<p>Hmm, so even though absolutely no appreciation has occurred, the loans have been paid down, so I guess that’s a negative for us, as preparing for sale and sales costs would take up most of the equity, most likely. Very little left for college. We bought rentals in the wrong decade, unless something amazing happens in the market. Even so, with HGTV, we need to completely redo everything for today’s buyers’ exceedingly high expectations, so there goes the profit. Ugh. </p>
<p>Not sure what other method would have done any better, as the 401K lost money too in the crash.</p>
<p>Maybe we should have stashed money away in a secure wall safe!</p>
<p>Bclintock, I think I disagree with your assessment about counting an “asset” against us “As well they should”.</p>
<p>I guess I should have been proactive in figuring this out earlier, but if we had lavishly spent on ourselves and bought an expensive house, none of that would be counted against us, as the value of your own house doesn’t count in financial aid calculations. Instead, in a perhaps misguided attempt to think ahead, we lived in a small, very average home, below that of which most people in our position live, and bought a few rentals instead that did not appreciate because of the abominable market the last decade. Now that attempt to be proactive will count against us, unlike if we had lived in a lavish home ourselves and spent our money. </p>
<p>Seems wrong. Maybe we ought to opt out of the whole financial aid scene and put our efforts toward improving and selling the house we will sell for the first kid and hope something comes of it. Debt is always a bad idea, and maybe we should never have purchased rentals, though it seemed ok at the time because the tenants would at least be paying them off even if they didn’t appreciate in value.</p>
<p>Wow, that’s an awful thought, notrichenough (love the name!), that the negative value rentals were arbitrarily assigned value! </p>
<p>itsv, that’s encouraging to hear that the money is out there if you work for it. We will not do any parent loans at our age. Debt is bad. Once the mortgage debt is gone, there will never be any more voluntarily undertaken, that’s for sure. </p>
<p>Stupidly, we paid down the rentals faster than our own home, when we should have done the reverse, or not bought rentals.</p>
<p>Ugh. </p>
<p>Thanks for all the websites and advice you all have shared, though. It is very helpful and I am checking out all sites. Our daughter does understand how debilitating debt is for new graduates and is definitely on board, so we need to do this work and NOW.</p>
If you bought the rentals with an eye towards them supplementing your income in retirement, and that is still a viable plan, you should stay the course.</p>
<p>Your financial security over the next 30 years is way more important that sacrificing that to pay for college. Don’t let the tail wag the dog.</p>
<p>The first question to answer is, how much can you afford to pay each year without divesting yourself of all your assets? And then go from there.</p>
<p>You indicated you have a high-stat, high GPA kid. There is plenty of merit money out there for kids like this. You may have to re-think your college search strategy and take some schools off the table, but your kid will get over it. There is a thread here that lists all of the full-tuition and full-ride scholarships that are available, it’s a good starting place.</p>
<p>The value of your primary residence doesn’t count on the FAFSA, but it can count for schools that use Profile. And those who spend lavishly and end up with no savings may sometimes be marginally better off for FA purposes, but are generally worse off in the long run–and may even be worse off when it comes to actually paying for college. Generally speaking, current income gets “taxed” much more heavily for FA purposes than do assets. Consequently, a high-income household that spends lavishly leaving no assets will have no financial reserves to fall back on; their full EFC will need to come out of current income, and they’ll be expected to pay a hefty portion of it. A household that has substantial assets will be expected to tap only a modest fraction of those assets (I believe for FAFSA it’s 5.6%, but it could be higher at some Profile schools). Of course, it helps if those assets are liquid. It helps even more if some of it is in cash so there’s no worry about big capital gains showing up on this year’s income, thereby reducing next year’s FA.</p>
<p>But I still say if you have assets you’re financially better off than someone who has no assets, and it’s fair game to count those assets–so long as they’re counted in a way that fairly reflects the economic realities, which is the hard part.</p>
<p>This is a very good point. “Meets full need” schools aren’t always the best bargain for those with unusual or illiquid assets, or assets that they don’t want to divest in order to raise cash for college. Take a close look at schools that offer substantial merit aid to attract top students.</p>
<p>Notrichenough (Why can’t I quote you? I can only seem to do this quick reply, even if I hit reply in your post? Not sure why)</p>
