some cap home equity at a multiple of income, while others expect the full home equity to be used to pay for college.

https://thecollegesolution.com/will-you ... d-chances/

Also, I believe the OP said that his combined Fed & State tax rate was 35%.
chazas
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Re: Paying for IVY

Post by chazas »

CletusCaddy wrote: Mon Jan 23, 2023 1:56 pm
DoubleComma wrote: Mon Jan 23, 2023 1:27 pm Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.
Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.
100 percent agree. Having been the lucky beneficiary of an Ivy education and graduated with a degree in philosophy, I can say that it has opened doors for me throughout my working life - and it challenged me, on both an educational and social level. There is something to be said for many kids for being surrounded by other bright, motivated kids rather than being the biggest fish in a much smaller pond.

Congrats, OP, and you're a very good parent for knowing what is right for your kid.
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iCare
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Re: Paying for [ivy league school]

Post by iCare »

Watty wrote: Mon Jan 23, 2023 5:17 pm If you have other kids then also be sure to consider what you will do if one of them also wants to go to an expensive college. Even if there are just older siblings one of them might decide that they want to go to grad school.

Reading way in between the lines it sounds like you think that this particular Ivy League school is worth it for this kid but also consider if there are other siblings they may want to go to expensive colleges too. You might not be able to pay for it or you might not think it would be worth it for them. There are lots of very reasonable situations where it can make sense to not financially treat your kids equally but if you do that then do that very carefully. Families and siblings have become estranged over less.

If you spend an extra quarter of a million dollars for this kid to go to an Ivy then some people would consider changing their will so that other siblings would get more from your estate someday to even things out some. That would in effect make the cost of the Ivy more of an early inheritance.

Now would also be a good time to review your life and disability insurance just in case something happens at a bad time.
iCare wrote: Mon Jan 23, 2023 12:56 pm Any ideas to improve the investment plan for paying for his college?
If this is the your only kid or the last one to leave the house then you might consider downsizing your house if you were planning on doing that someday anyway. Depending on your situation that could free up home equity or reduce your mortgage payment which could make paying for college easier.
thank you, I am amazed at the points that you bring up - I had not even considered so many things.
Yes, I have 2 kids, both IVY. I'd go back and replan everything together.
One tuition bill is triggering me to revisit my entire financial plan!! :oops:
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iCare
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Re: Paying for IVY

Post by iCare »

HereToLearn wrote: Mon Jan 23, 2023 5:26 pm
Also, I believe the OP said that his combined Fed & State tax rate was 35%.
I apologize for any confusion caused by my previous mention of a 35% tax rate. I did not realize the impact it would have on this thread. In reality, last year we were at a 32% federal tax rate "accidentally" and an additional 9% state tax rate due to capital gains and my wife's 2nd job extra income last year. This year, we would be in the 28% federal tax bracket again.

I did mention that our some will get $15K/year aid (loan).

I apologize for any confusion caused by my simplification of the tax bracket. I understand that some posters may have been upset by my concerns about paying the $80K ($160K before taxes) bill. I did not understand their point.
Harmanic
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Re: Paying for [ivy league school]

Post by Harmanic »

iCare wrote: Mon Jan 23, 2023 12:56 pm Our son has been accepted into an Ivy League school. The expenses are estimated to be $80,000 per year, with an additional 4% inflation each year. We saved up $100,000 in his 529 plan over the last couple of years. I had invested his money in a conservative portfolio, which unfortunately lost around 6% last year. He may also qualify for a loan of $15,000 per year. To cover the remaining costs, we will need to pay approximately $3,750 per month from my after-tax paycheck for the next four years.

Would it be wise to invest his 529 plan money at this time or to continue making contributions to a conservative fund? Even conservative portfolios lost money last year. I am willing to take risks after my bad performance last year.

Any ideas to improve the investment plan for paying for his college?

Are there any ways to save on taxes? Paying after taxes is a significant burden.

I am puzzled about my old impression that NOBODY pays the full fee at IVY. Am I the only one paying to subsidize others?

disclaimers:
1) all $$ figures are rounded for the sake of simplification above.
2) The decision has been reached to go to ivy, so please avoid rants on value for money colleges.
Our kids contributed a lot to their education after their sophomore year by doing paid internships. For certain finance, CS, and engineering degrees, internships can easily pay $30 to $50 per hour. That goes a long way to paying for college. They would need to take a semester off to get a meaningful internships of 6-8 months. Moreover, they graduate with work experience, which give them a big leg up on other new graduates.
Jimsad
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Re: Paying for [ivy league school]

Post by Jimsad »

iCare wrote: Mon Jan 23, 2023 12:56 pm Our son has been accepted into an Ivy League school. The expenses are estimated to be $80,000 per year, with an additional 4% inflation each year. We saved up $100,000 in his 529 plan over the last couple of years. I had invested his money in a conservative portfolio, which unfortunately lost around 6% last year. He may also qualify for a loan of $15,000 per year. To cover the remaining costs, we will need to pay approximately $3,750 per month from my after-tax paycheck for the next four years.

Would it be wise to invest his 529 plan money at this time or to continue making contributions to a conservative fund? Even conservative portfolios lost money last year. I am willing to take risks after my bad performance last year.

Any ideas to improve the investment plan for paying for his college?

Are there any ways to save on taxes? Paying after taxes is a significant burden.

I am puzzled about my old impression that NOBODY pays the full fee at IVY. Am I the only one paying to subsidize others?

disclaimers:
1) all $$ figures are rounded for the sake of simplification above.
2) The decision has been reached to go to ivy, so please avoid rants on value for money colleges.
We are in a similar situation and pay similar amounts
We just wonder at times whether to take student loans as it may be forgiven with the present political situation
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iCare
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Re: Paying for [ivy league school]

Post by iCare »

There are several good suggestions on this thread that can be applied to a myriad of situations. For my situation, it seems matching 529b to my overall portfolio instead of making it conservative, makes sense to me.

As for my short-term issue of an underfunded 529 plan seems a simpler solution. I would replan for 8 years of education instead of 4 because my son wants to be premed and eventually go into medicine. Therefore, I should plan more on my paycheck than relying solely on my 529b. This seems to cover all 3 scenarios:

1) market recovers: No foul, I'd pay the remaining tuition from 529b

2) market tanks: I'd sell my regular portfolio holdings at loss to pay for college - keeping 529b. Then wait for 529b to recover and pay myself at breakeven.

