I’m sure we agree- and I do think it’s great that your strategy worked. But I’m sure everyone on this thread knows a family where kid number 1 was an academic superstar, kid number 2 was either the same or an athletic superstar, and kid number 3 was an OK student (or maybe a solid student who was happy with B’s and the occasional C when s/he got bored) but the nicest, kindest, most empathetic extrovert you could ever meet. So numbers 1 and 2 can craft an application strategy to take advantage of merit aid, meets full needs, drop down a notch and end up with a free ride type of arrangement. But until colleges start giving out merit aid for being kind, kid number 3 can’t get into “meets full needs” colleges, won’t qualify for enough merit aid to make the numbers work… and there you go. And by now the parents are older, so every bit of retirement assets count…
Or kid number one was the average student but wanted to attend a private university. Parents said OK to that…but found they were very short then on funds for students two and three…or more.
I don’t think anyone here has a good enough crystal ball to help this OP….or a magic wand.
Adding…when we had our kids, we knew that IF they wanted to attend college, we wanted to fund as much of the cost as possible for undergrad. Our timing of paying off other debt, our maximizing retirement contributions for many many many years before they hit college age…and or timing of retirement for both parents played into our financial plan for paying for college as well as funding our retirements.
We don’t know what, if any, plans this family already has in place to fund or partially fund college. We don’t know whether they live in a state where there are great awards (e.g. Hope and Zell Miller in GA, or Bright Futures in FL). Or whether they live in a state where the public universities are plentiful and not more reasonably priced for instate students (NY, Ohio…but not maybe PA where even instate costs are high).
Too many unknowns here.
But I will say…once they know stats, chasing merit could be their best strategy.
Not without more information from the OP.
I thought I’d share one more story about how keeping an eye on financial aid, and in this case scholarships, could make a difference even when doing retirement planning.
My youngest is starting college at a state school in NY (SUNY) this fall. Her first year she qualified for a NY scholarship called the Excelsior where her tuition is covered (I think worth about $7K/yr or so). They have a whole bunch of rules around this scholarship - AGI (combined for family) has to be under $125K, there’s a NY residency requirement after you stop receiving the award, there’s also a credit requirement (min 30 toward your degree) for each year. The first year AGI requirement was for tax year 2020. I already know for her second year, tax year 2021, she won’t qualify. However, for her third year, tax year 2022, we could again qualify if I do some financial moves. The big one is whether I contribute to a trad’l 401K instead of a Roth 401K. If I contribute to a trad’l 401K, my AGI will be less than $125K. If I contribute to a Roth 401K, my AGI will be more than $125K (note that I believe regular financial aid adds back in 401K contributions but not this scholarship). So what should I do? Well, just looking at my retirement in isolation, I made the decision to contribute to the Roth 401K (we can have a whole other discussion about that decision, but let’s say here I think it is the better vehicle but not by a slam dunk). If I bring the college savings into the equation, it becomes alot more interesting. Financially, I would definitely prefer to get the scholarship and contribute to the trad’l 401K. But then the other scholarship qualifications become more important - the NY residency requirement, the yearly credit requirement and, one I haven’t mentioned yet, it is not guaranteed. So, taking all that into consideration, and because I do have enough money in her 529 to cover the tuition, I decided to pass on the scholarship for year 3 (haven’t made a decision for year 4 yet). Would that be the right decision for everyone? Probably not.
I think my point in all that is to keep an eye on the college aid, even when planning for retirement, but generally only alter your plans when you have more certainty to the financial impact of the aid. Many who do play financial games, do it before they have such certainty and it does not end up better overall.
One thing that I have not seen on this thread which I think is worth mentioning: Whatever you spend on your first child is IMHO setting a precedent. You should try very hard to make sure that you will be able to afford to spend as much for your remaining children if they also choose to attend university.
We set a somewhat conservative budget for our first child on the basis that there were uncertainties regarding what our finances would be seven years later (when the youngest would be in their last year of university). Things like what the stock market will do and what inflation will be are quite difficult or impossible to predict that far in advance. We tried to be careful that we could afford to spend as much for our younger child as we did for the older child. Fortunately for us it did work out.
I would assume that all will attend university unless you know otherwise. Even if they take a gap year or two after high school they still may end up in university after the gap.
Another thing to keep in mind is to try to avoid a financial disaster if it ends up taking five years for a student to graduate with a bachelor’s degree. If they attend an in-state public university in most cases they will still be in-state for a fifth year. If they attend a private university with need based financial aid, this usually ends after four years. Similarly merit based aid frequently requires some minimum GPA to keep the aid after the first year. One daughter for example had to maintain a 3.5 GPA to keep her merit aid.
