@twoinanddone - I think it was the cash flow / budgeting that worked them. My friend’s child attends an expensive school that has given him a lot of FA, but they still have to kick in a sizeable amount.
I was under the impression that most 4 year colleges will expect that families will use the 529 funds over all 4 years - are you saying that isn’t the case? If a family has $100K in a 529 plan before freshman year, and uses a quarter of it each year, shouldn’t they expect the same amount of aid each year?
But if they use up more than a quarter of it in the first year, then when they apply for the next year, I have been told they’d appear more needy (as 529 assets are treated differently in the need calculations, and are “assessed” at a higher rate than other assets) and could qualify for more financial aid (especially at a school that “meets” full need).
My S graduated last year from Columbia and D is at Stanford. We had very meager 529 plans, and we used them pretty much equally over 4 years for S. For D, we were advised that we should use what we had right away, so that D will qualify for more aid for her last 3 years - to offset the fact that we had one fewer family member in college.
A college financial planner told us that the biggest mistake people make in paying for college is failing to start saving early enough. But a second, very very common mistake people make, is that they fail to look at this as a 4 year series of problems - they only look at the current year. Even people who are smart enough to run the NPC’s, will not also run them under different combinations like what happens to FA next year when older sibling graduates.
Colleges FA advisors are really helpful when asked “what about” questions - they do not give personal financial advice, and they will tell you to consult with your own personal tax advisor or financial planner. They often can’t tell precisely how much next year’s tuition and board will increase. They will tell you how much aid you could expect next year, and that the formula is recalculated every year etc. But they understand how families are struggling to pay for the biggest expense in their child’s life, and they want to help.
So why not ask them what would have been the difference in your FA if you had $20 K in a 529 vs. having it in cash, or having invested in your 401K? Ask them what happens next year when you go from a family of 4 to a family of 3? Or a family of 6 drops to 3 when the triplets graduate? Ask if it makes a difference if your older child is still a dependent, or attending grad school? What happens if a parent changes jobs, and income goes up or down by $20K? Ask what happens if you get an inheritance during they time your child is in school. Whatever issue you reasonably think will affect your own family, chances are that the school has dealt with it, and they should be able to give an idea as to how it could impact your FA application. It doesn’t cost anything but a few minutes to re-run NPC’s.
For some of us, it can be maddening to think that we could have gotten better financial aid, or gotten a bigger tax credit, whatever, if we had done a few simple things differently. We can’t predict everything in the future, but there are usually things we can/should think about ahead of time that can impact our decisions.