<p>And the savings theme discussed above leads into the problem of savers being penalized when it comes to college costs. </p>
<p>Certainly, there are low SES families who have no savings, never had the opportunity to save for a variety of reasons, thus the EFC of zero or near that. For better or worse, that’s how FAFSA was designed. But then there are those who chose to spend & not save, and by doing that can attain a low EFC as well, and on the FAFSA it looks like the same thing. The result is that the spenders–BECAUSE they didn’t save–can get need-based FA (if their salaries aren’t too high) just like the true low SES families. </p>
<p>I’ve seen it in action–maybe it wasn’t planned that way, maybe they were religiously opposed to saving, but it worked out for them in the long run–a deep discount on private school tuition at a college that I couldn’t touch as full-pay.</p>
<p>Just pointing out that the system has flaws, and from that there are ways for the system to be exploited.</p>
<p>Right, and given that lotteries in several states are used to fund higher education and reduce tuition (HOPE in GA is one example), it’s the higher income families who mostly benefit.</p>
No, its the students with the higher GPAs who benefit in GA. The HOPE/Zell Miller has nothing to do with income. It did at one point when it was first implemented and got a lot of flack, so was readjusted. Now, as it is in financial trouble, they revisited that issue again, but once again did not tie it to income. The goal is to keep the best and brightest in state, and if they tie it to income, they might lose top students who they’d like to try to keep instate.</p>
<p>That’s why I only filled out one FAFSA form. I saw our EFC and was annoyed that I gave out our personal financial information - we weren’t going to get any kind of aid.</p>
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<p>We paid full-fare (there were some merit scholarships) and I don’t really care anymore. I’m working on paying back the merit scholarships because we really didn’t need them but they look good on his resume.</p>
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<p>I think that you’re always better off with more resources in hand than being dependent on the kindness of strangers. There is some value to peace of mind. We paid off our mortgage back in the 1990s - we didn’t have to but I wanted to get out of the routine of sending a check every month and didn’t want to bother with them in doing property tax payments.</p>
<p>So, all of you who feel like students should equally be allowed to “sink or swim” in college – here’s my question.</p>
<p>As a society, shouldn’t our goal be to work toward every member’s self-sufficiency? If every person earned a salary that could pay the rent and food and health insurance, our society would be a better place because then we wouldn’t need welfare and food stamps and WIC, etc.? Since college graduates earn a higher salary than high school graduates, shouldn’t our goal as a society be to work toward having more college graduates? If that means some hand-holding in college – in the long run, that’s a good thing.</p>
<p>I’d rather my tax or tuition dollars go to programs to support low-income college students than go to food stamps for minimum-wage Walmart employees.</p>
<p>This whole stuff about ‘savers being punished’ is one of the most pernicious myths about financial aid. Most of need based aid is determined by income, and only about 5 or 6 percent of savings (savings in qualified retirement accounts is not considered).</p>
<p>Here’s what CC has to say about savings and financial aid:</p>
<p>If you run the Harvard financial aid calculator for a 200K income, with one having 100K in savings, and the other nothing, the family with 100K in savings gets an 11, 950 K scholarship for a net price of 46, 100 while the family with no savings gets a 14, 450 dollar scholarship for a net price of 43, 600K. The ‘penalty’ for savings is not as great as you would think.</p>
<p>Sure, but the percentage of students from high income families who pursue higher education is much greater than the percentage of students from low income families.</p>
<p>As a family, should your primary goal be to get the children that you brought into the world to self-sufficiency? That is should you take care of your own responsibilities first?</p>
<p>Your perspective changes when your kids are through school. Those with students in school now may be facing a pretty big struggle as there is a competition for resources out there.</p>
<p>On support services for students: a lot of that may be possible with alumni volunteers. If that’s not possible, I think that taking fewer SES students but providing them with more support may be a more overall successful strategy.</p>
<p>Another point–some seem to be suggesting here that even low income families can/should have significant savings. At the same time, there’s always been the idea around CC that families making 200K and are ‘full pay’ cannot possibly afford elite private schools like Harvard.</p>
<p>But you can’t have it both ways. If a low income family should have significant savings, then a family with 200K in income should be able to have significant savings as well. Given the example from Harvard listed above, even the 46K net price should be affordable with at least 100K in savings.</p>
