<p>Parents may panic when a child reaches senior year in high school and there’s little or no money for college available. Here are some options.
<a href="http://www.nytimes.com/2014/10/18/your-money/a-financial-aid-map-for-families-who-have-saved-nothing.html">http://www.nytimes.com/2014/10/18/your-money/a-financial-aid-map-for-families-who-have-saved-nothing.html</a></p>
<p>Good article. Thanks for posting. </p>
<p>"Parents may panic when a child reaches senior year in high school and there’s little or no money for college available. "
- Too late…to panic
I do not think that saving for college is a very good idea. The good idea is to make sure that a kid graduates with very high GPA and great test score and eligible for Merit awards at several (many?) places. At the same time, extensive research is required (mine lasted for about 2 years) in reagard to UG that are known to offer great Merit packages (but at the same time are good fit for a student). This plan is a much more reasonable college “saving” plan than assuming that somebody misteriously can save $300k for each child. However, this plan has to start way back …in …kindergarten. </p>
<p>Miami, it’s great that merit aid worked out for you, but it is just not possible for every child to get a very high GPA and test scores.</p>
<p>We started before kindergarten… stuffed all those pre-tax daycare reimbursements into the college accounts. Made one fairly aggressive investment that paid off well with a few thousand of it as well. The long growth time gave us enough in savings that our kids could attend private schools with us covering some out of current income without too much stress. Just responding to @MiamiDAP … I know “any school” will do for @MiamiDAP 's kid, but wouldn’t have worked as well for mine.</p>
<p>What kills me in the end is because we have a nice nest egg not necessarily in retirement accounts is going to get depleted (our dream house money) because we chose to live very frugally as opposed to Joe Average who also had a good income but chose to spend most of it…in the end he’ll get more financial aid than we will. Sometimes I wish we had blown thru all our money too. This is coming from a parent whose child has been offered full ride scholarships due to grades/test scores/National Merit. I’d like him to have well rounded choices.</p>
<p>Rdtsmith: actually, that’s not true. It’s not true even for colleges that meet full-need - because the amount of financial aid you receive is not what “you” feel you deserve, but what the college calculates for you, and they imagine you basically live off thin air and free grass. The majority of the calculation is income-based, and they expect families to save a certain amount. The people with good income who chose to spend most of it… are still expected to pay the same as the families who saved. And of course it’s way worse at schools that don’t meet need.
Note: retirement money is NOT considered as assets for financial aid purposes. </p>
<p>The article is good but the title they picked " a financial aid map" oversells it, imo</p>
<p>One thing that vast majority does not think/plan ahead. Most kids who want to have great choices for UG will end up wanting to go to Grad. School. Good if they get into programs with stipends, great if they get a Merit out of so few available at this level. But how about the fact that NOT limiting choice for UG (while UG is not a great factor if Grad. school is in a picutre) will most likely lead to limited choices for Grad. School (which is much more important than UG for the future). Yes, we (including our D.) limited her choices for the UG, but when she was ready to choose the cheapest Med. School, we said, nope, go for the one that your heart desires, we will pay. The reason that we said so was that she choose free tuition UG ever so wisely. Cannot have it for both. Yes, there are exceptions and I have read here that in fact, some poster family has saved about $600k oer kid to cover both UG and Grad. school. We did not belong in this category as most others would not. And the fact is that many many Med. School applicants choose the cheaper option, I have read a lot here, primarily because family has paid a lot (sometime even more than the Med. Schoo tuition) for the UG. This scenario seems to be on unreasoanalbe side to me. Why? </p>
<p>Miami- there are kids who become flight surgeons courtesy of the United States taxpayers. There are kids whose med school loans are forgiven because they work in inner cities after they get their MD rather than becoming dermatologists in Beverly Hills. There are kids who go to West Point (the ultimate merit scholarship) and then on to med school. There are all sorts of ways to minimize the costs of med school. None of us criticize you for the choices you’ve made… why not extend the courtesy back to some of us?</p>
<p>We paid full freight for undergrad; told the kids they were on their own for grad school. It’s worked out just fine, thank you very much. Why is our plan less reasonable than yours? All my kids are launched professionally, pay taxes, advancing in their chosen careers. Why was my plan unreasonable?</p>
<p>Yes, those who save can get less financial aid than those who did not. Depends on amounts and the schools and the students, of course. But, yes, If you have say $200K over your protection allowance that’s about $12K added to your EFC over those with the same financial profile except without any savings. </p>