3) kids find some money/loan/part-time jobs in the future: anyway i am underfunded, i'd burn 529b money (not at loss) first

I'd appreciate any additional comments on this updated plan.
For premeds internships hardly work.
Johny Fever
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Re: Paying for [ivy league school]

Post by Johny Fever »

Our youngest daughter went to Yale as an athlete. The Ivy conference pretty much all use a need based system for determining scholarships and she was deemed to need about 90% of her total cost of attendance. The crazy thing to me was that about 4 years earlier several Ivy league schools had recruited her brother to play football and he only was deemed to need about 40-50%. Of course there are a lot more football players than gymnasts I guess. Son went on to play in the college on a full ride to a Big Ten school so it all worked out well anyway..but I really question how some of these schools determine these needs. Our income was about the same for 8-10 years so that wasnt a factor...daughter did get a great education of course and was not able to get into med school at Yale but did very nicely at Northwestern so all good. Perhaps you just take out a loan and pay it off down the road a bit? What degree is your son seeking? Is the Ivy worth it? Best of luck to your son!
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iCare
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Re: Paying for [ivy league school]

Post by iCare »

Johny Fever wrote: Mon Jan 23, 2023 6:12 pm Our youngest daughter went to Yale as an athlete. The Ivy conference pretty much all use a need based system for determining scholarships and she was deemed to need about 90% of her total cost of attendance. The crazy thing to me was that about 4 years earlier several Ivy league schools had recruited her brother to play football and he only was deemed to need about 40-50%. Of course there are a lot more football players than gymnasts I guess. Son went on to play in the college on a full ride to a Big Ten school so it all worked out well anyway..but I really question how some of these schools determine these needs. Our income was about the same for 8-10 years so that wasnt a factor...daughter did get a great education of course and was not able to get into med school at Yale but did very nicely at Northwestern so all good. Perhaps you just take out a loan and pay it off down the road a bit? What degree is your son seeking? Is the Ivy worth it? Best of luck to your son!
Congrats on your Daughter's and Son's success. Our son got in based on all academics and ECs. There is definitely something funny about how financial need is established. In our case, we don't have enough disposable income to feel wealthy. We are currently paying 1 full tuition already and planning for 2nd one. Learnt the hard way for the 1st, so planning out 2nd time.

As some suggested, we should have a word with FA office as well.

Currently he is planning premed (biology major) and thinks Ivy name should help in future.
Pdxnative
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Re: Paying for [ivy league school]

Post by Pdxnative »

With the revision to the tax bracket info, I’d suggest playing with the NPCs to see if adjusting the variables would change your FA situation.

For example, the rental isn’t helping you. If your kids are at schools that don’t consider home equity, and you currently have a mortgage, you could sell the rental and put all that equity in your primary home. That could help with years 2-4 for this child.

Also, did I understand correctly that your other child is also at, or planning to attend, an Ivy? I’d make sure both FA offices know about the other child in college. If the second child is already at school you might find the FA for future years is revised.

Also, if there was a significant change in income it is well worth calling each FA office to let them know your current circumstance. They were looking at old tax forms to determine FA. If conditions have changed and you can document that, they often will make adjustments. It is definitely worth a try if your current circumstances would put you in range for FA but your prior ones wouldn’t.

Whether any of this matters depends on your income level.
theorist
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Re: Paying for [ivy league school]

Post by theorist »

Congrats!

My parents paid my full way at one of these schools (though I graduated fast and did some teaching along the way). They were upper middle class but by no means fabulously wealthy; my father didn’t want to share his financial info with the universities, and they managed to cash flow it.

I can’t speak for others, but for me it was a wonderful experience, and played a huge role in shaping my future. (It is hard to compare to counter factuals, but I suspect it will also have paid itself back many times over by the end of my life — though there is far more to life, and education, than money…)
Pdxnative
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Re: Paying for [ivy league school]

Post by Pdxnative »

Johny Fever wrote: Mon Jan 23, 2023 6:12 pm Our youngest daughter went to Yale as an athlete. The Ivy conference pretty much all use a need based system for determining scholarships and she was deemed to need about 90% of her total cost of attendance. The crazy thing to me was that about 4 years earlier several Ivy league schools had recruited her brother to play football and he only was deemed to need about 40-50%. Of course there are a lot more football players than gymnasts I guess. Son went on to play in the college on a full ride to a Big Ten school so it all worked out well anyway..but I really question how some of these schools determine these needs. Our income was about the same for 8-10 years so that wasnt a factor...daughter did get a great education of course and was not able to get into med school at Yale but did very nicely at Northwestern so all good. Perhaps you just take out a loan and pay it off down the road a bit? What degree is your son seeking? Is the Ivy worth it? Best of luck to your son!
This is actually somewhat common. HYP aid is usually quite a bit more generous than other Ivy schools. Tens of thousands of dollars sometimes. In the old days the schools used to coordinate FA offers but they can’t do that any more. What they can do for athletes and those admitted to more than one Ivy, though, is match the best offer. I’ve seen that happen with several athletes I know who preferred a non-HYP; if they were recruited by Princeton, the other Ivies gave them a “Princeton” FA offer during the pre-read. Still hard for any Ivy to match what other D1s can do for head count sports though. Not to mention B1G stadium atmosphere. Fun!
HereToLearn
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Re: Paying for [ivy league school]

Post by HereToLearn »

Johny Fever wrote: Mon Jan 23, 2023 6:12 pm Our youngest daughter went to Yale as an athlete. The Ivy conference pretty much all use a need based system for determining scholarships and she was deemed to need about 90% of her total cost of attendance. The crazy thing to me was that about 4 years earlier several Ivy league schools had recruited her brother to play football and he only was deemed to need about 40-50%. Of course there are a lot more football players than gymnasts I guess. Son went on to play in the college on a full ride to a Big Ten school so it all worked out well anyway..but I really question how some of these schools determine these needs. Our income was about the same for 8-10 years so that wasnt a factor...daughter did get a great education of course and was not able to get into med school at Yale but did very nicely at Northwestern so all good. Perhaps you just take out a loan and pay it off down the road a bit? What degree is your son seeking? Is the Ivy worth it? Best of luck to your son!
Yale and other Ivy financial aid policies have become increasingly generous in recent years. The four year difference between your two children's application seasons may account for the variation in awards, in addition to how each school considers home equity in their financial aid calculations. A member of the woman's basketball team at Yale would receive the exact same FA award as a member of the football team, as long as the family's financials were identical.

