<p>Financial aid is driven mostly by a family having a low or moderate current income. While money saved in 529 accounts in a parent’s name does count against financial aid, you are only expected to spend about 5% of it per year. If you decide to spend it down the first year of college, then a 529 account would count against aid even less.</p>
<p>The vast majority of colleges do not meet 100% of need, and many colleges do not admit many students with high need. It is mainly the best low income students who get into the richest colleges who get large amounts of aid. Almost every college requires a student to take out 20 to 25K of loans, and do work study to supplement their large need-based grants.</p>
<p>Many other low income students never finish college because they have to work full time while going to classes, and it doesn’t work out.</p>
<p>M2CK, I see that you join CC on 2009. Had you been here 4 years ago, you would have known how much I struggled to answer exactly that question. How much,regretably, I pushed DD to get higher test scores etc so she could get merit $$ from those 2nd tier schools such as etc.</p>
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<p>because the income typically goes up. </p>
<p>I used to question how people make good $$ do not have any $$ to pay for their kids’ college. Now, I could definitely understand that because it is happening to me. </p>
<p>With 5 digits bonus, my income has come up significantly in the last couple years. We will more than likely more to move to full pay or close to that.</p>
<p>Tell you what, will you be willing to change situation with us? I would be more than willing to pay the full price, had I have more income before and after several years of college bills. With your higher income and assets, you will have a lot more choices in college. Let alone that you could enjoy a higher stanard of living, afford extra E/C and help if your kids would need it. You will have much better retirement etc.</p>
<p>Dad II–it is what it is. You were able to ‘push’ your D to higher test scores so that you could get generous FA from these high-end schools. Good for you, no one is begrudging you for doing what you could within the boundaries of the system to get your kid into a top-end institution.</p>
<p>An important point to be made is that a lot of us–kathie and myself included–were taught from when our children were born to save, sacrifice, work hard & hopefully get our kids into schools that matched their intelligence. We weren’t and aren’t looking for handouts. But I think it’s a fair argument to question whether we middle-class full payers are subsidizing low income families to a certain extent–when most if not all colleges will deny that accusation every day of the week. It’s a microcosm of the current state of Federal taxation, really.</p>
<p>Well, just heard from someone that her MD hubby has sunk ALL their retirement funds into putting in electronic medical records in their office, so basically they will have nothing. They spent their other money putting their 3 DDs through college, including grad school for all of them & two of the DDs having a term abroad in London. Two went to OOS Us and one went to a private U; none got any merit aid. The W is busy planning a bargain CRUISE for her & H & other couples. She quit her job last spring because she found it “too stressful.” Don’t know if any loans were taken out in connection with the college & grad schools. One of the Ds is in her 2nd year of a 4 year grad program.</p>
<p>I think this scenario will become more and more common–people who spend money on what they feel was good/right at the time & then wonder where their retirement assets are. They’re in their mid-50s. The wife is getting nervous & now wants to get a job to help them START saving for retirement. The good thing is that I believe they still have significant equity in their home, but still a pretty unsettling position.</p>
<p>EMR implementation is deductible over so many years, so it doesn’t really cost that much. It also doesn’t cost “all of one’s retirement savings”.</p>
<p>I don’t think others debts for school will affect others that much - it is the last thing about which I worry. Be thankful you don’t have any debt. I am more concerned that others can’t get an education without suffering.</p>
<p>Well, that’s the story that the W is telling her mom, so I have no idea; could be they lost a lot from the stock market turbulence as well. Not even sure if the W knows fact from fiction, but do know she is concerned about getting medical insurance. They still keep spending a lot, so perhaps they’re not as concerned about it as W tells her mom. </p>
<p>One of my friends is working F/T but getting a lot of flack from her job that she’s worked tirelessly at for literally decades. To get one of the jobs she might want more, she needs to get a master’s (she only has a bachelor’s degree). She can’t figure out what she would live on if she went back to school & how she could pay the bills and tuition. I worry for her and wish she had more & better options.</p>
<p>We have friends who are “funding” their parents who lived high and wonderful lives and are out of money. Which is unbelievable considering that generation amassed incredible wealth or inherited considerable wealth. Same friends of course have kids going to college. Seeing our friends grapple with broke aging parents and college tuition payments is not a pretty sight and something I never want my kids to go through. They can go to “cheaper” colleges or universities. They will thank us when they aren’t supporting us in our 80s.</p>
<p>Yea, our kids are VERY HAPPY that we have reassured them that we have sufficient assets to live out our lives comfortably and will NOT need their help. It really is sad when folks outlive their assets, especially after they have “lived high and wonderful lives” while the people who have to help “fund” them are being squeezed by college AND broke parents. </p>
<p>Sure hope, momofthreeboys that your friends will be sure THEY have adequate assets for their retirement as well, so as not to repeat the cycle. I’m sure it must be very painful for the friends.</p>
