<p>It depended on the major for us. My D went to Wharton at Penn so the choice was easy although she had a free ride elsewhere. If she wanted to be a teacher, free ride would’ve been the choice.</p>
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<p>Schools claiming to “meet full need” generally have a student contribution (work earnings and/or federal direct loans), so the net price will be EFC + student contribution, not just EFC. Of course, they may define “need” differently and have different expected student contributions, so “meet full need” is not that reliable in determining what schools have better financial aid – the net price calculators will give better estimates.</p>
<p>After much thought and dozens of campus visits, the kid’s final choices were the school that offered full tuition+ and the school that was the best academic and social fit. We chose the school that was the best fit; we are paying full price (no loans).</p>
<p>It is a highly personal choice. For a child with a different personality, for whom finding just the right fit was not as essential, or for a child with a different career plan, we would have made a different decision.</p>
<p>Choatiemom - if your son receives full merit scholarships, there is no 10% penalty for non-education use. It is considered an exception to the usual rules. You will only have to pay the taxes on this money because it was saved pretax. We find ourselves in this same happy situation. Enjoy those extra retirement funds!</p>
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529’s are not saved pre-tax. At least in California. Is it pre-tax in other states?</p>
<p>@luvmygirls: You can withdraw up to the amount of the scholarship penalty free, so it depends on how much you have in the 529 whether or not you will pay.</p>
<p>Our daughter is a senior in high school…straight A’s, tons of AP classes, super high SAT score, varsity athlete who will compete in college, in the highest-level band, and on and on. She’s a high achiever. There is no doubt that she would be in the running for full ride or at least full tuition at scores of colleges, and in fact, she already meets the published requirements at several state schools for full tuition.</p>
<p>So, really, we left it up to her, and certainly the personality of the student HAS to come in to play here. If she told us, “I’d really like to attend a big college where people go crazy for the big-time sports,” then we would have looked at such schools. She, though, likes the idea of smaller colleges with smaller class sizes, and she doesn’t care to be a FAN of the sports there as much as she wants to PARTICIPATE, so DIII colleges seemed to fit her best. Since she is an excellent student and she wanted to be surrounded by other students who are at the top of their classes too, we started looking at the top liberal arts colleges in the country. She is being recruited heavily as an athlete at one in particular, which happens to be her top choice. The coaches have already sent her transcript to admissions, and they have been given the go-ahead, so really, unless something very unforeseen happens, she will be attending this college next fall.</p>
<p>The school is a need-blind school and they offer “full financial need” based on income and assets. Based on all of that, we will basically be paying for room and board and get full tuition, books, travel to and from the school, and about $1300 of “personal expenses”. It’s not broken down like that, but effectively that’s what it will be…based on their online calculator which they say they follow very closely, so it’s supposed to be a good measure.</p>
<p>Room and Board is $11,515. She will get a student loan of $3500 her first year (we’ve told her that we will make sure to cap her loan at $15,000 total), and she will have to provide $2150 with earned income and savings, so my wife’s and my out of pocket for this top-tier small college is $5,865. We can easily afford that, and depending on how the 4 years go financially for us, we may be able to just pay off her loan when she graduates.</p>
<p>Bottom line for us is: $5,865 at a top college or a potential full ride at a second-tier college or even lower-tier college. For what our daughter wants, we are more than willing to pay to send her there.</p>
<p>Oh…forgot to add:</p>
<p>There were a couple of colleges that she initially considered which DID give merit-based scholarships (most of the elite colleges don’t) that she would have had a good shot at, but their requirements were outrageous. One college wanted her to come to campus for 3 successive Saturdays. She runs track and cross country, and of course those Saturdays conflicted with important meets. Another had a two-day interview and group project process. Seems excessive.</p>
<p>@stepay: They want kids who really want to go to that school (or at least get that scholarship). One reason schools offer merit scholarships is to improve their yield rate (and thus acceptance rate). Giving scholarships to kids who reject them in favor of another school isn’t in their interest.</p>
<p>Just wanted to put a word in for the experience a student might experience while attending one college over another without regard to to the fact that you can have similar life/career outcomes. You know, learning for learning’s sake, not only seeing college as a high-class votech school. </p>
