We have a junior, an only child, who is performing very well in school; GPA 4.0, SAT 2120 taken during sophomore year. We have high hopes for our child and we want to send him to best school possible without hurting our pocket too much. My wife doesn’t work and I currently earn about $24,000 a year. We live off on rental income. Well, during my younger days, I worked, saved hard and purchased rental properties, in prep for my retirement. Current market price is in total 1.1M and I have 300k mortgage on one of them. My primary residence is all paid for, 400k.
I don’t have much in savings. I have tried NPC on several private schools my son wants to attend and because of my rental assets, he doesn’t qualify for much financial aid package and I would have to pay full in-state tuition. To send him to college of his choice, assuming he got accepted, I would have to sell my rental property. I sure could use some financial advice.
Rental properties really hurt the financial aid picture at many schools. It is just a fact of how the financial aid works. It’s your choice to live off rental income. For FAFSA only schools, you may qualify for the automatic $0 or a simplified asset application, but for most private schools the CSS is required, and you have to list the assets.
Many people in your position focus on the high merit schools, either automatic awards (Alabama, Temple, LSU) or at schools that may have a few big merit scholarships (Duke), but with the understanding that those schools are only possible if the student actually wins the scholarship.
He could also try for the national scholarships which are very competitive. Some are available to only low income or minority students, but perhaps they only count income, not assets for qualification.
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My wife doesn’t work and I currently earn about $24,000 a year. We live off on rental income. Well, during my younger days, I worked, saved hard and purchased rental properties, in prep for my retirement. Current market price is in total 1.1M and I have 300k mortgage on one of them. My primary residence is all paid for, 400k.
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Are you saying that you work a job that pays $24k per year AND you have rental income? How much is the rental income?
you have 1.1M in properties…does that INCLUDE your home with the $400k value?
His best bets by far are going to be the big merit schools for high stats mentioned above. There is really no way around the asset issue for CSS profile schools. What is your home state?
Since he’s now only a sophomore and hasaalready demonstrated high performance on the PSAT, make sure he’s ready to do well again when he takes it junior year, to qualify for National Merit Semifinalist. That could unlock some automatic full tuition scholarships at a number of schools.
Correct. My current job pays 24k and I have hard earned rental properties 1.1M which does not include primary residence… Rental income is about 5000 a month. This is what we live on.
Residing in Washington…
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His best bets by far are going to be the big merit schools for high stats mentioned above. There is really no way around the asset issue for CSS profile schools. What is your home state?
Here’s a plan: Can you get a job that pays at least $50k? You obviously earned more income earlier in your career to amass all those rental properties. Go back to a higher-paying job.
Second, you wife needs to work (assuming she is not physically unable to do so). If your only child is away at school, your wife will be freed up to do so. Let’s say she makes $35k. With this new scenario, you can pay for college with a combination of next year’s current income, your son’s earnings from summer jobs and part-time work, and the $5.5k student loan your son can take freshman year.
Another idea: Can you sell just one property? If you can add $100k to the pot, that would be a big help.
Your son is obviously a good student, and I don’t want to diminish his grades and test scores, but if he is thinking about HYPS etc…he really should consider taking the SAT agin, or the ACT and try for a higher score. 2120 is a little on the low side for the very top schools, unless he has some other aspect that is impressive, like a sport, awards, great leadership, and so on. You can look at the mid 50% for colleges he is interested in. To have a better chance ( bearing in mind the chances are not good for anyone) he should aim to be well above 50th, ideally in the 75th percentile.
If your wife hasn’t worked for a significant period of time, it’s unlikely she is going to snap up a $35 thousand a year job. She’s most likely going to get something part time, minimum wage.
Look hard at lower ranked, less prestigious school with lots of automatic merit and good honors programs. A few with competitive merit as well would be good as reaches. Seriously, I bet your son could fall in love with some of those automatic merit schools.
What major is he thinking of?
Seriously consider Bama. We visited the school and were floored by what we found. S1 was scowling & skeptical when we first arrived for a tour at the honors college. By the end of the visit he said he could see himself going there.