<p>The idea was to sell a rental per kid and have one left for ourselves. I didn’t expect the flat market where no appreciation would take place, but, of course, this is the risk we all take when we invest in anything. I agree that it would be unwise to remove any “financial security” (if such a thing exists) merely to send a kid to dream college. I worked full time and attended college and grad school full time with no parental financial support, though I was fortunate enough to be able to use the Child of a Disabled Veteran benefit in undergrad. So you just do what you have to do. I hate to think that what we tried to do will be counted against us if we enter the financial aid arena just to try to reduce the inexplicable cost of attending college, when we all know that no one pays “sticker price”. Sticker price is a high price to pay to retain your financial privacy, though I am tempted. </p>
<p>If we enter that merry-go-round and it is of no benefit to our family whatsoever, I’m not going to be happy.</p>
<p>Stupidly, we paid down the rentals faster than our own home, when we should have done the reverse, or not bought rentals.</p>
<p>I am guessing that the reason why you chose a more risky investment for your retirement is because you expected a higher return than from a 401K?</p>
<p>IMO unless you live in an ultra desirable area, and like managing rentals, I would sell.</p>
<p>But - what do you mean " no one pays sticker price"?
That is precisely what we pay for our daughters school & without self employment or multiple real estate investments to skew income.</p>
<p>Actually, there are plenty of families that pay sticker price. If my D hadn’t chosen a school with generous merit scholarships, we’d be paying sticker price. We have several friends who are currently paying sticker price at expensive schools ($200-250,000). We knew we wouldn’t qualify for need based aid and we didn’t bother filling out the FAFSA.</p>
<p>We were sticker price payers–and also didn’t have real estate investments besides our home to leverage.</p>
<p>Nobody is forcing you to pay sticker price, or to sell property in a down market. But even with no appreciation- the property is worth something, no? Unless you are upside down with your mortgage?</p>
<p>You need to get over the idea that this is something that’s being used “against you.” These colleges are not out to get you. They’re just trying to make a fair and realistic assessment of your financial situation for purposes of determining whether, and to what extent, your child qualifies for need-based financial aid. You and one or more of the schools may not see eye-to-eye about how much you’re worth, and how much you’re able to pay; and you may have knowledge of the current state of the rental market that they don’t have, which might make their judgment more difficult to swallow. In all likelihood, the schools won’t even agree with each other about your ability to pay, which is why it’s wise to shop around. But nobody’s trying to stick it to you. They’re trying to decide how much of a discount, if any, to give you, based on their best, honest assessment of your financial situation. It’s not as if they have some ideological predisposition to punish owners of rental property. If you don’t like their conclusions, you can always try appealing the FA award; they’ll probably give you some chance to explain why your financial position is not as strong as it appears to be on paper, which may or may not result in a revision of the FA award. But look, tens of thousands of people are in a similar predicament, though perhaps with a somewhat different asset mix. Most of them figure it out eventually. So lighten up. </p>
<p>As for the idea that “no one pays ‘sticker price,’” that’s baloney. At many elite colleges and universities, half or more of the students are paying full sticker price–and we’re talking a sticker price that’s now in the range of $60K/year at some of these schools. Heck, I’m paying full sticker price for my D1’s education at a top LAC. Why? Well, because my wife owns some land that’s been in her family for 5 generations, that produces no income for us. But it’s an asset, and it pushes us into a category where we don’t qualify for need-based FA, at a school that offers only need-based FA. Consider yourself fortunate if you qualify for any need-based aid. We don’t, and I’m not whining about it. It is what it is. If you don’t think it’s worth it to spend that much, encourage your kid to attend your state flagship, or shop around for schools that give big merit awards.</p>
We had much the same plan. The real estate crash wiped out pretty much all the equity we had, we would have been bringing money to the closing if we could even have sold them.</p>
<p>We wound up being full-pay at the privates, and our FAFSA EFC would have made us full-pay at all but a couple OOS public schools. And there wasn’t a chance in he** of that happening without serious loans, which we were unwilling to take and I was not willing to saddle my kids with.</p>
<p>So we changed course - the privates came off the table, the search for IS schools and merit got under way, and the rentals were folded into our retirement planning. We have subsequently re-fi’ed them all to very low rates (check out HARP programs if you don’t have much equity), and they will now be a major piece of our retirement. College is/was funded out of income and some other much more liquid assets, and was doable because the net price wasn’t crazy.</p>
<p>
DS’s school required that we fill out the FAFSA every year for his merit scholarship. Makes no sense at all, but that is their rules. </p>
<p>Every school will have its own set of rules you have to be aware of, especially around application deadlines to get merit money. Pay close attention to this.</p>
<p>*DS’s school required that we fill out the FAFSA every year for his merit scholarship. Makes no sense at all, but that is their rules. *</p>
<p>I am guessing that they have the same rule for everybody- on the off chance that someone may qualify for need based aid?
