How much do colleges take from your savings?

[ADisneyQueen]

DH thinks we should spend more of our savings b/c when dd14 goes to college, they will take a lot of it. BTW, DH is a professor and dd could go tuition free there, but she wants to go to an ivy league like DH did We'll see.

If you are middle income ( I'm a SAHM), do they take a lot of what you have saved?

 

[crisi]

Some savings (like retirement funds) are exempt, but maximizing financial aid means being cash poor. Buy any new cars you need her Junior (IIRC) year in High School. If you want to do work on the house, now is a good time to do so.

However, remember that most financial aid for middle class kids is going to be in the form of loans anyway, which need to be paid back and do carry an interest rate. You aren't likely to see grants come down from the sky simply because you are cash poor. I wouldn't spend money you weren't going to spend anyway - i.e. don't blow money just to spend it.

 

[mom2princesss]

Universities don't just take any of your income. Now, depending on your financial situation, you may or may not qualify for certain forms of financial aid based on income and savings. That would not be IMO a reason to start spending your savings. I would continue to save so that you are in a position to assist your dd with her educational expenses outside of any scholarships or other financial assistance she may receive.

 

[Darcy03231]

I have three kids in college. I wouldn't start spending down my savings. If you're in the middle class you likely won't receive much financial aid, regardless of savings, and most of the aid you'll receive will be via loans, unless your DD is able to get some academic or sports scholarships from the school she's attending.

A better way to off-set costs is to have your DD apply for as many scholarships as she is eligible for, both through the school and privately. While DD#2 did get some substantial scholarships, she also picked up a lot of small scholarships (less than $500 each). A lot of kids didn't think they were worth applying for since some of them were so small (a couple of them were $50). She ended up having thousands in scholarships from all these little ones adding up. She applied for everything she was eligible for and it paid off.

 

[mrsklamc]

The only truly 'free' money as far as gov't aid is the Pell Grant which is income, rather than savings, based.

If my kid could go tuition free though they would have to have a better reason than "I want to go there like dad did." If what they wanted to major in wasn't offered or there were some other legitimate reason we could talk.

 

[etail]

And an Ivy Master's would go further than an Ivy Bachelor's. I'm a big advocate for affordable quality undergrad rather than incurred debt for undergrad in fields that will likely lead to grad work. Even if it is just for the first year or two as long as credits transfer to the desired Ivy.

I attended undergrad where my father taught (still qualified for aid since the pay was bad...) and was able to start out debt free. My brother was under pressure for five years paying back school loans which made it far more difficult. And now, 20+ years later it is much worse...

But no, to the original point this would not be the best reason to spend that family savings. You could pay down the mortgage or dump it into a second IRA if you only have one in your husband's name. That would remove most or all of it from the equation but preserve the value of the savings for your benefit.

On the other hand I don't expect to be able to preserve my son's savings but that will be directed toward outside educational expenses such as computer equipment or musical instruments.

 

[allison443]

OP if your dd is seriously a candidate for the Ivies, you should be aware that the Ivy League schools, as well as other top schools, do not give any merit or academic-based scholarships. All financial aid is need-based. That said, the Ivies are known for having very generous financial aid policies and a few are no-loans, meaning all the aid is in the form of grants.
I believe it is Harvard that for incomes between $120,000 and $180,000, you will be required to pay 10% of your income. That is a true bargain imho!

 

[sharbear]

Go to this site http://www.finaid.org/calculators/ and see how much you might be expected to pay. If she is looking at Ivy League schools use Institutional Methodology as an approximation of what you might be looking at.

Ivy League schools and many selective university's you will have to fill out the FAFSA and the Profile, the Profile will ask a lot more questions. It is a much more detailed look at your finances.

If she is able to get into an Ivy League school, many of them have very generous financial aid policies. Some schools, (I think Harvard and Yale and Stanford) only require a EFC (Expected Financial Contribution) of 10% of your income up to maybe $150,000. I am trying to remember this from the top of my head. There are also some selective schools that cap your loans at a certain amount and will meet your need without any loans. You must provide your EFC but anything other than that will be in the form of grants not loans.

My D goes to a school which uses the Profile and says that they will meet your need. We have been very happy with the financial aid that she has received. Her school will meet need without loans for people who earn less than $75,000 a year.

Also, I think they will cap savings and home equity up to $150,000. Anything after that, I think the schools expect you to use 35% of. The percentage is more if the money is in the students name.

It's pretty hard to get into a school which has generous financial aid policies. Even great students with super SAT scores and great credentials have a hard time getting into selective schools. I don't know if I would spend all of your savings with the expectation that she will get into the school of her choice. But if it's Ivy League school or the school her father works at, then the decision would be yours.

 

[DawnM]

I don't think it is wise to spend your savings to avoid paying more at college.

They base a lot on income. I don't know what part savings plays, but that is not an excuse to go and blow your savings.

Do your homework and see exactly how much you would have to pay were your child to attend the colleges of her choice and look up how much savings plays into the final figure.

Dawn

 

[akcire]

If you really wanted to "spend" your money, with the only purpose being to "hide" it from colleges. I would think it would be easier to just bank out of a safety deposit box.

If you spend it unnecessarily just to avoid paying for college or hide it in a safety deposit box, it's pretty much the same. Personally I just plan to pay 100% for college for my kid. If she gets a scholarship, that is a bonus.