<p>But what the savings does is keep that much more in options open. Most schools do not meet full need anyways. My SIL’s family is having a very rough time with their kids hitting college age. Yes, they qualify for financial aid at the privates, but barely are eligible at the state university level. But the aid they get , brings those privates that are the most generous still tothe cost of Flagship U. With no savings, they have to borrow if their kids are going to go away to Flagship U. or the kids have to commute to a state school or get merit money that brings the cost down to what’s barely affordable at least. With no savings, it all has to come out of current and future income. Problem is the reason they did not save is because they are living at every bit of what they can afford and then some, and alot of the current expenses are not negotiable; they are commitments. Sending the kid away means some drop in household costs, yes, but not what it costs for the kid to go to sleep away college. </p>
<p>Ironically, the fact that we sent our kids to private school helps us come up with college money We have had to live on that much less since the money goes to the private school. So we continue that payment to the college and we have to come up with the difference. A little bit of savings that we have, and also what we save having the kid away, and cutting back gives us what we can afford without loans. But that past income savings, does make it possible not to have to borrow as much or at all. Now had we sent the kids to public school and banked the money, we’d have been in even better shape.</p>
<p>Not having savings isn’t just because you didn’t live frugally, and spent all your money.</p>
<p>My DH was a highly skilled and well paid manufacturing technician. Then when all the manufacturing started going overseas, he went through a long period of time of being unemployed or underemployed. Can’t tell you how many applications and interviews he went through. </p>
<p>Those were years when we were barely covering expenses, so savings for college were not even on the radar. </p>
<p>blossom,
If you read my post, you have seen that I was talking about exceptions as well as your post:
“Miami- there are kids who become flight surgeons courtesy of the United States taxpayers. There are kids whose med school loans are forgiven because they work in inner cities after they get their MD rather than becoming dermatologists in Beverly Hills. There are kids who go to West Point (the ultimate merit scholarship) and then on to med school. There are all sorts of ways to minimize the costs of med school. None of us criticize you for the choices you’ve made… why not extend the courtesy back to some of us?”
However, let’s not be blind and keep in mind that most (not only Med. Schools, but any other Grad. school minus excptions as you and I have mentioned), WILL LIMIT their Grad. School selection based on cost. They are doing it all over the place in Medical School threads (you are welcome to read, I never posted any of this, I did not limit my D’s choice).<br>
So, the real life question, not any hypothetical that I sooo RUDELY pointed out, is why many who make selection choosing the most expensive UG becuase they love it, why they will be faced with the same decision and most likely will choose opposite for Grad. School.
Agian, I apologize for being soo rude expressing my opinion based on the recent experiences in my life, not anything from internet, not anything from the air or some wishful thinking, not anything from the very rudely designed theories in my own head.<br>
Anybody can criticize my choices as much a YOU DO. You post is misleading. Reality is that if family choose expensive UG (they have all rights to do so, none of our business),the fact is that in MOST cases (with exceptions that are available to a very small percentage), their kids will accumulate huge student loans or will be forced to attend a cheaper Grad. Schools (still having over $150k in loans). And being dermatologist in Beverly Hills is accomplishment that is almost beoynd any humanly possible, it is practically saying that some would choose to be a Brad Pitt. You do not choose that, it may happen if you are top of the cream of the top of all graduating medical students in the USA, but if you belong to this group, most likely it still will not happen. On the other hand, many choose to work for free at inner city clinics while and after Med. School at least for some time as well as paying huge money out of their own pocket traveling to some remote poor regions of the world to help those who do not have any means whatsoever. They streatch their very limited times to learn language so they can help better those who do not know English. They do it because of who they are and not because some loans would be forgiven. </p>
<p>In my conversations with parents, I often hear them lament that they don’t have any savings. The thing is, VERY often, I know the choices these parents have made over the years … and I know that had they made some different choices, they would have saved money for college. </p>
<p>I live in a very socioeconomically diverse community, so I absolutely do know that some people are not able to save for college. These folks do not have money for extras. I sympathize with them. My sympathy does not extend to those whose kids are in travel sports, taking expensive lessons, going on trips abroad, talking on the latest cell phone with the all-inclusive plan, watching HBO on the big-screen tv, etc. Life is about choices, and parents need to make saving for college a choice that is at least as important as the fluffy stuff. Kids can do without travel hockey if the alternative is that college is going to be affordable.</p>
<p>@kelsmom: full-price at a private now is orders of magnitude more expensive than any phone/phone plan or even high-end TV.</p>
<p>Now, if you’re talking about splurging on luxury cars/boats/houses, that’s another matter, but you won’t be able to save enough to afford to be full-pay at a private no matter how much you cut back on cell phones or cable.</p>
