I think that it is 6%. However, if the farm is work $1,000,000 then this comes to a $60,000 annual contribution per child even with no income at all. It does not take much income to get a person to full pay.
The choice was public university or sell the farm to a close family member or be kicked out of the family. They both went with public university.
It really does not take much of a farm to have the land considered to be worth $1,000,000 if it is close enough to a city.
How is that different than a home worth $1,000,000? Is the idea that the parents should be able to take a credit line on the farm property to pay for college?
BF actually covers tuition, fees, and books. Housing may cost a similar amount (about $7k?) but you want the scholarship (BF) to cover tuition and FPP (like a 529) to cover R&B. You can also save the FPP for grad school if you donât want to use it if you have BF.
The idea, from the collegeâs perspective, is that any asset (bank accounts, house, farm, etc.) can be used to generate income (which is assumed to be 6% regardless of the asset). If the asset canât generate that amound of income, the college would assume you could replace it with another asset that can generate that income.
That about 6% asset for farms is only for the FAFSA. Profile schools can treat additional real estate any way they choose to. They can expect you to sell it to pay for college. Itâs not always âjustâ 6% or so.
Good to know about books and fees, too. Didnât know that. Granted Iâm sure I will learn a lot if he ends up here in Florida.
But my head is still in the sand until all decisions are released in next 6-8 weeks.
(Note: and it kills me that Florida is such a good deal. I guess all the money we will save will help soften the blow if he gets shut out of OOS schools and remains in the Sunshine State. It really is an amazing bargain to stay here in state.)
You work hard for your money and you are giving up before you even complete the applications . . . Was it over when the Germans bombed Pearl Harbor? Hell no! You still have time to work the puzzle.
Piecing together what you have said, it sounds like you have several kids with enough years between them that maybe you are not getting the financial aid benefit of having multiple in college at the same time. If that is right, can you figure out a way to put one or more âextraâ kids into enough community college classes to constitute âhalf-timeâ next year? For example, a HS Junior might take 1 âdual-enrollmentâ class at the high school in the Fall, another in the Spring, and two over the Summer. Or, maybe you have a recent college graduate who is willing to sign up for a few art classes to save her family $20K. Answering 2 instead of 1 on FAFSA Question #74 could cut the EFC in half. I believe the CSS Profile asks about the cost of the other college in its version of that question, but you have to know if the specific college actually uses that information before giving up.
âRetirement fundsâ in financial aid world means qualified retirement account like IRAs, 401(k)s, 403(b)s, etc. When a person with retirement accounts like these retires, the accounts are not just liquidated with the funds sent to a regular bank account to pay expenses. That would be dumb, because except for a Roth account it would trigger a huge tax bill. The retirement funds sit in the retirement accounts, where the money is still sheltered for financial aid purposes, and the funds are withdrawn as they are needed. There is no requirement to take any money out until the account owner reaches the age of 72, when required minimum distributions must begin (with the exception of Roth accounts, which have no minimum distribution requirements).
This could very likely have been a bad strategy. First of all, I would always recommend using the NPC at each schoolâs website, so you can be sure you are getting the real deal. Making a decision not to submit financial aid documents based on EFC information provided through a third party makes no sense. Second, even if the schoolâs own NPC provides an EFC that doesnât look promising, you never know what the ground truth is until you actually submit the financial aid forms and get a formal reply form the financial aid office.
Of course I know this.
When you are retired, you cannot have all of your money in a retirement account. You need something in an account that you can access from day to day. Even a retired person can have a car die or a roof start to leak. When a person is retired, sort of by definition the money that they have in the bank is money that they intend to use after they are retired, but it is not money that the universities consider to be âretirement fundsâ.
Regardless I think that this is getting away from the original point of this thread.
What do you consider âwell paidâ? Friend is a tenured college professor (has been at a T50 LAC for 10+ years) and makes $65k.
5 posts were split to a new topic: CSS & New York University
Assets arenât counted as much as income but sometimes assets are the thing that push families into full pay status. We are savers and not spenders and have been investing smartly since we were young. We did save for college in 529s but itâs likely the rest of our savings that makes us full pay. Who can retire on just 401kâs anymore? Weâve been saving over and above those accounts forever and those investments count as money that can be used for college.
So a family in our position makes a choice. Do we want to use our savings for college or keep it earmarked for retirement? We could have insisted that our kids only use the money we saved in the 529s for college but, for various reasons, weâve decided we would support them if they chose a school that costs over and above whatâs in those accounts. We are full pay at a NESCAC for our S and will likely be full pay for our D come this fall too.
Many top private colleges have about 50 percent full pay students.
Even before you retire, you should have a liquid rainy day fund. This isnât exclusive to retirees. Iâm not sure what your point is.
Only a small fraction of full pay families wouldnât feel material impact from the cost of their childrenâs college education. Many would have to make some meaningfully adjustments or even sacrifices to their lifestyles. The high cost of a US college education is the issue and itâs still rising at an unsustainable rate, not unlike healthcare cost. Some reform in the system is inevitable but we kick the can down the road for as long as we can, just as we seem to be doing with every other issue we face.
Exactly. It was similar for our family. The âtypical assetsâ language must be very low because we were full pay at a lower income than I see thrown around on CC, but I have those funds earmarked for retirement, just not in retirement accounts.
I looked at âtypicalâ assets once. I think it was on the Rice website. It was a joke. Anyone with higher income would not have what they deemed as âtypicalâ assets.
Not every college costs $70K/yr. There are private universities at nearly every price point from $30K to $75K. Not to mention there are in-state public universities that are even less for lower-income in-state students.
The problem is NOT that all colleges cost too much. The problem is that some families limit their scope to the colleges that cost the most. That is a very different problem. That is a user error, not a system error.
If NYU costs too much, go to Hofstra which is about $10K less. If Hofstra is costs too much, go to Manhattan U which is less expensive than Hofstra. If that is too much, choose a CUNY or SUNY. There are many options.
I think the problem that the options donât go much lower than $15,000 a year, assuming itâs in commuting distance, and if not, add $15,000 to that. Even living at home with cost $60,000, the students can borrow $27,000.
I completely agree with @Econpop that kids do not have to attend pricey colleges to get an excellent education. Myself and both my sisters have been full pay families and we did not have to make major sacrifices to afford college. However, our students did attend in-state options which are more affordable then many of the private school options. We also happen to be big savers, so 529âs funded our studentâs college choices.
As California residents, we have some great choices between the Cal State and UC systems. I know other states do not offer as many in-state options. We gave each kid their college budget and it was up to them to stay within that budget. We did not encourage taking any student loans but it was an option if needed.
My older son constantly thanks us for allowing him to attend college and come out without debt. Sometimes Mom and Dad know best.