There are colleges with a set # of athletic scholarships and coaches allocate those scholarships as they see fit when recruiting their teams. There are no athletic scholarships at Yale--only need-based financial aid.
LeftCoastIV
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Re: Paying for IVY

Post by LeftCoastIV »

MMiroir wrote: Mon Jan 23, 2023 4:26 pm
SmileyFace wrote: Mon Jan 23, 2023 4:17 pm
iCare wrote: Mon Jan 23, 2023 4:11 pm
MMiroir wrote: Mon Jan 23, 2023 4:06 pm
The threshold for the 35% income bracket is $216,000. Based on Harvard's net price calculator, a family with income of $216,000 and $100,000 in assets would get more than $30,000 in need based aid. Need based aid under those circumstances goes away after $280,000 of income.

https://college.harvard.edu/financial-a ... calculator
What is "need-based aid"? Our elder son was offered financial aid but my understanding is that it was a loan with 6% interest rate at that time?
Need based aid would be if you filled out FAFSA and your income was low enough that you are said to "need" aid.
The loan could be either need based (and therefore subsidized) or non-need based (a nonsubsidized loan is generally offered to everyone). Non subsidized loans start sticking you with interest the day you take them out - subsidized loan are interest free during student years (interest accumulation starts after graduation - so a slightly better deal).

And yeah - the whole "no one pays full price" statement is a big myth.
It is not just income that is considered but also assets. Student controlled accounts like 529's are "taxed" at 20 percent, while parent owned assets (outside of home equity and retirement accounts) are "taxed" at a 5.64 percent rate.

The following websites walks through the formula.

https://www.road2college.com/how-fafsa-calculates-efc/

Also, the Ivies have their own internal formulas for calculating aid which can be more or less generous than FAFSA depending on the situation.
Are trust assets, and income distributed to a beneficiary (a parent of a student) via trust, included in EFC and CSS?

In the case of distributions from the trust, these do show up on the beneficiaries tax return.
SpaghettiLegs
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Re: Paying for [ivy league school]

Post by SpaghettiLegs »

Our first born just graduated from a UC school as out of state student. COA slightly less than Ivies. First year I spent a lot of time on the FAFSA and just got offered loans so we paid full freight the whole way and never bothered with the FAFSA again. We have two kids and a late start on 529 due to long training pipeline for my career. Anyway I decided to pay out of pocket for kid #1 and continued to contribute the max deductible amount to both kids’ 529s (and still do) with plans to transfer kid #1 529 to kid #2 when the time comes.

If you don’t have another child in the pipeline then in your place I’d want to defer using the 529 as long as possible for some tax free growth. Writing a check for $6k every month definitely induced some angst but I actually, on occasion, got a little thrill with the financial juggling and making all the pieces fit.

Congrats to your child for the accomplishment!
Topic Author
iCare
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Re: Paying for [ivy league school]

Post by iCare »

SpaghettiLegs wrote: Mon Jan 23, 2023 10:15 pm Our first born just graduated from a UC school as out of state student. COA slightly less than Ivies. First year I spent a lot of time on the FAFSA and just got offered loans so we paid full freight the whole way and never bothered with the FAFSA again. We have two kids and a late start on 529 due to long training pipeline for my career. Anyway I decided to pay out of pocket for kid #1 and continued to contribute the max deductible amount to both kids’ 529s (and still do) with plans to transfer kid #1 529 to kid #2 when the time comes.

If you don’t have another child in the pipeline then in your place I’d want to defer using the 529 as long as possible for some tax free growth. Writing a check for $6k every month definitely induced some angst but I actually, on occasion, got a little thrill with the financial juggling and making all the pieces fit.

Congrats to your child for the accomplishment!
what was your portfolio for #1 529 and #2 529 ? When is 2nd kid going to college? What was withdrawl strategy for kid#1 expenses?
Topic Author
iCare
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Re: Paying for [ivy league school]

Post by iCare »

Pdxnative wrote: Mon Jan 23, 2023 6:30 pm With the revision to the tax bracket info, I’d suggest playing with the NPCs to see if adjusting the variables would change your FA situation.

For example, the rental isn’t helping you. If your kids are at schools that don’t consider home equity, and you currently have a mortgage, you could sell the rental and put all that equity in your primary home. That could help with years 2-4 for this child.

Also, did I understand correctly that your other child is also at, or planning to attend, an Ivy? I’d make sure both FA offices know about the other child in college. If the second child is already at school you might find the FA for future years is revised.

Also, if there was a significant change in income it is well worth calling each FA office to let them know your current circumstance. They were looking at old tax forms to determine FA. If conditions have changed and you can document that, they often will make adjustments. It is definitely worth a try if your current circumstances would put you in range for FA but your prior ones wouldn’t.

Whether any of this matters depends on your income level.
We are going to be paying for 2 kids IVy bills together for a couple of years. For the education of the elder one (kid is in 6th year of education, with some loans - 80% paid by us), we did not pay much attention, and it broke our bank. So have to plan for 2nd one more carefully. Back to basics.

How to approach FA office? What information to prepare before meeting them?

Secondly, I hear others chat about moving assets to "trust". How does that work? How can I hide assets in trust for FA consideration? Will like to learn more about it.
CletusCaddy
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Re: Paying for [ivy league school]

Post by CletusCaddy »

iCare wrote: Mon Jan 23, 2023 11:16 pm
Pdxnative wrote: Mon Jan 23, 2023 6:30 pm With the revision to the tax bracket info, I’d suggest playing with the NPCs to see if adjusting the variables would change your FA situation.

For example, the rental isn’t helping you. If your kids are at schools that don’t consider home equity, and you currently have a mortgage, you could sell the rental and put all that equity in your primary home. That could help with years 2-4 for this child.

Also, did I understand correctly that your other child is also at, or planning to attend, an Ivy? I’d make sure both FA offices know about the other child in college. If the second child is already at school you might find the FA for future years is revised.

Also, if there was a significant change in income it is well worth calling each FA office to let them know your current circumstance. They were looking at old tax forms to determine FA. If conditions have changed and you can document that, they often will make adjustments. It is definitely worth a try if your current circumstances would put you in range for FA but your prior ones wouldn’t.

Whether any of this matters depends on your income level.
We are going to be paying for 2 kids IVy bills together for a couple of years. For the education of the elder one (kid is in 6th year of education, with some loans - 80% paid by us), we did not pay much attention, and it broke our bank. So have to plan for 2nd one more carefully. Back to basics.

How to approach FA office? What information to prepare before meeting them?

Secondly, I hear others chat about moving assets to "trust". How does that work? How can I hide assets in trust for FA consideration? Will like to learn more about it.
No for a trust but yes for whole life insurance
cfaquant
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Re: Paying for [ivy league school]

Post by cfaquant »

Perhaps split the difference - you pay half, your kid borrows and pays the other. This way he has skin in the game, you get to keep building for retirement
helloeveryone
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Re: Paying for [ivy league school]

Post by helloeveryone »

cfaquant wrote: Mon Jan 23, 2023 11:30 pm Perhaps split the difference - you pay half, your kid borrows and pays the other. This way he has skin in the game, you get to keep building for retirement
Interestingly this response and another were the only ones that mentioned kid taking out loans, or working.

