@DoingOurBest I didn’t even get into the surgical/rehab costs that can easily get added on as ACL tears, meniscus injuries, shoulder and elbow injuries are way more common than understood.
2 Likes
But then isn’t it the case that the saver saves $1 while the spender spends the $1 and might get a $0.06 lower (FAFSA or college-defined) EFC as a result, which may or may not matter depending on whether the college actually “meets need” based on whatever EFC it uses?
Seems like it is still better to have the extra $0.94 or more out of the dollar saved when it comes time to pay for college. Also, plus whatever investment gains that might have accrued.
3 Likes
my pet peeve… pension vs 401k? FAFSA and CSS is not asking pension plan employees to add back the value of their pension to their income but it’s future income just like my 401k contribution is. We did the math. 90% of our EFC is due to retirement contributions added back in (we are max contributors with catch up). That EFC portion doesn’t exist for the pension benefit parents. Trying not to complain, just pointing out inequitable holes. I’m interested to see what the new forms will request. Until then, I’ll keep saving everything for sticker price!
1 Like
You do have to report pension plan contributions (ETA: Private pensions that fall in any of the W-2 Box 12s) on FAFSA and EFC, same as 401K contributions. And on the same line: 92a.
1 Like
One thing about true low cost of living areas. It’s hard to get that 100K salary. My public employer has 1200 people. Roughly 1% makes over 100K. I’m not there as a professional engineer with over 25 years of experience. If you make over $50K your name gets printed in the paper. The list isn’t that long. It took H (teacher) and I over 20 years to make 100K combined. And that’s gross salary before any deductions, taxes, insurance premiums.
3 Likes
I’m referring to defined benefit plans, not defined contributions - I should have specified. The ones that don’t appear in income and you receive a set amount on retirement. Many government workers have this type of plan. Maybe there is a place for them also and I’m misguided on the form?
1 Like
There are different levels in sports, recreational gymnastics is cheap. We spent a lot less on my son’s club soccer than his sisters’ irish dance, which was about $10,000 a year (which a generous grandparent sponsored). It certainly doesn’t start out that expensive. I agree about COL, I live in NE NJ, my property taxes are up to $13,000 a year, my house is small.
As I understand it that’s true of any employer contributions even to a defined contribution plan. For example matching contributions that don’t appear as a salary deduction on your W-2. A company can make SEP-IRA contributions of up to $57K per year (20% of salary) and it never appears on your W-2. Great for the self-employed (if you incorporate as a C Corp rather than an S Corp).
1 Like
yes - (late in the convo here - replying about hockey ) – all of the above including hockey boarding school - to the hockey fees. they were trying to get kid to the next level. talented kid - but . . . . . height got in the way and dreams are ending.
1 Like
Super sorry to hear that. That’s no fun, to put it mildly.
We can relate a little. With our first born, she was playing AAU basketball (regional team) and playing on a top regional Premier club for soccer. I will admit that I had some visions of her getting a partial scholarship for college as she was a two sport star at the time. In the end, after her freshman year of HS, she decided she just didn’t enjoy sports, and quit them all entirely. We talked about it, and she had begun feeling this way a year+ earlier. We gave it the old “Well, give it one more shot, maybe you will like it better in HS”. The talent was there, but at a certain age, she wasn’t enjoying it at all. While coaches still thought she was amazing, we started to see her not giving a full effort (she didn’t always need to, still a starter). But I learned a lesson there, in that, sports is one thing no one should ever count on. We sort of knew that the entire time, but we got reminded harshly that one day she broke it to us. Injuries, talent, interest, luck, they can all derail a sports plan.
We’ve also seen kids who had parents who refused to pay extra for clubs and special training, and limited the kids playing to just HS and cheaper rec teams. Those kids still went on to dominate and then get college scholarships, showing that the massive effort that many parents put into “prepping” their kids can sometimes be less relevant. Every little bit helps, and some sports this goes a lot further than others (especially specialty sports).
Next, you of course have those sports that only the wealthy tend to be able to afford. Not so much basketball and soccer, but certainly equestrian, golf, fencing, water polo, sailing, and so on. Things that are either rare and only exist in wealthy pockets, or things that require huge cost.
