Is saving money for suckers?
Is this saved money in any particular type of account? I would imagine that savings in a retirement vehicle (401k, IRA or Roth IRA) are treated differently from a savings account, CD or brokerage account. That was certainly the case for colleges and financial aid when I was looking. Schools are much less likely to expect that you would cash out your retirement to pay for your kid’s school than they are to expect that you would cash out a savings bond. Of course, if you put it in a retirement account in order to get better financial aid for school, you won’t have access to it until you’re 65. In my opinion, that’s not a bad thing anyway–if you’re holding on to it in case of dire emergency, putting it in a retirement account both gives you some peace of mind about your future, as well as puts it somewhere that you could get a hold of it if you absolutely, positively had to (albeit with penalties). All in all, it seems like the financial aid office of this private school should be able t
iminurmefi has it right. Savings and other assets have to be in specific retirement or otherwise inaccessible accounts (such as certain trusts), in order to be considered differently for financial aid. And the rules will differ by school. Some private scholarships also consider these factors when dishing out scholarships. Consult a financial planner that has a specialty of college planning. You may be able to start a 529 plan and forward fund it to the max (probably four years worth, but that would require consulting a 529 expert). You may also be able to gift some money to your children (Gift to Minors Act) and that may be considered as a different income source. Again a college financial planner would know.
I understand the poster’s frustration: people who work harder typically are expected to absorb more costs as a result of their success. Income tax is a perfect example. I suspect that people who accuse you of succumbing to the welfare-queen myth have never had much money to begin with, and do not appreciate just how hard it is to make and save money. If there is financial aid for your children, it makes perfect sense to figure out how to access it – you won’t be depriving anyone of anything – in fact, if you choose not to try to access financial aid it means you will be depriving your own children. Anyway, don’t give up on accessing financial aid: often it means figuring out the right way of asking for it, as jamaro notes above.
You’re right, people in the middle income areas tend to get screwed as it most highly correlates work with reward. Someone pulling in $500,000+ a year probably isn’t working 5x as hard as someone pulling in $100,000 but I bet the correlation is much higher in the 40-90,000 range. Ergo someone who put in the extra hours and who was financially prudent can very well be in, say, the 80,000 range and someone who didn’t could be in the 70,000 range and that 10,000 a year plus savings is all the difference on some financial aid algorithms. So yes, some get who don’t deserve and some get it who do. Every system will have inefficiencies. Please see a financial planner so that you can most wisely protect your assets from taxes and things like this. There’s no reason for you to feel as if the system is “getting you,” and there is no reason for us to think that you can afford this. I’m somewhat appalled by the posters assuming that some formula used in financial aid a gift from God. It is just a
Tuition assistance is not aid to you; it’s aid to your children. Children who go to private school need to get the money to pay for it from somewhere, and the two most common sources of funding are their parents and aid from the school. Your children do not need aid; they have parents who have some money to pay for private school for them. Your friends’ children need aid, because for whatever reason, their parents have less money and can’t pay for private school tuition for them. Therefore, the tuition assistance goes to your friends’ children, rather than to yours, on the basis of need. Practically, the easiest way for your children to qualify for more aid is for you to become less good at providing for them. If your children become more needy, they will qualify for more assistance. However, putting them in that position will necessitate taking away from them some of the security that you’ve been able to give them thus far in their lives. I think that you don’t want to do that.