Do students who attend Ivy League schools not have time to work a part time job to offset costs for parents where it’s a financial burden to cover the full costs? And is Ivy League tuition so expensive that parents who send their kids to such schools don’t want to overburden their children with loans because they chose such an expensive school?
DonIce
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Re: Paying for [ivy league school]

Post by DonIce »

If you own any I bonds or EE bonds, I believe these have a favorable tax treatment when used for education expenses.
Topic Author
iCare
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Re: Paying for [ivy league school]

Post by iCare »

DonIce wrote: Mon Jan 23, 2023 11:55 pm If you own any I bonds or EE bonds, I believe these have a favorable tax treatment when used for education expenses.
Not completely true, use of Ibonds/EE comes with lots of restrictions including a very low-Income cap to be able to use funds for education - tax free.
Eutychus2022
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Re: Paying for [ivy league school]

Post by Eutychus2022 »

Here are a few thoughts based on my experience as an Ivy graduate, an Ivy parent, and being friends with several Ivy employees.

Background items:

1) Ivy admissions are need-blind. Ivy financial aid is need-based only. There are no merit-based or talent-based (e.g., athletics) scholarships. Factors like athletics can make a difference for admission, but not financial aid. An Ivy coach told me he could get almost any reasonably qualified student admitted. Professor friends also told me they could tell who some of the athletes were simply by their (subpar) academic performance. But, athletics, musical ability, etc., play no role in financial aid.

2) The Ivies use the standard forms (e.g., FAFSA), but they also use their own proprietary formulas. Those proprietary formulas are usually more generous than the FAFSA.

3) They consider the loans they offer to be financial aid, even though the only real benefit is a possible subsidy. Princeton (and maybe Harvard and/or Yale) has replaced loans with grants. I don't think the others have done so.

4) This is the big one: Some people have enough income/assets that they will pay full tuition; and there's nothing that can be done about it, especially if it's because of income.

So, in terms of recommendations:

1) Based on the info you've shared with us, your income/assets are probably too high to qualify for need-based aid according to their formulas. If your income is too high, no amount of shifting assets will get you any financial aid. So, I'd start by trying to find out if your income is too high. You could try using one or more online calculators and use your income only (ignore your assets). If they say you can afford to spend $80K/year, the chances of you getting any aid are pretty slim. If that's the case, I wouldn't do any asset movements that would jeopardize your long-term financial situation in a likely useless attempt to get financial aid. Even if you can get some, it will likely be very small and might not be worth the long-term cost.

2) In any case, talking to the FA office can't hurt. If your child was admitted to an equivalent school (e.g., another Ivy or Stanford) and their package appears better, you could ask the FA office to consider revising their offer. They'll probably tell you that they won't match the other offer, but they will very likely consider it (which is a word game to avoid saying they match other offers). If the other school is Princeton, they probably won't match the no-loan aspect. But, it can't hurt to ask. In our experience, each of the 2 schools we were dealing with knew exactly how the other school calculated their aid and they showed us that they were equivalent even though they didn't look like it on the surface. They clearly had this info memorized, which means they had taken it into account when making their aid offers. I'm not saying they were colluding, but they clearly knew their competition.

3) If your financial situation has changed negatively since you filled out the application, or if you made a mistake on the application, make sure you tell them.

4) If something about your financial situation is unusual and they either didn't have a way for you to tell them or they might have overlooked it, make sure you inform them. We had an unusual situation that we were able to put on the custom part of the application (i.e., not FAFSA), and they definitely considered it and it definitely helped us.

5) You could see if you can find outside scholarships. If you were already getting financial aid, outside scholarships would probably be useless since the school usually reduces their need-based award dollar-for-dollar based on the outside scholarship. But, since you're getting no aid (other than a loan), this avenue could be worth exploring. Your kid's guidance counselor can probably point you in the right direction for ideas like essay contests, community scholarships, civic or ethnic group scholarships, etc.

6) Even if you get no aid this year, apply again next year. Princeton recently changed its formula to be more generous. You never know if your child's school will do the same.

Final thoughts:

1) If your child applies themself, they will likely get a top-notch education. If they coast, they're wasting your money.

2) An Ivy diploma does open doors, and it often results in a higher starting salary.
CletusCaddy
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Re: Paying for [ivy league school]

Post by CletusCaddy »

iCare wrote: Mon Jan 23, 2023 11:59 pm
DonIce wrote: Mon Jan 23, 2023 11:55 pm If you own any I bonds or EE bonds, I believe these have a favorable tax treatment when used for education expenses.
Not completely true, use of Ibonds/EE comes with lots of restrictions including a very low-Income cap to be able to use funds for education - tax free.
I would not call $159k MAGI “very low income”. If both parents work and are maxing out two 401ks, that could be well over $200k gross income
Valuethinker
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Re: Paying for [ivy league school]

Post by Valuethinker »

TomatoTomahto wrote: Mon Jan 23, 2023 5:23 pm
Watty wrote: Mon Jan 23, 2023 5:17 pm If you spend an extra quarter of a million dollars for this kid to go to an Ivy then some people would consider changing their will so that other siblings would get more from your estate someday to even things out some. That would in effect make the cost of the Ivy more of an early inheritance.
I recommend against this. If Bob got braces, does that change his inheritance? And what about Susie's travel hockey expenses?

It's different with loans for a house down payment, but that's another reason I'm not a fan of them.
Even much later in life, these sorts of arrangements can cause trouble between siblings which lasts decades after the death of the parent.

In a case I know of, an accidental death meant there was no opportunity to sort it out.

Unless there is a special needs case eg an adult w disabilities - in which case some kind of trust arrangement may be necessary - an equal division between siblings is usually the simplest, and the best (and presumably the hardest to challenge in court, if it gets to that).
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galawdawg
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Re: Paying for [ivy league school]

Post by galawdawg »

Young adults can borrow to finance their educations. Older adults cannot borrow to finance their retirement.

Since your mind is absolutely fixed on both of your students attending Ivy League schools, we can only assume that they both have the aptitude, attitude and work ethic to maximize their financial opportunities when they have graduated. As mentioned, successful graduates of those schools can become top earners in many lucrative fields. If that is the case, consider sharing the expense. You contribute what you are able without altering or sacrificing your financial security and retirement needs, your students take care of the rest. That keeps you on track for your goals and also gives them some skin in the game. For many students, investing in their own education will help motivate them to make the most of it. It also may encourage them to choose a career that maximizes the return on their investment.

