@gearmom, the kids would all be paying OOS tuition at that Midwestern university.
How does that save money?
The parents will be in Asia, so the kids wouldn’t be state residents.
Start job hunting now so that you can move back soon. When the kids are out of college, you can return to your international life. Not what you are hoping to hear, I know.
If you have a teaching certificate, you can get a job somewhere in the US teaching ESOL in a K-12 school which would give you in-state residence, a decent salary (if you choose the state well), and benefits. If you don’t have a teaching certificate (and don’t want to get one or don’t land in a state where it isn’t required for K-12) then the market is a bit trickier. You would need to figure out whether you are looking for an Academic English gig, or something else. In some locations, there are only a few full-time jobs, and most of the instructors are part-timers. TESOL.org has a useful career center that could have ideas for you: https://careers.tesol.org/jobs Some of the larger “chains” like ELS Language Centers also are always hiring somewhere. And with your experience, there could possibly be a job at ETS writing for the TOEFL or TOEIC.
Wishing you all the best!
@BelknapPoint can answer this better…but I think ONLY transfer the kid who will be attending college. Do this right before you file that kid’s FAFSA.
If you transfer all to 529 accounts, in your name, ALL are counted on kid number One’s financial aid forms.
Adding…any chance there is job potential for you parents in Oregon where you already own a house?
Please talk to a tax advisor about transferring the UTMA accounts. Your child legally owns the money and transferring it to a parent-owned 529 will have tax implications. It may not be worth it. Your student can spend down the UTMA money their first year of college and not have that asset for sophomore year.
The financial aid office will not only count your rental property as a business but also your rent subsides for your job as more income. Run the College Board EFC estimator here to see whether you demonstrate need for financial aid purposes
Note that the estimates returned are the MINIMUM you would pay. Most schools do not meet need and expect you to have student and possibly parent loans plus a student job. It’s still a good idea to have some idea where you stand, though. This estimator asks more questions than some others so hopefully it catches more of your situation.
Moving to the states and qualifying for in-state tuition somewhere is a great money-saving strategy. Working in a college town so your kids could commute to school would be a further bonus.
Have you run the numbers thru FAFSA to determine your likely EFC? Is it under $20k? If so, consider moving back to that house in Oregon at least 12 months before your 16 yo graduates from high school. Check out the Oregon Promise.
Granted, the program changed a bit this past fall (hence the question about the EFC) but it’s still a heck of a deal for Oregonians.
@momrath There are some states that the students can apply for instate status after living there a year such as Utah or North Dakota. So kiddo would live in the house for a year and work and save. After a year have instate status. (check all the fine print especially tax papers) They would have to research if they wanted a place like that or they wanted a place that provided high merit money. Or once they were residence of, for example, North Dakota, look into Contiguous, MSEP or WUE residency. And then they could possibly have more options. http://und.edu/admissions/student-account-services/residency.cfm
Using Tuscon, Arizona as a potential rental property place https://financialaid.arizona.edu/types-of-aid/scholarships/freshman-transfer
If they have a 3.75 and a 1390 SAT, their cost would be 10k + board a year. They have saved 2.5k per year per kid. With that saving and the Stafford loan and Pell only another 1k for the first year, the U of A is paid for. And the U of A is a good school with a broad range of majors.
Also Huntsville, Alabama https://www.uah.edu/admissions/undergraduate/financial-aid/scholarships If they can get at least a 3.5 GPA and a 30 ACT and then they would get a 100% tuition scholarship and have their room paid for. They’re college would only cost board and fees. So let’s guess that at 5k a year. Mostly paid for by 2.5k a year savings and 1.5 Pell with little loans. If their ACT is less than 30 then they would probably pay 15k+ a year. They could also enroll part time and work and go to school if need be. Huntsville is a great tech area.
So, they way they could save money is by not having to pay room and prepared board similar to @MACmiracle 's example. You would have a house with multiple apartments. Your college kids would live in one and the other apartments would be rented out and providing income.
The UTMA accounts, legally and ethically, cannot be transferred to a different account in the parent’s name. The money belongs to the child named as the UTMA owner/beneficiary, and it can only be used for that child’s benefit.
Opening a custodial 529 account should be very easy, but 529 accounts can only take cash, so you would have to liquidate the corresponding UTMA account first. Whether or not it’s worth it depends on how the UTMA accounts are invested, and how much (if any) tax liability there would be. If liquidating the UTMA results in realizing capital gains above the child’s standard deduction, you’ll want to figure out how much tax will be owed. Understand that whether you liquidate now or liquidate later in order to pay college expenses, there could be taxes owed either way.
No. A custodial 529 account, just like a UTMA, is the legally owned asset of the account owner/beneficiary; the account custodian (usually a parent) is just managing the account until the owner/beneficiary reaches the legal age of majority. The account is only reported on the FAFSA of the owner/beneficiary.
