Author Topic: Any Mustachian Guides to Paying for College?  (Read 19753 times)

Weedy Acres

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Re: Any Mustachian Guides to Paying for College?
« Reply #50 on: January 06, 2015, 02:22:21 PM »
I haven't read all the replies, but just wanted to pop in and offer 2 nuggets:

1.  The book Debt Free U: http://www.amazon.com/Debt-Free-Outstanding-Education-Scholarships-Mooching/dp/1591842980/ref=sr_1_1?s=books&ie=UTF8&qid=1420579152&sr=1-1&keywords=debt+free+u

2.  If you put responsibility for paying for college on your child, they'll be more likely to consider cost/value in the equation and make a wiser decision.

MrsPete

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Re: Any Mustachian Guides to Paying for College?
« Reply #51 on: January 11, 2015, 05:24:17 PM »
Merit based scholarships typically come from outside sources, not from schools, and can be used anywhere. 

The top schools compete for the top students regardless of your ability to pay.  If you're smart enough, college is always free.
1st statement:  True.  Most scholarships are not specific to any one school.

2nd statement:  False.  I've known PLENTY of top students over the years who weren't able to college for free -- and it wasn't for lack of trying.  Scholarships don't automatically go to the smartest kid; they often go to the kid who fits into the category that the benefactor wishes to reward. 

If I had to pick the student who is most likely to get a big scholarship, it'd be a minority kid with both top grades and financial need, who has held solid leadership positions over his four years of high school and who wants to be a nurse in the military.  Also, this hypothetical student needs excellent writing skills to "sell himself" to the scholarship committees, and he needs to have over-the-top recommendations from his teachers /mentors. 
 


sol

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Re: Any Mustachian Guides to Paying for College?
« Reply #52 on: January 11, 2015, 11:06:53 PM »
Merit based scholarships typically come from outside sources, not from schools, and can be used anywhere. 

The top schools compete for the top students regardless of your ability to pay.  If you're smart enough, college is always free.
1st statement:  True.  Most scholarships are not specific to any one school.

2nd statement:  False.  I've known PLENTY of top students over the years who weren't able to college for free -- and it wasn't for lack of trying.  Scholarships don't automatically go to the smartest kid; they often go to the kid who fits into the category that the benefactor wishes to reward. 

If I had to pick the student who is most likely to get a big scholarship, it'd be a minority kid with both top grades and financial need, who has held solid leadership positions over his four years of high school and who wants to be a nurse in the military.  Also, this hypothetical student needs excellent writing skills to "sell himself" to the scholarship committees, and he needs to have over-the-top recommendations from his teachers /mentors. 
 

I'm standing my ground on this one:  if you're smart enough, college is always free.  If you don't know anyone who has had multiple free ride offers then you haven't yet met any of the country's top students.

I'm talking about the kids that rock the USAMTS and get recruited by the NSA.  There are roughly a thousand kids every year who get a perfect score on the SAT, PSAT, or ACT.  The handful of kids who win the Westinghouse Prize each year.  Hell even the National Merit Scholars all get a free ride, and there are thousands of them every year.

Those top kids are going to be admitted to every school to which they apply.  They don't need to "sell" themselves because most of them will be actively recruited by universities based on their existing accomplishments, and the rest can get full rides to state schools without trying too hard.  They don't need to be minorities or have a niche major.

If you hang out in the tallest ivory towers long enough, you meet lots of these kids.


MDM

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Re: Any Mustachian Guides to Paying for College?
« Reply #53 on: January 11, 2015, 11:56:08 PM »
...if you're smart enough, [some] college is always free [and the smarter you are, the more colleges are included].

The handful of kids who win the Westinghouse Prize each year [although first prize is "only" $150K, not enough for a full ride at the most expensive places.] 
Hell even the National Merit Scholars all [can] get a free ride [at certain colleges], and there are thousands of them every year.

Would you accept the edits above?

Pigeon

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Re: Any Mustachian Guides to Paying for College?
« Reply #54 on: January 12, 2015, 10:54:14 AM »
Merit based scholarships typically come from outside sources, not from schools, and can be used anywhere. 