But, that only works if your students intend to actually put that degree to work in a financially lucrative job and don't plan on becoming a public interest lawyer, social worker, schoolteacher, artist, restaurant manager or settling into some other low-paying career. There is absolutely nothing wrong with a career in those fields, but choosing a low-paying job after spending the money on an Ivy League education is financially foolish.

As far as investing the funds you have earmarked for their education? I'd recommend a treasury bill ladder in rungs that match when each payment is due. So $100k over the next four (4) years starting this August assuming tuition is due annually is $25k in a t-bill maturing in July 2023, $25k in a t-bill maturing July 2024, $25k in a t-bill maturing July 2025 and $25k in a t-bill maturing July 2025. Simple. You want something safe that provides a good return. That would fit the bill.... :wink: :beer
MMiroir
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Re: Paying for [ivy league school]

Post by MMiroir »

Eutychus2022 wrote: Tue Jan 24, 2023 1:01 am Here are a few thoughts based on my experience as an Ivy graduate, an Ivy parent, and being friends with several Ivy employees.
Very good post. Some comments:
Eutychus2022 wrote: Tue Jan 24, 2023 1:01 am 2) The Ivies use the standard forms (e.g., FAFSA), but they also use their own proprietary formulas. Those proprietary formulas are usually more generous than the FAFSA.
The proprietary formulas are based on the CSS. In our case, for one of our kids the Ivy using the CSS was about $17K a year more than several T20's that just used the FAFSA. Fortunately, the Ivy matched after a discussion with the FA office, submitting a two page letter summarizing the various need based and merit based financial offers and supplying FA awards from the other schools. There was great jubilation in our house when this happened.
Eutychus2022 wrote: Tue Jan 24, 2023 1:01 am 1) Based on the info you've shared with us, your income/assets are probably too high to qualify for need-based aid according to their formulas. If your income is too high, no amount of shifting assets will get you any financial aid. So, I'd start by trying to find out if your income is too high. You could try using one or more online calculators and use your income only (ignore your assets). If they say you can afford to spend $80K/year, the chances of you getting any aid are pretty slim. If that's the case, I wouldn't do any asset movements that would jeopardize your long-term financial situation in a likely useless attempt to get financial aid. Even if you can get some, it will likely be very small and might not be worth the long-term cost.
Very good advice. When our oldest was initially accepted to an Ivy, she received no financial aid. However, by playing around with the online calculator, we realized that the reason there was no need based aid was too much cash in taxable accounts and 529. Two years of near full tuition drained the 529 accounts, and by the time she was a senior and a sibling was in school, her tuition bill was in the low $20K range.
Eutychus2022 wrote: Tue Jan 24, 2023 1:01 am 2) In any case, talking to the FA office can't hurt. If your child was admitted to an equivalent school (e.g., another Ivy or Stanford) and their package appears better, you could ask the FA office to consider revising their offer. They'll probably tell you that they won't match the other offer, but they will very likely consider it (which is a word game to avoid saying they match other offers). If the other school is Princeton, they probably won't match the no-loan aspect. But, it can't hurt to ask. In our experience, each of the 2 schools we were dealing with knew exactly how the other school calculated their aid and they showed us that they were equivalent even though they didn't look like it on the surface. They clearly had this info memorized, which means they had taken it into account when making their aid offers. I'm not saying they were colluding, but they clearly knew their competition.
Our youngest was accepted to several Ivies and comparable level schools, and the various financial aid offers differed to the point that there was a $15k variance in net tuition. Princeton was the lowest by a couple of grand, so we supplied the Princeton FA offer to the other schools that were of interest and they all matched right away.
Eutychus2022 wrote: Tue Jan 24, 2023 1:01 am6) Even if you get no aid this year, apply again next year. Princeton recently changed its formula to be more generous. You never know if your child's school will do the same.
This happened to us when one the schools our kids were enrolled in changed their financial aid formula after eliminating consideration of home equity. It reduced tuition by about $5K a year.
stoptothink
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Re: Paying for [ivy league school]

Post by stoptothink »

helloeveryone wrote: Mon Jan 23, 2023 11:41 pm
cfaquant wrote: Mon Jan 23, 2023 11:30 pm Perhaps split the difference - you pay half, your kid borrows and pays the other. This way he has skin in the game, you get to keep building for retirement
Interestingly this response and another were the only ones that mentioned kid taking out loans, or working.

Do students who attend Ivy League schools not have time to work a part time job to offset costs for parents where it’s a financial burden to cover the full costs? And is Ivy League tuition so expensive that parents who send their kids to such schools don’t want to overburden their children with loans because they chose such an expensive school?
I can share my sister's experience, which was from 15-18yrs ago. She did undergrad at Brown, she played water polo and that clearly played a significant role in her admission. She received full need-based aid, but worked various part-time jobs during her 4yrs there to cover other expenses, she also took out small loans for study abroad. She graduated cum laude (and got into Oxford for grad school) while being an athlete and working part-time, granted, if I told you her major, you probably would not even believe it was a thing.

I also have a childhood friend who went to Brown to play soccer. I could not tell you much about his experience, but for certain he received full need-based aid.

Obviously, both my family and the family of my friend had nowhere near the financial resources of OP and the costs involved are certainly much different than they were 15-20yrs ago.
MMiroir
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Re: Paying for [ivy league school]

Post by MMiroir »

iCare wrote: Mon Jan 23, 2023 11:16 pm
Pdxnative wrote: Mon Jan 23, 2023 6:30 pm With the revision to the tax bracket info, I’d suggest playing with the NPCs to see if adjusting the variables would change your FA situation.

For example, the rental isn’t helping you. If your kids are at schools that don’t consider home equity, and you currently have a mortgage, you could sell the rental and put all that equity in your primary home. That could help with years 2-4 for this child.

Also, did I understand correctly that your other child is also at, or planning to attend, an Ivy? I’d make sure both FA offices know about the other child in college. If the second child is already at school you might find the FA for future years is revised.

Also, if there was a significant change in income it is well worth calling each FA office to let them know your current circumstance. They were looking at old tax forms to determine FA. If conditions have changed and you can document that, they often will make adjustments. It is definitely worth a try if your current circumstances would put you in range for FA but your prior ones wouldn’t.

Whether any of this matters depends on your income level.
We are going to be paying for 2 kids IVy bills together for a couple of years. For the education of the elder one (kid is in 6th year of education, with some loans - 80% paid by us), we did not pay much attention, and it broke our bank. So have to plan for 2nd one more carefully. Back to basics.

