PlasticMoonRain

What is the best way to find the right financial advisor who can go over all our accounts and advise us what to do with them so we can get the best financial aid package?

We live in the New York City area.

Our son will be a HS junior in the fall.

We definitely do not want to use an advisor who is part of an investment bank.


THANKS.

mom2collegekids

Unless you can put your "accounts" into protected retirement accts, there's not much you can do with them to get more aid.

Financial aid is based MOSTLY on income. If your income is too high, then your accts aren't going to matter AT ALL.

There's no point in doing any financial gymnastics (if there are any that you could do), if your income is already too high.

Financial advisors often do not understand the college FA process anyway.

If your income is over $100k, then estimate that about 33%+ will be your "family contribution" at schools that "meet need". For instance, if your family income is about $155k per year, then your family contribution might be about $50k per year. so, you'd likely get no free money...just loans.

It could be higher if you have substantial assets that aren't in retirement accts.

Your home equity may also get considered by some schools.

Try running some Net Price Calculators on some colleges' websites. Don't use the ones on Harvard, Princeton, Yale, and Stanford's websites because those are the 4 schools that give "super aid" and they would mislead you for other schools.

Try using the NPCs on Cornell's websites, your state flagship, and a few other schools.

Also, keep in mind that many schools do NOT meet need, so you may not get ANY aid even if you qualify for aid.

thumper1

Agree with mom2. Need based financial aid is largely based on income. Assets come into play at a 5.6% assessment of the amount after an amount that is protected. You may find that you are doing a lot of financial gymnastics for NO reason...if your income level is such that you would not qualify for need based aid anyway.

dodgersmom

That seems a bit of an oversimplification. Investing in a 529 plan is certainly one obvious strategy - and given the differences in plans from one state to another, that investment is not entirely straightforward. As I recall, Paying For College Without Going Broke recommends consulting a knowledgeable advisor in certain situations, doesn't it? (Or does it just say to stay away from the ones who know nothing about college planning? )

I'd think, though, that most questions could be readily answered on this forum . . . and that's probably the best (and least expensive) strategy!

mom2collegekids

Also....if you don't qualify for much aid, moving money into retirement accts or other untouchable accts may end up hurting you because you'll need that money to pay for college.

Frankly, it's been my experience that people with accounts that would even be seeking ways to "get more FA" are usually the people with incomes that are too high anyway. Or, your assets are too high.

Keep in mind that most schools do NOT have much aid to give. Some have NO aid to give outside of the small federal grants for low income. Often the little aid they have is for those with NEED....not for people who have money.

I'm not trying to be harsh. We have too much in income and assets to qualify for aid. Our kids opted to attend undergrads that would give them large merit money. Our intent was to help with grad school, but older son ended up with a free ride for his PhD. But, we will be paying for younger son's medical school.

If you have a budget for how much you want to spend each year, and it's less than $60k per year.....tell your child what that budget is. Tell him that he must either get FA (may be unlikely) or attend schools that will give him merit scholarships for the difference.

mom2collegekids

Dodgersmom....since their child is a rising junior, how much could they NOW put in a 529? I think they can do a one-time contribution of about $60k right? But, then can't contribute again for 4 years?

Do colleges assess the acct at the same 5.6% or what?

dodgersmom

m2ck - The 529 accounts, if owned by either parent or child (and not some other relative) are declared as a parent asset and assessed at the parent rate of 5.6%. But, as to how much one can invest in a 529 plan, I have no clue. (And, if there is a limit, could one get around it by having multiple plans in different states?) Those are exactly the kinds of questions that one might want to ask a financial advisor . . . or post in the forum for kelsmom to answer!

swimcatsmom

I'm confused about the suggestion of a 529 account as a strategy for protecting assets. A 529 account is treated exactly the same as any other unprotected asset by FAFSA (other than the student owned 529 being treated as a parent asset as mentioned). $50,000 in a 529 account or $50,000 in the bank or in investments are all exactly the same in the eyes of FA. What am I missing?

vballmom

Parent-owned 529s are treated as any other parent asset by FAFSA and assessed at the parent rate of 5.6%. So moving funds from a parent investment account to a 529 would have no net effect on a family's EFC.

The place where moving funds to a 529 would have more impact is when considering child-owned assets in a checking/savings account or a UGMA. Funds in these accounts are assessed at the child rate of 20%, whereas if they were rolled over to a child-owned 529 then they would be assessed at the 5.6% parent rate.

There are no Federal annual limits to how much can be contributed per beneficiary to a 529. Individual states might impose an annual limit although I haven't heard of any offhand. Each state has its own lifetime limit, typically over $200K.

Gift and Generation-Skipping Transfer Tax (GSTT) regulations include one unique provision, applicable only to Section 529 plans. You may contribute up to five years’ worth of annual exclusion gifts in one year. So a married couple could contribute up to $130,000 per child up front without using any of their lifetime gift tax credit.

mom2collegekids

I'm confused about the suggestion of a 529 account as a strategy for protecting assets. A 529 account is treated exactly the same as any other unprotected asset by FAFSA


that is what I thought, which is why I asked if they are assessed at 5.6%...which is the same as if the money were in stocks or whatever,...so no benefit.

I don't see any real benefit for a family to move money into a 529 when their child is a rising junior. Does anyone see one?

dodgersmom

You're assuming that the assets that would be moved are the parents' assets, in which case it wouldn't make any difference. But if there are any assets in the child's name - whether it be a savings account, a trust fund in the child's name, or any other funds held on behalf of the child - moving those to a 529 plan would yield significant savings.

SlitheyTove

OP, if your estimated family contribution is high due to income, you'll want to change strategy and start looking for schools that offer merit aid.