<p>$200K definitely wouldn't allow a luxury lifestyle in the NYC metro area, but would make that family quite a bit better off in comparision to many who live and have to make ends meet in that region.</p>
<p>The reason for the disconnect is that $200K is a lot of money in many areas, and even in NY/NJ should allow some level of savings with the right lifestyle choices, i.e., buying a house that isn't a financial stretch, not trading cars often, etc.</p>
<p>Our society is aspirational, though, and I think many people would prefer to work at the limits of their income in order to maintain an upwardly mobile, if not luxurious, lifestyle. In fact, I'd say all but the most frugal (or destitute) among us have had periods when we spent just about all of our income to have a better house or drive nicer cars. Financial Planning 101 tells you never to do that - rather, you should save first, and then figure out what you can spend on housing, transportation, etc. Most of us don't do that with sufficient dedication. If one employs that strategy for many years, though, the combination of healthy income and lack of college savings is a killer if the student wants to attend a high-priced college.</p>
<p>The whole issue of planning for college costs is very tricky - an family that expects to have a high income at college time should plan to pay for the costs out of pocket, and, if possible save the full amount in advance. But, if the family is eligible for aid from an income standpoint at college time, those same savings will end up increasing the EFC and the out of pocket cost. Add other variables into the equation - job changes, divorce, remarriage, tuition jumps, rule changes, stock market gyrations, etc. - and determining the right strategy starting 18 years in advance is next to impossible. Certainly, though, money saved in the parents' name and available for tuition will give the student more options without greatly inflating the EFC and without requiring a crushing load of student loans.</p>
<p>ok... so for those applying to columbia for financial aid...
have you noticed that the federal verification worksheet on the website is for 2007-2008? should I just send that in, and leave it as it is? (I'm applying for aid for 2008-2009). </p>
<p>There is a space in the FAFSA for describing special circumstances. You should use that to explain the high cost of living in your area, the recent surge in your parent's income etc.</p>
<p>But I'm still not sure if Columbia would deem you eligible for Financial Aid with a $200K income. They would definitely expect your parents to have saved for your college admission.</p>
<p>There are applicants with family incomes ~$20,000 (and lesser) too. I don't see why Columbia can or even should provide you with aid.</p>
<p>I thought the 200K was after all the taxes have been taken. Apparently not, my bad. That being said though, I thought college financial aid is given based on a family's income after taxes not the 200K figure the OP gave. Quite misleading.</p>
<p>thegodofrice, your argument is absolutely absurd</p>
<p>first of all sprtn117 hit it right on the nose: </p>
<p>
[quote]
I thought college financial aid is given based on a family's income after taxes not the 200K figure the OP gave
[/quote]
</p>
<p>this is true....they don't look at your income before taxes and of course saying that your income is "cut in half" after taxes is a silly overstatement because we all know thats not true....we're not in france or the UK ....the most you would pay in taxes in the US is 33% not to mention when you file a return you are sure to find deductions up the wazoo. </p>
<p>the point is though that a 200k income should be plenty to afford a college eduction...which of course doesn't cost 52k up front. I'm positive that the EFC on your fafsa was well above the cost of attendance and as a result you shouldnt really have expected any aid from any school you were going to apply to. I also get the sense that you haven't really talked to your parents about this and there is probably little justification for your (albeit noble) concerns.</p>
<p>Also, to respond to the point about your parents being newly well off....doesn't matter at all....colleges mainly look at your income and don't expect your parents to dip into savings to pay for college. </p>
<p>That being said...my senior year, my family's income was about 100k and my brother had just graduated from college...so i was the only one in college. As a result my family's EFC was over 40k and of course i didn't get any grant money. Mind you my family lives in manhattan so your NJ argument is really not holding water and if you write in the special circumstances section of the fafsa that 200k doesn't go a long way in ny/nj all you will get is a few laughs but zero sympathy.</p>
<p>
[quote]
this is true....they don't look at your income before taxes and of course saying that your income is "cut in half" after taxes is a silly overstatement because we all know thats not true....we're not in france or the UK ....the most you would pay in taxes in the US is 33% not to mention when you file a return you are sure to find deductions up the wazoo.
[/quote]
</p>
<p>You really don't have a clue what you're talking about here.</p>
<p>The highest tax bracket is 35%, and 200k easily puts you in the 33% tax bracket. That's just federal. If you're in NYC, you have to pay both a CITY income tax and a STATE income tax, which is going to total to about 10%. And then there's FICA, which is another 8% or so.</p>
<p>And have you heard of the AMT? People who make 200k aren't going to be able to get "deductions up the wazoo." They won't even be able to deduct a lot of their state/city income taxes. And they're not rich enough to engage in complicated tax shelters. </p>
<p>So yes, it's about half.</p>
<p>
[quote]
I thought the 200K was after all the taxes have been taken. Apparently not, my bad. That being said though, I thought college financial aid is given based on a family's income after taxes not the 200K figure the OP gave. Quite misleading.