All of which just means, be cautious. Stuff happens. Putting three students through university can be expensive.
The FAFSA doesn’t ask this.
I’m also wondering if this question on the Profile is a supplemental one asked only by some colleges.
@Bart_Nathan i asked these questions upstream, and they really could provide everyone here a context to give you better answers. Any chance you can answer them? Or if not, just say you don’t want to or can’t answer.
I don’t think we really have enough information.
- Does this family have any college savings for the three not yet in college kids?
- Remember that the split EFC per FAFSA is going away. No one knows what Profile schools will do (and most schools that meet full need use the profile).
- Look at what Blossom wrote. Your financial plan should be your financial plan…and not with the possibility that maybe your family contribution will be lower…because that just might not work.
- How secure is your retirement income? IOW, what is your budget for college costs for all three of your kids with your anticipated retirement income (and savings).
- Stats…what are they for these three kids? SAT or ACT scores? GPA as of end of junior year? You likely don’t have this info for all three kids yet…so hard to even guess where admissions or merit aid are highly possible.
OP here. Thank you everyone for the thoughtful comments. Let me address some issues.
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I do understand that I should not base my financial decisions about retirement income based on what would “look best” on the FASFA. Nor will I make any changes to my retirement based on the information I get from an online forum. I am just looking for ideas to present to my financial advisor.
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I do understand that no matter what the EFC turns out to be, my kids will be getting or not getting financial aid is based on more than just the EFC. What college or university, grades, further unknown changes to the rules, etc. OTOH, if I can tweak my retirement income that helps with the EFC and is in line with optimizing my retirement plan, is it not worth it to look at?
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I understand that each kid will want the standard I have set with the first to college.
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I understand from some of the replies that it looks like I have some information from this thread that I can pass along to my advisor. I should look into spending down my non-retirement saving first. It sounds like there FASFA treats earned and unearned income differently, though I am not sure to what degree and the effect on EFC. Maybe if I can find out how this income is treated, I can pass that information along too (assuming it is relevant).
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I understand that many of you want more specific information. We live in Virginia. My oldest just completed an AS at the community college and will be transferring to an engineering school. The engineering schools in Virginia either did not accept him (he did not get one of the degrees that automatically allows transfer) or others he had no interest in. He has been accepted to a variety of private schools outside of Virginia. Other than a PTK scholarship, a lot of these schools provide minimal merit scholarships to transfers. He has agreed to work during school and will be doing COOPS or internships to help pay down loans.
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My second oldest is a HS junior. He has started looking and fortunately one of his top choices is a state school (but not his actual top choice;-) He has good grades and a decent, but not extraordinary SAT.
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My third child is currently in 8th grade. He doesn’t have a clue where he wants to go.
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Financially, our advisor has always recommended that we maximize our retirement portfolio and worry about paying for college on the “back end” We have some 529’s, but they are minuscule compared to the expected college tuition and compared to our retirement portfolio. About 20% Roth IRA, 50% 403(b), 5% non-retirement securities, remaining 20% SS and pension.
If anyone has any additional ideas on tweaking our portfolio to maximize financial aid, I would welcome it. I’d prefer not to get “advice” that comments on what I should or should not have done in the past, since I cannot change that (ie. “you should have saved more on 529s”.). I can add to existing 529s, but it would be hard to make up for all that lost time.
Thank you for your answers.
It sounds like student one has a plan already.
For number 2, that SAT and GPA could net this kid decent merit aid depending on what those numbers actually are. @tsbna44 can give you some info about schools with auto merit and what it takes to get it at various places.
For number 3…it’s a little early to look at specific colleges, in my opinion, but the stronger his record is in high school, the better chance that kid has of getting merit aid someplace.
You can’t wind the clock backwards, I agree. Work with what you have and know.
I still say…merit aid is your friend. It is not income dependent.
If your EFC is $70k for child #1, it is a long way (down) to getting the income and assets to an amount (below $7k) to qualify for need based FA on the FAFSA only. Some schools do use the FAFSA EFC to award aid from the school, and the student could qualify for subsidized loans, but it is hard to say ‘if you get that EFC number down to$30k your children will get a lot of money.’ At some schools, maybe. Can your family live on a much lower ‘salary’ (pulling only a little bit out of your retirement accounts each year)?
FAFSA doesn’t really care where the income is coming from, if it is retirement funds pulled from 401k, pensions, etc. It’s income.
I agree that chasing merit is a better route. Virginia has wonderful public schools so I hope your kids can make those work.
