retirement in mid-2019 . . . how do I seek need-based aid for beyond then?

Paying for College
21

This has all been immensely helpful! My daughter has solid application groundwork, including a 34 on the ACT and a 4.4 gpa. We’re considering various selective or highly-selective liberal arts colleges. She might apply to a dozen for regular admission. I know that’s more than generally suggested, and it would cost as much as $1000 of app fees. But maybe only three or four are close to slam dunks, and it seems worthwhile to maximize the range of choices around April 1, including the possibility of merit aid. A few colleges on our tentative list provide merit aid; we could consider expanding that portion of the list.

From a “worst case” standpoint, the full sticker price for four years is ours to pay, close to $300,000. In response to earlier suggestions, yes, postponing retirement is possible. We also could draw on retirement funds, without depleting them for three-plus decades . . . maybe (using the too-simple 4% withdrawal model if not something more conservative).

It’s helpful to confirm what I’ve somewhat suspected: no college is going to offer a pre-read on future years even if I supplied hypothetical numbers. I’ve concluded, as suggested, that the best I can do presently is to run the net price calculators myself, with various scenarios, then make decisions based on the worst-case assumption of little or no need-based aid and no merit aid.

I also can see, and the confirmation is quite helpful, that it may make sense to withdraw from retirement accounts in the same tax year that I’m still working. The tax hit (for non-Roth withdrawal) would be painful, and we would get zero need-based aid for the ensuing year, but in the “after-after” year, we can use the cash stash to pay all expenses (college + living expenses for my wife and me) and maybe get some modest need-based aid. As someone noted, it’s better to have money in savings (subject to approx. 5% EFC) than as income.

It’s a complex and moving-pieces judgment intersecting with other life decisions, and alas, no sure path to reducing the full sticker price of the $70,000+ schools. Many points to consider alongside my wife and daughter.

22

With your daughter’s strong stats you can find $70K+ schools that would give her merit aid including some good LACs. If I was you and didn’t want to be full pay for 4 years of college, I’d focus the college list heavily on those schools.

23

This suggests you have a high balance in your retirement asset portfolio … just as a general policy, I’m not sure the meets-full-need schools should be giving grants to your student in this scenario when there are families with significant need.

But, you are smart to be looking ahead and examining all of the potential scenarios while there is still time to build a good list for your excellent student.

24

You can also look at colleges that cost far less than $70,000 a year. There are a lot of those starting with your own instate publics.

Merit aid is not usually income dependent and would also give your kiddo aid during her first two years and would allow you to bank some money during those years for the last two.

25

Agree with those who suggest you focus your search on LACs that offer good merit.

If your daughter can get $25k / year merit for four years, then you are getting $100k off the sticker price. Compare this to what you would save if you were full pay for two years and then got some need based financial aid for two more. Would you possibly qualify for $50k / year in need based aid after retirement when your assets and disbursements are taken into account? It doesn’t sound like this can be guaranteed.

I’d go for the merit money and if you get a bit of need based aid in the final two years, that will just be a happy bonus.

26

When you run the net price calculators, do pay attention to how the college/university evaluates your retirement funds. While those are invisible to FAFSA, some places will factor them into calculations using the CSS Profile or if the place uses its own financial aid forms.

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@happymomof1

Yes, some Profile schools do ask for balances in retirement accounts.

BUT there is no clear evidence that this money is used to calculate need based institutional aid. It is speculated that these schools ask this to see if the amount included in retirement accounts is in line with what the family actually has as income.

For example…if a family has $10,000 a year income, but millions in retirement accounts, this could beg the question…how?

28

Playing with the NPC for this situation can probably work…2 kids in college, but soon down to 1

However, I wouldn’t trust the NPC for estimating 1 child now in college, but will have 2 later. Many schools (for Child #1) won’t give much/any more money the next year when suddenly there’s 2 in college.

29

Actually, you should do this NOW, so that it can inform her application strategy. Don’t wait until she gets “admission offers.” Also, be sure she has solid safeties. Her stats are great. But they are the same as almost every person applying to those schools. Don’t make the mistake of being over-confident. By the way, ED will give her a big boost.

30

To the OP…

Please…please do NOT let your kid enroll in a college unless you feel confident that you can pay for years three and four. Do you want to have to ask her to leave because you can’t pay year 3 and 4 bills?

Is there any way you can defer your retirement, or is this a forced retirement due tomage restrictions for your job?

Does your spouse have a job? If not, can he or she get one?

If you retire, can you get a part time job…at least to help with college costs?

31

I get the feeling that he has the assets to pay, but is basing his potential eligibility for FA on income. And hoping his reduced income will qualify the student for FA.

If it is a voluntary retirement and you have a good chunk of assets (as you indicated upthread), the student will not be getting FA in years 3 and 4.

Also, how old are you? If you are in your 70s or older, the retirement will be understandable. If you’re in your 40s-50s-60s, I really don’t think they will care that you are retired (if it was voluntary), especially when they know what your income was previously.

32

If the poster will be asking for a special circumstances consideration due to reduced income, yes he will need to provide documentation why the income was reduced.

