?Good? life style?

Parents Forum
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<p>Life style, what does it have to do with college application? Let’s see.</p>

<p>Society told us that “Don?t live beyond your means” and “save every penny that you could”, etc. are good rules for live. We did follow that ? live in a small old house, drive old domestic cars, take limited vacations mostly by driving to the destinations, have basic cable TV and use basic cell phones. The results are what one would expect, decent $ in saving and low debt (only mortgage). Now the college application starts and we have the feeling as we were just robbed. </p>

<p>Because of our saving and salary, we have high EFC and no chance for need based aids. </p>

<p>Had we spent every penny we earned on big house, fast cars, and oversea vacations, we would be penniless with debt up to our eyeballs. However, our kids would have been able to go to school for next to nothing. And we would have surely been enjoying that ?good? life.</p>

<p>So, what is a ?good? life style?</p>

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<p>This has been covered many times before. Debt doesn’t effect EFC. Parent assets pulled at 5.8% or so, not including house equity except for Profile. (And quite a few Profile schools cap home equity.) You are NOT worse off to have saved money and been frugal. :slight_smile:

So… I don’t see the problem. You have savings and salary to pay for college. Congratulations! :)</p>

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<p>And you’ve got a great smart kid that will get merit aid! Feeling bad because you can pay for college is like envying someone that “gets” to park in a handicapped parking spot.</p>

<p>A good life style is when you are happy and healthy and looking forward to more of the same!</p>

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<p>Hey, I have enough to pay for my kids’ college AND I have a handicapped parking permit. :)</p>

<p>The people who didn’t live frugally and didn’t save money and who now have kids ready for college are regretting it now.</p>

<p>Those EFCs are really high for a family with little or no savings. </p>

<p>Several of my daughter’s friends will be unable to attend excellent colleges that have accepted them because the financial aid packages were inadequate. Yet these same families are living in houses far larger than they truly need, driving luxury cars, and going on expensive vacations every year – in some cases more than once a year.</p>

<p>Other families, who have lived more frugally, may see those same financial aid packages and say, “Oh well, the EFC is more than we expected. But we do have savings, and we can dip into them a bit to make up the difference.”</p>

<p>The frugal people win.</p>

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<p>laserbro: I have not checked out your situation, if you are applying for FAFSA schools, even if you had not saved a dime, if your salary is over a certain amount, you are out of the running for Pell & other state grants. You might have home equity which is large, yet not counted at all. If you have $100k in cash and $100k in mortgage (not likley, but it could happen) you could pay off the mortgage and protect those assets…but all of that will not offset a salary in a certain range!</p>

<p>So, if that is your situation, your savings are helpful to you.</p>

<p>In the same situation, your home equity would count against you for Profile schools. Your savings and lack of debts are not really affecting you if you have a hihg income!</p>

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<p>Had we spent every penny we earned on big house, fast cars, and oversea vacations, we would be penniless with debt up to our eyeballs. However, our kids would have been able to go to school for next to nothing. And we would have surely been enjoying that ?good? life.</p>

<p>Agree with other posts- debt is not considered, in EFC, except with PROFILE, when your home equity/mortgage is considered. People with equity will be expected to take out that equity to pay their EFC, if you had * debt* and equity, you would * really* be up a crick.</p>

<p>We don’t have the savings * or the * salary, but because of rapid and ridiculous housing inflation, we have the equity on paper, so we had to take that out to pay EFC.
Which wasn’t optimum, because we now have a housing payment we can’t afford, even though we have zero other debt besides our now larger mortgage.
No one likes their EFC, but if you can afford yours through salary and savings without taking out lots of loans, you are way ahead of most :)</p>

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<p>"Had we spent every penny we earned on big house, fast cars, and oversea vacations, we would be penniless with debt up to our eyeballs. However, our kids would have been able to go to school for next to nothing. "</p>

<p>As many have replied, that’s not true.</p>

<p>In addition to what other posters said about debt, very few colleges guarantee to meet 100% of students financial need. The average amount of loans that most students take out to cover 4 years of college is $20 k. </p>

<p>If you are able to send your kid to the college of his/her choice without taking out loans, your child is very fortunate, and you have lots to be proud of. To many people, your earlier penny pinching would be worth it.</p>

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<p>Laser: You couldn’t possibly know for sure, back when you started saving, when your children were younger, that your kids would be successful enough as students to get accepted into great colleges and to be able to go for next to nothing. You had no crystal ball so you did the most prudent, wise thing as a parent and saved money for your children’s education. </p>