The top schools compete for the top students regardless of your ability to pay.  If you're smart enough, college is always free.
1st statement:  True.  Most scholarships are not specific to any one school.

2nd statement:  False.  I've known PLENTY of top students over the years who weren't able to college for free -- and it wasn't for lack of trying.  Scholarships don't automatically go to the smartest kid; they often go to the kid who fits into the category that the benefactor wishes to reward. 

If I had to pick the student who is most likely to get a big scholarship, it'd be a minority kid with both top grades and financial need, who has held solid leadership positions over his four years of high school and who wants to be a nurse in the military.  Also, this hypothetical student needs excellent writing skills to "sell himself" to the scholarship committees, and he needs to have over-the-top recommendations from his teachers /mentors. 
 

Scholarships may or may not be available to use anywhere.  Some people use the term scholarship and merit aid interchangeably. Merit aid is essentially scholarship money given out by a school to certain students.  Some schools have scholarships specifically for people meeting certain criteria.  Generally, they are the yield from an endowment fund set up by a donor who specifies how he or she wants the money used.

My nephew got a scholarship to go to a particular college and major in a certain program.  Only students from his high school were eligible.  (It was almost like the donor had him in mind, it was so specific.) He couldn't use that scholarship anywhere.  My daughter is applying for a scholarship from our credit union.  She could use it for any accredited program, and she has to compete for it by writing an essay and demonstrating certain things.

It should be noted that most schools will deduct any third party scholarships you may get from the amount of merit aid they will give you.  So, in those situations, there's no point in applying for a bunch of small scholarships as you are just creating a lot of work with no reduction in your costs.  My daughter is going to a state school and that school gives zero merit aid, so it would help us.

Saying college is always free if you are "smart enough" is meaningless.  College is going to be free for very few people, and you can define "smart enough" to mean the top 0.0001%.  The vast majority of people, who may be very smart and hard-working, are not going to get college for free. I showed that statement to a friend who works in college admissions ,and she laughed.

MrsPete

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Re: Any Mustachian Guides to Paying for College?
« Reply #55 on: January 12, 2015, 05:08:23 PM »
I'm standing my ground on this one:  if you're smart enough, college is always free.  If you don't know anyone who has had multiple free ride offers then you haven't yet met any of the country's top students.

I'm talking about the kids that rock the USAMTS and get recruited by the NSA.  There are roughly a thousand kids every year who get a perfect score on the SAT, PSAT, or ACT.  The handful of kids who win the Westinghouse Prize each year.  Hell even the National Merit Scholars all get a free ride, and there are thousands of them every year.

Those top kids are going to be admitted to every school to which they apply.  They don't need to "sell" themselves because most of them will be actively recruited by universities based on their existing accomplishments, and the rest can get full rides to state schools without trying too hard.  They don't need to be minorities or have a niche major.

If you hang out in the tallest ivory towers long enough, you meet lots of these kids.
You can stand your ground on this idea, but it doesn't fit the reality that I see in high school every day. 

Reyes01

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Re: Any Mustachian Guides to Paying for College?
« Reply #56 on: January 12, 2015, 08:20:45 PM »
As to "how to do that without borrowing money," you pay cash:-) DD1 did not qualify for any need-based scholarships, so that was all paid for out of pocket (I think she received 5k in merit scholarships). DD2 is a freshman this year, she received 14k (over 4 years) in academic scholarships, again no need based scholarships as we make too much (and I am fine with that -- both not qualifying for need based and making too much:-). I pay the tuition/housing bill each term as it comes due. Both kids attended/attend in-state public universities. It has been a priority to me to pay my kids' way for their undergraduate degrees so I lively simply and bank the money for them. 

feelingroovy

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Re: Any Mustachian Guides to Paying for College?
« Reply #57 on: January 12, 2015, 10:15:07 PM »

Hell even the National Merit Scholars all get a free ride, and there are thousands of them every year.


While I agree with your general premise, this isn't true (unless things have really changed).  I had a National Merit Scholarship and it covered about half my tuition at a liberal arts school.  I still didn't pay much b/c I also got financial aid and it was almost all grants.   