 

[lost*in*cyberspace]

Spending your savings to try and qualify for more college financial aid is crazy!
Don't worry about ivy league costs - even if your daughter is a super student with a 4.0 and tons of extracurriculars, her chance of being accepted at an ivy league are slim to none.

If your husband thinks this is a good idea, you might want to get some professional financial advice to plan for college. It's kind of late now, but better now than after your daughter gets accepted at colleges you can't afford. You also need to have a serious talk with your daughter about college costs and what you and your husband are willing to contribute and what she is expected to contribute. It might make your husband's school look a lot more desirable.

 

[punkin]

I do know that the child's savings is counted at a greater rate than the parents' savings. Parents' ages also matter (how close they are to retirement). While retirement savings are protected, retirement contributions are not; they will get added back to your income for financial aid purposes.

 

[MrsPete]

DH thinks we should spend more of our savings b/c when dd14 goes to college, they will take a lot of it. BTW, DH is a professor and dd could go tuition free there, but she wants to go to an ivy league like DH did We'll see.

If you are middle income ( I'm a SAHM), do they take a lot of what you have saved?

Without knowing exactly what "middle income" means to you, I am sure this method will backfire on you. They'll look at what you've earned and question why you don't have more in savings. It isn't going to net you more grants AND you'll be without the savings.

The only thing I'd consider doing in this situation is -- assuming you have a mortgage on your primary home (not a vacation home) -- to put some money down on that. Also, you should do this before your daughter's a senior; they'll look at your taxes for the year that your daughter's a senior.

You can find books on how to pay for college, but the bottom line is that the average middle class family isn't going to rack up need-based grants no matter what they do. NOW is the time for you to start studying up on the topic; if you could "up your chances" by altering your withholdings, etc., you should do it NOW rather than waiting 'til she's a senior. I do know a couple famlies who've made financial decisions specifically with financial aid in mind: For example, I know a divorced couple who purposefully put the kids on the ex-husband's taxes because he's likely to qualify for financial aid, where as the ex-wife (who remarried a wealthy man) isn't going to get anything in the way of need-based help.

Personally, I'd be thrilled if I could just get work-study for my daughters. A little job ON CAMPUS that would offer flexible hours and wouldn't require transportation. Just enough to give them spending money each month. I'd love just that.

Finally, if her goal is an Ivy-league school, she needs to consider that's going to require both excellent grades and serious financing -- and even excellent students don't always get what they expect. I always recommend that my seniors have a "dream school" in mind, but they also have a couple realistic schools in the hopper. If you're already scoping out multiple options, you won't find yourself scrambling at the last minute IF things don't work out as you'd like.

 

[allison443]

Personally, I'd be thrilled if I could just get work-study for my daughters. A little job ON CAMPUS that would offer flexible hours and wouldn't require transportation. Just enough to give them spending money. I'd love just that.

Mrs. Pete, my dd didn't get work-study but she found that at her college the food service company was always hiring. Flexible hours, across from her dorm, ability to trade shifts/pick up extra shifts--it worked out well for her. Her school is big and they have a lot of cafeteria facilities...but your dd might find a similar situation.

 

[MrsPete]

Mrs. Pete, my dd didn't get work-study but she found that at her college the food service company was always hiring. Flexible hours, across from her dorm, ability to trade shifts/pick up extra shifts--it worked out well for her. Her school is big and they have a lot of cafeteria facilities...but your dd might find a similar situation.

Yeah, Residence Life is another good spot to search for an on-campus job. Your suggestion'd be great for my second daughter, but not my first -- she's never caught onto the idea of working with food. Not even here in our own house.

 

[punkin]

DD18 did not get work study her first year, but this year's package includes $2000 of work study. Now all she has to do is find a job.

 

[MomToOne]

If you aren't already maxing out your Roth IRA contributions, start moving your savings into that every year. In an emergency, you can still take out whatever you put into a Roth IRA tax free (any growth, however, cannot be withdrawn without taxes/penalties).

Also, if you have any consumer debt, you might want to consider paying that off with your savings.

 

[ctinct]

I think many people are shocked when they see how much they are expected to pay for college. I read somewhere that it is often one-quarter to one-third of income. This figure isn't all from current earnings...it is supposed to be made up of savings, current income, and loans. Another thing that people often forget is that financial aid usually includes loans and often work-study;it's not just grants and scholarships. The work-study figure essentially still has to be paid upfront, because the student earns it bit-by-bit, and most students tend to use it as their spending money. Another big shock for the college bound family is the "gap." Very few colleges meet full need, and you've got to find a way to pay for that, too. So, bottom-line, I think it's far preferable to have savings for college than not to.

And Punkin, I was very surprised that my retirement contributions were added back into my income. Something I hadn't expected.

 

[bridget]

I'm going to graduate school and I work. I would also consider myself middle class. I was told I should be able contribute $22,000 a year based on the federal financial aid forms. I was eligible for $18,000 a year in loans.

Thankful, at a state school, my tuition isn't that bad, and I am able to pay it each semester without taking any loans.

 

[ADisneyQueen]

Thanks for all the answers. Some of you are so silly to think I am talking about blowing all our savings- we just want to figure out if we can take some out to travel more before the kids are in college! The only debt we have is our home mortgage, both cars are paid for and no other credit card or medical debt.
Maybe we will go talk to someone in financial aid at DH's college. I would love for her to go there but she has set her standard's high. We'll see. Also, at the Ivy Leagues there is something ( I can't remember what it's called) but if you have a parent/grandparent/sibling who went there you are more likely to get in. I didn't say I thought it was fair,though! So don't flame me.