<p>That too can be accomplished at a variety of different colleges, but I think there is something to be said for the small lac where classes are small, taught by faculty–not grad students, and there are many other students focused on the intellectual task at hand. </p>
<p>@stepay, this is a good illustration of the range of choices and how much it varies among families. You are choosing between a good fit at $5K/yr out of pocket and a not so good fit at $0. For our family the fit part is not so clear, but financially the choice has been between $50K+/yr on the one hand, and on the other, $0-10K/yr. </p>
<p>@kmywest Please do not get misled by “out of pocket” analysis of @stepay. This is one of the ways colleges make students and families believe the cost of attending a school is less than it truly is. In the case of @stepay the true out of pocket cost to attend their daughter’s college choice is over $11K and not $5K. Colleges giving loans and/or work study are not lowering the actual net cost to attend but providing an illusion of lower yearly payments. </p>
<p>Please eliminate all loans and other methods where you must contribute toward the cost to attend in your evaluation. Your evaluation must compare actual costs to properly weigh colleges against each other. Also be aware that financial aid is not quite the same as merit scholarships. The latter is generally fixed for your entire 4 years but the former fluctuates with income and may end up costing you much more in the years you are in college. This is an all to common situation where a college awards a large grant your freshman year but converts all or part of it to loans the following years so your actual costs may go up for your college degree.</p>
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<p>While this is true, it’s less of an issue at the top-tier, need-blind schools. They are not generally wont to change their methodology once they “have you.” If anything, it’s just the opposite. They have every incentive to want to see you graduate once you’ve matriculated to their school. I found the net price calculators for the better schools amazingly accurate and felt confident that, had we chosen to go with one of those and our financial situation remained essentially the same, our out-of-pocket expenses for the next four years were pretty clear.</p>
<p>Re factoring in the cost of loans when you make your comparisons, however, I absolutely agree with @voiceofreason66! Loans are loans, and you not only have to pay them back, you pay them back with interest. That’s fine if you’re comfortable with that, but it’s not the same as receiving a grant, be it need-based or merit-based.</p>
<p>Make sure you’re comparing like to like when decision time comes. Setting up a spreadsheet that breaks down the various costs and aid offered will help make it clear which schools are the better value overall.</p>
<p>In a similar vein, note the requirements to keep merit scholarships, often there is a GPA that must be maintained.</p>
<p>My understanding of 529 use for non-educational purposes is that you pay the usual tax on the earnings (whatever you would pay on any investment depending on your tax bracket) plus a 10% penalty on the earnings. (If you invested $50,000 and it increased in value to $55,000, you would pay a penalty of 10% of $5000, or $500.) They are not pre-tax savings, at least not ours! And yes, my understanding is if your child gets a scholarship, you do not pay the penalty, but you would still owe tax on the earnings, just as if you held money in a mutual fund and then sold with a gain.</p>
<p>LBowie-- You are correct–my mistake. The money is not saved pretax. You are correct that you would be taxed on the earnings if the funds are withdrawn.But-- In my state, if the funds are not used, (due to scholarship), there are no additional penalties.That additional penalty only applies if funds are withdrawn, used for non-educational purposes, and there is no scholarship involved.</p>
<p>So you don’t even have to pay tax on the earnings if your child gets a scholarship? I think you still do, just not the additional 10% of earnings.</p>
<p>Tperry1982 - well said!</p>
<p>You pay taxes on the earnings, but no additional penalties.</p>
<p>@latichever: There are different learning environments, for sure. However, different settings can provide different educations that are better in different ways. A LAC generally provides more faculty interaction and is more nurturing. However, the big bureaucratic, more impersonal state U with a ton of students may prepare kids for the real world better in some ways (especially big corporations, which tend to be bureaucratic & impersonal) by teaching them to navigate such an environment and introducing them to a wide variety of people.</p>
<p>In any case, some LACs provide big merit money as well. Granted, most of them would not be filled with the highest-caliber students (though some LACs that provide big merit scholarships, like Bryn Mawr, Macalester, W&L, Richmond, & Lafayette, as well as New College of Florida and W&M would have a high number of them). </p>