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Financial Planning / Paying For College


Subject:  Re: Parent vs Child Assets Date:  8/9/2001  12:02 PM
Author:  elambeth Number:  4173 of 8558

NellieD wrote:

Federal grants are "meant" for people with very low incomes. I make no judgment about why people have low incomes -- they could have lost their job, could be disabled, could be uneducated themselves and unable to earn a lot of money.

Ah, but you are making a judgment about why my income was low. It was low because my parents and I had the foresight to accelerate our expenditures and defer our receivables during the years I was in college. Make no mistake, my/our income was quite low while I was in college.

That's the crux of our disagreement -- you're saying that it's okay to qualify for aid for a limited subset of reasons you've defined as "ethical," while those of us who can quite legally qualify but don't meet your personal definition of "needy" are, in your own words, "lying, law-breaking, cheating scum."

You should be aware, then, that practically every financial planner in America is a lying cheating scum, because they're all out there recommending that people plan their finances so as to best maximize aid. There was an article recently in Money magazine, for example, cautioning against investing in Education IRAs and UTMA accounts because it can reduce the student's eligibility for aid. By the criteria you're using, that technique is also morally objectionable; by your standard, we who can afford it have a moral obligation not to consider the drawbacks of this type of investment. To plan our finances with an eye to maximizing aid would be ethically wrong, according to you. What rubbish! My case may be more dramatic than most because my parents were self employed and thus their income was more malleable from year to year, but the principle is no different.

There are many straightforward ways to play the game the government wants and still qualify for aid. Some are easy, others are probably not worth it. For example, a married student is certifiably independent and their parent's income is not reportable. It would be quite within the law to have your child get married at age 17 to another college-bound 17 year old. Then, with zero income, they would both qualify for full aid for 4 years. Then they could get a friendly divorce upon graduation. In my state, the total paperwork for a marriage and divorce combined would cost about $50 and an afternoon of your time, assuming of course a friendly distribution of assets. It would net you anywhere from $10,000-$50,000 in cold, hard cash, per each student. Is this something I'd recommend? Well, no, I certainly didn't do that. But it was an individual decision; if someone else wishes to use that route, I wish them luck.

This is the message I am trying to impart to the original poster: The financial aid system is *quite* manpulatable within the legal parameters specified by the government. And that, after all, was the gist of his original question.

If you don't like the results that the system induces, write your congressman and change the system; don't take issue with those of us who simply ask for what we are entitled under the rules as they stand.
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