Inspired by the spirited discussion here:
http://forum.mrmoneymustache.com/welcome-to-the-forum/paying-for-childrens'-college-when-you-have-no-savings/I started wondering how someone who is FIRE (maybe for many years) could massage their financial landscape into something that presents a sympathetic face to university financial aid departments.
The basic idea would be to use "retirement" assets to live off of during the college years of your kids. The FAFSA calculations do not take into account the retirement savings of the parents when calculating the EFC (Expected Family Contribution).
So combining that with some classic mustachian tax avoidance plans I came up with this:
- Execute a roth conversion pipeline (hopefully for many years)
- Use up your taxable investments for your living expenses
- Whatever is left in taxable the year before college dump into your home equity / pay off mortgage / spend on big home repairs / buy a nice (used!) car to last you for the next 10 years / ??
- Live off of roth withdrawals during the college years, continue to fund the roth pipeline up to the 0% EFC income level ($24k/year)
- Continue to live off your roth pipeline until you hit 59 1/2
I could imagine shielding assets in other ways though. Since we're planning a rural homestead I could see buying several second hand (but still very expensive) tractors which will predictably avoid depreciation over the medium term right before filling out the FAFSA.
Heck, for that matter, any personal non-cash asset with a stable market (I guess that's the rub) could theoretically be used to shield your assets during the college period.
Disclaimer: I'm a financial tinkerer, and even more so a financial roadmap optimizer. This is all hypothetical. There are no Frugalwoods kids at the moment, so this is at least 18 years away... during which time the rules will almost certainly change.
But I still think it's a fun question.
Does this make numerical sense? Practical sense? Ethical sense?