But there are colleges who have special deals where the college sponsors the National Merit scholarship and it is a free ride.  So yes, the premise holds. One of my friends did this.  So had my parents and I been more savvy, we would have looked for these schools.

sol

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Re: Any Mustachian Guides to Paying for College?
« Reply #58 on: January 12, 2015, 11:02:06 PM »
You can stand your ground on this idea, but it doesn't fit the reality that I see in high school every day.

I'm not sure how to write this post without sounding like a huge jackass, so please read it as kindly as possible.

I wouldn't expect your average high school to see a ton of free rides.  There are roughly 20,000 high schools in the US and reportedly about 10,000 free ride merit scholarships for smart kids, and most of those are concentrated in a small subset of all high schools.  So from the average high school perspective, they will seem rare.  From the ~300 kids admitted to Caltech this year, they'll seem a dime a dozen.

But that's just counting single scholarships.  Lots more kids go to college for free by getting two or more scholarships. 

The problem is that most of those full scholarships go to the same 5000 kids so a lot of them go unused.  I turned down several free ride scholarships because they weren't at places I wanted to attend.  On the flip side, the kids who get lots of scholarship offers are also going to get admitted to all of their schools, which is part of the reason why all of the Ivies, for example, have such low matriculation rates.  They've all admitted the same same 1000 kids but a kid admitted to four Ivies only gets to matriculate at one.

While I agree with your general premise, this isn't true (unless things have really changed).  I had a National Merit Scholarship and it covered about half my tuition at a liberal arts school.  I still didn't pay much b/c I also got financial aid and it was almost all grants.   

This is exactly what I meant.  National Merit Scholars, like Westinghouse Finalists, don't always get a free ride from that particular prize.  They get a free ride from the school or from other scholarships they get because of that prize.

I was also a National Merit Scholar and I agree the cash value of the award is definitely not a free ride (in my case the scholarship portion was wasted because my school didn't recognize merit aid).  On the other hand, there are a handful of schools that DO have standing free ride offers to any NMScholar, which is exactly the problem I mentioned above.  Most of those free ride offers go unused because the applicant turns them down to go somewhere else.  Every NMS has multiple free ride offers, but can only accept one.

And the moral of this story?  Take that PSAT seriously, kids.

teen persuasion

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Re: Any Mustachian Guides to Paying for College?
« Reply #59 on: January 13, 2015, 07:08:22 AM »
Those unused scholarships have always bothered me.  The HS loves to praise the kids that receive $100ks worth of scholarships, but most of it is wasted, since the student can only accept one school.  It is in the student's best interest to apply to multiple schools and take the best offer, or even play schools against one another for a better offer like my DS2 did, but why can't those unused scholarships get passed down to the next one on the list?  I wonder how much scholarship money is unclaimed each year?  I know I turned down one full tuition scholarship (school too far away) and one part tuition scholarship in favor of another full tuition scholarship, so that's two wasted scholarships.  I also remember that my school required me to apply for TAP and PELL, and subtracted those from my "full" scholarship.  They estimated what my TAP and PELL would be, and reduced my scholarship by that amount.  Every year it was a hassle, I had to go get the amounts corrected, or owe money.

caliq

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Re: Any Mustachian Guides to Paying for College?
« Reply #60 on: January 13, 2015, 09:48:25 AM »
It's really not hard to get a free ride even if you're not top 0.00001%. 

I did not give a crap about high school.  I graduated with a 3.3 GPA, 1910 SAT (taken once sophomore year and should have retaken), and a 34 ACT. 

I got a full ride honors program scholarship to a second tier state university that is still a very good school, just not nationally known. 

Kids that know their limits (self-imposed or natural) are much more likely to get a free ride to an appropriate school.  I did apply for a couple high end private liberal arts colleges and got either waitlisted or accepted with no aid.  I did not apply to any Ivies because there was no point. 

It's all about finding the best fit.  Ironically my honors program school ended up not being the best fit, and I later ended up at a community college, where I also got a free ride, through a combination of federal grants, state grants, merit aid from the school, and a private scholarship I wrote an essay for.