<p>Pardon my ignorance again…so income is the main thing period? So from the college visits we’ve attended if you make $80-100k, ie your parents…most of the schools we went to said you pay nothing. Harvard and mit I think were two of those schools who kept saying that but if your parents make more regardless of what you have in savings you’ll both pay the same? And to clarify retirement funds are only iras and other such accounts not random mutual funds that you may have pegged to only use in retirement? Sorry for not being smart!</p>
<p>Rdtsmith, yes, income is the main driver of what you are expected to pay for college. The biggest % of the formula is set against adjusted AGI the year before the fall semester that the student starts college. So for kids starting college in fall of 2015, income this year, 2014 is what will largely determine what the family is expected to pay. Assets are hit at about 6% on part of the parents. If you want to see how you fare, find NPCs for some schools, a good variety of them and see what each one expects you to pay for a student. Change some factors around and see how it changes the results.</p>
<p>Harvard and MIT are among the most generous schools in terms of financial aid formulas. They are one of a handful of schools that even extend need blind admissions and meet full need to international schools. They are not at all typical. </p>
<p>Most schools do not guarantee to meet full need, and they tend to gap, some of them terribly. Many schools that do guarantee to meet full need, define that need themselves, not as the federal government does (actually hardly any school guarantees to meet full need as defined by FAFSA EFC) .</p>
<p>Qualified retirement funds are things like IRAs, 401Ks and other such plans. NOt money you have designated as your retirement nest egg. I have a friend who owned apartment buildings, not big ones but run down ones, that he rented out for income and considered them his retirement source as well, as he did not have earned income and did not expect to get much that way. Harvard would not, despite a modest income that would have meant a full ride, give his son any need based aid because the value of the realestate was too high and they also added in a lot of the depreciation and other things that he took off the tax returns. He couldn’t get loans against the buildings as they were considered high risk, and if he did, he’d have to take the pay back out of his already modest income. If he sold a building as Harvard told him to do do, it would reduce his future income right into retirement. </p>
<p>So there are niches that where it’s difficult to come up with the money, yet you really don’t have it pay. . </p>
<p>But the article is about how to go to college when parents haven’t saved. It is not an article about not paying for UG so that you can pay for medical school, or why the parents didn’t save, or the evils of student loans. The article is about picking a school you can afford, how to get merit money, how to get loans when you’ve saved nothing. It stresses learning about the options and where to get the best merit. It states that it is likely loans will be involved when you’ve saved nothing.</p>
<p>The family highlighted did not waste their money but just has a lot of kids spaced over a number of years and never started saving. Will they have to make compromises for their son to go to college? Loans, a not-first-choice school, work study? Probably. </p>
<p>The problem with saving for college is that it’s not the only thing in life one has. How about a comfortable house, in a safe place, easy commute, good schools system? What about getting some goodies along the way? Is it worth to scrimp so that there is enough money for college? How much should families save? Easy to say that a family with 4,5, 6 + kids did them selves in. What about the family with 2 or 3? A lot of different priorities in life. </p>
<p>I would not have wanted my parents to live more frugally than they did so that I could have had more college money. Nor would I have wanted Dad to take a second job, my mother to take a job to make it happen. Mom was unskilled, cleaning would have been her thing, she did that for a while when things were tight. Wouldn’t have wanted my younger brothers to have had less either. </p>
<p>It’s very hard to generalize. I really try hard not to judge, and although I know that we will be full pay, I’m fine with the fact that our doing so will allow a kid from a low income family to go for free, or at a substantially reduced cost. However, I know that there are families whose income has been the same as ours throughout the years and have no savings, whereas we have saved enough that while I’m not crazy about dropping a quarter of a million dollars over the next 4 years, it won’t be a hardship. I also know that since the formulae for FA are based primarily on income, they will have to pay as much as we do and that seems fair to me. The thing that kind of bugs me is that if my family and that family were both to lose their income next year, I would still be on the hook for the full ride because of savings, whereas the people with no savings would suddenly get a free ride. (yes, I ran some NPCs with 0 income). This doesn’t quite seem fair to me. We chose to buy a 250K house rather than a 500K one we could have qualified for; we always buy 5-10 year old cars and keep them till they die; we’ve never spent more than 2K on a vacation (and we’ve only done that twice - we usually spend less than 1K/year;, and we chose to only have one child. However, there really is no completely fair way to do this, and I’d rather err on the side of educating as many children as possible, even if it means that I am slightly “punished” for making frugal choices.</p>