How to approach FA office? What information to prepare before meeting them?

Secondly, I hear others chat about moving assets to "trust". How does that work? How can I hide assets in trust for FA consideration? Will like to learn more about it.
I would not go down the trust path or otherwise try to hide assets.

https://finaid.org/savings/trustfunds/

From the website:

Most trust funds are not effective means of sheltering money from the financial aid process and often backfire on the family. Almost all trust funds are counted in the financial aid process, often as an asset of the child. This leads to a high impact on eligibility for need-based financial aid. If the trust fund document restricted the beneficiary’s access to the principal, the trust fund will affect aid eligibility every year. The only situations in which a trust fund would not be counted during the financial aid process are as follows: An involuntary trust established by a court or where the use of the trust has been restricted by court order, such as a trust fund to pay future medical expenses of an accident victim.
runninginvestor
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Re: Paying for [ivy league school]

Post by runninginvestor »

If pre-med and med school are now on the table, I would highly recommend glancing at White Coat Investor's website to see if you can glean any more information. There might be extra information on any kind of med school specific loans and things like that that your child could get.
cmr79
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Re: Paying for [ivy league school]

Post by cmr79 »

As an Ivy grad who was a pre-med biology major and subsequently attended medical school, I worked part time (10-15 hrs/week) during the academic years after my freshmen year and worked full time over the summers in a lab. I don't think this is unusual at all and dovetails nicely with research-oriented medical school CV building. Filling out the FAFSA, even if no actual aid is expected to be awarded, may be helpful in increasing opportunities for jobs like this, as many of them are work-study which requires assignment of an amount.

I would recommend not expecting a freshmen to work if possible; the extra time commitment will be problematic if the student has any difficulty adjusting to the college coursework, lack of structure, or social aspects. For pre-med, a lot of the core science classes are front loaded, and it can be difficult to recover from even one semester of below-average grades. The risk just isn't worth $100-150/week.

Regarding skin in the game with student loans, for someone attending medical school the undergraduate loans will likely amount to a drop in the bucket. Student loans are kind of an abstract idea, I think, to most college students anyway and seem unlikely to provide any additional motivation to an unmotivated student (and wouldn't be necessary in the first place for an already internally motivated student). Nothing wrong with expecting one's child to take out loans for part of college tuition even if one can easily pay for all of it, of course. If I'm wrong and there is research to suggest otherwise, though, I would personally find it actionable!
Ependytis
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Re: Paying for [ivy league school]

Post by Ependytis »

First, congratulations on your kid getting into an Ivy League school. You must be very proud. As the old saying goes" You can finance tuition, but you can't finance retirement."Therefore, I wouldn't sacrifice retirement at age 50 to pay for an Ivy League tuition. The fact is you less years to accumulate savings then someone in their 40's.

If your kid could get into an Ivy League, why can't he get into another Ivy League with a more generous scholarship package? If they can, this can save you a lot of money.

My parents made sure I had skin in the game. Therefore, when I graduated, I had to pay some of the money back to them. Even at your kid's age, I would have thought twice about going into debt for a college education to the tune of $400,000 (4 years times $80,000 for tuition plus $20,000 for room and board).

What would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
stoptothink
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Re: Paying for [ivy league school]

Post by stoptothink »

Ependytis wrote: Tue Jan 24, 2023 12:56 pmWhat would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
I believe it was mentioned earlier that OP's child is interested in medicine. If they do indeed go into medicine, this option is even more enticing.
Pdxnative
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Re: Paying for [ivy league school]

Post by Pdxnative »

Others have provided good info above. On the question of how to approach the FA office and what info to have:

First, can you make a compelling case that you should be receiving need-based aid based on current circumstances?

I’d run the NPC with current income to see if that’s the case. You used 2 year old tax info for the FA app and you indicate it wasn’t representative of current conditions, so see if updating that info changes the result. If not, then your income is likely too high for aid.

If the NPC gives you reason to think you are in the range for FA, have the relevant documentation ready to discuss these changes with them. That could be your 2022 taxes if you’re filing soon. Have an explanation of the one time cap gain you mentioned. Then call and tell them your conditions have changed and you’re hoping they’ll reevaluate your need and reconsider the award. Humans in the FA office do have some latitude to exercise judgment in cases where computer algorithms might have missed something.

I had assumed when you mentioned 2 in Ivies that both would be undergrads. Sounds like your oldest might be in grad school? I’m not sure that’s going to help you as much as two undergrads would, as they are different FA systems and parental support for grad students isn’t assumed. You can mention it as a factor in your finances but I don’t think it necessarily triggers the same sort of automatic adjustment to aid as two undergrad would.

I wouldn’t get into the trust and insurance world for FA reasons. I don’t think that’s generally thought to work. But in any case, you’ll have more than a year from now to explore asset location strategies before FA applications for year 2 are submitted. As mentioned, whether any of that would move the needle depends on your income.
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Re: Paying for IVY

Post by Jack FFR1846 »

Johnsson wrote: Mon Jan 23, 2023 1:51 pm IMO, for a truly motivated student the benefit of an IVY is marginal. A student can gain an equivalent education with often greater opportunity at a good state school. AND often times state schools will give incentives to students who have excelled to get them to their campus... at a MUCH lower cost.

OTOH, for a not so motivated student, the IVY may be best... Having the IVY on the resume can give a step up to what could be an otherwise mediocre student.
I would completely disagree with this and use my own son as an example. He started college at a mediocre engineering school known more for architecture than anything else. He found that serious students were easy to find because they were maybe 1% of the student population. He wanted to be in a student body committed to achievement. He transferred to an excellent engineering college his second year and found the students to be far more committed to their studies and nobody starting the weekend of pot and drinking on Wednesday afternoon, like the previous school. I would expect IVY students to also be more committed, bringing up the level of everyone.

