<p>Not understanding the bum rap for 529s here. We have done beautifully with ours - the Michigan TIAA-CREF plan. Of course, we were fortunate to move out of age band funds before the big melt down and into the guaranteed. Our income alone would have ruled out FA for son so there was no point in not seeking a tax sheltered investment for college funds. These past few years we have been very determined to handle as much of his college from salary and leave the 529s alone for grad school and second child who will start college shortly. </p>
<p>Where would college money have done better than a guaranteed fund within a 529 lately? </p>
<p>The worst strategy we have seen friends employ is real estate investment, counting on appreciation to fund kids’ college. Yikes.</p>
<p>Not a bum rap, sewhappy. H and I decided to pay our kids’ tuition through current income and loans as well as savings. It turned out that there was some money left in S2’s 529, and that, of course, can only be used for educational purposes. At least, he is in grad school; although he has a stipend, I imagine that the 529 monies will provide him a bit of a cushion, especially if he takes a bit longer to get his diploma than the stipend allows for.</p>
<p>"It’s lunacy. Those of us doing this are lunatics. "</p>
<p>I start to feel this way. We are very proud of our kid, however, this proud is overshadowed by future financial burdens. $50K+/yr is still a huge burden on a family making $200k+/yr (65K taxes/retirement, 55k mortgage/taxes/insurances, 8k auto loans, 55k Harvard tuition + out of state travel), do the math, there’s really not much left.</p>
<p>marite, I believe that if your son has a stipend helping him with current educational costs you can withdraw that amount without penalty from the 529 to use for non-educational purposes. You may have to pay income tax on the growth, though.</p>
<p>We required our 2 full-pay kids (one at H and other at Y), to help by taking out the unsubsidized Stafford loan. This left us with $170K each, and they will have about $30K in debt when they graduate. If they can’t afford to pay back that loan with degrees from H and Y, then something is really wrong.</p>
<p>^ We did not require son to take out a loan but we have required him to hold a job at school and during summers and winter break. This does help. One irony, of course, is that the full-pay students are not eligible for work study and they are sometimes the most strapped for cash.</p>
<p>“If your savings are going to run out after the first year, I would hope that your FAFSA calculation would reflect that and that your child (ren) would then qualify for financial aid.Have you contacted the relevant financial aid offices?”</p>
<p>Exactly what I was going to say. Every class has a financial aid officer. Contact yours and explain this situation and that you plan to file FAFSA/Profile again. Ask if you may be considered for financial aid for future years.</p>
<p>Do you have other children who will be in college in the near future? If so, your EFC will be cut in half and you will be in a good position for financial aid from Harvard unless they deem your “other assets” to be too high.</p>
<p>I don’t know if Harvard will do the following for students who are not on financial aid, but it probably pays to inquire. Although the “official new policy” is no loans, that actually means, no required loans in a finaid package. Harvard may be willing to give you one of their own loans which basically follows the repayment guidelines of a Perkins loan. Check into that too.</p>
<p>Regarding 529 plans with monies left over: If you have nieces/nephews etc. who are in college, you can use your 529 to pay for their education and get reimbursed by their parents.</p>
<p>Sewhappy, you described it all perfectly. Financial lunatics, that is exactly correct! I think the most unfortunate kid in this situation is one who worked unbelieveably hard and got accepted to his or her expensive dream school-whose parents make an upper middle class income and are unable or unwilling to pay. Parents who have lost 1/3 of their net worth in the last year, who are struggling to save for their own retirement, worrying about keeping their jobs, are paying for other kids or health issues, think their kids should have taken that full ride scholarship, or who were like mine-“Here’s a couple hundred bucks, now go pay for it yourself”.</p>
<p>So that kid either doesn’t go to his dream school, or graduates with over 200K of moderately high interest rate debt. Apparently the tuition gods at many schools think that it’s just fine for one kid to walk away with 0 debt, and another to be suffocating in it. For the same education, when the schools could easily decrease the tuition costs, purely because they were unlucky enough to have parents making too much money on their paychecks in the prior year. And in these tough economic times, even with a Harvard degree, it can take a long time to get a job after graduation, particularly a high paying one. All while letting that interest accrue on 200K.</p>