It's really not all that difficult as long as you're applying to/attending a school that matches up with your previous academic achievements and put a little effort into apply for aid and selling yourself.  Even if you don't have the academic record to back it up.  I had a friend who did terribly in high school, worked for several years, and returned to college at 26 or 27.  He received multiple scholarships at the community college I ended up at, but he did have to put a significant amount of effort into writing essays explaining why he deserved them. 

And as much as this is a bit painful for me to admit, there are some kids who should not be in college.  As a 17 year old freshman with no idea what career path to take, I was one of those kids.  I learned that the hard way and spent a year working minimum wage after dropping out before I realized that I was not prepared for that to be the rest of my life.  Since then, I have worked significantly harder at school and various jobs because I know what my future would look like without a college education.  In my classes, I am constantly annoyed by kids (lol I'm only 23 but...) who have the same attitude I did -- and I wonder WHY they're actually in school.  It's because in many towns, especially in the Northeast (at least that's my experience), going to college is seen as the only legitimate step after high school.  It's something that's expected and never questioned -- I remember planning college course schedules in middle school (before I got off the high-achiever bandwagon).  This is not a sustainable situation.  Perhaps, if your kid hasn't qualified for a single penny of school-granted merit aid, hasn't put a single ounce of effort into applying for separate scholarships, and hasn't worked a minute to save up for college, you should be asking yourself if they really WANT to go or if they're really READY for it?

Apples

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Re: Any Mustachian Guides to Paying for College?
« Reply #61 on: January 13, 2015, 02:02:37 PM »
Generally I would expect to pay less than sticker price, but still at least 75% for planning purposes.  Unfortunately it's impossible to know until after the kid in question has been accepted to different schools and gets merit and need-based aid offers.  And I agree with Sol that excellent students (on a national level, National Merit Scholars being a minimum) can get a full ride if they want to.  But they don't go to the schools that offered them the full ride.  I was a College National Merit Scholar (so not a 'real' one, for those in the know), but I went to a state school and came from a rural area with a fairly prestigious local scholarship.  I applied to 3 schools:  one Ivy, my home state school, and an out of state school.  The out of state school way wayyyyyyyy cheaper than the other two.  As in, it was free.  They threw money at me; I think I got merit aid for being in the honors college and a research assistant (they offered me the job), merit aid for being out of state and in the honors college, and then the college awarded me a scholarship because I was the next highest student who didn't win one of the big tuition scholarships.  They gave me a smaller amount of money in consolation for not getting the highest test score for the largest amounts of money.  Which they then made up for with all the other aid I mentioned before.  I think I owed 1/5 of total sticker price after all of that for tuition, and that was covered by my outisde scholarship.  But when I was applying, we didn't know any of that (and certainly not the dollar amounts), so I was considering if it was going to be worth paying that much more than my in state school.  The in state school ended up costing twice as much with very little merit aid, and the ivy was four times as much after one scholarship for community service.  My family did not qualify for any need based aid.

So, apply around and let yourself be recruited.  But I plan to pay for about 75% of sticker price.

Apples

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Re: Any Mustachian Guides to Paying for College?
« Reply #62 on: January 13, 2015, 02:14:52 PM »
This is a great thread and something I've been thinking about.  Does anyone have any experience with getting in state tuition rates at out of state schools?  We are not sure where we will end up in the next couple years so not sure what state schools will be open to us.  I read that 33 or higher on ACT can get scholarships equivalent to in state tuition, but not sure how to research that.  We're not expecting $0 tuition, but think we can pay around $25k total per year for everything and I just don't know if that is realistic.  The kiddo gets good test scores, writes well, is in honors classes and runs track.  She is only in 8th grade this year, so we have some time.  I'm not fooling myself that she is valedictorian material though, she does well and keeps an A average, but its a low A average.

If your girl keeps the well above average grades up, and does get that 33 on the ACT, this is doable.  The specifics will depend on the school and her choice of study, and it'll be nearly impossible to figure out before she decides what she's going in to.  (Schools you look at for ag vs. engineering vs. comm vs. etc etc are all different).  But a mid-level school recruits higher up students HARD in my experience.  For me, the out of state school was cheaper than in state after all the scholarships offered.  But IMO the student has to score that 33 or up on the ACT (or, well, I got a 1420/2070 on the SAT, which is comparable).  But just want you to know this is totally possible.

feelingroovy

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Re: Any Mustachian Guides to Paying for College?
« Reply #63 on: January 13, 2015, 09:21:39 PM »
And the moral of this story?  Take that PSAT seriously, kids.

