<p>Marite, you are assuming the alternative to working is sitting at home doing nothing. Able-bodied normal people with extra time on their hands will be itching to find something to do. </p>
<p>Assume the following, instead:</p>
<p>Empty-nester Mom has a choice of 1. taking a job working at the zoo gift shop for $30,000 that will cost her $15,000 to perform (commuting, clothes, taxes) and reduce her kid’s financial aid $15,000, or 2. volunteer for a position at the zoo giving tours to groups of school kids and caring for the baby animals. If you want to, assume that volunteer position 2 also requires occasional manure-shoveling.</p>
<p>Choosing 2 allows the $30,000/year job go to someone who really needs the job and can keep the money, like a recent liberal arts graduate with no job still living at home with depressed parents.</p>
<p>What are the ethics now of choosing 2, i.e., not working to avoid the hit on financial aid?</p>
<p>DT123- I assume from your post that you don’t know any widows or divorcees.</p>
<p>I know lots- dozens- and every single one of them (including the one married to a multi-millionaire real estate developer) wishes they had returned to work at some point prior to the divorce or before their husband died prematurely. The multi-millionaire had done “advanced estate planning” in the years prior to the divorce which put many of their assets out of the reach of the wife. They divorced; she gets child support and the judge told her “it’s time for you to get a job”. She has no pension, no IRA, and the clock is ticking (child support won’t support her in her old age). Or my neighbor whose husband had no life insurance.</p>
<p>I could go on. I think women who think that H will be around forever to take care of them and therefore it’s not “worth it” to work are being very short-sighted… and also hugely ignorant of the actuarial tables.</p>
<p>It sounds like the OP’s friend is going to be working for herself, since she’s figuring on paying 15% self-employment tax. Hence no ethics about taking a job away from anyone else. She may even end up creating jobs as her work/business grows. </p>
<p>It’s not an ethics violation to take a job when there’s someone who is more deserving who also needs the job, because you cannot know that by nobly turning down the job it will go to the Deserving Person. The job might well go to someone else looking for a second income to finance vacations, or private school tuition, or something else “nonessential”. The same logic applies to merit aid. </p>
<p>I totally agree with blossom on the benefits of working beyond the immediate paycheck.</p>
<p>Bay - so would taking an extra job. How would you define <em>truly needy</em>? Perhaps we should just do away with FA altogether. Obviously is both parents are working 2-3 jobs and the student is working, there would be no need for FA. It pretty easy for those of you who obviously have no problem pulling out the checkbook to write the check to be so judgemental.
Honestly, if the college wished to award a need-based grant to a student why should you care?</p>
<p>I am not assuming anything about how people choose to spend their time when they are not gainfully employed.
I am going by the criteria laid down in the original post: the parent (let’s assume that it is the mother) no longer needs to be staying at home as the last child is grown. There are jobs available for which the parent is qualified. The parent makes the calculation that if she takes one of these jobs, the financial aid her child might qualify for will be reduced. Ergo, it makes no sense for her to take up a paying job. How she chooses to spend her time is up to her. It could be shopping, watching TV or volunteering.</p>
<p>The fact remains that if all parents (and why not stop at one) made the same calculus–that it really does not make financial sense to be working–we would be needing a huge welfare system, and not just to support higher education. In my case, for instance, if either my H or I had made the decision to not work, we would certainly have qualified for a very large finaid package from either of the two colleges my kids attended instead of paying full fares. And, of course, we would not be paying the same amount of taxes we do. But would we not want to have SS and Medicare available to us down the line, and all the services our taxes go to provide? and to have our kids educated at the best possible colleges for them?
Let me make clear that I am not talking about people choosing jobs that are not high-paying. I am talking about a deliberate strategy of not working in order to get more financial aid. That was the gist of the original post.</p>
<p>marite - all parents can’t make that caluclation. This woman can because she is being supported by a spouse (presumably) and there is enough money to support the child(ren) who are in college. This woman is just one part of a family UNIT. We (our society and government) tend to look at a family unit (husband/wife) as ONE person. Hence the filing of a joint tax return. The government doesn’t care who is earning the money just that the couple is earning the money.
