Money Matters - Part 10

Who makes up the difference???

oh wow!

the ones that are paying full tuition

It's usually the case that the AID and LOANS are based on finances, not the tuition.

And where do you 'hide' the money you would have saved for them??

We may be just saying the same thing. But I have never heard the advice to not save anything if you cannot save everything.

you should be maxing out your 401K first (20% of your income) for your own retirement and paying down your home, never take a loan on the house to pay for kids education. if you have extra money to put towards kids education after that then go ahead and help - otherwise let them take out loans.

Absolutely. Is it up to 20% now? Nice. We are in a different boat now so play by different rules. Let them take out loans, change the locks and phone number and scrub your dna!

Seriously, we really hope the kids can get scholarships. My wife and I both went to college for free. Hate to start something new. ^_^

i basically went for free too - the cost of today's education is so expensive people can not be risking the future - or is there a deal when you lose the house you can move in with the kids? I am sure the kids would not be up for that:)

Yes hopefully my super genius son gets a scholarships to MIT
Can't remember at the moment where he said to "hide" the $....hopefully it will hit me

We are so woefully inept as a country in math and science that those are the ripe areas in which to show excellence.

that's my son's strengths, he made the math olympic team

My reason for wanting to save for my daughter's tuition in full is that I don't want her to have to take out loans for an undergraduate degree. I had student loans after I graduated and even though the interest rates were low compared to other kinds of debt, it was a burden that I couldn't handle very well as a 22-year-old and it kept me from getting to do a lot of the things I think people in their 20s should get to experience.

The literature I read on the 529 Plan says that the money I contribute to the plan will be considered my asset and that when it comes to federal financial aid, the formula they use considers 5.6% of my assets and 20% of my daughter's. The way I read that, even if I contribute $125,000 to the 529 plan, the federal government would only say that $7,000 of that should be considered when determining any financial aid. Does that sound right?

Don't know. The 526 contributions help with my NYS tax.

do not know for sure although i thought 529's where for kids college's and would be considered at 100%

I'm not a certified broker or anything like that, but I have been learning a lot about college financing. You'd think because the government offers something nice sounding like a 529 that it would benefit you, but in many cases, it doesn't. In my state it really doesn't because there's no tax advantage to 529 in Massachusetts as there is in some states such as New York. On a 529, if you make the kid the owner, it's part of THEIR assets which are hit harder than if you are the owner and the kid is the beneficiary. Then it's counted as one of your assets. Moeover, the little money in our 529's for over ten years performed abysmally. When I stopped contributing, I found a better route in stocks, but that's a longer story.

I agree with Bill's sentiments entirely. Paying for college is a lot like having the airplane buck , so you put the overhead oxygen mask on yourself before you fasten it on your kid. It's no benefit to the kids to go broke paying for their college.

I also detected some confusion about state vs. the private schools. They have different formulas for aid. If you want to look it over, check out the FAFSA for state schools and the CSS for the private or "profile" schools. College board administers the CSS profiles for private schools. Both kinds of aid based upon something called the Expected Family contribution or EFC. Depending upon which type of school you are applying to, the number can come out differently. Then each college makes its own offer. That's why I've been saying I'm looking for a bargain. You don't really know who's going to give the best advantage financially until the offer comes, though you can make educated guesses. These days, it is a practical requirement for your kid to apply to about 10 schools as a minimum, because there can be 9 expensive offers and the tenth could offer a scholarship, and everyone uses the Common Application now. To make it harder, some schools automatically process applications with scholarships in mind, and others, such as Vanderbilt and Wash U. want the scholarship applications separately from the financial aid packet.

The best endowed schools may give the most aid to a talented student they want. Maybe they need a kid who plays the oboe and yours has won state competitions. Also, most privates have a presidential scholarship. Worth getting if your kid is academically inclined. We took a risk that one DD could apply for early decision II to go where there's a decent package, because it's the school with the best reputation in the country for her academic interest. She was almost promised the presidential scholarhips at one or two other colleges, so we had to maintain our focus. If she gets denied her first choice in a week or more, then she's free to consider all actually tendered offers. Be prepared for a roller coaster ride!

Fo anyone who doesn't know it yet, I have triplets all applying to college. So if I make a mistake, it will be a biggie!

Oh, and as for MIT. Check out the vibes there before getting too excited about it. They have a very small undergraduate program, and it's best for a very specific kind of kid with interests that match their faculty interests.

Yes, MIT is primarily a graduate school.

I attended Manhattan on their Presidential scholarship.

Way to go Victor! You're kids will have the idea too.

Hope so. Thanks!

Some private schools use he FAFSA as well.

Its all such a racket.

If you have enough to max out college plans, and max out hiding it in IRAs, and want to hide more, well then you have too much LOL.

And if your kid is named Max...

And that is why I have cats - no schooling needed! But there is that pesky hair all over the place issue . . .

So, Expected Family Contribution or EFC is kinda like credit scores: determined by some undisclosed formula, and all we have figured out is that some things we do can raise or lower it.

Additionally, there is a certain distribution of allotted funds that works on a Federal level (like Highway funds)that are then apportioned to each state with their own maximization of assistance funds for their state coffers and then each college's own individualized funding, (stay in business), viability priorities. Very similar to the mortgage industry, the more students (consumers) you can generate through grants and loans the more profitable for lenders (brokers) even if many drop out and default (foreclose) down the line as "profit taking" is up front (tuition) and funds loaned and granted are immediately reinvested in what ever financial institutions hold their funds.

A difference is that playing in the educational financial consumerism system isn't covered if an individual loses. One can't discharge in bankruptcy or sue for "false advertising" when value estimated is not value received for investment ,( 50 MPG , increased income over a lifetime) The odds of coming out on top, breaking even, or being "under water" financially and educationally are shifting sands.

