Why not allow your kids to become adults and apply for a mortgage when the time comes but help them out now by saving them from 10+ years of debt?
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Because if I don’t save at all, they will be charged less than half as much for the same education, and I can cover that and help them with a down payment too. If I have to pay over a million dollars for their education, then I won’t be able to help them with a down payment.
OP, as others have pointed out, treatment of retirement and home equity will vary by institution. There are no ‘rules’; just practices and policies. Having said that, I’m not sure it really matters for you. Surely you are not proposing to ignore the need for an emergency fund? Having that in taxable savings, then maximizing retirement contributions is fine. But at some point you’ll need to figure out how to fund the part of college you know you’ll need to pay. You can probably fund from income, but what if there is illness or job loss at an inopportune time? Given that risk, you’d probably designate some savings for college (in addition to the EF) when your kids are in their teens, and you might add to your EF as your roof, furnace, etc start to show age. The net result is that when the time for college arrives, you’ll probably have significant taxable (and/or 529) savings along with your 200k income. Accepting that in advance might lead you to see benefit in starting 529 contributions now.
We are making WAY less than $200,000. Our EFC and Virginia Tech is $38,000. The estimated cost of attendance is $43000. We got wonderful aid for the $5000 difference: loan for 3500 (no interest until graduate) and loan for 1500 (interest from day one). I guess technically that’s considered financial aid since they are aiding me and my financing but the only thing it’s saving me is some interest on loans for a small portion of the total cost
This poster’s oldest kid is about 10. I would suggest he look at how schools hand out financial aid,when his,kid is 15 or so.
“Because if I don’t save at all, they will be charged less than half as much for the same education”
THEY WON’T THOUGH [at least, not how things stand today – and you’re just kind of wildly asserting that things will be different in a few years]
At least 5 different people have told you this already. I don’t know where you’re getting this figure from or why you’re making this assumption, but no, just no.
Earning 200K is the single greatest “lever” on college costs in this equation. Every thing is secondary, tertiary, or just not relevant. Your neighbor earning 200K with lots of shiny toys and fab vacations and zero savings is NOT going to get a better deal than you are at the same college.
Is this your fear- that you are getting screwed?
“Is this your fear- that you are getting screwed?”
I think so. High income and assets, so colleges see a high ability to pay. Must be hard.
I think that to the extent you receive any aid at all, that aid is definitely going be 100% in the form of loans. And to the extent you feel animosity towards the neighbor enjoying his Mercedes every other year, keep in mind that you are buying a Mercedes every year in your retirement account. I get that this plan of yours is driven by the myth that people living high on the hog are getting their kids college paid for them, while frugal savers are getting the raw end of the deal…it’s a myth. Current income is king when it comes to what matters for college aid.
Blossom - I’m expecting that with a $200k income and ‘broke’ with only retirement savings, my kids will be charged $50somethingK/year for their education…just like the family next door ‘broke’ with shiny toys and fab vacations. Is this incorrect?
I am expecting that with a $200k income and $1M in a 529 plan, my kids will be charged over $1M for the same education. Don’t you think paying well over twice the price for the same service because I saved for it is getting screwed?
THEY WON’T THOUGH [at least, not how things stand today – and you’re just kind of wildly asserting that things will be different in a few years]
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I’m lost here. So you DON’T think college list prices will continue increase as they have for the last 70 years OR you think grants won’t be reduced by 5.something% of taxable savings anymore?
Yes. But that isn’t what will happen. Your financial aid will be loans, so will theirs. You will both end up the same.
Neither. I’m saying the “they will be charged less than half as much for the same education” statement is coming from a place where the sun don’t shine.
Neither. I’m saying the “they will be charged less than half as much for the same education” statement is coming from a place where the sun don’t shine
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So the “Need based grants” on the NPCs are all lies?
12/50 != 1/2
I’ll point you to my previous post where I say call WPI and ask. That’s the only way you can actually be sure of their policies, at least as it stands now. NPCs are notoriously unreliable for many different situations.
And based on the collective experience here, I gotta agree with other posters that you’re realistically probably only going to see loans as aid.
As far as the need based grants: there has been discussion where several have run the cost calculators (me included) and it came up saying would receive agrant (in my case $6000). And as you. Can see in my previous post that didn’t happen. And, that was at more than one school.
OP: your theory is correct. And many people do save only in their retirement accounts. And if the FA is still the same in 8 years, then you are good with today’s NPCs. But aid is not the same everywhere and is increasingly loans or a gap. Just beware of this, bc FA is not trending higher.
Many schools include home equity.
Once more…if things stay the same every…the balance IN your retirement account won’t matter one bit at tune very vast majority of colleges. Your need based aid will,be based on your income…not that balance.
But do remember…that you need to add back in any pretax retirement accounts made in the year your FAFSA uses.
So for,example…this year, the fafsa and Profile use 2015 tax data. All pretax contributions made in 2015 would,be added back innas income.
12 grants out of 64 list is TODAYs aid and price. I’m expecting it will be more like 62 grants out of 114 list a decade from now.
Apparently https://npc.collegeboard.org/student/app/wpi was taken down in the last couple months and you are looking at a different calculator now.
As far as the need based grants: there has been discussion where several have run the cost calculators (me included) and it came up saying would receive a grant (in my case $6000). And as you. Can see in my previous post that didn’t happen. And, that was at more than one school.
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Thank you for answering my questions!
Once more…if things stay the same every…the balance IN your retirement account won’t matter one bit at tune very vast majority of colleges. Your need based aid will, be based on your income…not that balance.
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Thank you for stating that so many times so nicely. I believe you are correct unless the rules change signifcantly. 