I’m sorry. I am concerned that my post seemed to be interpreted as some kind of confession to tax fraud.
I will say that I have never, nor do I intend to, lie on my taxes or any other form. If I have ever made a mistake I will own that.
I was simply asking what others thought about an apparently widespread belief about college funding in this column, because I felt like a schmuck.
Instead I am getting answers suggesting that I somehow approve of this system, instead of asking questions about it. Thanks for all the answers, seems like many people think there are no real work-arounds and that people who claim they have found loopholes are just lying.
Brute force strategy compared to what other strategy?
Of course, you could give away all of your assets and take a low paying job in order to be “poor” for college financial aid purposes. But that would be more limiting to your kids’ college choices (many colleges do not give very good financial aid) as well as being less comfortable in other aspects of your life.
Many of us who have been on CC for awhile “just paid for it.” That is not to say that we threw money out there that we didn’t have. H and I saved for our kids to go to school, and we set budgets for them. They couldn’t just go anywhere - in fact, both kids had to say no to a school they liked because it ended up being more expensive than we expected. Both found schools they liked that fit within our budget. They focused on schools where they might get merit aid, and D ended up at one of the most generous meets-need schools. S went to a school on scholarship but later transferred … he ended up full pay after a sophomore year transfer scholarship, but the school was affordable (state school, in-state). They had plenty of options, and I know for a fact that they wouldn’t have had the same opportunities if we hadn’t saved.
@ucbalumnus “Brute force strategy compared to what other strategy?”
That’s what I mean by “what am I missing”? I’m wondering if there are more sophisticated strategies than just actually being poor, which I think we both agree is not a good strategy.
Kind of like the mega backdoor Roth but for college, things that seem ridiculously unfair and which should be disallowed but which are totally legal and therefore, used by everyone who has the means.
Sorry to disabuse you but there are thousands of people who have the means and don’t do ANYTHING “ridiculously” unfair or otherwise. They pay full freight because they can, and don’t listen to their neighbors bragging “only an idiot pays full tuition”.
I know someone who almost got disbarred because his kid claimed to live fulltime with grandparents in a different state so he’d qualify for in-state tuition. Long (and sordid) story, but a former client’s kid ended up as the lawyer’s son roommate; son bragged about how smart his dad was, former client called the state bar association.
Sure, play the game. But don’t assume “everyone” does it because they don’t.
We live in a very high COL area, one income, 5 kids not eligible for FA. Two graduated from two of the top public in state schools, two had stats high enough to get merit from OOS publics, one is currently commuting. We paid what we could and they have loans (my 25 and 26 year olds have them almost paid off). They did not have free choice with majors, hey needed to be able to secure good jobs upon graduation, which they did. One is very musical and a performer (CPA by day), at least one night a week she has a paid gig, but always knew it would be a hobby (my husband has been in the same band since high school, they played at a party on Saturday, he played with my daughter last night, they have a fundraiser to play at Saturday). It is what it is.
I didn’t make any assumptions. I was asking that question based on what was quite frankly a shocking read in the referenced article. If you have a subscription and you’re up for feeling depressed, you should read it.
There were a lot of people there saying that the letter-writer should not report what sounds like fraud, because “that’s how the game is played” and that their kids got into better schools, blah blah.
I figured I’d ask a different audience so I logged in here.
I’m not sure what “strategies” you are thinking of - you either qualify for need-based aid, or you don’t. Some schools are very generous and offer aid to families making up to the low $200s (admittedly not a huge list and all are tough admits); others are not so generous. To find out what (if anything) you might qualify for, you can run the NPCs at various schools. Even if a family doesn’t qualify for any aid, that doesn’t mean they need to provide a $80k education for their kids - there are colleges at many price points, many colleges with steep merit discounts etc. Determine what you can afford and go from there.
The story sounds a little suspect simply because most selective colleges require both parents’ financial information when filling out the CSS - there are only a few that don’t (which often disadvantages divorced parents-especially if one parent is remarried to an affluent spouse who won’t contribute). If it is true, this is a case of fraud and, really, it’s disgusting because someone making $500k deserves to get $0 in need-based financial aid. I hope this kind of thing is relatively rare (and, unfortunately, cases like this undermines the argument against counting all parental income).
