You say that definitively, but if that is the case why are CSS schools collecting the information?
ETA: It’s nice that that guy makes such a definitive statement in his article, but he does not speak for the schools. They collect that information for a reason.
Guess the schools are just liars.
And the author of that Forbes article, which has been published and updated for the past 2 years, is pretty well respected in the college financial aid world. Here’s his company. Don’t attack me-- if you have issue with his credentials, business or fees, take it up with him. http://www.stratagee.com/
We found that there were some schools that required the FAFSA to be filled out, just for applying for merit aid. I didn’t understand why, and it was a pain filling it out when we didn’t want FA. I wondered if it was purely so they could take into account income/assets for acceptance, and then for hitting you up for donations.
Or maybe their motives werent that nefarious.
Yup, some schools do require the FAFSA for merit aid. Some public schools (eg UNC Ch Hill) require the CSS for consideration for some of their scholarships. If they are doling out institutional money, doesn’t seem totally unreasonable that they ask a bit more about the candidates under consideration. That said, if it is “supposed” to be purely a merit based award, in the ideal world it shouldn’t matter… Am guessing they use the info to put the whole package/offer together in their attempt to attract the desired students.
Well, students DO have a choice as to whether or not to apply to Us that require financial info be submitted to be considered for MERIT awards. We told our kids we were NOT submitting financial info, so only apply to Us where they could get merit awards WITHOUT financial info. We didn’t feel that our financial info would have helped them and felt no interest in sharing our financial info with any Us.
My recollection (from a few years back) is that
DS’s school required FAFSA for merit aid. Their reason was “we want to make sure a student is not missing out on any need-based aid”, and there were some scholarships that were merit-based but only went to students with need. These seemed to be mostly endowed scholarships, like "company XYZ gives $1000 to a high-achieving student with need studying " or “the Jones Family awards a student of descent studying who is high-achieving and has need”.
DD’s school did not require FAFSA for merit aid, even though her school’s merit awards were much more generous overall than DS’s school.
Perhaps schools are mining FAFSAs and CSS/Profile forms for development purposes. But if you know you make too much or are too wealthy to get FA, you are probably not going to apply. So it seems like it wouldn’t be that useful. Not all schools are need-blind for admission, but if you don’t fill out the forms there are other ways to ballpark your wealth and income.
We are full pay for D, but it strikes me that adding annual 401(k) or any ongoing deferred compensation back into annual income for FA forces parents who want to prioritize saving for retirement to count cash flow that isn’t available for tuition.
I think they are trying to strike a balance by not penalizing you for past retirement savings, but preventing it from being abused.
Let’s face it, if they didn’t add the current year’s contributions back in, everyone who could afford it would suddenly be making a maximum contribution in order to increase their financial aid. If you are in the 28% bracket, every $100 you put into a 401K or IRA would lower your EFC by $33. Money for nothing!
And why should you be given a higher FA package (i.e., subsidized by others) because you chose to prioritize retirement over paying for your kid to go to college?
It’s a tricky equation, and there is no simple formula that is fair to everyone, if you can even define what “fair” is.
^^ That’s why I think they should differentiate qualified vs non-qualified deferred comp. If you put $18k into your 401k or other ERISA plan, that’s fine. Otoh, it’s possible to defer $150k of a $250k salary in a non-qualified, which I don’t think is fair.
I agree with both of you, especially regarding the non-qualified deferred comp. Those are where the fat packages tend to be and afford the most flexibility in design.
Some of this is just getting to the line of being a little personal. Just a note to be careful. It looks like a good thread and no one wants to close it, or even have to delete posts, send warnings, etc. I would rather be Barney Fife and “Nip it! Just nip it in the bud!”. So no snide comments or even hinting at snideness, please.
For those who use financial advisors / financial planners, it’s a hot topic in light of Obama’s new proposals:
^We talked about that a few pages back. I think it’s the right direction to go. I am not sure how much general public will benefit from it tho. Wasn’t something like 80% have less $100K in retiremnet savings?
“According to the National Institute on Retirement Security, 45 percent of working-age households have no retirement savings at all. Among people 55 to 64, average household retirement savings total only $12,000. For those near retirement who have savings, the average balance is $100,000 – still not much money to finance the next 20 to 30 years.”
From the second of AttorneyMother’s links:
I think they are being kind to call it a 1% cut. 1% probably comes from high fees, and then there’s churning, inappropriate investments, loads, etc.
Yes, we did discuss the fiduciary standard. The sad fact is that many employer-sponsored plans do not provide associated counseling regarding investment suitability and those who need the best advice don’t have access.
If it generates media coverage, maybe it’ll get to a few more eyes and ears.
It’s a sore subject for me because I recommended that my late FIL look at Vanguard index funds approx 17 years ago. He instead chose to use a friend-broker who put him into Putnam funds. Loads, high fees, 11 funds for his account. I have not even looked at the management fees for each of those funds. Those are lopped off the top of account balances each year, so if it’s a “good year,” maybe no one takes a closer look. I’m sure the broker met the suitability standard but I’m sure he also got commissions and fee-splitting.
I did a very rough comparison of historical S&P 500 performance vs. the account balance. Difference is about 4:1.
@newjersey17, there’s a lot to like in your link. I like the first two sentences here, not the third
@AttorneyMother, I’m sorry to hear that. There is a circle of hell reserved for “affinity brokers,” who must be honest because they attend your church, or belong to the same frat, or whose brother plays on your softball team, etc.