It’s plenty, just not for every school.
I have to ask…did your daughter somehow convince you that she HAD TO attend college out of state?
I hate to say it, but there is no additional cache for attending IU. None. It’s another flagship university, and to be frank, some feel that UGA is a better school overall.
If you have the money to send your daughter to these other schools…then fine…do so. But if you are trying to limit your costs, and have a specific budget, you need to consider all options that will do so.
It sounds like your daughter has convinced you that these more costly schools are the ONLY way to go. Fine…if you can pay for it, and agree.
She won’t be getting need based aid at any of these schools…except maybe Emory if she gets accepted.
In my opinion, she probably won’t get merit aid to being the costs to $35,000 a year.
But the applications are out for most of these schools. The problem you have is that she has NOT applied to a true safety…one that is affordable where she has a very solid chance of acceptance.
Every student NEEDS that school in their application list.
I’m in a similar boat - we have a lower income than yours, but high EFC due to higher than average assets. Our assets were a “windfall” almost 20 years ago, so (a) They are not going to be replaceable once spent down (b) There is a huge amount of capital gains in our mutual fund portfolio.
You will not get any need based aid, so skip looking at meets-full-need schools. You need either merit aid or a low price tag.
DD#1 filled her list with LACs known for being generous with merit aid plus an in-state tuition safety school.
DD#2 is filling her list with in-state, WUE, and merit-aid research schools and a maybe a couple competitive merit scholarship private schools (places like Case Western).
What we have done:
In our younger days, we transferred money from the windfall to IRA’s at the maximum contribution each year. IRA money does not count against you in financial aid formulas.
As kids got to high school age, changed dividends on remaining mutual funds to pay into a money market fund rather than automatically reinvested. This gives us some cash that won’t trigger capital gains.
Minimized 401K contributions and put that cash towards tuition as well.
Because our income is lower than yours, we do have a chance of qualifying for income-based aid with two in college, so we are attempting to avoid selling mutual funds until our younger daughter’s basis year. However, it’s a borderline case for us. With higher income and assets, it is likely that there is nothing you can do to qualify for need-based aid, so avoiding capital gains does not benefit you as far as financial aid is concerned.
You may wish to consider gifting your assets to a child to use as college tuition as a tax strategy. Google the following words: troy onink forbes wipe out capital gains
Talk to an accountant or tax preparer first on that one! We are considering that strategy for after our 529 funds are spent down, but there is already no capital gains on 529 funds so we don’t need it right away.
OOS publics will not care that you have two in college.
She should be looking at what each school offers as far as language study, study abroad opportunities. For international studies/relations that would be very important.
Adding to @mommdc comment. Schools that don’t meet full need also aren’t guaranteed to increase your aid in subsequent years with two in college. So…don’t count on more aid when number two is in college from Elon, American, GW! College of Charleston, or IU. Oh…and neither of the Georgia publics will care either.
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Schools that don’t meet full need also aren’t guaranteed to increase your aid in subsequent years with two in college. So…don’t count on more aid when number two is in college from Elon, American, GW! College of Charles
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Very true.
We’ve seen this before here. I particularly remember the posting from a dad who allowed his older DD to attend a pricey school with the misapprehension that when his son started college the next year, the EFC would split and DD would get a good bit of aid. Wrong-O. When they got DD’s aid pkg for upcoming sophomore year, there wasn’t a dime’s worth of free money in there. The school didn’t care that EFC split. It never promised to meet need anyway. At that point, the dad was in a panic-state because he had to decide whether to force DD to leave the pricey school or tell son he could only attend a cheap school. Horrible situation to be in for a parent.
Yep! True story here. When DD was a college freshman, her brother was a senior in college. His aid that year went up $250. Cost of attendance at the time was over $45,000 a year. Oh…and that $250 was an increase in a merit award…not need based aid.
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I have to ask...did your daughter somehow convince you that she HAD TO attend college out of state?I hate to say it, but there is no additional cache for attending IU. None. It’s another flagship university, and to be frank, some feel that UGA is a better school overall.
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No she did not, but together we came to that conclusion. There is also only a 50/50 chance of UGA, and she would rather go to KSU, then UGA, even though UGA is a top school. She just did not like it for some reason. There are other reasons for the schools that were picked as well, due to a potential minor she may want to do that is not offered at most GA schools.
WE do have some true Safety’s as well, that we just have not hit the “send” button on yet ; figuring out which ones she would attend if the money thing would not work out. Once she got into IU we took a break. She can still meet the deadlines on those. Those schools have set merits based on GPA/test scores that we meet.
The other consideration is that my 2nd child is more likely to stay in state, because their interests are different, and they also might make the “32 act” for Alabama. I know that is absolutely not a guarantee though .
Thank you for responding!
It sounds like you have some bases covered. I would suggest submitting the safety applications sooner than later.
And if there is a drop dead budget net cost that the schools have to meet…please share that with your daughter soon.
I wouldn’t base college decisions or expenditures for child 1 on hypotheticals about child 2. We have money saved for both our children and I expect to be back to working full-time when our 2nd child goes to college, but the budget for our eldest is based on what we have now. He doesn’t get to spend his sister’s college fund.
If you spend more money on child 1 because child 2 seems to want to stay in state or might get a high enough test score to get a scholarship, how will you make it up if those things don’t happen? And will child 2 feel they can change their mind once the money’s been spent? Your second child should get as much choice as your first.
@austinmshauri I do plan on giving child 2 the same opportunity as child 1, with the same budgets, but there stands a chance they might make that decision to stay in state or get a scholarship, which would help when child 1 is a JR and SR as far as how much out of pocket we would have to spend. I know that its a wildcard and not considering.
My D and I do talk about this a bunch since I have come to realize the realities.
Curious…if you transferred your windwall into IRAs…they would still be aftertax IRAs and would be considered as countable assets…
that comment was directed to @aroundhere
@calmom We didn’t consider that and I have no idea how financial aid rules work in that case.
For example:
If you are talking about the 2017-2018 fafsa…any money transferred to a pretax account in 2015 would still be counted as income.
Money transferred into post tax accounts has already been counted as income.
In addition, there is a limit on the amount you can put in these retirement accounts annually.
The family contribution is largely based on INCOME. Before you do ANY financial gymnastics…look first at your income.
The OP income is $150,000 a year…and his kid is looking at OOS public, and schools that do not meet full need. Doing financial gymnastics might not net them a dime of additional need based aid at the schools the OP listed that his DD was applying to.
In addition, the assets are in stocks…the owner would need to cash those in to reinvest in other types of things. There would probably be a tax implication there. Plus the OP says…this stock money IS their retirement plan.