<p>I remember reading a kind of silly article in the L.A. Times a year or so ago about a student complaining that because he was waitlisted and seeking financial aid at his first-choice school, he was probably out of luck, since the FA gets distributed to admitted students first and none is usually left over for anyone who comes off the WL. He was a “B” student at Harvard-Westlake, an elite private prep school in L.A., and his parents had decided to spend education dollars on private high school rather than saving for private college, so they couldn’t afford the kid’s first choice school’s expense without FA or merit aid and the kid just wasn’t that kind of student. Oh well. </p>

<p>Having the money to pay for college is an accomplishment you should be proud of. It will probably mean a wider choice of college options for your kids.</p>

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<p>O.k. would someone please kindly explain to me what is this “profile” thing? </p>

<p>May be what I heard was wrong. My understanding is that “the more you have the more you pay” and that “You got nothing, you pay nothing”.</p>

<p>We are at low middle class at best. To send our kids to Princeton etc university will use all of our cash savings.</p>

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<p>According to a previous thread, you reported that you earn $120,000 a year. That income is one reason why most colleges would expect you to pay a significant amount of money toward tuition, room and board. That income puts you into the tippy top of earners in this country.</p>

<p>A college education comes at a price, like almost everything in life. Just as I pay for a good meal at a restaurant, a hotel room, a pair of shoes, I expect that I should pay for my child’s education – for the professors, the library, the dorm room, the athletic facilities, etc. Is that cost too high? Do colleges cost too much? I’m not going to argue that here. But – especially if you value an education, and I think you do – then you should expect to pay for it. What message are you sending to your kids when you say that a college education should be worth “next to nothing”? Does that philosophy really reflect your value system?</p>

<p>Under our system here in the US, there are many options for how much college costs. You can take your kid’s stellar HS performance and apply to schools that will give her merit aid (and thus, she can still go to school for “next to nothing.”) You can go instate and pay a much-reduced price for a public than a private school. If you decide that what you want is an expensive private that does not give any merit aid, then you will have to pay for it. </p>

<p>Every spring, there are kids who are devastated when they can’t go to the private school of their choice because their parents say they won’t pay. There are many reasons why parents won’t or can’t pay – and one of them is that their parents did spend all their money on luxury items and expensive cruises instead of saving it. Be grateful that given your salary and savings and low debt, your daughter can have a choice. Also be thankful that you did the research now, before your daughter submits applications, so that you can be upfront with her about how much you can afford and are willing to pay, so she won’t be disappointed come next April.</p>

<p>Frankly, I am much happier being in a financial situation where I have a high EFC than a low one. Being poor – and by poor, I mean earning less than $40,000 a year, not $120,000 – is just not fun. I was there once, and I hope never to be there again. I could have spent my entire income on designer clothing, European vacations, new cars. Instead I have a savings account. I have no regrets.</p>

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<p>Sly_vt</p>

<p>Please help me understand by using real numbers.</p>

<p>Two kids A and B whose parents make exactly the same salary, say $100K/year. Family of A follows the good rule and accumulates $500K worth in equity, retirement accounts and taxable cash savings. Family of B enjoys themselves and has a negative family worth.</p>

<p>When they go to Harvard, does A’s family has to pay more than B’s family?</p>

<p>BTW, I bet most parents on CC makes more than $120K a year.</p>

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<p>laserbrother</p>

<p>We’ve been through this before. Most of us think $100K is a very good income and many parents have told you they are making much less than that and still having to contribute significant amounts to educate their children. What you need to figure out is what you will be expected to pay and then figure out how to do it. Asking questions like this isn’t helping you get prepared for next year.</p>

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<p>Bethievt.</p>

<p>It may not help me get prepared for next year. But it will definitely give a “happier” year. We are in the spend down mode.</p>

<p>Sending DD to Europe for three weeks in summer, buying her a new bike, a new camera, purchased a violin for her at $2000, sending DS to Asia for about a month in summer, me buying a SLK32 AMG, we going to Thailand for a 14 day vacation, redone all windows and a new kitchen for my house; just to name a few things. We want to make sure our taxable cash account is down to about $1K after all these.</p>

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<p>Laserbrother, I’m sure another parent who knows the financial aid system better than I do can answer that. If family B has a salary of $100,000, even with no savings, you can bet that their EFC is much, much, much higher than 0. If family A has $500,000 in savings, can you please explain to me why that family should not pay for college? </p>

<p>OK, just went to the Princeton financial aid calculator. A family of four with a AGI of $100,000, zero savings, is expected to pay about $18,000 a year. A family of four with AGI of $100,000, $250,000 in savings/investments and $250,000 in retirement savings is expected to pay $29,000. And if that $500,000 in savings was broken down to $400,000 in retirement and $100,000 in cash, then the family’s contribution goes down to $21,000 - just a couple thousand a year more than the family with zero savings. So, there goes your theory.</p>

