Dear exnavychick,
My brother works for a Fortune 500 company in a senior engineering position. Although not rich, he has a low six figure income. His wife works as an insurance underwriter, and makes mid-five figures. Between them, they have a lot of income.
Unfortunately, they're spendthrifts, and really don't have any savings outside of the value of their home, and his pension and their retirement accounts. He and his wife have managed to put something into his company 401(K) over the years, and her company's defined contribution plan, as well.
When Son No. 1 applied for college, even though my brother and wife had plenty of income, the son still nonetheless received some financial aid. Tuition, books, room and board, at the time, came to $26,000 per year. I think my nephew got financial aid of about $7,000 per year.
Son No. 2, similar deal.
My brother still had to take out six figures of student loans to help them through college, but the amount of financial aid was increased because my brother and his wife had virtually no assets outside of the equity in their house and their retirement accounts.
Now, here's the thing. Up until he sold it just recently, his wife and he owned a house in Connecticut that they bought in the late '70s. You can imagine the equity they had. And since even modest contributions to retirement plans snowball over the course of 20+ years (and his company's stock, which he gets some for free every year, has quadrupled in the past 10 years), he's got, I estimate, a couple hundred grand there, too.
Not too bad for a guy who spends just about every cent that walks in the door.
But the equity in the house (hundreds of thousands of dollars) and the retirement accounts (also six figures) didn't get calculated into the equation.
Because there were no general savings, or education savings, the only thing they considered was household income. Even folks who are well-to-do will be eligible for some financial aid at the more expensive schools, if assets are primarily in home equity and retirement accounts.
sitetest
"Because there were no general savings, or education savings, the only thing they considered was household income. Even folks who are well-to-do will be eligible for some financial aid at the more expensive schools, if assets are primarily in home equity and retirement accounts."
I make under $40 grand a year, own a nice house, have had a son in private school for 9 years and when I went to get a school loan for the 10th year of private high school, I was denied. Why? BECAUSE OF MY INCOME TO DEBT RATIO!!! Translation, I did not have enough debt!@##$ I asked if I had a new car loan would I have been qualified and was told yes! Here I am spending frugally, ( some friends say CHEAP), and get turned down. Go figure.
Tell me who your brother's accountant is....I need to give THAT name to a divorced girlfriend of mine - her a** of an ex refuses to contribute AT ALL to his two kids education (he's remarried, after carrying on with her first)....anyway, long story short, my friend can get NO HELP from the gov't (loans) for her kids education, because she almost owns her house, even though she makes only about 30K a year.