So true.  I had no idea it was anything other than practice when I took it.  Luckily, I'm good at test-taking.

sol

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Re: Any Mustachian Guides to Paying for College?
« Reply #64 on: January 13, 2015, 11:14:03 PM »
I've been cruising the internet, and gleaned a few other tidbits about paying for college in the US.

The financial aid calculations are based on your Expected Family Contribution (EFC) which is then divided between however many kids you have in college at the same time.  One strategy is to encourage your older kid to take a gap year, maybe get a job, so that your kids are in school at the same time.  The example spelled out here shows this trick being worth $38,000 in additional financial aid.

Tidbit number two is that colleges all use one of three different financial aid calculation formulas.  We've mostly talked about the FAFSA form on this forum, which has some quirks like excluding all of your assets if your AGI is under $50k and you can file a short form 1040.  But there are two other formulas that some schools use, called Profile and Consensus.

"Profile" is the College Scholarship Service Profile and is only used by about 400 of the more elite schools.  It digs much deeper than the FAFSA, and will take a cut of your home equity, your business, and your 529 accounts.  It's ruthless.

Consensus is much closer to the Profile calculation than the more lenient FAFSA, but it caps the assessment on your home equity at only 120% of your income.  So prepaying your mortgage really helps if your kid is applying to any of the Consensus schools.

At Profile schools the maximum assessment rate on student assets is a brutal 25% but on parents' assets is only 5%, so if your kid is applying to one of those schools then he should basically give all of his assets to you the year before he applies.  It will save him 20% of his net worth per year.

529 accounts are uniformly taxed less if parent owned than if student owned.  A grandparent-controlled 529 counts as a taxable asset at Profile and Consensus schools, but is shielded at FAFSA schools.

lakemom

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Re: Any Mustachian Guides to Paying for College?
« Reply #65 on: January 14, 2015, 05:25:21 AM »
I've been cruising the internet, and gleaned a few other tidbits about paying for college in the US.

The financial aid calculations are based on your Expected Family Contribution (EFC) which is then divided between however many kids you have in college at the same time.  One strategy is to encourage your older kid to take a gap year, maybe get a job, so that your kids are in school at the same time.  The example spelled out here shows this trick being worth $38,000 in additional financial aid.

Tidbit number two is that colleges all use one of three different financial aid calculation formulas.  We've mostly talked about the FAFSA form on this forum, which has some quirks like excluding all of your assets if your AGI is under $50k and you can file a short form 1040.  But there are two other formulas that some schools use, called Profile and Consensus.

"Profile" is the College Scholarship Service Profile and is only used by about 400 of the more elite schools.  It digs much deeper than the FAFSA, and will take a cut of your home equity, your business, and your 529 accounts.  It's ruthless.

Consensus is much closer to the Profile calculation than the more lenient FAFSA, but it caps the assessment on your home equity at only 120% of your income.  So prepaying your mortgage really helps if your kid is applying to any of the Consensus schools.

At Profile schools the maximum assessment rate on student assets is a brutal 25% but on parents' assets is only 5%, so if your kid is applying to one of those schools then he should basically give all of his assets to you the year before he applies.  It will save him 20% of his net worth per year.

529 accounts are uniformly taxed less if parent owned than if student owned.  A grandparent-controlled 529 counts as a taxable asset at Profile and Consensus schools, but is shielded at FAFSA schools.

A couple of things to point out based on one experience (mine).  EFC is not a "flat fee" kind of calculation, when we had one in college our EFC was 8k. The next year with 2 in college (with no change in income or assets) our EFC was 7k per child.  Also, EFC does not indicate that the balance of tuition/fees/housing/meal plan will be paid with "aid" as our kids were mostly awarded loans with a very small portion of grants/scholarships.  This year with one in college and about 25% increase in income (over where we were a couple years ago when #2 &#3 were in school at the same time) our EFC was over 10K (don't remember what as we don't pay for college they do).