Periwinkle

Thus, 90% can't come up with the needed funds.

As for the remaining 10%? Well, I think the generous aunt's rather a rare creature. There may be grandparents who help. Then again, the only people who know for certain are the schools' business offices, and they don't talk.

There are quite a few people in this area who have second houses on Cape Cod. I believe many people have regarded the "house on the cape" as retirement savings, if they own them outright. Many of them inherited those houses, and the property may be shared with relatives. They may be able to use the house for a week or two in the summer, because there are so many relatives. I assume it's difficult to sell an inherited share to those relatives, and probably very difficult to sell it to people outside the family.

I assume that most families who come up with the money sell property, or take on a mortgage. They may tap into retirement funds.

Is it fair to other families to offer FA to families who could pay, although it will be painful? No. And the schools don't, as far as I can tell. Is it better to be accepted, but not granted FA, or to be rejected/placed on a waitlist due to FA? I don't know.

D'yer Maker

Actually, once the financial aid is off the table, the business office only knows that the money comes in, not where it came from unless the funding source is writing checks directly to the school. For all they know, I could be moonlighting as a mafia hit man to pull together some extra scratch. If I'm not getting financial aid, I'm not filing forms and as long as the money gets there and the checks clear, that's all they need to know in the business office. So even the school is mostly clueless as to how these 10%ers are pulling rabbits out of hats...which means it's hard for the schools to create a better method for ferreting out these rabbits in a new and improved PFS.

Periwinkle

They'd better be writing checks directly to the school. Otherwise, it's a gift, subject to gift tax.
3 Tax-Friendly Ways to Pay Grandkids' Tuition - SmartMoney.com

f2000sa

......Yes, some people misrepresent their wealth, and I've seen it and resented it......


How can they hide their assets? Is SSS supposed to check and verify the financials?

ops

A friend of mine use to be on the board of Trustees at one of the schools commonly mentioned here on CC. It certainly did not surprise him of how so many people on FA pulled the rabbit out of the hat, in fact it downright ticked him off. If he had his way, the vetting would have been a lot more thorough. He said so many would arrive in their luxury SUV's with a year or two worth of tuition right there. It tells me that at least the board is aware of the games that are played. With tuition rising and the economy blowing smoke, I would think that maybe the schools would be more vigil but it is easier said than done

D'yer Maker

Periwinkle, That takes care of relatives...but even then, not always. Grandpa can give $39,000 ($13,000 each) to daughter, son-in-law and grandchild before gift taxes kick in. Grandma can give the same. That's $78,000 in tax-free gifts per year from one set of grandparents that can go straight to parents' bank (maybe with a quick stop in the grandkid's account). They could send even more if there are more grandkids (at $13,000 per grandparent per grandchild). But then there might be that bank account that's off the radar. Or that job that's not on the books. Or the revenues from the cash retail business that were understated. Who really knows -- besides the parents -- where that money comes from? In some cases there may be grandparents writing direct checks (more for the purpose of ensuring the money is used as it's intended, I think, than for tax purposes) but I don't think the business offices are very well informed as to where financial aid applicants are coming up with the funds to pay for an education that they claimed they couldn't afford. And with only scant information as to the sources of funds, it's hard to create a new process that will elicit that information in a revised PFS.

Weatherby

I question the following assumptions

1. $200,000
2. 10% find the funds on Tuesday
3. The FA applicant pleaded poverty
4. There is an Dear Aunt Tilly (Dat) in the background
5. DAT has availed her funds
6. DAT's funds should be counted in the PFS

1. Isn't it true that many families request far less than a full free ride? Isn't it also true that even full pays are somewhat subsized by Alum and endowment contributions? Isn't it much more likely that some of the financial aid waitlisted had much more modest requests of say $10-15,000 per year? If so, wouldn't those with more modest request have more resources to tap and therefore be more likely to be able to find the funds?

2. Is there a link or reference to support that 10% of the FA waitlisted on Monday come up with the money on Tuesday?

3. Listing one's income and assets and asking for FA is hardly pleading poverty. One does not need to be poor to lack the resources to fund a BS education.

4. I don't know anyone who has a DAT with $200K sitting around. Who does?

5. Those that have that kind of capital tend to be rather cheap with it, so, I seriously doubt that is where the Tuesday morning funds come from.

6. Who even knows what level of capital family members have? What right do I have to ask a sister for my kid's education.

So, where could someone scratch together an extra $10-15K per year.

Sell possessions: watches, wine, boats, jewelry, golf club memberships, art collections, optics, coins, etc.

Stop funding 401k and IRA accounts

Sell the fancy cars and drive beaters with minimal auto insurance

Cut out all vacations, dining out, cable TV, smart phone services, etc.

Take a 2nd or 3rd job

Take out home equity loans

Take 401k hardship loans

mountainhiker

And that is how some families who are not “rich” can apply without requesting financial aid. They have made lifestyle decisions, often for many years, that have resulted in savings that can be used to fund their children’s education. (Choosing to live in a modest home with a smaller mortgage, choosing not to buy expensive luxuries, buying less expensive cars and driving them for a decade, choosing to take inexpensive vacations, having both parents work full-time, with additional jobs on the side, etc.)

It all comes down to “choice” - so many of the things that our culture considers “necessities” maybe aren’t when you step back and really think about it. But it is such a personal viewpoint, and every family has to make their own choices. I sometimes wonder how “mindful” we are in our choices, though - it is so easy to get swept up in the “everyone else is living this way, so it must be the way to go” mode of thinking.