<p>No, DadII, I didn’t forget that…believe me, I lived it! We didn’t have a crystal ball, or extra cash, but just lived below our means, even when those “means” were barely above the poverty level. I thank my parents for teaching me to pay myself first and have tried to impart the wisdom of this on my own kids. OTOH, I see way too many kids whose parents, including some of my own friends and family, have next to nothing saved for college and don’t seem to give it much thought until the college search ensues. Nor have they taken the time to create a solid, written plan - to pay off debt, time car puchases, take on a second job, or any of the other things that can free up current/future income in time for the kids to go college. As mom2 said, how are they going to afford those loan payments if they’re already living paycheck to paycheck?</p>
<p>Student debt, college price increases, and decreased aid to state universities have been in the mainstream news quite a lot in the past few years and yet I still don’t see much awareness among the parents of current elementary-aged students. The old misconceptions persist…that savers are penalized, everyone will get financial aid, there are billions in unclaimed scholarships, full rides are common, etc. and I think that it’s easier to use this magical thinking to avoid modifying one’s lifestyle and planning for educational expenses. At this point, when even the instate publics are becoming unaffordable to many, the wake-up call is seriously overdue.</p>
<p>*The old misconceptions persist…that savers are penalized, everyone will get financial aid, there are billions in unclaimed scholarships, full rides are common, etc. and I think that it’s easier to use this magical thinking to avoid modifying one’s lifestyle and planning for educational expenses. *</p>
Whoaa, wait a minute - that’s not how it works! You don’t get to change positions when it’s time to reap the reward. Would you also be willing to trade your prior few decades with kathieh1, and put forward the same level of effort and sacrifice to achieve that situation? It doesn’t sound like it was an easy road. What choices did you make?</p>
<p>Well… I do wish I had been smarter on my investments. I had a string of terrible advisors… and when you lose half or more of the savings, you end up in the same place as people who saved half as much. That’s life though. </p>
<p>Reading all these posts on CC has really helped me come to terms with how much many are paying for college. Until I was here I never really understood that EFC isn’t supposed to be paid from your salary year by year… but also from savings and loans. I’ve learned we are better off than some, and worse off than others and we’ll muddle through… but I do think my D is likely to choose a college that gives more merit aid.</p>
<p>The average new car is around $30,000, but many transactions are for used cars. And plenty of good new cars can be bought for around $20,000 or less.</p>
<p>Since most colleges do not meet need, the relatively small increase in EFC that comes from saving for college makes the “penalty” a myth since it’s unlikely that grants would be given anyway. Only 5.6% of the asset value is going to hit the FAFSA EFC annually and, for those with lower incomes who qualify for one of the simplified formulas, it doesn’t change the EFC at all. Would you rather have savings to pay your EFC (and cover the gap) or have your EFC be slightly lower and borrow to cover it?</p>
<p>That’s a good question. I think my concern comes from the position that I’ll be depending on assets pretty soon as we’re close to retirement. Not all our assets were able to get into qualified (IRA type) accounts… and having schools assess our salary so heavily (which is about 120K) means we’ll have to use the assets - and then when the salary is gone … sooner than we’d like… the assets won’t be there either. We don’t have a lot of post college years to make up for it.</p>
Wait, is that really the question? Of course, we would all choose to have the savings. And yet, relatively few of us choose to actually live below our means and save. </p>
<p>I would submit that for a person who has saved earnestly for decades, it’s not a myth at all. Ask kathieh1 if it feels like a myth.</p>
<p>kathie, I would urge you not to use any retirement assets to fund college costs and try to decrease other expenses before you decrease your retirement contributions. Ideally, college funds should be accumulated (or at least accounted for) separately. I understand that the EFC alone is going to be difficult to cover and agree that your “contributions” have to be budgeted to match college savings and whatever you can afford to pay from current earnings without sacrificing retirement contributions. I think your kids should be (and sounds like they are) looking for schools that will offer enough merit aid to cover their “need”, and then some, so they can use their earnings and student loans to help pay the difference betwen your EFC and what your current savings/budget can handle.</p>
<p>The only high and wonderful life thing we’ve done is spend gobs of money on the kids, especially on their college educations. Luckily, the hubby and I don’t spend much money on ourselves…going to come in handy once we retire, LOL!</p>
<p>MisterK, I don’t know if you have a clear view of how the FA formulas work. Kathieh1 is saying that their savings have decreased due to market conditions and their EFC is high due to current income, hence her concern that the savings portion will not cover the portion of the EFC that colleges (and the government) assume that will be made from “past” income…and that assumption is going to be made whether the savings exist or not. She doesn’t have enough time before retirement to commit “future” income and certainly there are very few of us who could dedicate the 1/4-1/3 of current income to entirely cover what the formulas assume will come from “past, present, and future income”. Since they’re close to retirement and likely have a decent asset protection allowance it’s clearly not savings, but income, that is driving the bus here.</p>
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<p>Exactly…Which is exactly why underfunding of retirement and college accounts is the norm. It’s not that most of us don’t think that it’s “worth it”, we simply don’t want to do, or even think about, what’s truly necessary to pay for it!</p>