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I save $1300/month for college into 529s for my two kids (ages 6 and 11). If you are in this bowl 529s and investments are going to get you there. Financial aid ain't for us.
Some of it is. We’re still expected to use loans, which count as financial aid.
FYI, 529 holdings in a parents name get counted (at a discounted rate) towards your expected contribution. Consider doing this same thing in a grandparents or aunt’s name. It doesn’t get counted then unless you withdraw during the college period. Note that if you do plan to withdraw instead of taking loans, it’s better to have it in your name.
And I’m younger so I think projections have it at like 250k+/year for my last kiddo. 1,300 a month isn’t gonna do the trick for me.
I think this is coming across as a bit tone deaf. Financial aid is meant for those who need the assistance, not the FIRE richy riches. Sounds like you're trying to game a system meant to help those who actually need it.
Coach
I think $100k/yr is going to be the breaking point for change. Schools will have to dole out half a mil financial aid packages if it keeps climbing after that. And now this is out of the reach for even upper middle class families who are making a lot of sacrifices. We're now only talking about the top 10% of HHI that can send kids to college. And even being an individual high earner doesn't guarantee anything if your partner isn't also a high earner.
I graduated in 2008 and had about $120k in financial aid /scholarships/grants. Mostly covered by one very generous donor. There won't be many donors who can drop half a mil to sponsor one student.
Mentor
Yes, it’s called the simplified needs test...actually they changed the name recently for the next Fafsa cycle...you avoid certain line items on the 1040 and you keep your AGI low, and voila-none of your assets count against you. The simplified needs test used to be based on whether you used the 1040-EZ or longer form 1040, but under the TCJA there was just one tax form...so they changed things up a bit and based it on which deductions are claimed. As an example, you can’t report an HSA deduction or you cannot qualify for the Simplified Needs Test...but if your employer deducts HSA contributions, you’re all good. You can take an IRA deduction, but cannot use a capital loss...there are several things you need to avoid...however, they are in the process of changing things all over...but the 2020, 2021, and 2022 FAFSAs should be easy to game. These tricks don’t work for the CSS profile schools, FYI.
Mentor
They might be factored in later in the process, but are they factored in for the earlier steps in determining whether the family is eligible for the Simplified Needs Test? That’s the relevant question...maybe try googling it.
Yes, be poor
Ask a stupid question ... How about how to do it while doing FIRE?
Following. I do estate planning and am working on getting more involved with multi-generational planning. But, the asset counting for financial aid is an issue.
Coach
This is such a huge issue for me. I come from a low income family, so I'm getting squeezed on both ends. Trying to help my parents with retirement and plan for kids to attend college. And I don't have multigenerational wealth (ie: grandparents) who can pitch in to help with tuition or cover big parties (graduation, weddings) or take the kids on nice trips, etc. Point just being, I'm super grateful to have a decent NW, but it isn't the same as someone who has that multigenerational wealth.
Protip: if you are on the path to FIRE, you have the resources to actually prepare your children to be academically ready for higher education. Then you hire a consultant to help you target schools where your kids are desirable candidates that will qualify for competitive scholarships and grants.
This is really important for high achieving professionals with working class backgrounds to understand, only 11% of students pay full tuition. The worst thing you can do is encourage your kid to focus all their hopes on only a few institutions. That inflexible mindset is how you get screwed on cost.
I think the first step is to determine whether reducing your reportable assets is worth the effort.
If it is, maxing out retirement accounts would be the first step. Then maybe paying down your mortgage (and any other debt). I believe there is a small business exemption too if you are eligible.
Varies by institution, and I’ve not been able to find a collection. I think the house is counted by the majority of schools but not all. For schools that exempt it, some schools that exempt house only do so for one house even if the parents are divorced. I started digging, discovered that it was complicated and figured I’d poll the folks here since presumably the vast majority of FIRE folks need to address this. Hard to imagine no one has worked it out yet, but I couldn’t find it.
Schools are generally more aggressive than FAFSA. I think I have a solution for FAFSA, which is to avoid dividends and live off vested Roth withdrawals while the kids are in. If you can get below some income level FAFSA doesn’t look at assets anymore.