Saving for college

[allison443]

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Financial aid is not just for "poor kids" -- the majority of families qualify, and you can earn a very high income and still qualify.

What do you mean when you say "very high income"? Like what dollar amount?

 

[Green Tea]

I'm planning on 5 years per child. My experience is that engineering programs can take that long. Most of my interns have taken 4.5 years to finish. 5 years at $20K per year is cheaper than 4 years at $40K per year. .

Don't discount the $40K privates ultimately being cheaper. They are far more generous with scholarships and aid. The access to faculty at a small private, getting the needed classes, no government gridlock. Really, don't discount the privates.

 

[Green Tea]

http://apps.collegeboard.com/fincalc/efc_welcome.jsp

College board has an estimator you can input your data into to see what your family contribution may be.

 

[MarkBarbieri]

Don't discount the $40K privates ultimately being cheaper. They are far more generous with scholarships and aid. The access to faculty at a small private, getting the needed classes, no government gridlock. Really, don't discount the privates.

My kids will almost certainly review all of their realistic options. We'll be comparing schools based on their effective costs, not their list prices. If someone wants to grant us money to lower the cost, we'll take it. If they want to make up the difference with loans, well, that might help with cashflow but it doesn't really lower the price.

There is something a bit creepy about the whole process. I can't imagine buying something else and having the seller demand to know an extraordinary amount of personal information before he sets the price. Looked at cynically, it seems as though the schools are asking how much you could possibly afford to spend and then charging you that much. That hardly encourages working hard to earn more money or being thrifty to save some. If that was the standard for all sales, we'd be living in a world in which all work would be rewarded the same and no one would save. OK, that's a really cynical take.

It just grates that I will be penalized for the sacrifices that I've made in order to provide for a better life for my family. I'd like a system in which financial aid was entirely in the form of loans for those in need. Grants would be reserved only for merit.

As for "Very High Income", that's anyone who makes significantly more than I do. "Low Income" is anyone that makes much less than I do. I've known very few people that consider themselves rich or poor because they all know people making more or less money than they do. I don't see that as a peculiarity of the class system in America. I see it as evidence that don't really have a class system in America. Some people make more than others, but there are no distinct castes or classes.

 

[golfgal]

Don't discount the $40K privates ultimately being cheaper. They are far more generous with scholarships and aid. The access to faculty at a small private, getting the needed classes, no government gridlock. Really, don't discount the privates.

I agree with this 100%. Often private schools are less expensive in the long run then public schools because there is more money to be had. I know the school I graduated from has scholarship money based in your GPA. If you have a 3.75 or above, here is $12,000 off the top. The puts the cost of the school about $3000 more then the public schools. Factor in other academic scholarships that you may get and often the private schools can be close to free. I have several friends who's children are making money going to school because of good grades and the willingness to write a few scholarship application letters.

It was true in my day as well. It was about $5000 LESS each year for me to go to a private school then a public school all because of the amount of aid available at the private schools.

Another note, one should NOT put money away for a child's education until your retirement funds are on track to provide for you in the future. The time horizon for school funding is shorter but your need in retirement is so much greater so it takes longer to save.

 

[Green Tea]

My kids will almost certainly review all of their realistic options. We'll be comparing schools based on their effective costs, not their list prices. If someone wants to grant us money to lower the cost, we'll take it. If they want to make up the difference with loans, well, that might help with cashflow but it doesn't really lower the price.

There is something a bit creepy about the whole process. I can't imagine buying something else and having the seller demand to know an extraordinary amount of personal information before he sets the price. Looked at cynically, it seems as though the schools are asking how much you could possibly afford to spend and then charging you that much. That hardly encourages working hard to earn more money or being thrifty to save some. If that was the standard for all sales, we'd be living in a world in which all work would be rewarded the same and no one would save. OK, that's a really cynical take.

It just grates that I will be penalized for the sacrifices that I've made in order to provide for a better life for my family. I'd like a system in which financial aid was entirely in the form of loans for those in need. Grants would be reserved only for merit.

As for "Very High Income", that's anyone who makes significantly more than I do. "Low Income" is anyone that makes much less than I do. I've known very few people that consider themselves rich or poor because they all know people making more or less money than they do. I don't see that as a peculiarity of the class system in America. I see it as evidence that don't really have a class system in America. Some people make more than others, but there are no distinct castes or classes.

My child received the largest grant in his high school class. We never filled out any financial information. We did not apply for financial aid, and it was flagged as such on his admissions application. He was still awarded the college's largest merit scholarship.

There are fantastic scholarship opportunities at many private schools. Children from the poorest families, children from the wealthiest.....they all have a shot at competing for merit. (and the same holds true for some publics; The Jefferson at UVA, Morehead at UNC)

 

[MarkBarbieri]

It seems counter intuitive, but for many students, the PSAT (practice SAT) is more important than the SAT. It certainly was for me. The SAT scored required to get into my school of choice was pretty trivial at that time, so I wasn't concerned with it at all. The PSAT was the starting point for deciding who gets money. I paid for my first car with my PSAT. I'm not sure if the rules have changed since then (I took it decades ago), but it does pay to know the rules of the scholarship game before you start high school.

Another note, one should NOT put money away for a child's education until your retirement funds are on track to provide for you in the future. The time horizon for school funding is shorter but your need in retirement is so much greater so it takes longer to save.

I wholeheartedly agree with that. You can finance college with borrowing if you have to. You cannot finance retirement. Before you think about saving for college (a nice to have), you need to make sure that you have your financial basics covered.

