<p>Can someone who makes a lot of money, but spends without boundary, be considered poor?</p>
<p>I.e., a hypothetical person who makes a lot but lives in an high rent apartment, sends kids to private camps and other activities, and purchases everything the family ever wants?</p>
<p>This personhas no savings and no emergency fund, and labels himself/herself poor, but in reality the income is good and it’s a bottom line (expenditure) problem rather than a top line (income) problem?</p>
<p>Should this poor person qualify for government programs, scholarships for education, and sympathy from family members for being in such dire straits financially?</p>
<p>This is a hypothetical situation and something I’m mulling over in my mind today.</p>
<p>Has a lot to do with college tuition. Heard that college tuition may hit $20k/year for in-state in my state. So, does a high income family that choose to spend every penny get a full ride scholarship for being low income? Or do they need to pay full fare, barring merit scholarships?</p>
<p>A person with money is not poor. People have the ability to allocate their money. Some choose to invest, some to spend, some to gamble, etc. Poverty is a lack of money to spend or invest, meaning a lack of funds to allocate. The question confuses a point economics specifically pulls apart: that which you have and what you choose to do with it.</p>
<p>I remember a girl who was in school with one of my D’s…her mom always talked about how poor they were, how they were going to have to file bankruptcy if they didn’t sell their house soon. Their house was on the market for $4.2 million.</p>
<p>Heard that college tuition may hit $20k/year for in-state in my state. So, does a high income family that choose to spend every penny get a full ride scholarship for being low income? Or do they need to pay full fare, barring merit scholarships?</p>
<p>For financial aid, income is weighted more than savings, debt is not considered unless you are supporting an elderly relative or paying for a kidney transplant.
A family who makes $100,000 is going to have an EFC of at least $25,000. Doesn’t matter if they actually have it or not.</p>
<p>My understanding is that a top student – regardless of family income–might be able to get a merit scholarship, depending on the university’s merit guidelines (not all offer them). For need-based aid, parental income and assets are considered, based on the Fafsa and, for some schools, the CSS profile. Yes, they do look at what assets or savings a person has, but they also look at income. Usually, past a certain income, one is considered full-pay. So, someone with a 500k income, but no savings, is considered full-pay… A person with similar income, plus savings, is in a better place to pay for their children’s education without cutting into their standard of living. (Not that I would know anything about a standard of living at that level of income. ) I think where it may get a little dicey or seemingly unfair is at a point where, given the same income, one kid may get aid due to low family assets and another kid would get less help due to the fact that the family has substantial savings. It seems that the prior family, if they could have saved but failed to do so, is being rewarded. On the other hand, that same family may have had lower income in earlier years or higher expenses, say a catastrophic illness, that derailed their ability to save. It seems that for public institutions, the cutoff for qualifying for need-based is understandably more stringent. Depending on the private school, need may be considered for upper-middle class families. Hope this helps.</p>
<p>Don’t know where you got this idea…some colleges may make adjustments if a family lives in a high cost-of-living area, but as other posters have said–the actual income that comes into the household is heavily weighted when it comes to financial aid calculations, not the net income after wildly extravagant expenses.</p>
<p>There’s a difference between poor and poverty. Poverty is defined, poor is not. </p>
<p>Since FAFSA and most colleges don’t take spending into account, I would say no they’re not poor and they won’t qualify for those programs just because of high expenses.</p>
<p>The “official” government definition of poverty in the U.S. (Census Bureau) is income less than that necessary to meet the basic needs of daily living: food, shelter and clothing. The latest estimate is that poverty in the U.S. for a family of 4 would be income less than $23,050 per year. These estimates were first put together in the 1960s and are largely based on the cost of food for a basic diet. The poverty level is essentially 3 times the basic food budget, because in the early 1960s it was found that the lowest income groups spent about 1/3 of their budget on food. The food budget goes up with the cost of food in the Consumer Price Index.</p>
<p>While there may be many problems with this official definition of poverty, it is consistent over time and any alternative definition of poverty may well seem artificial. So a family of 4 with income more than $23,050 per year (slightly more in AK and HI) would not be officially in poverty, no matter what they did or did not spend their income on.</p>
<p>A person can be house rich but cash poor. Engineer, you cannot qualify for needs based scholarship, as far as I know (feel free to correct me if Im wrong) if you have high income. Merit yes but need-based, no. </p>
<p>A huge part of your EFC is based on your income. But its possible for a person who receives 1099 instead of W2 to have huge deductions or commit fraud by fudging his deductions (for ex., Mercedes Benz lease payments) that results to a low AGI. </p>
<p>The above quote should required reading for all parents. So many people have the false idea that if they will be penalized for saving and that scholarships will just appear out of nowhere if their child is a good student. </p>
<p>I personally don’t care how others spend their money. But I feel awfully sorry for some of the kids out there whose parents spend,spend,spend and then can’t help them with college costs. I’m not talking about things like medical expenses, etc.</p>
What about flip side to this…So, does a family that decide to have one working parent or to take on a lower paying job in order to have more free time deserve financial aid?</p>
<p>I am just not happy with OP’s judgmental tone of his/her post.</p>
<p>You must live in Washington State as those numbers were in our paper this week. You’re in luck! Nobody gets much money for the UW no matter how poor or “poor” they are so you will be treated equally regardless. :)</p>
<p>I have often wondered about the non-working parent issue with income. Is there any FA consideration for the fact that one parent choses not to work? I don’t want to bash stay at home parents by any means (I would love to have been one). However, I do think a family with two working parents should get more aid than a family with one working parent if the household income is the same. In theory, the non-working parent COULD get some type of job, all other things being equal.</p>
<p>It used to be that virtually everybody in America, no matter how much money they made or had, considered themselves to be “middle class.” It concerns me if now everybody, no matter how much money they earn, considers themselves to be poor.</p>