Congrats on admission to an excellent school. Don't feel bashful to go into the financial aid office and try to get more aid. We were in the same boat and one of the colleges my son was accepted to but didn't accept was Boston University who offered him $13,000 in grants. That on top of the Stafford loans was more than nothing. So private colleges, especially IVYs do have the money to give. You can go see them every year to try for more aid. I personally didn't qualify for aid when I went back to school myself, but I was able to get an on campus job driving a student transport van.
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er999
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Re: Paying for [ivy league school]

Post by er999 »

stoptothink wrote: Tue Jan 24, 2023 1:18 pm
Ependytis wrote: Tue Jan 24, 2023 12:56 pmWhat would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
I believe it was mentioned earlier that OP's child is interested in medicine. If they do indeed go into medicine, this option is even more enticing.
You’re probably right if their child ends up going into medicine as having low/no debt (so money left over for med school) is the best thing for a doctor. However many people are premed before starting college or in their 1st year but then change their minds. Also going to an ivy might make it easier to get into med school (although that may be controversial)

Since the poster is or soon will be wealthy with an income > $460k (assuming they don’t get disabled or retire extremely early), is on bogleheads with likely conservative withdrawal rates in retirement and reasonable investments, they will likely die with millions. It doesn’t seem unreasonable to spend that money on luxury opportunities for their child in early adulthood assuming they can otherwise afford it.
cmr79
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Re: Paying for [ivy league school]

Post by cmr79 »

Since OP's children are already attending/planning to attend their Ivy League schools, discussions about whether or not expensive private schools in general are worth it vs less expensive schools or less competitive schools with a full scholarship are off-topic and unhelpful.
stoptothink
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Re: Paying for [ivy league school]

Post by stoptothink »

er999 wrote: Tue Jan 24, 2023 1:54 pm
stoptothink wrote: Tue Jan 24, 2023 1:18 pm
Ependytis wrote: Tue Jan 24, 2023 12:56 pmWhat would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
I believe it was mentioned earlier that OP's child is interested in medicine. If they do indeed go into medicine, this option is even more enticing.
You’re probably right if their child ends up going into medicine as having low/no debt (so money left over for med school) is the best thing for a doctor. However many people are premed before starting college or in their 1st year but then change their minds. Also going to an ivy might make it easier to get into med school (although that may be controversial)

Since the poster is or soon will be wealthy with an income > $460k (assuming they don’t get disabled or retire extremely early), is on bogleheads with likely conservative withdrawal rates in retirement and reasonable investments, they will likely die with millions. It doesn’t seem unreasonable to spend that money on luxury opportunities for their child in early adulthood assuming they can otherwise afford it.
Certainly, but clearly the cost is a concern, hence the thread.
thedaybeforetoday
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Re: Paying for [ivy league school]

Post by thedaybeforetoday »

OP:
Not sure which Ivy your son was accepted into, but congrats!

If you would be willing to name the Ivy, your taxable and 529 savings numbers, along with home equity and household income, many here could make more specific recommendations on how to reduce that Ivy league net cost.

Income tends to be hit the hardest, so much so, that some Ivy's (I believe Princeton was mentioned, but also Harvard and a few others) have a household income number that will allow your son to attend at no cost or at a percentage of income (I believe Harvard charges 10% of household income as long as income stayed below a threshold). Princeton's is the most generous ( https://admission.princeton.edu/how-pri ... gram-works ).

If there is anyway to reduce household income...

Each Ivy does this differently, which is why the name of the school is important, but I certainly understand if you weren't comfortable "naming names". You could just google something like "Name of school full ride based on household income". Most will have a chart like Princeton's in the link above.

Congrats again!
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
LeftCoastIV
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Re: Paying for [ivy league school]

Post by LeftCoastIV »

thedaybeforetoday wrote: Tue Jan 24, 2023 5:32 pm OP:
Not sure which Ivy your son was accepted into, but congrats!

If you would be willing to name the Ivy, your taxable and 529 savings numbers, along with home equity and household income, many here could make more specific recommendations on how to reduce that Ivy league net cost.

Income tends to be hit the hardest, so much so, that some Ivy's (I believe Princeton was mentioned, but also Harvard and a few others) have a household income number that will allow your son to attend at no cost or at a percentage of income (I believe Harvard charges 10% of household income as long as income stayed below a threshold). Princeton's is the most generous ( https://admission.princeton.edu/how-pri ... gram-works ).

If there is anyway to reduce household income...

Each Ivy does this differently, which is why the name of the school is important, but I certainly understand if you weren't comfortable "naming names". You could just google something like "Name of school full ride based on household income". Most will have a chart like Princeton's in the link above.

Congrats again!
My understanding is that FAFSA has a two-year lookback, so any income changes would not impact Freshman year costs at this point. Could be useful for later college years, although I am by no means a FAFSA expert.
WestCoastPhan
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Re: Paying for [ivy league school]

Post by WestCoastPhan »

iCare wrote: Mon Jan 23, 2023 12:56 pm Our son has been accepted into an Ivy League school. The expenses are estimated to be $80,000 per year, with an additional 4% inflation each year. We saved up $100,000 in his 529 plan over the last couple of years. I had invested his money in a conservative portfolio, which unfortunately lost around 6% last year. He may also qualify for a loan of $15,000 per year. To cover the remaining costs, we will need to pay approximately $3,750 per month from my after-tax paycheck for the next four years.

Would it be wise to invest his 529 plan money at this time or to continue making contributions to a conservative fund? Even conservative portfolios lost money last year. I am willing to take risks after my bad performance last year.

Any ideas to improve the investment plan for paying for his college?

Are there any ways to save on taxes? Paying after taxes is a significant burden.

I am puzzled about my old impression that NOBODY pays the full fee at IVY. Am I the only one paying to subsidize others?

disclaimers:
1) all $$ figures are rounded for the sake of simplification above.
2) The decision has been reached to go to ivy, so please avoid rants on value for money colleges.
We had about $150k in my oldest's 529. Our strategy has been to pay out of pocket for the first two years, and leave the 529 for the last two. Yes, risky, but not the end of the world for us if the market didn't do well. In 2022, with the way the market performed, our strategy looked . . . unwise. About 5 months ago I switched the 529 from half target-date, half passive equity index fund, to 100% equity index. Doubling down on stupid? Maybe. YMMV.

Rest assured, you are not the only one paying to subsidize others.
rule of law guy
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Re: Paying for [ivy league school]

Post by rule of law guy »

kudos to your son. now tell him he needs to get an on-campus job. and suggest to him that this has financial and educational benefit
snowday2022
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Re: Paying for [ivy league school]

Post by snowday2022 »

WestCoastPhan wrote: Tue Jan 24, 2023 8:49 pm
iCare wrote: Mon Jan 23, 2023 12:56 pm Our son has been accepted into an Ivy League school. The expenses are estimated to be $80,000 per year, with an additional 4% inflation each year. We saved up $100,000 in his 529 plan over the last couple of years. I had invested his money in a conservative portfolio, which unfortunately lost around 6% last year. He may also qualify for a loan of $15,000 per year. To cover the remaining costs, we will need to pay approximately $3,750 per month from my after-tax paycheck for the next four years.

Would it be wise to invest his 529 plan money at this time or to continue making contributions to a conservative fund? Even conservative portfolios lost money last year. I am willing to take risks after my bad performance last year.

Any ideas to improve the investment plan for paying for his college?