The way FA is calculated they expect you pay out of earnings and to have some savings - if a family makes $50,000/ yr for 20 years scraping by to feed, house and clothe the children, they have not had the ability to save. If their income doubles - they are treats for FA purposes as IF they had been making $100,000 for all those years. Many people think that is not fair.</p>
<p>Trust me - even those who are getting financial aid need to understand that a lot of dollars are already being shelled out. All Financial Aid does is soften the blow.
Furthermore - you are assuming that the FA calculation was the ONLY determination being made in the equation. There may be reasons why she would not want to be tied down to a job - i.e. taking care of ill elderly parents or in-laws. </p>
<p>Stop equating a need based grant from a college to welfare. No where near the same thing.<br>
When my children were small, I made similar calculations. 3 small children at home * day care vs my own earning power and taxes etc…
There are numerous ways where FA is not “fair”. Should we extend the bureaucracy to require non working parents to file a report on their job searches?</p>
<p>If you think this is not “fair” I can assure you that there are numerous other ways where FA is “not fair”. Look at divorced couples - there are plenty of high earning parents whose children garner a lot of FA $$$ because of divorce.
People massage their financial situations and are advised to do so by their financial advisors.
What this woman is doing or not doing is not illegal. I don’t even think it’s unethical.
Those of you who are full pay, feel free to judge - just walk in someone else’s shoes before you do.</p>
<p>True. And this is not a good governmental policy, IMHO. Many a spouse has made this calculation and decided not to take a paid job. And many a spouse has paid the price later.</p>
<p>The reason I care is because the cost of college tuition has risen due to the enormous amount of FA now available. And if we are talking about a public university, then a portion of full-pay tuition goes directly to FA. I’d like to believe that the money is going where it is needed, and not to help support a parent enjoy quiet time at home (which is the scenario presented here - there was no discussion of ailing parents, etc). I think you are taking this a bit too personally.</p>
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<p>Hmm, how is it “obvious” that full-pays have “no problem pulling out the checkbook to write the check?” I’d say that is a pretty inaccurate judgment on your part. Perhaps you haven’t been following the news, but plenty of full-pay families go thousands and thousands of dollars in debt to make that payment. FA calculators can be inaccurate in very many ways.</p>
<p>vicariousparent - I didn’t make the judgement that it was “good”. I guess it’s the price we pay for viewing the union of marriage as “one”.</p>
<p>
pure speculation on your part. It could be a private university. But what does it matter?
very very few public universities give need based grants. some do give merit scholarships which are not based on need. Show me a public univeristy where a portion of tuition funds FA. </p>
<p>Not taking this personally at all. I work full time.
Hmmmm - one of the biggest misconceptions I have run across on this board (mostly by full pay parents) is that kids who get FA are getting a “free-ride” or that their families are not struggling to pay the difference between the FA and the bill. Plenty of kids who get FA have parents who borrow money to pay the bill.</p>
<p>Perhaps what you want is for FA to be eliminated completely. After all if your kid can’t qualify then probably other kids should not reap the benefits.</p>
<p>I believe it is you who is making a lot of assumptions. The OP only said that now the kids are grown, it would be fine to get a job, except that it would reduce finaid. The OP specified that the presence of the mother is not needed at home. The OP did not say that the family has elderly parents. Please do not introduce red herrings.</p>
<p>I’m not even starting on the issue of single earners. There was an article in the Daily Beast about women who’d left high paying jobs to stay home. When their husbands lost their jobs, the women tried to get back in the job market and found that they were no longer competitive against new hires or that they were offered jobs well below what they used to earn. If I had chosen to stay home while my children were growing, my family, too, would have been hit by my husband’s several job losses and I would certainly have not reached my current income level.<br>
I totally respect the choice women make to stay home until their children are grown. But it is a totally different calculus from deciding not to work in order to qualify for more aid. Sorry, that calculus is about wanting someone else to pay for yout free lunch.</p>
<p>small nit, but the Cal Grant program is administered by the State of California and not the University. Thus, like a federal Pell Grant, a student could receive a Cal Grant by attending a private college such as Stanford, for example.</p>
<p>I find the tone of the posts of marite and Bay profoundly offensive. A number of years ago, shortly after our first child was born, my wife left her well-paying job and has since been a professional volunteer (in addition to having a part-time low paying gig), working largely for nothing in the schools improving the experience of the children of people like them, while many “career” women looked down on her. I’m not crying poor–I do pretty well by any reasonable standards–but we have a lot less of the material things than most of the two career couples that we know, and one of my children had to move lower down her college preference list for financial reasons.</p>