1) Make sure that you are on track with your retirement savings. It can be a bother to calculate it, but it is much better to waste a few hours every year or two than it is to be forced to choose between working well into old age or taking a huge reduction in your standard of living.

2) Make sure that you have a reasonable emergency cushion. If current events don't make it abundantly clear, your should have 6 months of expenses in a reasonably stable and liquid place.

3) Make sure that you have adequate insurance - life, disability, home, health, etc.

4) Pay down any high interest debts and avoid taking on any more.

Only when these things are done should you start saving for college. Of course, those things should be done regardless of whether you intend to ever pay for anyone's college.

 

[Dan Murphy]

I have recommended this book to my clients over the past many years (here is link to 2009 edition, it does change somewhat every year) http://www.amazon.com/Paying-College-without-Admissions-Guides/dp/0375428836. It is VERY helpful for the college planning process and entry process.


(not to be taken as financial advice)

 

[themarquis]

What do you mean when you say "very high income"? Like what dollar amount?

Well, if you read what I posted, I said that I don't know! And that most people don't know and are not able to accurately assess whether their income is "high" or not. Which is why everyone should fill out a FAFSA.

It's also worth pointing out that whether or not you might get aid depends on what school your kids go to. So for example, another poster mentioned a 100 K number. I'd be willing to take a guess that if that family has a child going to a 40-50k school, they'd be eligible for some aid. At the local state school, not so much. And if that family had three kids in 40 k schools, there might be additional aid available.

 

[allison443]

My child received the largest grant in his high school class. We never filled out any financial information. We did not apply for financial aid, and it was flagged as such on his admissions application. He was still awarded the college's largest merit scholarship.

There are fantastic scholarship opportunities at many private schools. Children from the poorest families, children from the wealthiest.....they all have a shot at competing for merit. (and the same holds true for some publics; The Jefferson at UVA, Morehead at UNC)

Congratulations to your son! The competition for those awards is very very intense!!

 

[allison443]

Well, if you read what I posted, I said that I don't know! And that most people don't know and are not able to accurately assess whether their income is "high" or not. Which is why everyone should fill out a FAFSA.

Oh, okay...it's just that when you posted that "you can earn a "very high income" and still qualify" I figured you knew of some real life examples or something....like someone who had xx amount of income and qualified for xx amount of financial aid. That's all.

 

[allison443]

I know the situation is particularly problematic for kids of divorced parents (both parent household incomes count)

I believe FAFSA only takes into account the custodial parent's income, doesn't it, unless you are referring to the CSS Profile?

 

[themarquis]

Oh, okay...it's just that when you posted that "you can earn a "very high income" and still qualify" I figured you knew of some real life examples or something....like someone who had xx amount of income and qualified for xx amount of financial aid. That's all.

lol, sorry! I guess I just meant that people can earn what *they think* is "really high" and mistakenly believe they're not eligible. Sorry for the confusion. If you're really curious, you can run some numbers using the wizard at the us financial aid site (or there are others online, too). That is really the only way to know with more certainty.

 

[themarquis]

I believe FAFSA only takes into account the custodial parent's income, doesn't it, unless you are referring to the CSS Profile?

my knowledge is that it takes into account both parent's incomes if they have joint custody. But it could be that I am not correct. Maybe somebody else knows for certain.

 

[Green Tea]

my knowledge is that it takes into account both parent's incomes if they have joint custody. But it could be that I am not correct. Maybe somebody else knows for certain.

Correct. Both parent's income.

 

[lillygator]

also - our state has dual enrollment with hs kids who take college classes while in hs - I did this and knocked out 4 classes!

 

[McDISer]

Sadly, every time college costs go up, more federal aid is given. With more money available for education, colleges are able to raise rates. It's a vicious cycle.

Is this a fact or just your opinion.

I have 4 children. 2 just graduated college and 2 are still in college.

Since 2001, I have seen Federal Aid go up twice. I've seen tuition go up ever year, and I've seen it go up twice in one year.

Financial Aid is a joke. Do you want a reality check? Me and my wife both work 2 jobs, our kids in college almost work full time and attend college full time. Our kids are first generation college graduates. We were never encouraged to attend college. We graduated in 1980, probably one of the last years school encouraged you to go out in the working industry and get jobs. Heck, factories in our area, recruited us, the minute we turned 18. I remember kids in my class working 2nd shift and going to school from 7:30-2:00 and then going to their job.

We were just an average working class family, there was no money ever left over to put aside for college. We are doing everything we can to get our kids through college. No one says you owe your kids a college educaiton, or they should get a free ride from mommy and daddy. But we are doing everything we can to help them get that education.
They older 2 have some college loans. They both attended a semester away in Europe and Africa, so they took out the loans for studying abroad. Luckily the interest is tax deductible, but congress and President Bush wants to elimate that deduction too.

3 1/2 more years, and we are college debt free.

 

[bluesaturn]

I was always told that until a certain age it was very hard to get a large amount of financial aid. Luckily, I had most of my school paid for by my mother but, the last two years I did have to get aid. I was able to get enough for tuition, books, and other fees such as parking. I think after a certain age the gov't. assumes you won't be getting help from parents. It's unfortunate because parents can't always pay the difference! Good for you for getting through it all though!

I believe that age is 23, I think? I do know that even if your parents don't contribute a single cent to your education, before that age it is very difficult to convince the financial aid people of that and you are likely to get no help. I have a friend funding her education entirely on loans for that reason. Her dad is loaded, but won't help her at all.