Not only do most meets need schools require info on both parents, but in many cases (most?) they require copies of your tax returns and w4s. I had to provide those docs both years so far to my D22’s school. Not to mention there is always the chance FAFsa will pick you for verification any given year - esp if you don’t use the IRS direct retrieval. I read that column and was pretty sure something wasn’t true - maybe the letter writer made it up because either she’s trying to get “permission” to cheat herself and/or she’s one of those people who always worries others are getting away with stuff at her expense and wants everyone else to feel as indignant as she feels or else the story from her side is true but the family who claimed to be getting the free ride is lying. I’m not saying no one cheats - I’m sure some do - but most people are honest and for those who aren’t there are some pretty good safeguards in place.
How about get merit scholarships and save yourself the trouble of being unethical?
I have heard of one very sophisticated (to me) approach used by some parents. I find it quite distasteful. So, won’t post it here. I heard of it on a popular podcast and it appears to be legit.
I have never lied on any form. Ever. What I’m asking is, am I missing LEGAL strategies for maximizing my kids’ chances for going to college.
Also - if my kids were talented or smart enough for scholarships, I wouldn’t be posting here. My kids dropped out of sports, they don’t like performing, they don’t like entering contests. One gets good grades and we’re working on finding a way for her to publish, but another one is just someone who will be lucky to get into college at all and scholarships are the last thing on my mind for her.
Well, the good news is that the average tuition discount for most private colleges is 55%, which they call “scholarship” but it is actually the sale price. And what is even better is that the majority of colleges that need to discount their sticker price are also schools that need students. In other words, not very selective schools. Most colleges are actually starving for students. Not just the ones that get a lot of love on here.
Jeff Seligno has a list called buyers versus sellers. Look that up.
Where parents get tripped up is when they chase prestige. Based on what you stated about your kids, I’d probably stay away from the prestige game. My suggestion is that you work with a reputable college coach to find the right fit. There are a few that are raved about on Reddit’s A2C. Or, you can find all of that information for free on here.
Have you looked through the 3.0 GPA thread for class of 2023?
We all hate the idea that we might be the only ‘suckers’ not getting away with something.
There will always be people who find ways to cheat.
It is not most people.
I think the challenge is that your framework is off: “brute force” is one path to paying for university, but as a lot of posters have noted, there are others - that do not involve cheating.
There are plenty of open enrollment colleges that will be happy to enroll her if she has a hs diploma or GED. What makes her lucky is that she has a family willing and able to make college a reality for her by paying for it.
Thanks. I have encouraged my kids to go to state schools. I agree with you re: “prestige” and myself graduated from public schools all the way from K through a master’s degree.
My question is not really about how to manage costs, which I am confident I can either way, but whether the “alternative” way of paying is really as common as some would make it sound.
I don’t know of a single person who has found a way to game the system. Most here just appear shocked when their first kids gets he FA letter with just the federal loans (and I’ve been in enough Facebook parent pages and have many unhappy reactions).
Well, there is a questionable one, which is in a legal grey area, and it’s not something that I would recommend:
Like the Varsity Blue scandal, colleges are getting wise to this, and the kids are finding themselves suddenly without financial support. Also, considering that only a few dozen were doing it, despite there being a few thousand in that income range in the area, means that it’s not common, and likely not a good idea for many people.
You want legal? Take the money you have in a brokerage account, cash out, purchase an annuity. Your assets will go down significantly and PERHAPS you will qualify for aid.
It is legal and it works. It is also monstrously dumb. You will pay taxes on the capital gains of what you’ve sold, you will pay a HUGE fee on the annuity (it will have a fancier name, but the salesperson will be very, very happy with you and will likely send you a nice card on your birthday every year) and you will have lost whatever liquidity you had in your brokerage account in case of a job loss or whatever.
I could describe five other perfectly legal “schemes” which may result in more aid, which are also incredibly dumb from a overall financial perspective. I know people who have taken 30K losses to gain an incremental 3K in financial aid (and they brag about it-- like they are Warren Buffett) and I know people who have given up 8 years of solid year-to-year growth (compound interest, dividend, whatever the investment was paying) to “lock in” an extra 5K in financial aid.
The idea of playing by the rules is so upsetting to them, that they are willing to LOSE money in order to get a freebie of some kind (even when it’s a totally marginal increase in aid). And it ignores the reality that MOST colleges won’t care about your financial shenanigans- they don’t meet full need anyway because they don’t have it. So you need 30K? Great. They’ll give you 10 and the balance is your problem- Parent Plus loans.
You could retitle your house and sign it over to your brother. Pay him below market rent, you’ll show zero in home equity for colleges that ask about it. But be prepared to be evicted by the sheriff if he decides to sell the house and move to Cancun on the proceeds. There’s always a dark side, right?