33

The answer is that nobody knows. This could be a school teacher married to a speech therapist, both have worked for the same school system for over 20 years. Earnings not huge, assets not huge, but a pretty sweet pension which doesn’t reduce income much. Or it can be a modest earner who has maxed out on 401K’s every year, fund manager has been aggressive and successful, so retirement assets are disproportionately large vs. income. Or it can be someone whose income AND assets would make them ineligible for aid no matter how you slice the bologna. At some point it just doesn’t matter- if you earn too much, you earn too much and it doesn’t make a difference whether you are getting a pension check, selling assets out of an IRA, or earning a paycheck- too much is too much for aid.

34

I’m going to take a closer look at some colleges that offer merit aid, although few if any of the most selective do.
I’ve concluded, based on running net price calculators and on the consensus in this thread, that need-based aid will not be available. In the last of four years, when income dips below six figures (on the “after after” tax returns) if I retire, a small need-based amount might be available from some colleges; it may not be significant enough to factor in.

I would be sure we can “full pay” for four years before my daughter enrolls anywhere. The full-pay scenario is painful, although my wife and I can withstand it, we think. So many young people are facing greater pain with large loans.

I appreciate the mention of possible (likely?) consideration of retirement assets of those who file the CSS Profile. Is that only SOME CSS Profile schools that consider retirement account balances, or do all ask and then probably consider it? Once the information is in hand, it’s difficult to imagine aid officials ignoring a relatively high balance. Someone noted: "some places will factor them into calculations . . . . " If anyone has further comments, or hard information, on that point, I’m interested.

Financially, I’ve been frugal, disciplined, and fortunate. Without getting too specific, our 401k is roughly at seven figures. That seems, and I acknowledge it is, high for most people contemplating retirement or sending kid(s) to college. It’s not so high though that paying the full sticker price of $300,000 is a no-sweat-just-write-the-checks-then-go-on-vacation prospect, not for us. My wife (retired, 60ish, some health issues) and I, in my early 60s, can get by for many years, even if $300,000 of our retirement savings is withdrawn for our daughter, who has worked hard to go to the college of her choice. We’ll have pension income and Social Security too, for the duration.

I sincerely realize so many people, for various reasons, are not at all in a situation where they might retire in their early 60s or anytime. I also realize some people might feel I shouldn’t ask about how to reduce the sticker price. I’m not expecting sympathy but am unapologetic about trying to reduce the full sticker price even a little, whether the label for the reduction is merit or need. The full sticker price is more than any expenditure (or investment) I’ve ever made. We live modestly and always have.

Some participants on this forum may be similarly-situated, trying to make a judgment on the spending of $300,000 on a selective liberal arts college with low faculty-student ratios, career support from connected alums, reputations surrounding the college name, etc. All things considered, that decision process encompasses intangibles and unknowables-- fundamentally about whether a $300,000 purchase is worthwhile when less expensive options are available.

The in-state public option is available, and the total cost over four years would be roughly $100,000. My wife and I both went to state universities and did ok (after earning graduate degrees that similarly cost modest sums). So yes, the in-state option clearly exists for our daughter, certainly as a “safety” on the evolving list that includes at least one or two “reach” colleges and a dozen or more “likely” ones.

I understand there’s even a possibility of getting merit aid from our in-state college (which requires only the FAFSA). If our daughter is lucky to get some in-state merit aid (she is not an athlete and does not have any other factors in her favor aside from academic merit), I guess the in-state could be considerably less than $100,000 for four years.

35

“I’m going to take a closer look at some colleges that offer merit aid, although few if any of the most selective do.”

If you and your daughter can get past prestige and aiming for the “most selective”, she can get a FANTASTIC education at private liberal arts schools (which you and she seems to favor) with merit aid. There are many one can build a list on but one personal favorite as an example is Bryn Mawr - strong academics, favorable outcomes (strong alumnae network, strong PhD track record), one of the prettiest campuses, bi-college with Haverford, Quaker consortium w/Haverford, UPenn, Swarthmore, easy access to a major city for off campus fun and culture plus internships. Just one example that provides merit aid. There are more.

If you can afford full pay without putting a kink in your retirement lifestyle, more power to you. However, don’t put your retirement at risk if it is going to squeeze you because there are great educational options at private colleges that do give merit aid.

36

Why do you need to be full pay at a $70,000 plus a year college? Why? Surely your state flagship is less costly. Surely your kid can get some merit aid at less costly and elite schools.

It always flummoxes me when folks bemoan their financial situations but don’t consider colleges that are less costly to begin with. Why…why is that?

Your state flagship likely provides an excellent education…and even the most costly instant schools arein the $40,000 a year range…or far less.

37

You and your daughter are in a GREAT position. You have the in-state flagship option at relatively low cost that you can afford. You have the elite schools option (assuming she’s admitted), which you can also afford (even though nobody enthusiastically hands over that sum of money, you do have it available). And she has the option to go to a lower-ranked college where she can get merit aid.

In addition to a seven-figure 401k, you will also be receiving a pension – that’s money coming in ad infinitum, for the rest of your life. Plus the earnings on your 401k. Plus the 401k principal. You won’t run out of money (assuming responsible spending), even if you live to age 95.

Oh, and you also have the choice not to retire until your daughter graduates.

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This thread has been split. Please continue here
http://talk.qa.collegeconfidential.com/discussion/2098068/300k-for-lac-or-75k-for-state-flagship