It also isn’t a bad idea to have that taken care of, so then the student can have " skin in the game" with a small student loan.
If you want their money- their rules.
If you don’t want their money, you have more options.</p>
Maybe. After the first year, it’s pretty obvious if you have no chance of qualifying for need-based aid, so why do they need your private financial information each year?</p>
<p>I had my suspicions that the FAFSA data was making its way from the FA office over to the fundraising office.</p>
<p>But - their rules. It was enough money to make it worth playing by their rules.</p>
<p>
I don’t believe this works. I think most kids have zero concept of what it means to have a loan, they aren’t going to work any harder or be any more serious just because they have a loan that they don’t even have to make payments on (yet).</p>
<p>I wouldn’t make that assumption. The wealthiest schools don’t care that much. They have ample financial aid budgets, so they know they’re covered pretty much regardless of the financial status of the people they accept. Besides, they know high SAT scores correlate pretty strongly with income, and the top-performing kids at elite private schools and top suburban high schools are going to be predominantly from affluent families anyway. So bottom line, the whole admissions system is geared toward privileging affluence; as a consequence, they don’t need to go out of their way to look for wealthy kids, or certainly to give them any kind of break in admissions standards.</p>
<p>Most of the schools that claim to meet full need also claim to be “need-blind” in admissions, meaning they don’t explicitly consider wealth or ability-to-pay. It’s schools with tighter financial aid budgets that sometimes feels they need to be “need-aware,” i.e., to screen out a certain number of high-need applicants. Other do it the old-fashioned way, by “gapping” most or all students on financial aid, so those with the most need self-select out by not enrolling, because they can’t afford to pay.</p>
<p>We were also in the same “boat” as rich enough. 3 rentals and some land…sell 2 rentals for college etc. etc. Sad tired story for anyone who owned real estate in the last decade. And we were/still are full pay, but at the end of the day we’ve survived and we still have all the assets and decided that living like we were twenty (old cars, no restaurants, no vacations, grocery list, minimal expenses) was the only thing we could do and we had the kids take out federal direct loans which we’re helping them pay back so yes, we did the FAFSA every year. But it’s not about “counting against you” as bclintock points out, you have assets that many other people don’t have and having those assets can be viewed the same as having an actual fund earmarked for college in some form or another. You alone decide how much you are willing to pay and how you will accomplish what you need to do. Take the “what does the kid deserve” out of the equation. They deserve what you are willing to give them.</p>
<p>*full pay students are more likely to be accepted, especially for private colleges with expensive tuition? *</p>
<p>Many schools, even ones that used to be need blind when they were flush- are now * need aware*.
Admitting full pay students gives them more flexiblity to be able to offer a good package to students with a great deal of need, but whom they want to attract from another school.</p>
<p>Schools that stay need blind- either have a hella huge endowment, or they dont even attempt to meet 100% of need.</p>
<p>TranquilMind, we paid full sticker even though both kids were attending privates at the same time. We survived, even go on vacations though my H is still driving his 1995 car and has no plans to retire.</p>