Lastly, at least where I am at, there are also scenarios where kids get free rides. My daughter’s team has one talented girl who has a family with very little money. She gets a free ride, zero cost to play. Her parents tell the coaches this up front, and they say “no problem, she can play for free”. Obviously this is based on talent, they do not make exceptions for average or lesser kids, just the star players. In that sense, me (and other parents) are subsidizing her soccer play, as those numbers are a bit built into the program cost. Sometimes specific examples of this irk me (such as the kid on my daughter’s team, who LOOKS like she would be amazing, but is actually not very effective, ever, in games), but the concept of subsidizing lower income kids does not.
I think you meant FAFSA and Profile…
Public pension contributions are not reported on the FAFSA or Profile. These are mandatory deductions and the employee has no option to not have this deduction taken…just like SS. In some states, SS is actually not deducted at all for public pension folks…but that’s a whole other thread.
-
The only school that meets full need and can be FAFSA-only is the U of C (that I know of), so it’s kind of a moot point as the vast majority of FAFSA schools don’t guarantee to meet need anyway.
-
That family that splashed out on athletics gambled and won.
-
Families that choose not to work are making a lifestyle choice. They’re also gambling because the vast majority of colleges don’t meet need. But the marginal tax rate when taking in to account fin aid formulas is rather ridiculous.
1 Like
In America, parents are penalized, period.
Definitely are not paid for the positive externalities to society of having children.
1 Like
Personally, I am fine with “subsidizing” Bill Gates’ kid because under such a system (high tax/free college), Bill Gates’ absolute taxes will go up many times more than mine and he’d be forced to subsidize the college education of a ton of kids with his extra taxes.
4 Likes
This is a valid point. One of the challenges here is the education. When my wife and I had our first, we were 25 years old, a few years out of college, and well before the Internet boom where this sort of info was available.
When my wife decided not to work to stay at home with the newborn, it was still a fairly typical thing to do (1999) in our area. Two working parents was common enough, but not the expectation in any way. We then had a second child 2 years later, and then another one 2 years after that.
By the time we had all 3, still under 30, hadn’t thought a ton about college and were just struggling to survive. We started to see around that time that other peers and friends of ours were CHANGING the societal norms, and looking to have kids in their 30’s, developing professional careers for a decade or more before they started to have kids. This is entirely fine of course! But it was a huge change. So a number of those families who chose to have one parent stay home did so when young, and when times were very different.
Today, at least in my area, it’s considered insane to have kids before 30, and every young couple is well aware of the dual income reality we now live in.
Agree. I’m not worried about the 1 in a million that may get this free ride, if it helps the millions. For the top 0.5% that people focus on, the cost of college is a fly on the windshield. We’d be taxing them, as @PurpleTitan mentions, to offset this. That tax would also be a fly on their windshield. Potentially a moth.
2 Likes
I’m only willing to pay more in taxes to fund education if I can send that money directly to my state public university. I’d never give it to the feds because it wouldn’t make it where it’s supposed to go.
The government is the least efficient way to accomplish almost everything.
4 Likes
This might be true if “savings” only means a 529 plan. Parents who saved by investing in the stock market (no 529) are going to generate capital gains income when they sell stock to pay for college. Assuming only one child, capital gains between January 1 of the HS Sophomore year through December 31st of the College Sophomore year are going to show up as income on both the FAFSA and the profile. That parent will likely pay 15% capital gains and have 47% of the income created only to pay for college added to the ECF.
This is us. Got married at 36, had first at 37 and second at 39. Initially went back to work but decided to stay home after nanny issues (premature son couldn’t go to day care). Of course I didn’t actually choose to wait for kids - I had them as soon as I met a viable partner and that took a while. I’ll admit, though, because we were older and really well established financially, it wasn’t a hardship to stay home - either money wise or from a career perspective (had worked for 15 year, made good $$ and had a lot of great experiences). Of course, there are trade offs either way.
2 Likes
I’m losing the logic. We’re increasing everyone’s taxes to make college free (or cheaper) so that kids whose parents are ALREADY paying taxes in their state don’t have to go one of their own, already subsidized public U’s? If my taxes are going up so that the single mom who works as a waitress in the diner down the block can send her kid to our flagship- I’m all for it. If my taxes are going up so that kids in my state who have the stats to get into one of our public U’s AND their parents can afford it, get to choose from the buffet of choices around the country-- not so interested. My taxes support our public education options. Check, seems like sound public policy.
8 Likes