[/quote]
</p>
<p>Not really misleading. People talk about their salaries in terms of their pre-tax money. People say "I make $20/hr" or "I make 200K/yr." They don't quote their salaries in terms of their post-tax amounts.</p>
<p>some back of the envelope calculations using Turbotax:</p>
<p>Assuming: married couple with 1 dependant child making $200k in wages, only taking the standard deduction (10,700) which you would of course be stupid to do. Living and working in NYC.</p>
<p>Turbotax comes up with federal taxes of $39,141 and NY state and city taxes of $18,814 for a grand total of $57,955 in taxes and a tax rate of.....29%</p>
<p>I realize this is a very crude way to do it but if anything doing it like this is overly liberal. I think i'll trust turbotax here rather than your gross exaggerations. I'm sorry you're wrong. </p>
<p>Maybe you should go back to arguing that poor people should pay more for the subway because they ride it for longer distances...that argument might make more sense than arguing that a kid whose parents make $200k should get lots of financial aid.</p>
<p>It is misleading because the OP says his income is 200K and that he won't get any financial aid. Given that information, I don't care where you live in the US, the first rational thing to assume is that's a lot of money.
If instead the OP would have said his family's income, after taxes, is 100K and Columbia is still not giving him any money despite the fact he lives in NY, then that would be different. Given this different viewpoint, people can then have some sympathy for him.
Besides, Shraf said he lives in NY and that at 100K per year its enough. I would listen to him. When it comes down to it, the biggest indicator of how much financial aid you receive is the Expected Family Contribution from the FAFSA report. This EFC takes into account all your assets, income, taxes, and whatever. The fact that the OP doesn't receive any financial aid signifies his EFC is very high which means his family can afford to pay their way. Whether his parents are willing to pay and whether they can pay are two different things. If he is so concerned about his parents scraping the piggy bank to pay for him, then he should get a job to help them out and prove it instead of whining about how his 200K salary is barely enough.</p>
<p>
[quote]
arguing that a kid whose parents make $200k should get lots of financial aid.
[/quote]
</p>
<p>I didn't argue that at all. I said that the kid who has parents making 200k can't necessarily afford to go to Columbia.</p>
<p>
[quote]
Assuming: married couple with 1 dependant child making $200k in wages, only taking the standard deduction (10,700) which you would of course be stupid to do. Living and working in NYC.</p>
<p>Turbotax comes up with federal taxes of $39,141 and NY state and city taxes of $18,814 for a grand total of $57,955 in taxes and a tax rate of.....29%</p>
<p>I realize this is a very crude way to do it but if anything doing it like this is overly liberal. I think i'll trust turbotax here rather than your gross exaggerations. I'm sorry you're wrong.
[/quote]
</p>
<p>You totally ignore FICA. Do you know what that is? That's another 8% or so. So add that to your 29% and we're already at 37%.</p>
<p>And did you run an AMT calculation? Do you know what the AMT is either? Do you know how it works? </p>
<p>
[quote]
The fact that the OP doesn't receive any financial aid signifies his EFC is very high which means his family can afford to pay their way.
[/quote]
</p>
<p>Everyone knows the EFC doesn't really reflect how much many families can "afford" to pay, whether they're rich or poor.</p>
<p>
[quote]
You totally ignore FICA. Do you know what that is? That's another 8% or so. So add that to your 29% and we're already at 37%.</p>
<p>And did you run an AMT calculation? Do you know what the AMT is either? Do you know how it works?
[/quote]
</p>
<p>Where do you get 8% from for FICA? Are you just assuming for the sake of your argument that the OP's parents are self employed? Since odds are they aren't self employed, their company covers all but ~1.5% of that tax with the 1.5% being the individual's contribution to social security....and though the social security and medicare taxes are widely criticized in the literature for keeping wages lower than they should be, only 1.5% comes out of your check and your employer pays the rest. So if you want to count all 8%, you should first add the 6.5% that OP's parents would never see nor would be considered part of their salary to begin with. </p>
<p>Oh, and of course the program isn't ignoring the individual's contribution to social security.....so that 1.5% (not 8%) is already included in the 29%.</p>
<p>I will concede that i did not include AMT and wasn't really aware of how it works (only that it stood for alternative minimum tax)....but since you are so stubborn I looked it up and....good god that's some complicated stuff...but from what I've parsed out....the alternative minimum taxable income for a $200k income would be about $50k at a rate of about 20-25% (according to wikipedia)....so again being super liberal with my calculations that would add another $12k in taxes which makes the effective tax rate about 35% </p>
<p>.....can you just admit that saying you'd be forking over half your income to the government was a gross overstatement and that the actual number is much much closer to the 33% I quoted? Oh and its one thing to talk down to high schoolers and another to talk down to other college grads....totally not appreciated especially when you don't even have your info straight.</p>
<p>
[quote]
.....can you just admit that saying you'd be forking over half your income to the government was a gross overstatement and that the actual number is much much closer to the 33% I quoted? Oh and its one thing to talk down to high schoolers and another to talk down to other college grads....totally not appreciated especially when you don't even have your info straight.