College for your kids in the country you are now living in is not an option? And are all of your kids US citizens? And are their grandparents or aunts and uncles in the picture so that your kids aren’t staying in an empty dorm room for every vacation?
If it were me (and of course, advice is cheap) I’d be looking at two tracks.
Track one- relocate back to the US and establish residency in a state with good public U’s commutable from major cities where you and your spouse are likely to find jobs. If it means moving back to your old house- wow, that’s easy, but if not, this is a big country and there are lots of nice places you could find a strong educational system close by. One you’ve got jobs and a place to live you can work the numbers to see if you need to sell the house to buy yourselves somewhere to live, or keep the house because you and spouse are teaching at a boarding school where you get lodging in exchange for being dorm parents/masters, or some combination thereof.
Track two- look to extended family to see if your kid (or kids) could live with them and commute to a local public U, see what that would cost you out of pocket and if it’s affordable.
I think setting up an 18 year old kid in housing which you own but where you are thousands of miles away is a recipe for either disaster or financial risk. Do you want your kid dealing with plumbers and locksmiths and snow shoveling when kid is supposed to be studying for a chem final? Of kid is living in a condo community where everything is provided… do you want the neighbors calling an association meeting every time your kid has a few friends over and the music is a little loud? Or your kid gets a roommate to help with cover the condo fees and your property taxes and the roommate flunks out in the middle of the semester and you’re stuck covering the entire bill with no extra cash coming in???
I’d explore the tracks that encourage your college kid to be a college kid, not a landlord or property manager before I even contemplated that option.
@blossom It perhaps wouldn’t be ideal but many college kids have jobs. I think you have greatly exaggerated the amount of landlord activity and we are landlords. College kids in off-campus housing have to get their butts out there and shovel the snow when snows. Nothing strange about that. Or you can just hire a snow removal company. Or they could choose a family such as a grad school family as renters. Or they could choose a regular family. Or a professor family. The house we stayed in college at had three floors. The dad bought it to pay for housing for his kids. They only rented it to engineering or pharmacy students and not one time in the years we lived there did we need a locksmith or plumber or electrician. I don’t think it has to be this huge drama.
In a perfect world they would have all the money that they need to send the kids wherever. But they don’t and this is merely one option that families do choose. An option of putting that potential property investment to use. Heck, they could hire a property manager if this was too much and still have the kid live there for free. Who is managing the Oregon property for them while they are in Asia?
A friend’s father bought a house when she, the oldest of 4, went to college. She lived there for 7 years (3 years of law school) and various brothers and others lived there over about a 10 year period. She managed it but father lived 2.5 hours away, so could do major repairs at times. There was a lot of snow, frozen pipes, grass cutting to worry about but it saved the family thousands of dollars over the college years. It was also very likely that all 4 kids would go to this school since it is the only one in the state.
I gave my advice. I didn’t tell them “OMG this is the worst plan I’ve ever heard”- I’m just pointing out that from 8,000 miles away it looks like a no-brainer (sell the house, buy a house), but from up close there are other things to consider.
I grew up in a university town and saw first hand that some student lived- in properties were well maintained and taken care of, and others became slums in a matter of months. Two blocks from my parents house was a single family home which probably had 15 people living in it at one point ( a zoning violation and the owners were cited and fined many times for this); the neighbors must have called the police daily. Old couches on the lawn, cars parked in what used to be flower beds, kids urinating on the sidewalk at 1 am on Saturday nights. The owner was a small corporation which owned a few hundred similar properties, so their interest was in the cash flow (significant) and not the eventual appreciation of the homes (which became tear- downs after not too much time).
This family likely doesn’t have the financial cushioning to weather a loss of value, and maintaining a property from far away is usually more time-consuming than small time investors realize.
Go in peace. I have no dog in this race.
@twoinanddone I agree that there could be snow removal (not likely in Arizona or Alabama, the high merit places) and grass cutting. You’d have to plan for that and what to do or who to call in case of a plumbing or electrical issue. Even if you had to call someone in for an occasional repair, you could still save maybe 10k per kid per year on room and board costs. That would equal 160k in savings for four of them. You could simply hire a lawn guy or a snow guy and have phone numbers for plumbers and electricians at that point if the college kid could not do any work. Or if that was too much, hire a manager.
@blossom For the possibility of them saving 160k, they could just hire a property manager and NOT rent to undergrads.
The savings on food only materialize with kids who are prepared to shop for groceries, cook, and clean up after meals. If a kid who is not on a meal plan is eating in restaurants/doing takeout every night, that wipes out the “board” savings pretty quickly.
People like to complain about the cost of dining halls- and true, it is more expensive than preparing your own food, but if a kid without a car were to replicate some of the dining hall offerings, it would be tough. One of my kids ate MUCH more healthy foods on the dining plan than off. Salad bar at every meal. Fresh fruit at every meal. Once he went off it, it was food trucks and taco joints and energy bars for breakfast. The occasional trip to a real supermarket, but otherwise, 7/11 type food shopping.
