financing children's college?

[LCHIEN]

I guess the sad thing about being diligent parent and saving for your child's college fund is that it is much harder to get scholarship money.
Most scholarships now have gone to a need based basis and use a universal database for determining the need.

Yes, you still get some small scholarships based on merit, maybe 500 to $1000 per year designed to lure you to their college. But the big scholarships basically go to those who need it or those whose parents were too busy buying a boat or bigger house and not saving for their kids education. By saving diligently you put yourself out of running for this need based aid. I can understand those who need it but those whose parents who spent their money elsewhere chaps me.

My kids got into college and they sent me those financial aid application forms. I looked at the questions which have you disclose all your assets and savings and tossed it in the garbage... I could see they'd never give me any money when we had some fat savings accounts and bonds.

[Jeffrey Schronce]

I guess the sad thing about being diligent parent and saving for your child's college fund is that it is much harder to get scholarship money.
Most scholarships now have gone to a need based basis and use a universal database for determining the need.

Yes, you still get some small scholarships based on merit, maybe 500 to $1000 per year designed to lure you to their college. But the big scholarships basically go to those who need it or those whose parents were too busy buying a boat or bigger house and not saving for their kids education. By saving diligently you put yourself out of running for this need based aid. I can understand those who need it but those whose parents who spent their money elsewhere chaps me.

My kids got into college and they sent me those financial aid application forms. I looked at the questions which have you disclose all your assets and savings and tossed it in the garbage... I could see they'd never give me any money when we had some fat savings accounts and bonds.

That is one of the biggest problems that I see with these tax differed or tax free investment account such as the 529. The funds are so visible to financial aid departments as often they have to authorize or request reimbursement from those accounts.

All of our college education funds are invested under grand parents names. These are not considered in Federal Financial Aid, which will not likely get you free money but will qualify you for max federally backed loans, often interest subsidized. Also, remember retirement accounts and equity in your primary residency can not be used against you in calculating need. It would make sense to move liquid assets such as bonds, savings accounts, etc into those vehicles that are not considered in financial aid planning.

BTW, taking money out of a 401k or other tax deferred retirement account for educational purposes is one of the universally worst ideas out there. People do it all the time and I just shake my head.

Like I said in my original post, borrow all the money you can. You will not find a cheaper source of money right now than educational loans through the Fed. Just watch out for those new loans from Chase, etc that are being advertised like crazy. You know those loans that pay for all the extras like entertainment, gas, etc.

Its a shame that so many financial advisers today are only interested in their own personal bottom lines as a percentage of what they can sell you.

[Jeffrey Schronce]

When I went to school, I paid for everything myself. Filled out all the grants, student loans, scholarships papers I could get my hands on. Also worked 20 - 30 hours a week. My parents did give me the use of an old junky car, and cover the car insurance. But that was it.

I learned something that they don't teach at college: I learned (mostly already knew) the value of money, to appreciate what you already have, to shop around, to find out were to get the best bang for my buck, How to budget for up coming expenses, etc. If I got some food I didn't like, I still ate it, didn't have the money to get something different. Shopped at Goodwill / Salvation Army many of times.

It wasn't all bad, I ate steak (every now and then), partied, went out with friends, visited different places, etc. But I still knew that if I wanted to eat that steak on Sunday watching the game I had to save my money to buy it.

Sounds EXACTLY like my educational story. Sold new and used Nissans a few days per week. Nothing motivates like hunger. Got to admit I sold blood plasma quite a few times in college as well.

[dlminehart]

We found out that even having no savings outside a modest 401K didn't matter as much as current income . . . even if that income, where we live in California, is not sufficient to make ends meet. The national income criteria don't seem to allow for people who live in more or less expensive places.

Further, it makes no difference if you, like me, have large debts in the form of many years left on the mortgages and credit cards, due to having been unemployed and underemployed for a few years.

The folks I know who've gotten substantial financial aid have been either ethnic minorities (of virtually any income bracket), big-sport athletes, or children of those with virtually NO income (e.g., a friend who's separated from her husband, has been going to school to get a teaching certificate, and has nominally no income, but also is nominally the custodial parent for her college-age kids).

[Slik Geek]

One I see a lot of poeple stating that the kids had better contribute large portion to motivate that they'd better learn something rather than play/party.

That was the most striking impression that I got in college: I could generally pick out the students that I lived near who had somebody paying the full tab. Many of them didn't apply themselves. (Of course there were exceptions, but it was the offenders that got noticed).

...college was supposed to be the best time of your life- meet new people, join activities at the college level, spend time taking advantage of the college atmosphere.

That was the primary activity of the students that I witnessed getting the free ride - whether it was a relative or the government.

Frankly I went to college to get an education for my career. I had some recreation, but it was quite limited as I had to study hard and had to work alot of hours to afford college - both during school and over the summer. To be honest, I wish that I could have worked a bit less in college, pursued more activities, and enjoyed more freedom. I have some remorse, especially when I read Loring's post! I don't see how I could have done it any differently, however.

At registration time, I watched students ethnically different from me receive a check, while I received a bill, paid hard earned cash and signed up for loans. My Dad helped as best he could, but the previous two brothers' college assistance, and my sister still in college had nearly bankrupted him. He sacrificed more than I knew at the time.

At graduation time, my parents were suffering under the economic challenges of the early eighties. My father was "underemployed" - the first time in his entire career. My second month out of college, in addition to paying on my student loans, I took over my Dad's car payment (and took the car as my first) to prevent it from getting repossesed. I traded it in some time later to get a cheap car that I could better afford. I still lived like a college student for at least the first seven years after college.

I actually had an opportunity for a bit of recreation during college... During my senior year, I won a sweepstakes for an 8-day trip to Hawaii - airfare and hotel provided. I figured that I would waste it as a single college student, so I gladly let my parents enjoy it as a second honeymoon. (Unknown to me was how little money they had to spend on the trip).

Now the cycle is repeating. My oldest just started college. I'm straining at the contribution expected of me according to Uncle Sam, but my son is expected to contribute a portion of the cash and is taking loans. I can't wait until he wins me a trip to Hawaii!!! (Never been there).