[/quote]
</p>
<p>You're just as naive as a high school student on this issue. It's clear you've neither seen a pay stub for someone who makes 200k nor spent the time to educate yourself on these issues. You've admitted you didn't have any clue about the AMT, which is a major tax liability for people in this income range.</p>
<p>You also don't have a clue how FICA works. Have you ever had a job, dude? The 8% or so I'm talking about is how much the individual pays out of his salary, not the employer's contribution. And no, the FICA taxes you pay aren't part of your FEDERAL <em>INCOME TAXES.</em> SDI/Med are not income taxes. It's totally separate.</p>
<p>
[quote]
For 2008, the employee's share of the Social Security portion of the tax is 6.2% of gross compensation up to a limit of $102,000 of compensation. This limit, known as the Social Security Wage Base, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). The employee's share of the Medicare portion is 1.45% of wages with no limit. The employer is also liable for separate 6.2% and 1.45% Social Security and Medicare taxes, respectively, making the total Social Security tax 12.4% and the total Medicare tax 2.9% of wages.
[/quote]
</p>
<p>....clearly adding 8% the way you did is wrong....also either way you want to twist it...the calcuations i did on the tax program took this into account, so i really don't know what you're arguing....I realize that its typically taken out of your paycheck but if it isn't they take it from you on your income tax return and include a tax penalty for the interest...I didn't include that penalty because you wouldnt be liable for it since those taxes would be taken out of your paycheck.</p>
<p>
[quote]
It's clear you've neither seen a pay stub for someone who makes 200k nor spent the time to educate yourself on these issues.
[/quote]
</p>
<p>sounds like educating myself on something like that would be quite a waste of time....even if i was making 200k since you can just pay someone a couple hundred bucks to take care of it for you....my quick and dirty estimation after wikipedia-ing it did a pretty fair job...though you might not want to admit it. </p>
<p>
[quote]
Have you ever had a job, dude?
[/quote]
</p>
<p>I've had four paying jobs since freshman year of college and do my own taxes every year... though, i must admit that I've never made anything near 200k a year (shocker....i know....i'm so behind the curve, most grad students are pulling in millions at 22)</p>
<p>so, even though you claim i'm "as naive as a high school student on the issue" you really haven't made any argument that would disprove my calculation....i guess you just saying it should be enough for us to cower and believe ...i'm done with this unless you have something more constructive to say than "you're naive and have never had a job"</p>
<p>
[quote]
ok, so we're both wrong....clearly adding 8% the way you did is wrong.
[/quote]
</p>
<p>No, just still haven't a clue about any of this. You're just wrong. You say that the FICA taxes are the same as income tax. You wholly ignore the AMT. And so on. You're fundamentally out of your league even in terms of understanding the basics.</p>
<p>Besides, the SDI cap isn't all that relevant because we're talking about joint filers making an aggregate of 200k here.</p>
<p>
[quote]
sounds like educating myself on something like that would be quite a waste of time....even if i was making 200k since you can just pay someone a couple hundred bucks to take care of it for you
[/quote]
</p>
<p>Um, it makes sense to understand the basics of how the tax system works if you actually earn a paycheck. You should know how various investments are taxed so you know whether to do 401k's, IRAs, tax-free savings accounts, short and long term equities, etc. You should know how deductions work so you know how you'll be affected if you buy rather than rent. People who make money understand this stuff so they know how to make even more money.</p>
<p>
[quote]
so, even though you claim i'm "as naive as a high school student on the issue" you really haven't made any argument that would disprove my calculation....
[/quote]
</p>
<p>Your "calculation" is already at 35%, and you forgot to add in FICA. So we're well over 40% already.</p>
<p>
[quote]
Our society is aspirational, though, and I think many people would prefer to work at the limits of their income in order to maintain an upwardly mobile, if not luxurious, lifestyle. In fact, I'd say all but the most frugal (or destitute) among us have had periods when we spent just about all of our income to have a better house or drive nicer cars. Financial Planning 101 tells you never to do that - rather, you should save first, and then figure out what you can spend on housing, transportation, etc. Most of us don't do that with sufficient dedication. If one employs that strategy for many years, though, the combination of healthy income and lack of college savings is a killer if the student wants to attend a high-priced college.
[/quote]
</p>
<p>My son's first two years in Columbia, we had an income quite a bit lower than 200K, and somehow managed to survive while paying full price (we live in Northeast Jersey, by the way.) Second two years, income dropped dramatically and we did get aid, but our income minus what we still paid was a fraction of what a 200K income would have left over after paying for school. We chose to live below our means, so that college was within our means. Someone else may choose differently.</p>
<p>Even in NJ/NY, a 200K lifestyle is a choice--and a perfectly reasonable life can be had on much less--most of us live it.</p>
<p>"We chose to live below our means, so that college was within our means. Someone else may choose differently."</p>
<p>to be clear, a college gives aid (and always should) to families who can't afford to pay high fees, not to families who don't want to. It's expected that parents [within means] save money for their children's college education.</p>