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OP, do some math since you’re smart. It’s easy to calculate your monthly spending since you’ve been living “very frugally”. You’ll be surprised that you don’t know everything about your family’s financial status. That’s ok. My HS senior doesn’t have a whole picture of our family’s either. But she does know she is not qualified for any financial aid.</p>
<p>Of course we understand the concept of taxation. WE ALL PAY income taxes…You do understand that you are talking to TAX PAYING parents, don’t you???</p>
<p>We all know that with such an income (and truly living frugally) that your family should have been able to save $500k (at least) in the last 10 years. The fact that they have only saved $60k is proof that they haven’t lived frugally.</p>
<p>Your parents have not been upfront with you about their finances…and that is their right. But, please stop thinking that they have been “frugal” when they have saved so little with such a big income.</p>
<p>Based on personal experience, I would expect with an income of 250k, one should be able to pay 50K out of current income not using any savings or other assets.</p>
<p>If your family is netting (after taxes) about $160k per year, are you saying that spending over $12k per month is “living frugally”?</p>
<p>I’m sorry, but that is sooo wrong.</p>
<p>Ah, class wars. Always an entertaining thread.</p>
<p>Sadly, “poor” people do not understand “rich” people, and vice versa. </p>
<p>A poor person sees a number like $250K, and its “OH MY GAWWD that’s so much money I would be on easy street if I had half of that, how can you even whine about unfair financial aid you’re so entitled” without recognizing that 1) half of it goes to taxes- half! poor people pay virtually nothing in taxes; 2) virtually everyone, once they can afford it, will move to nicer/safer housing with better/safer schools, as is entirely appropriate. It’s not free though, so you can no longer live on $20K/year and bank the rest; 3) since the rich person will be full pay, the schools expect half of what is left of your paycheck. How many people can live on 25% of their income? It’s that or have the school confiscate your house and savings. Or both. </p>
<p>A rich person goes to buy a product called “college” and discovers it’s the only product in America where what you pay for it is not based on some sort of free market principle, it is based on what the legally-of-age’s consumer’s parents can afford. How is that rational? So the rich kid realizes that one parent’s entire income (or more) will be taken up paying for school, while the poor person gets the “free ride”. Of course the rich person (especially the rich person’s kid) has no idea what sort of barriers and obstacles must be overcome to even survive on $20K/year, let alone make it to college. They assume that if their parents could bootstrap themselves up, the poor person’s parents must not work that hard or be that smart. After all, they are proof of the American dream.</p>
<p>So the poor and rich hurl insults at each other. You see ludicrous statements like ‘I would MUCH rather live on ~20k a year, like I do, and be happy and not put others down than be like you who calls people who makes less than his family lazy and stupid.’ which really don’t contribute anything but just fan the flames…</p>
<p>To the OP: hopefully you are coming around to the discovery that paying full price for undergraduate school is for suckers. Your money is being used to subsidize others, and you are paying for a product whose pricing is not based on anything rational, but is arbitrary and likely based on collusion between the schools. Get past the name, and go to a school that doesn’t bankrupt you or jeopardize your parents’ assets and retirement.</p>
<p>Kids are Harvard and Stanford are getting just as drunk on the weekends as the kids at Penn State… save your money for grad school, which these days is more important to have a “name” school on your diploma than undergrad.</p>
<p>Your only other option is to game the system: once you make it into HYPS, have your mom quit her job (she can work pro bono for a few years to stay in the game and you would no longer need the 2nd house), have your dad take a pay cut to $180K, now you will put $30K/year+ of FA back in your pocket, which is about what your mom is clearing after taxes anyway and paying to the school. Everybody wins!</p>
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<p>Not just a “poor person,” but anyone who earns $100K per year can easily look at $250K and easily see that people with that much money are not “living frugally” when they have saved so little money. </p>
<p>That said, I don’t think that is all they have saved. I think the OPs parents haven’t been “upfront” with her. I think they have a lot of money somewhere. The money has been going “somewhere” - either into investments that the parents don’t want to touch for college costs, or expensive real estate, or into some failed business.</p>
<p>MBJ…see post 94 of this thread regarding filing for financial aid with significant assets. I already posted my opinion about that.</p>
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Speculation on your part.</p>
<p>Law school alone (which the OP said his mom recently completed) can cost $120K+. They are supporting other relatives. We have no idea if money is being sent back to the home country to support anyone.</p>
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Well, if they put money in real estate, the equity is likely gone, if in a failed business it is gone. Are we punishing people for poor investment choices now?</p>
<p>Maybe they have other assets than the $60K in savings, we have no way of knowing.</p>
<p>notrichenough- thanks for the insightful post and for this
“Law school alone (which the OP said his mom recently completed) can cost $120K+. They are supporting other relatives. We have no idea if money is being sent back to the home country to support anyone.”