<p>Thanks, sewhappy and twinmom. I think he should be able to live on his stipend and hope that he will be done by the time the stipend runs out. In the meantime, I’m keeping the monies in 529. No niece or nephew in need of finaid. They’re in France and those attending university do it for free.</p>
<p>Sorry to add to the rant, but H’s tuition increase this year felt like a slap in the face to us full-pays, while H cut its own costs (our kid now gets less while paying more), and carefully preserving all FA!</p>
<p>Here’s a scenario for how people get to the nice income brackets without super savings. My husband spent 27 years in the Army. We moved nine times the first thirteen years we were married and bought three houses during that time. We managed to sell the first two without a real estate agent, so we didn’t lose our shirts. You can imagine what my work history looks like. Now, he is retired and makes a nice retirement, plus his second career income. After all those years of my spotty work history, we are trying to catch up a bit.</p>
<p>I don’t want anyone’s sympathy; we have a great life. But it does kind of stink when you think that you really can send a very talented kid anywhere she is accepted and it turns out to be unrealistic. Perhaps the inheritance will be better!</p>
<p>My kid never eats breakfast anyway. However it irks me that they want students to TA without paying them. I also hear that grants for research for undergraduates (particularly seniors) will be hard to come by.</p>
<p>^^ Wow! Undergrads act as CAs partly for the experience but mostly for the money. Unlike graduate students whose finaid package includes teaching unless they are paid out of their advisors’ or departments’ research grants like NSF, undergrads are not expected to do any teaching. I think my S would have done one course for the experience and to help his advisor, but not the other two. One, in particular, was a lot of work. I think undergrads should simply refuse.</p>
<p>My D did it last year and this year was told there wasn’t money to pay them. Since she’s a senior, already applied to medical school, what’s the point? Instead she’s being paid to tutor.</p>
<p>My perspective is more along the lines that if students are asked to perform a service, they should be paid. S actually was a CA in the second semester of his senior year. I think he enjoyed the experience and learned some new material. And he was paid!
If advisors put pressure on their students to be unpaid CA, it will be very reprehensible.</p>
<p>The Bureau of Study Counsel (gotta love that name) pays $14/hour to students who received at least an A- in a course to provide tutoring in said course. It is a great source of extra income for my son.</p>
<p>Not quite full pay here, but close enough that we fall into the “significant pain” category…Dh and I put ourselves through school. No family money, then or now. Whatever we have, we earned ourselves. DH works for the government. </p>
<p>S1 turned down full ride plus stipend at flagship. (Sigh…) </p>
<p>Started saving when the kids were born; I have been in and out of the workforce, most recnetly out for five years on unpaid medical leave (and no disability coverage). Am back part time now and my paycheck goes directly to EFC. Every freakin’ cent of it. Returning to work means we won’t have to borrow while we only have one kid in college. Hope my health holds up!</p>
<p>We still live in our starter house. Have not pulled out any equity in the eleven years we have owned it. Both cars (Hondas) have over 150k miles. We live cheaply. All our savings went into a money market – so while we didn’t make a killing, we didn’t take a hit, either. We save via payroll deduction, which makes it a LOT easier to save when the $$ never shows up in the paycheck to begin with.</p>
<p>S1 takes out Stafford loans – $3500 first year, $5200 this year. Will graduate with <$20k in Staffords. He gets a $10k merit award from Chicago. Merit was greater than financial need, so we get no other FA. S had a tidy bundle of one-time external scholarships last year. He works during the summers and during the year (he’ll be a math TA this fall). He paid a little over 50% of the bill last year, and will be at @ 40% this year. He is TOTALLY on board with helping to share the financial load, as he knows we could have pushed him to take the full ride.</p>
<p>We hope we’ll get some FA next year when we have two kids in college, but are prepared for the worst. If we can get away with borrowing from the HELOC for S2’s bill minus any FA for the two years both kids are in school, we will be delighted.</p>