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There is No Financial Aid for Retirement.
By Heather Bruce
I have a senior in high school and those college tuition bills are right around the corner. But, I feel ready; I have plenty of money tucked away in my 401(k)!
College funding is a retirement problem. At Education Funding Solutions, we encounter too many people planning to use their 401(k) and IRA money to put their children through college. We strongly discourage this course of action. You may face penalties for withdrawing funds prior to retirement age, and any money you withdraw will be added onto your income, decreasing your eligibility for receiving financial aid. If possible, wouldn’t you take advantage of the financial aid - grants, scholarships, low-interest loans, work-study programs - that may be available to help you pay for college? After all, when you enter retirement age, can you count on a hefty grant or generous scholarship to help you enjoy your golden years? Unfortunately not!
But my income is way too high to qualify for financial aid for college. What then?
If you make over $160k a year, your chances of receiving need-based aid for college are slim. However, merit and performance-based aid may still be available if your student is a strong candidate at the schools he or she is applying to. High income clients who may not receive any need-based aid can still benefit from Education Funding Solutions college funding services. We may be able to develop a plan to help you fund college on a tax-favored basis, without draining your retirement savings, stock portfolio, or other life savings. In most cases, no matter how much money a family makes, very few parents have an extra $40,000 or $50,000 at the end of the year to put towards college.
I haven’t saved much for retirement. I’m planning on using the equity in my house to pay for college and fund my retirement plans. I’m sitting on a gold mine!
Hopefully even in this “soft” real estate market, your house has appreciated into the gold mine you were banking on. Instead of refinancing, taking the check and dividing it between your child’s college of choice and your retirement home on a remote island in the Caribbean, make your home equity work for you. Education Funding Solutions can put together a personalized plan to make both you and your college-bound child’s dreams become reality.
Getting my child through college is just the first of many financial obstacles. Of course I want my child to get an education, but I also have plans of building an addition on my home and retiring a few years early. Do I have to choose between college and the rest of my goals?
When a college funding consultant at Education Funding Solutions puts together a college funding plan for your family, we look at all your life aspirations. We understand that paying for your child’s college education is just one speed bump along a very bumpy road. A college education for your children, home repairs (or maybe purchasing a second home), an emergency fund, and retirement—all of these areas of life require saving and planning for. Let us smooth out your financial future while preserving the assets you’ve worked so hard to accumulate. The funding problems do not start and end with college.
Now that I know how we will pay for college, it’s time for all those forms. Where can I get help?
Establishing a college funding plan goes hand-in-hand with making sure financial aid forms are properly filled out. The Free Application for Federal Student Aid (FAFSA), the College Scholarship Service Profile (CSS Profile), and the schools’ own institutional forms must be consistent and completed on time to be sure you receive the most financial aid available. Education Funding Solutions can be your ally in the financial aid process.
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