Are there any ways to save on taxes? Paying after taxes is a significant burden.

I am puzzled about my old impression that NOBODY pays the full fee at IVY. Am I the only one paying to subsidize others?

disclaimers:
1) all $$ figures are rounded for the sake of simplification above.
2) The decision has been reached to go to ivy, so please avoid rants on value for money colleges.
We had about $150k in my oldest's 529. Our strategy has been to pay out of pocket for the first two years, and leave the 529 for the last two. Yes, risky, but not the end of the world for us if the market didn't do well. In 2022, with the way the market performed, our strategy looked . . . unwise. About 5 months ago I switched the 529 from half target-date, half passive equity index fund, to 100% equity index. Doubling down on stupid? Maybe. YMMV.

Rest assured, you are not the only one paying to subsidize others.
Reasonable because it’s your oldest. If market does badly you can transfer money from younger kids 529s to cover, or cash flow. If market does well, you can use all and then transfer excess to your younger. I think if you have the means, this is a great strategy. I too could cash flow if necessary, so would have left and plan to leave it in all equities for the duration. When the time comes let’s see if I can stick to that.
stoptothink
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Re: Paying for [ivy league school]

Post by stoptothink »

rule of law guy wrote: Tue Jan 24, 2023 10:00 pm kudos to your son. now tell him he needs to get an on-campus job. and suggest to him that this has financial and educational benefit
Wife and I are adamant that our kids will work during school, even though we are likely to cover the entire cost, but is an on-campus job even going to put a dent in the $80k/yr cost?
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Vulcan
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Re: Paying for [ivy league school]

Post by Vulcan »

stoptothink wrote: Wed Jan 25, 2023 8:23 am
rule of law guy wrote: Tue Jan 24, 2023 10:00 pm kudos to your son. now tell him he needs to get an on-campus job. and suggest to him that this has financial and educational benefit
Wife and I are adamant that our kids will work during school, even though we are likely to cover the entire cost, but is an on-campus job even going to put a dent in the $80k/yr cost?
DS had RA and LA jobs during three of his five semesters (RA was essentially getting paid to do his own research with a professor). Those were 10hr/wk $13-$15/hr assignments (and M is more generous than some). You do the math.

Now, summer internships can be a very different story for certain majors (i.e. if you can do the math:)

https://www.levels.fyi/internships/
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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iCare
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Joined: Sat Dec 18, 2021 9:08 am

Re: Paying for [ivy league school]

Post by iCare »

Ependytis wrote: Tue Jan 24, 2023 12:56 pm First, congratulations on your kid getting into an Ivy League school. You must be very proud. As the old saying goes" You can finance tuition, but you can't finance retirement."Therefore, I wouldn't sacrifice retirement at age 50 to pay for an Ivy League tuition. The fact is you less years to accumulate savings then someone in their 40's.

If your kid could get into an Ivy League, why can't he get into another Ivy League with a more generous scholarship package? If they can, this can save you a lot of money.

My parents made sure I had skin in the game. Therefore, when I graduated, I had to pay some of the money back to them. Even at your kid's age, I would have thought twice about going into debt for a college education to the tune of $400,000 (4 years times $80,000 for tuition plus $20,000 for room and board).

What would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
you have good point about thinking about saving for retirement - I'd look into those plans. I may have to halt for almost 8 years given new responsibility.

I don't agree with putting funds in walstreet instead of sending kid to IVY. I understand your perspective, but it sounds like low-balling to me. My reasoning is that greed has no end. One may work hard in life and save up to spend money on things that matter to their family. For example, if my child wants to attend an Ivy League school, they will get that opportunity instead of benefiting the "wall street sharks." I have been investing for over 20 years+, and despite the Bogleheads' wonderful suggestions, my returns have been way subpar due to various decisions in life including my gambling addiction in market (buy / sell all the time). I have witnessed almost three crashes in my investing career. Every time, I regretted not taking that trip with my family or buying that tesla that my wife wanted instead of putting all that money in the stock market.

It is worth noting that my child is getting into an Ivy League school based on their academic achievements. They have worked hard for it. While the idea of getting a full-ride scholarship elsewhere may be tempting, I personally feel that it is like "child labor". Parents not paying tuition is like getting paid for their children's hard work instead of giving them what they truly deserve.

I have to probably change my thinking but I think that as long as children work hard for their grades and extracurricular activities, it is not worth earning extra $100 or $150 per week. They already have a lot at stake. They won't get into medical school if they don't. Studies and socializing are already stressful enough for kids. Adding more work stress is not something I am convinced of. Life brings enough stress on all of us in adult life, and they will have their own stress to deal with soon enough.

Furthermore, paying for my child's tuition keeps me motivated to work harder at my job too. Without that financial responsibility, I may become a slacker too. I am not hell-bent to pay for college - currently thinking pros and cons. I am a saver too, I'd love to save if I can. This thread makes me feel like a penny pincher saver who saves pennies to lose dollars lavishly.
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Vulcan
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Re: Paying for [ivy league school]

Post by Vulcan »

Ependytis wrote: Tue Jan 24, 2023 12:56 pm What would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
Maybe. Maybe not.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
cmr79
Posts: 353
Joined: Mon Dec 02, 2013 4:25 pm

Re: Paying for [ivy league school]

Post by cmr79 »

stoptothink wrote: Wed Jan 25, 2023 8:23 am
rule of law guy wrote: Tue Jan 24, 2023 10:00 pm kudos to your son. now tell him he needs to get an on-campus job. and suggest to him that this has financial and educational benefit
Wife and I are adamant that our kids will work during school, even though we are likely to cover the entire cost, but is an on-campus job even going to put a dent in the $80k/yr cost?
It won't. Not even close to a dent. But if a work-study or minimum wage type job is how the kid earns spending money, they are probably more likely to learn to be responsible, to budget, and not to buy stupid things they can't afford by making mistakes on an even smaller scale than what would be likely when they start working post-college.
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TomatoTomahto
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Re: Paying for [ivy league school]

Post by TomatoTomahto »

Vulcan wrote: Wed Jan 25, 2023 9:46 am
Ependytis wrote: Tue Jan 24, 2023 12:56 pm What would happen if they got a full ride somewhere else and you took the $320K () 4 years * $80K) and you invested it in the S&P 500? I'm assuming, depending on the major, they'd be a lot further ahead regardless of the Ivy League degree especially an undergraduate degree.
Maybe. Maybe not.
Yeah. Maybe it's a self selecting crowd, but I don't know anyone in son's cohort who is earning less than 6 figures. Some are doing extraordinarily better than that.
I get the FI part but not the RE part of FIRE.
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