<p>The family with no savings does not get to go to Princeton for nothing. At colleges that do not meet 100% of need, they would be expected to pay even more. Without a savings account (remember, zero savings), that $18,000 bill will seem awfully steep.</p>

<p>Based on all the posts I’ve read on CC, I’d say there are plenty of parents here who earn considerably less than $120,000 a year.</p>

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<p>Retirement accounts aren’t considered, except for the amount that is put into retirement during the year that is being looked at
( example for the 2007-2008 school year, contributions made during 2006 will be viewed as money that would otherwise be available for tuition)</p>

<p>If family A has equity and owns a home and family B does not, family B may indeed have a smaller EFC, if PROFILE is used. Family B wil not have the asset of a home, but have rent, which cannot be deducted on taxes.
Debt- as mentioned before- outside of mortgage is not considered.
Salary is considered.
If family A has a lot of savings, besides retirement accounts and home equity, that will be considered as well, particularly if it is in the students name.</p>

<p>While I don’t guess what other parents make, $120K, would still be middle income, the combined salary of a teacher and busdriver for example, 5 years from retirement.

  • We* don’t make that much, in fact our family makes below the average salary for our area, but we are far from being low income as determined by qualification for free/reduced lunch.</p>

<p>Like other families, our income has varied over the years, from years with much overtime pay, to years when we paid the bills from savings and by mowing grass and babysitting.</p>

<p>Like you we have minimal expenses- we have never taken a vacation where we needed to fly, indeed we have never taken a family vacation out of state.
Our home is less than 1000sq ft, I daresay we could probably find one even smaller, but if was much newer than our 105 year old house, it wouldn’t be saving us any money.</p>

<p>Thats great that you have over a hundred thou in a savings account, although that is kinda a dumb place to put it, why would you need that much money that is easy to get at? a retirement account is probably a better place, but if you have already maxxed out your contributions for this year, then you are way ahead of most people.</p>

<p>Kwichyr*****in</p>

<p>Be happy you apparently haven’t experienced catastrophic debt that other families may have found themselves in after long term job loss or illness.</p>

<p>If youve been reading CC for a while, you have probably run across other posters whose kids don’t qualify for any need based aid. However, most of those posters, while they admit that it will hurt to pay full price, they are happy to be in that position & aren’t looking for ways to “game” the system in an attempt to qualify for need based aid.</p>

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<p>Thanks Sly_Vt. So I was partilly right. If one saves instead of enjoys oneself, one would have to pay about $11,000 more after tax cash a year for one kid to attend a good school. For two kids in 8 years and that will be almost $100K extra. </p>

<p>To answer your question “If family A has $500,000 in savings, can you please explain to me why that family should not pay for college?” Because Family A got those worth by restricting their own enjoyment of life year after year. Why do you want to do that and then pay more for the samething some one who would party all 20 years.</p>

<p>BTW, We are not where near that 500K worth. I just use that as a reference.</p>

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<p>Laserbrother: You didn’t read my entire post. That’s $11,000/year under one condition, that $250,000 is available in cash and $250,000 in retirement. If it was $100,000 in cash and $400,000 in retirement, then the difference comes to $2,000 a year. You didn’t specify how much of the savings went where.</p>

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<p>Please read the numerous posts about gapping that so many people are experiencing now. Sure, Harvard and Princeton are great, but the overwhelming majority of kids aren’t going there. To base financial decisions since infancy on a child going to Harvard would be foolish. Has your child already been admitted? If so, don’t they already have your financial information?</p>

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<p>Sly_Vt, I have never had that much money so I have not idea what will be the split for a typical $500K worth. However, In case of a 50/50 split, my comment was correct.</p>

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<p>LB–your appalling sense of entitlement leaves me with really no way to even discuss this.</p>

<p>So, for living frugally, you are “owed” college money which comes from other people?</p>

<p>Please. I can outdo you on frugality in any contest, and I am glad that, even though we qualify for aid now (because of income changes not free-spending) we could send our kids to their first choice schools without a qualm, because we saved.</p>

<p>I don’t know if you are serious about your spend-it-down plan to get tuition paid by someone else, but I sure hope it doesn’t come back to haunt your D when you don’t have a spare dime in savings and the big bills come due. I hope you also take into account that even without a dime of savings, your home equity counts against you in figuring financial aid.</p>

<p>I keep thinking your posts are a parody, but I am afraid that they are not.</p>