Hi All,
Today I’m doing a guest post over at Budgeting for the Fun Stuff. Be sure to go over to the site and have a look.
The gist of the post is that most people will be better off if they put all other savings goals ahead of saving for their children’s education. It has a lot to do with the federal guidelines around what counts as a “eligible asset and liability.”
Plus BFTFS is a fun blog.
{ 8 comments… read them below or add one }
It is a great post – I suggest you check it out.
PS, you are on my blogroll now. Sorry for the late add, vacation really threw me this summer!
Everyday tips. How are you not on my blogroll? I thought you were the first one on it as you inspired me to actually start this blog. Must’ve gotten overwritten somehow. You’re back on now. Thanks.
Good advice. We learned this the hard way – my widowed mother, making minimum wage scrimped, sacrificed and saved for our college funds. It was just enough that we were not eligible for any financial aid. It was (and still is) hard to understand the kids driving around in really nice cars, in great wardrobes, lots of spending $ and tropical spring breaks were eligible for financial aid and I was, on occasion, eligible for work study. Had my mother only lived beyond her means and not taken our future into consideration, we’d all would have had more $.
Yup. Same here. We had a guy who’s parents had a second home in the adirondacks, jet skis, cars, spring breaks and he got financial aid. It really has a lot to do with how you allocate your assets. Nutty for sure.
My mom had very little cash savings and low income, so I was fortunate to qualify for a lot of need based scholarships and aid.
Your primary residence and your 401K account does not count as an eligible asset, so I’ll be maxing those out first for sure.
Good point! I think if I could do it over, I would probably go that route. Or I’d put the account in my father’s name. Financial Aid doesn’t look near as hard at my parents assets when considering financial aid.
I’m not suggesting that anyone try to find loopholes in the system. There are legitimate reasons why the parent’s retirement and primary home assets don’t count towards need based aid. I knew very little about it until the year I filled out my FAFSA form. In my case, it didn’t end up mattering, but in many other people I know, it made a huge difference.
We’ll need to keep an eye on the 401k too – there’s alot of rumor that will be counted within the next 5 to 10 yrs. Who knows – the rules are constantly changing so good thing we have your blog to keep us all updated 🙂
SIL has a very good point! Things can change surprisingly fast in the world of financial aid. With the recent spate of articles that have brought attention to alarming amounts of student loans, I look for more changes to come in the next year or so.
The Princeton Review publishes an updated “Paying for College Without Going Broke” each year, and I found it very helpful. I suggest if your kids are high school juniors that you either buy this year’s copy or check one out of your library. Then buy one for the year you fill out the FAFSA.
Example of helpful tip to know early on: For those with high school juniors (ET&T!), you will want to think about ways to lower your AGI on your 2011 taxes, because the FAFSA will want your 1040 for 2011 (because you fill out the FAFSA in early 2012 – and do think EARLY on FAFSA).