<p>^If you have a million in savings, your EFC of $55K a year or whatever is not going to kill you.</p>
<p>BCEagle, you are definitely in the minority if you could pay off your mortgage while you still had kids in school. And your anecdotes about your family members saving even despite meager income are just that–anecdotes. I agree with fireandrain–let’s work on helping everyone have a living wage rather than continue to insinuate that the poor are poor by choice.</p>
<p>The higher income family will put their kids in a more expensive school district for the better education or live in a lower-expense school district and pay for private schools which can eat up a lot of the extra income. The higher income family will pay a lot more in taxes too.</p>
<p>Can the higher income family save a ton of money on $200K/year? Absolutely. But it would take a particular mindset to do that. I’m sure that there are lots of those kinds of households that do have that mindset.</p>
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<p>No, I’m not.</p>
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<p>The EFC was actually a lot higher.</p>
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<p>I don’t think so. Home prices vary around the country. It can be a matter
of finding a cheap enough home in an area where you can find work.</p>
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<p>I saw a statistic several years ago that about 1 in 200 households in the US had at least a million in net worth. That is a lot of households and I’d guess that more than a few of them came from low-income backgrounds.</p>
<p>John Mauldin has done extensive research on millionaires with very detailed questionaires and he was going to publish a book on his findings. I’m not sure if the book is out yet but it would be fun to look at the statistics from his survey. He’s also done private interviews too.</p>
<p>Its perfectly possible to pay down your mortgage while your kids are in school. In fact that may be a good approach to the FAF- move non-retirement assets into your house. </p>
<p>Overall I think posters are losing the plot. Talking about the dirty poor is not the subject of this article. The statistics are about the lowest quartile which is up to 40K (Angelica’s mother makes 35.7K) and since the statistics are nearly the same for the next quartile that would take incomes upto $60K/yr.</p>
<p>Does it make sense that we would set up elaborate sherpa systems for kids with clearly middle class families who dont want to open their emails or go to class? We arent talking about kids in this article who had no access to Internet. And once they were on campus they clearly had access. </p>
<p>The failure of the girls had nothing to do with Internet access in the home, or their parents savings plan. Or working during high school.</p>
<p>I think a lot of the blame has to go to Upward Bound and Miss G who basically prepared them to take on a lot of debt but not to get into a school they could be successful at. That my criticism of this “go to college” movement.</p>
<p>*The savings rate correlates very poorly with income…The same way almost all savers save … they save first and then live off the remainder. *</p>
<p>Although historians now doubt she really said it, the whole point behind recalling “let them eat cake” was Marie Antoinette’s complete lack of understanding that the poor did not have the range of choices she did. No cake in the larder, when the bread ran out.</p>
<p>I’ve been through this argument, one way or another over the years- and think it behooves us to at least try to comprehend that not all are in “our” shoes. Despite random examples of people who made good. </p>
<p>So now, in addition to holding high finaid kids to a higher academic and social standard, we want their families to somehow not be in a position of needing aid?</p>
<p>That’s a big “if” for most people. I don’t know anyone who has paid off their mortgage, even those who are incredibly frugal “millionaire-next door” types. This is also an age/stage-of-life/location thing. You apparently live in New Hampshire–don’t know much about the cost of living there but I can assure you there are not a lot of jobs in my field there…I am sure this is true for others. And not everyone has the geographic mobility to uproot their lives for the sake of moving to an affordable area anyway.</p>
<p>Put in 60K of income on a 500K in savings into the Harvard net price calculator, and you get an EFC of 24, 600K. Given that a family with a 500K in savings can easily afford the total cost of attendance of around 58K from savings alone (with some left over) on a modest income of 60K, then I’d say savers are not as penalized as you’re trying to make it out to be. </p>
<p>Same income, 700K in savings, and then you get an EFC of 34, 600K. With a million saved, 49K. So even with a million dollar saved on a middle class income, a family is still not ‘fully pay’.</p>
<p>Of course, Harvard is in a league of its own when it comes to need based aid.</p>
<p>Cobrat! Come out of NYC/Stuyvesant for once! Jym is a poster from Georgia, describing a Georgia-specific program. She never once said she was talking about NY.</p>