<p>Now, apparently, she supposedly should feel obligated to return to the paying workforce even though the way the rules are set up, we would net very little because of the effect on financial aid now that we have three in college. It appears that the theory is that by having our financial aid reduced that money will be saved for someone more deserving. Boo hoo. I’m sad. </p>
<p>Well, I have news for you. They are not my problem. Maybe two earner families should be given a break on FA. We didn’t make the rules, but we (and the OP) are entitled to make judgments about what is right for our family based on those rules. The situation is in principle no different than the financial calculations that some families make about working based on the cost of day care.</p>
<p>To answer the question in the original post – no, it doesn’t (and I do have a degree in economics!).</p>
<p>The only way the OP’s friend’s analysis makes sense is if she has figured out that her net pay (pay after taxes) would be less than the amount of non-loan aid that her child would be eligible for if she didn’t work. The 50% reduction in the amount of aid she talks about is irrelevant; only the actual dollar reduction in aid should be considered. And it doesn’t make her work “tax” 100%.</p>
<p>If she were to make $30,000, net $15,000 and her child would lose $15,000 in non-loan aid, then her working would be a wash. But if her child would lose less than $15,000 (for purposes of this example) in non-loan aid, than the family comes out ahead financially if she works. </p>
<p>I’m assuming that she realizes loans just delay the day-of-reckoning and only non-loan aid is relevant to her decision. And also that she realizes that she is looking at this purely as a short-term financial decision; I certainly would not.</p>
<p>We will be full pay wherever my sons attend college (although the older one did get a merit scholarship at his school). My husband and I both work. I would have it no other way. More money gives you (and your children) more choices and more control. </p>
<p>BTW, I did work part-time when my boys were younger. It was a good trade-off for us.</p>
<p>Thank you for all your responses. I guess the original question was whether it made sense to think of the reduction in financial aid as a tax, not whether it made sense for my friend to put off working, but all of your answers were enlightening on both counts!</p>
<p>The comments on whether working makes sense financially for my friend were interesting. Delamer’s comment above makes it clear that if the FA is loans it is really almost useless as a benefit, much better to lose the “aid” and pay off the cost now than putting it off for the future. I’m pretty sure the aid must be grants, or my friend wouldn’t be agonizing over the decision - she’s pretty smart. The posters who brought up the issues of building up seniority and insuring against change in family structure (divorce, disability, death of spouse) have very good points; these things, of course, should be taken into account in any calculation of the present value of working. </p>
<p>One thing I was very surprised that nobody brought up in an explicit way (although this was hinted at) is that my friend also loses the value of her time if she works. This time certainly has positive value to her, and to others if she spends the time volunteering. In fact, if the value of this time is taken into account, working may actually result in a net loss to her (and the community if she volunteers).</p>
<p>As for whether the reduction in financial aid can be considered a tax, I think your responses indicate the answer is a resounding Yes! Nearly everyone considers the tuition to be something that is “owed” if you can pay it, and to be a contribution to the common good. That’s what I’d call a tax. </p>
<p>My original point was that the structure of this tax is wacky. On top of other income taxes it starts off at 80% (my original 100% was off, thank you for the corrections) and then it REDUCES as tuition is paid off down to the regular marginal rate of ~50%. In short, it is an incredibly regressive tax on middle income earners. And depending on the spacing of your children, you could fall under this regressive tax structure for many years.</p>
<p>The community can (and apparently does!) heap scorn on those who respond rationally to this inverted incentive system. But I can’t help think that this poorly structured tax has the effect of skewing the decision making of tens and maybe hundreds of thousands of families.</p>
<p>^
I don’t think of it as a “tax” at all. If this is a grant offered by the college itself (not Fed or State) then it can be taken away in any given year, if the school so chooses. This is a risk, obviously. </p>
<p>One thing you don’t mention is where would she work? If she is a professional and can land a great full time job with a great salary, that is different that making minimum wage cashiering at Target. The former certainly allows her to become more financially sound and increase her standard of living (prepare for retirement etc) while the latter may hardly be worth the trouble.</p>
<p>Yes, the only way your “tax” analogy works, is if you start from the premise that a college education is an entitlement or right. That is not how college has traditionally been viewed in this country. This thread is the first I’ve read that conveys that opinion.</p>