^in response to so many people’s unfounded accusations of my parents lying to me and “not being frugal.” Our mortgage is over 5k a month because we chose to do a 6 year mortgage rather than string it out over 15-20 years like a lot of people. we have to pay medical expenses for my grandparents who live with us and who are not US citizens. like notrichenough said, we had to pay for my mom’s law school. then there’s insurance- my mom’s life and car insurance are very high because her driving is extremely extensive. and then there are the costs that I do not know of. like notrichenough said, our tax percentages are a lot higher than yours probably are. I don’t need you to tell me we are living extravagantly. I don’t know many people who are as money-conscious as us.</p>
<p>That said, I don’t think that is all they have saved. I think the OPs parents haven’t been “upfront” with her. I think they have a lot of money somewhere. The money has been going “somewhere” - either into investments that the parents don’t want to touch for college costs, or expensive real estate, or into some failed business.</p>
<p>^your speculation is infuriating. you “think” but you don’t know anything about us, and coming from your perspective, you think that we are filthy rich, when maybe you don’t understand the expenses we have to pay. maybe you live in an area with low property tax who knows. my parents did not invest, nor do they own “expensive real estate” nor do they have a failed business. I told you that we have not been making this much until very recently.</p>
<p>Aglages, you are a cretin.</p>
<p>Stupefy, one thing you need to know…by using a 6 year mortgage, your family is amassing more equity in your home than they would be if they stretched it out over 15-20 years. Many schools also use a %age of home equity as an asset in the financial aid calculations if they use the Profile. Most financially generous schools use the Profile. Some do not count home equity, and others count only a capped percentage of it. Still…if you are paying the principal that quickly, you will have more equity more quickly.</p>
<p>thumper- yeah I figured that would be detrimental in terms of getting financial aid. my parents were just in the mentality of “getting out of debt” and reducing interest as much as possible.</p>
<p>Please, someone take this one while I go get popcorn and a beer.</p>
<p>OP, when you get a grasp of the real world, you will see how ludicrous your post is.</p>
<p>People don’t WANT to take out a 30 year mortgage, but they DO, as they have other things to finance and obligations to pay. Your parents chose to take a short mortgage term (for two houses?) and we should feel sorry for you? No, I admire your parents for being able to do this. But at what expense? Mom can go to college, but not you? Their mortgage gets paid off earlier but you don’t go to the school you "deserve?’ </p>
<p>A little humility will take you a long way.</p>
<p>Your parents CHOSE that short term mortgage. They could easily do a longer mortgage to lower their monthly payments. Yes, I know that you wind up paying more interest with a longer loan, but colleges will look at the situation and say this is a choice. Just like paying into a 401 is counted as money that COULD have been used to pay for college. That’s annoying as most of us have lost 401 funds due to the stock downturn and want to (need to) continue to save toward our retirement. But from the college point of view, they say it’s our CHOICE. I don’t like it or agree with it, but I understand it’s their right to decide how to give THEIR money away. Remember, these are institutional funds. They have the right to decide. It’s a gift. </p>
<p>Your family could have stayed in a smaller home, rather than moving up to a larger home. Many people are still in the same homes they bought when they first married. They are fortunate to have a home. Many in this country don’t. Your family could have set up a college savings plan, putting away a relatively small percentage of their income. Over 18 years, this fund surely would be quite large today. Again, this isn’t MY being judgemental. I’m simply trying to show you that colleges see these lifestyle decisions as choices your family made. </p>
<p>BTW, extended family and medical expenses are considered extenuating circumstances at some schools and CAN lower your EFC, but at $250K I don’t think there’s a chance of getting FA.</p>
<p>OP,
This is an excellent time for your parents to refinance their home. Interest rates are at a near-all-time low. Your parents could reduce their monthly payment for the next four years with a 30-year mortgage, leaving them with a couple thousand extra $$ per month to help pay for your tuition. If the mortgage has no pre-payment penalty (most do), then they can pay it all off after you graduate. You might suggest they at least investigate doing this as a college financing strategy.</p>
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Colleges don’t care what your mortgage payment is. They care only what your equity is. There are no forms anywhere that ask for your mortgage payment that I remember.</p>
<p>And the OP’s parents are building equity very quickly. This will hurt them FA-wise. However, if they were not paying down the mortgage it would be piling up in the bank, which will also hurt you FA-wise. Whether one is better depends on the policies of the school and what kind of equity protection they have.</p>
<p>I think the biggest drawback to paying down your house so quickly is the loss of liquidity. It might not be so easy to get the money back out if you need it.</p>
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I have a problem with the attitude that everything you do in life needs to be geared around saving as much for you can, so that you can turn it over to a school when your kid enters college. This is playing right into the school’s hands.</p>
<p>There are other quality of life issues that affect the entire family for years or even decades, and to me they should be given higher precedence than saving every nickel for college. Your kid spends 12-13 years in grade school through high school, this is probably more important in the grand scheme of things than where your kid goes to college. It is wise to invest in this phase of their education as well, and this likely means moving out of the starter home you bought when you got married and moving to a place with quality schools. And this will not be cheap… On much of the country this means $400-$500K+ for a house, $10-$15K+/per year in school/property taxes, etc. No one should feel like they have to make trade-offs in this area to save more for college.</p>
<p>I believe the Profile asks for the amount of your mortgage payment.</p>
<p>bay yeah we did something similar. Refinanced with a 30 year at a very low rate to provide increased monthly income for the college years and to help pay off debt from our first child’s college. i don’t have much financial expertise but even I figured that one out. If you’re concerned about the profile, just do the refinance after filing</p>
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<p>It is your choice where your priorities are. If you CHOOSE not to save then the school has the choice to give money to a kid whose parents couldn’t save. </p>
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<p>Or you could stay in the $100k or less home, spend about 5-20k on private schools every year, and save a lot of money.</p>