A big consideration is not to make large pre-tax contributions to retirement accounts in the years of relevance to FAFSA (ie starting this year for a HS junior). The contribution gets added back to your income but you don’t get the benefit of the tax paid being offset against your adjusted income.
Better to add to your retirement accounts with post-tax contributions (Roth IRA/401K?) or if that’s not possible just put more post-tax money in a 529 instead of saving for retirement (if you’d otherwise need to make IRA withdrawals to pay for college). Or just accumulate more post-tax assets (counted at 5%) instead of having to withdraw money as income (counted at 20%) from your IRA during the relevant FAFSA years. But spend those assets down quickly to avoid them counting repeatedly across multiple years. Unfortunately you may not be able to sustain this until your third kid goes to college.
Kid #2 GPA=3.64, wGPA=4.06, SAT (1st try)=1200.
All good, but not great.
Can kid one take the additional CC classes that would guarantee him admission into the COE at any VA colleges? That might lower the cost and their debt.
So I just read the entire thread - and agree - the FAFSA, other than perhaps your state school, won’t help. Most OOS schools don’t offer substantial need (UNC, UVA are the only I believe) and many privates will have CSS requirement. Having kids in school simultaneously could help but it seems like the kids are spread apart and maybe would only have a year of overlap.
What not to do - try and game the system.
Rather take advantage of the schools that offer big bucks. For a 3.5 and decent SAT/ACT, you want to look at schools like Alabama, UAH, Mississippi State, Murray State and more. For a 3.75 or higher, U of Arizona. A lot on here like Iowa State - some have described it as a mini Purdue. The Florida state schools, not easy to get in, but are reasonably priced - Florida, Florida State - with a strong ACT can be really cheap, UCF, UFS, FAU, etc. Others mention, Utah, New Mexico, South Dakota School of Mines, Mizzou, Arkansas, Missouri Sci & Tech.
Really need to know actual #s (not pretty good or decent student), desires, and how much does money matter…so if the student wants to be in a certain region, but for $30K all in, they’d go anywhere - that type of stuff. Also, other interests - because half of kids won’t finish in engineering (if that’s the major of choice).
For your son transferring - again, a low cost school might be the way to go- and there are some - but what’s the desired budget?
Not without pretty much completing another AS degree
There is an older book “Paying for College Without Going Broke”. Some of the info is a little old and perhaps not pertinent anymore…but the basis is there. See if you can get a copy someplace to read.
One thing that bothers me reading the last year - everyone assumes a perfect world like we have.
@Twoin18 says, interest rates are going up. I’m not ready to say we’re going into a prolonged bear market like they did - it’s certainly within the realm of possibility.
I’m already thinking - I should have made the college funds more conservative vs. leaving them in their current basket.
To me, unless you have income (i.e. dividends, bond interest), then you are playing with fire - because assets re-price daily. Dividends have typically been secure although many were removed a few years back but some are now being reinstated (Ford, Nordstrom, Cheesecake Factory)…I’m a fan of muni bonds because they are typically secure, they provide income (although now below inflation) and frankly, the values once you own them aren’t that important…if you have enough, you can fund the education through them…but they’d require a substantial amount of principal to earn that much.
My point here is - people need to ensure their finances are bullet proof…we’re going to find out a lot of people who didn’t plan but said - i’ll figure it out day by day - we’re going to find out so many wrecked their lives.
I am sorry but a lot of red flags here. Your son should have known which courses to take for a transfer. Is there a particular reason he did not follow that pre-engineering path? Coops and work study sound really great but that will be a drop in the bucket. If he needs another two years worth of coursework to gain entry into a state school then it is likely that he will need to take just as many courses at an ABET accredited engineering school. What you do not want is for him to spend $60K a year in a college that will let him in because you can pay and then change majors. Look I do not want to come across sounding like an a-hole but how about tell your son to take some more classes at the community college to prove he can do the coursework in engineering and have HIM pay for it while commuting from home?
The stats you posted are decent if he can boost his SAT/ACT. Repeat after me: AUTOMERIT at schools that offer automerit.
Good luck!
What I would share with your financial advisor is that the absolute worst thing to do from a FA perspective is to generate income (from Roth conversions, IRA distributions, etc) during the years covered by financial aid forms. Minimizing income during those years is the biggest piece of the puzzle.
Of course, one still needs to come up with the money to pay for college. So I’d ask your advisor what his plan is for paying for college “on the back end”. My guess is that his plan is going to involve distributing money to pay for college from retirement funds if your current assets aren’t sufficient.
Excelsior does not cover full tuition. The max scholarship amount is 45500 and it is a last payer after all other NYS aid