Has anyone looked into "college student health insurance"? DH wants to investigate the options, although I really doubt they can be better in total than keeping kids insured as part of the family.

I haven't looked into student health insurance, but I think that you are right that it would be best to stay on the parents' plan. Of course, the one thing you'd want to look into is whether your health plan would cover routine things like an office visit if your kid goes to college outside your health plan or medical group's service area. Most health plans will only cover emergencies if you are using out-of-network providers but it would be worth checking to see how your plan handles college students. My hunch: keep them on your insurance but look into whether the college offers a supplemental insurance that would cover things like going to the on-campus health center for cold medicine and ace bandages.

The Expected Family Contribution or EFC figures aren't that hard to estimate. There are estimators on-line at the official FAFSA site and on College Board's website. In order for parents to have a better idea of actual cost of each college, starting this year, each college has to post an "estimator." Even the "profile" schools, which are the private schools that use the CSS figures, will usually ask for the FAFSA or its equivalent eventually. What you can't anticipate is the institutional grants or scholarships, or how a financial officer might adjust your data to give you a break.

The question of best student health insurance may depend upon what your employer offers to compare to the college's offering. In my case, I'm waiting to learn whether my kids will be attending college out of state and where, because if so, I'll change to a more expensive health insurance that has out of state benefits.There's no wiggle room to decide. College decision day is May first, and that's when we have to make coverage changes too where I work. I doubt that any college health center will cover as much as a parent's plan, but maybe I'll be surprised. People really didn't ask about this at the twenty or more college sessions I've attended. They were all preoccupied with their kid getting in.

I thought most parents just kept them in their plan.

Some plans only offer full coverge in some regions except for emergencies. Thus, some parents' plans might not be adequate.

Victor, you mentioned maybe we shouldn't be overly political. We must not be, as I have not seen any editing going on here.

I'm with you on the cats thing, Memory, no schooling, though with me it's dogs. Not that they're cheap, mind you, when you think about the vet costs, toys, high quality food, etc., but not near as pricey as kids. I get dog hair dust bunnies, though.

Karen

Yeah not NEAR as costly as kids!! Until they invent orthodontics for pets. No, I'm sure it's invented but not as popular as it is for kids...
Reason we're looking at college health plans is, we won't have employer health plan a few months from now- we aren't going to pay the Cobra cost to keep the current plan.
Our agent for Erie Insurance where we have car and home, has been a good resource for us. He referred us to a guy in Towson MD who deals with health insurance. We'll see.

I tried to convince my wife to stick to cats but it didn't work.

Orthodontics for pets....hmmmm..... LOL! Well, the kids will care about how they look when they're old enough. The pets certainly don't.

Karen

victor- I think we all know you still had "something" to do with the kids...
~~~
Look at Oogy
http://www.amazon.com/Oogy-Only-Family-Could-Love/dp/0446546313

Oh, poor, poor Oogy, but lucky for him he found a great home. I have seen that book at the stores and wanted to read it. Sounds really good.

Karen

I have only seen the cover too, not rad it, but watched the video. It sounds very heartwarming. Oogy didn't need orthodontics- just a loving attitude.

Loved the oogy video!

I think I'll post it here, it's financial. DD didn't get into Middlebury College. She got her rejection online today. She's dejected. They accepted 41% of their early applicants, and everything on her application was strong. Goes to show, you can't predict what the colleges are considering. It probably didn't help that she wants to study Spanish, not Arabic or Mandarin.

It's mixed for us, because her next two choices are in-state, meaning she might get her teaching license in Massachusetts. Still, we have to submit tax data or additional financial aid forms to 33 schools, now. We were hoping to knock a dozen off that list. We're back to working on getting 3 kids accepted in college. DS asked his physics teacher for a letter since one school wanted it. No idea if the letter will be favorable enough, since the teacher isn't releasing it to us.

Now we have no idea what our costs could be. The state schools are competitive for admissions, also, so no guarantees there, since people want to apply to the state programs and they have limited slots in their majors. Apparently, as shown by our web searches, the business of matching kids to colleges has meant that there are no secrets about where the most financial aid gets offered, and the applicants line up for those well-endowed schools. Middlebury wrote that they had the highest application pool in terms of scores and academic standards in their entire history.

Sorry your DD didn't get accepted, Rosemary. I didn't know what a pain it was to have to go through all that to get a kid into college. It's a lot. I hope she finds something soon and can feel better about things.

Karen

Sorry about that news, Rosemary. Best wishes to all three. Any considering RPI, my DH's alma mater?
We were glad when one of our sons went to the USCGA in CT. He was a twin and then 2 yrs later our youngest entered college. it was kind of like having all three in diapers at once again.

so sorry I remember that feeling when I didn't get into Rutgers, found out AFTER THE FACT that I should have gone in for English major then switched to communications.....who knew? Maybe apply for something different then switch majors?

Thanks for your kind words, Jan, Karen and Jenn. I took DD out for lunch and to buy books since she's a reader. She's handling the lesson in humility very well but feeling lonely because she feels separated from a place where she'd feel she belonged. Turns out her next choice is now Oberlin, so no in-state school on the horizon at the moment.

My DS did apply to RPI. We visited a year ago in the bitter cold. I was very impressed. He's tall and he was wearing his track Sweatshirt over the chinos, so it was fun to watch the admissions people checking him out and asking for his name. I'd go there in a second if I were attending college in technology today. I read about their involvement in the genome project and other research. However, it might be a bit too big for him, and a bit far from home. They did want to see his portfolio of graphic art, but he's applying in engineering. .