You know your kids eating habits and whether or not they’ll be of the mindset to cook nutritious meals or just eat out.
We just pointing out that managing a house is not that easy from 8000 miles away, especially in a climate this child may not be used to. This family lives in China so may live tropical. Oregon (or Idaho, or Colorado) have homes that need to be winterized, that when the temps drop 60 degrees in a day have to have the hoses disconnect from the faucets.
It also limits the following 3 kids to the same school. That’s fine if they all agree and if they are all fairly responsible to take over as the next landlord or on-site manager or even just the person who arranges for the electricity to stay on.
My daughter lives in a rental house. Even though there is a management company, one parent takes care of collecting and paying the rent and utilities. For two years it was a parent who lived about an hour away. This year it is a parent in another state. It’s tough. A couple of the dads are in town enough to make minor repairs. The management company does nothing, did not come over to prep the house before the hurricanes and did not come to clean up afterward. D’s boyfriend was living in a house owned by one of the housemate, and they put up plywood, secured everything, prepared for the storm. Owner v renters.
@twoinanddone Somehow they are ALREADY managing a house from 8000 miles away and have done so for years. How ever they have figured that out they could continue.
Just one possibility so find affordable college options. Yes the college options would be limited just like most kids in the US have. They would have to carefully plan.
I’m sure they know the ins and outs of being a landlord since they are ALREADY landlords who deal with renters 8000 miles away.
I’m not understanding the math where trading in one house for another nets 160K in savings. But you guys are clearly the experts so I bow out and defer. If this families only two assets are a house and the four UTMA accounts, then becoming LESS liquid by buying another house-- this time in a place where none of them have ever lived before, don’t know the local market, don’t have former neighbors or any attachments locally, etc. seems counter-intuitive but whatever.
fyi- predicting financial aid TWO years out is complicated. How you predict financial aid/costs/affordability for a kid who is likely now in the third grade? or whatever kid number four is? Seems very, very complicated and assumes many facts not in evidence.
And the biggest assumption- that a public college is going to give in-state rates to a kid moving here from China just because there is an older sibling (not a guardian, but a sibling) living in that state already- is a big, risky play.
@blossom The college does NOT have to give in state rates for this to be beneficial. Currently they are facing OOS rates wherever they go. They would save the money for them by not paying room and prepared board. WHICH IS THE OP"S OWN IDEA, OPTION #3. OP lamented that if kiddos stayed at the Oregon house which they are rent out while being 8000 miles away, they would lose all rental property. So, ONE possibility is that they could get a BETTER rental property. This rental property could, for example only, be a duplex because a KID does not need a whole house. So the idea is that there could be a continued income stream from the rental AND boarding taken care of. Now since having his kiddos live BY THEMSELVES in a house in Oregon was OP’s OWN idea, I am assuming that he thinks his kids can grocery shop, make food, shovel snow, call the plumber etc… This is just another take on OP’s OWN idea #3. There could be a better strategy or optimal location. Since OP is personally coming to America to sort this out this summer, it could be something he looks into. AS SIMPLY A POSSIBILITY.
If your room and board costs, for example 12k-14k per year, and they can simply have kiddo live at the rental and make food for ONE person. They could be saving 10k a year on room and prepared board costs. So 10k times 4 for 4 years in college is 40k. For 4 kids 40k times 4 is 160k. Now OP’s OWN suggested #3 was to have the kiddo stay without rental income. This COULD POSSIBLY be improved by maintaining SOME rental income. Now they could stay in Oregon is they love the location and need to stay with familiar but it COULD POSSIBLY BE, that there is another property that would make more sense even in Oregon BECAUSE A KID doesn’t’ need an entire house. And no we didn’t say that we were all the best experts on the planet, but it is just something that you could possible look at and I don’t remember stating that this was the solution. It could be worth a look though maybe!
Gearmom, the math works if the math works. It’s simplistic to say that you can save 10K per year on room and board by living in a home owned by the parents. You don’t know property taxes, you don’t know water/sewage fees, you don’t know home-owners insurance (especially for a property that is not owner-occupied-- the kids name is not on the deed so rates are likely much higher than a comparable property across the street where the owner is living in the home), you don’t know garbage collection fees or home heating costs.
Living in your OWN parents house saves you 15K or 10K per year BECAUSE YOUR PARENTS are already living in the house and paying for hot water and heat and taxes. The incremental cost of a college kid living at home is pretty low.
But you aren’t talking about a kid living “at home”. It is crazy to tell someone how much money they’ll save with this scheme without having a single fact at your disposal. Owning and maintaining property is always a good idea when it’s someone else’s capital at risk.
I’ve got a relative who owns an investment property in a town where taxes almost doubled after the last re-evaluation. If you are renting it out to strangers you get to pass the increase along to your tenants so it’s close to a wash. If you are “renting” it out to your kid, who are you passing the increase along to? Nobody.
YMMV. I’m just pointing out that it’s not at all obvious that this “scheme” is a money saver.