Weatherby

Good points, Mountainhiker.

Isn't an accept with a financial aid denial quite different from an accept and a FA waitlist? In the former, the school sees income and/or assets that could have been allocated to funding BS, perhaps over a period of a decade as you have alluded.

parkermom

Could someone explain the difference between an accept with Fin aid denial and an accept with Fin aid wait list? I'm confused about this. Thanks!

ChoatieMom

How about I just answer this one for all of you as a family that found themselves full-pay without having a clue that the funds were there? This story has no loans, no benefactors, no property to sell, and no hidden wealth –that we could see. Trust me, as I’ve posted before, if we knew what “peril” checking that FA box put our son’s application in, we wouldn’t have checked it and wouldn’t have applied at all – because we did not believe for one minute we could afford it. But guess what? The schools TOLD us how we could afford it! By giving up every single form of savings (no more 529 or retirement contributions) and all FUTURE income from my job--sending every penny and then some of my paycheck, and living hand-to-mouth from husband’s paycheck. We didn’t apply for full FA; goodness, even we could see that we could eek out about half by stopping the 529 and giving up “excess” retirement contributions, but we’re in our mid-fifties and assumed there would be some leniency for retirement and basic living expenses. Nope. We’ve always lived simply with an eye to retirement and not being a burden on our only child who appeared late in our lives. We drive ten-year-old, paid-for cars, we have no debt outside a small mortgage, no memberships, no cable, no vacations (fancy or otherwise), and our clothes have no distinguishing characteristics. We feel somewhat penalized for being financially responsible (but certainly not wealthy), but we’ll take a $200K hole in our retirement funds and even simpler living to give our child this gift. Gladly. But, please, do not assume that a family who finds itself full-pay has somehow been deceitful and has used some sleight-of-hand to pull a rabbit out of a hat. We are grateful to the schools that did not reject our son outright and that took the time to help us see how we could make it possible, surprising even us. They did NOT look down their noses at us or make us feel that we were trying to game their system. They simply helped us shed our naiveté about our financial situation. We got the impression that they see our situation much more frequently than they see deceit.

As a postscript, I hope you all can see that not all full-pay families are 1%-ers and some of us may look pretty shabby when you see us on campus.

ChoatieMom

Also, we were not told on Monday and then came up with funds on Tuesday. We simply stopped all forms of savng and started putting half our income, paycheck by paycheck, into an account to pay the bills as they are due. And our simple lives have become even more restrictive. No one envy's our lifestyle.

f2000sa

.....And that is how some families who are not “rich” can apply without requesting financial aid....

Yes, Living a frugal style, saving money by giving up so much, not qualifying for FA. Folks with higher income and not saving,, qualifying.


Fair or not Fair ?? Should not FA decision be based solely on Family income??

ExieMITAlum

It does come down to lifestyle choice for many. I remember years ago when my daughter's attended a local private school and the tuition was low enough that we could swing both without FA. But it was a real struggle and meant no funds going into my retirement (at the time I was younger and thought I'd live forever), etc. I was walking down the hallway and overheard the FA officer screaming into the phone "No, you don't qualify for aid. You have a $500,000 mortgage and drive a brand new jaguar. Sell the car and the house and move into something you can afford!" The conversation went downhill from there.

I also had parents attend my reception for admitted students who pulled me aside and asked if I had some insider information that could get their student a scholarship at MIT because they couldn't afford the $50,000 price tag. Apparently they owned their own business and had not filled out FAFSA because they didn't want to reveal their income. I suggested they had time to do the form and appeal, but I got the impression that they were hiding income. Needless to say the student ended up enrolling somewhere else.

Some people play game - but most don't. Like ChoatieMom, many families give up vacations, retirement funding, luxuries. We drive paid for cars and keep them limping along. We don't eat out a lot.

I do agree with @Weatherby that there is a misconception that people who are waitlisted are full FA applicants. A large percentage of financial aid dollars is awarded to people who are receiving partial aid (perhaps with the exception of schools that instituted a "free under x$" policy. There's just not enough money to spread among all qualified applicants and the dollars can go farther if you fund middle class families who can pay a portion. Plus I think people appreciate the experience more if they have some "skin" in the game.

BUT - for those parents reading this thread and panicking. There are also an awful lot of schools that don't force middle class parents to stop funding retirement or other reasonable expenses. I know we found several in our research, and I've talked to parents who have been modest in their living expenses and were given adequate (partial) aid by their respective schools last year as well which didn't involve stopping normal expenses. So it's not universal. Different schools view things through different lenses so the answer is:

Depends on the specific school, their funds available, and the specific child.

Still - I have an old house with old house needs, so having allocated all extra funds for college and BS tuition, I'm desperately seeking DAT for those non tuition needs. Feel free to have her PM me if you find her.

neatoburrito

weatherby, from where I am sitting, if someone has wine that can be liquidated in a way other than with a corkscrew, chances are they are what I would consider "rich", regardless of their annual income. The same goes with the golf club membership (some of which are comparable to the cost of tuition).

back to the OP:

If I had a Dear Aunt Tilly, I would approach her at the beginning of the process or not at all. If a firm commitment was had, I would not apply for FA because I know that itself, would double my kid's chances. As a matter of fact, that would probably be part of the plea to Aunt Tilly. If she said something like, "Well Dear, go ahead and apply for FA and if you don't get it, I'll pay." I'd likely follow her advice because what else could I do? Whether I followed up or not after getting that FA WL letter, I don't know. I just can't say what I'd do in that hypothetical.