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Do not buy into Colby College "no loan" policy

unemployedfamilyunemployedfamily Registered User Posts: 2 New Member
The family is unemployed and they want retirement assets to pay tuition!!! Either that or loans!! Meanwhile they have over $400 million. Thank you Colby.
Post edited by unemployedfamily on

Replies to: Do not buy into Colby College "no loan" policy

  • worried_momworried_mom Registered User Posts: 2,205 Senior Member
    Read Colby's "no loan" policy very carefully. It does NOT say that the student and/or parents will never have to take out a loan to pay for the school. It simply says that Colby does not include student loans in its financial aid packages, but does make them optional.

    Also, Colby is not a "full needs met"school, so many students find that their financial aid does not provide everything they need but leaves a big gap that requires them to come up with extra money through loans or other means.

    I'm sorry that you did not receive enough aid to attend Colby and hope you have some other great choices. Good luck!
  • hmom5hmom5 - Posts: 10,882 Senior Member
    By retirement income I assume you mean savings not in retirement accounts? Every college would want the same. Roll the money into true retirement vehicles and by the third year you would get the aid if that's the only asset effecting it. Of course most families don't want to do this for many reasons.....

    This blame the college thing gets very old. All of the FA rules are easily found. Most schools have calculators on their web site. Why are there so many aid award shocks?
  • MomofaKnightMomofaKnight Registered User Posts: 451 Member
    Actually, Colby does meet 100% of demonstrated need. From their website:

    "The expected family contribution represents the combination of expected parent contribution, student earnings and benefits, and a portion of student assets as well as other available resources (for example, gifts from relatives or tuition benefits from a parent's employer). If parents are separated or divorced, the College may include an expected contribution from the non-custodial parent. This total contribution is then subtracted from a student's total cost of education, including estimated personal and travel expense allowances, to determine the eligibility for aid. The College offers a financial aid package, usually consisting of a grant and campus employment to meet 100 percent of the eligibility determined by the College."
  • 2collegewego2collegewego Registered User Posts: 2,708 Senior Member
    Hmmm... We got a good package from Colby last year and they calculated EFC very similarly to similarly-ranked schools. I did find that the no-loan schools generally calculated our EFC a bit higher than schools that included loans in the package but the difference was $1500 or less so our out-of-pocket was definitely less for the no-loan schools than for the schools that included loans in the packages.
  • sunnyfloridasunnyflorida Registered User Posts: 4,790 Senior Member
    Exactly what "retirement assests" are they speaking of? Are they actually in a "retirement account?"
  • MomofaKnightMomofaKnight Registered User Posts: 451 Member
    On the Profile, Colby will ask you to list the value of your IRAs, 401K/403B accounts, pension etc.
    Frankly this worked somewhat in our favor as we appealed our initial FA award and they increased our aid by about 5 grand to account for the fact that our retirement accounts were "underfunded" and we would need to put more money away while our child was in college.
  • CountingDownCountingDown Registered User Posts: 12,415 Senior Member
    If your assets are in a 401(k)/IRA/403(b) they are not included as an available asset for college. However, if you are CURRENTLY making contributions to a retirement plan, those funds ARE considered avaiable for college expenses. PROFILE asks how much you have in your pension/401(k) accounts, but as the poster above mentioned, it's to see how adequately you have funded your pension and whether, based on your age, the school should reduce your EFC to reflect that you need to save for retirement, too.

    If you hold other assets in your names that are NOT under the umbrella of an IRS-qualified retirement plan, they ARE considered available for college expenses (i.e., an investment property that you intend to sell to help fund your retirement).

    Assets held in a student's name also are assessed at a much higher rate than assets held by the parents.

    This is standard FA procedure and not specific to Colby.

    If the only way you can fund college expenses if you are "gapped" or the college's idea of EFC doesn't match yours is to loot your pension plan, that should be a big red flag about the school's affordability for your family. Taking $20k out of your pension now, after the hits the markets have taken, is like taking out $40k two years ago -- plus you get to pay 35-45% in taxes and penalties. It is a VERY costly proposition.

    -- I'm a 401(k) administrator and have seen people raiding their accounts. It is heartbreaking to see so much of what they have worked to save first lost in the market, and then hit with taxes and penalties on distribution.
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