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Can anyone help me determine my best strategy for paying for Harvard or Stanford taking my salary, parents salary, and personal assets into account? I'm getting conflicting information from folks I speak with so I'm hoping someone here can give me something definitive.

Should I:
A. Save as much as I can now to pay for as much as possible on the front end.
B. Liquidate and spend my assets now because, based on my families income, I may be eligible for more need based aid that way.
C. Focus more on outside scholarships because those don't impact need-based grant determinations.


Background:
Personal Income: between $50k and $75k
Parents Income: low. had 0 EFC in undergrad.
Assets/Savings: not much, but could definitely save more aggressively.

Thanks.

I've only read through Harvard's finaid materials, so I'll just respond to that half. Note, this is just my best understanding, but I may be mixing up some stuff.

The simplified formula for aid is $76,000 - [Family Resources] = Need. If your need is less than $42k, then you get nothing but loans. If your need is greater than $42k, then you get loans and a grant.

I'll run two scenarios for you. First, you quit your job and do nothing this year. You have no assets. If your parents make less than $60k, HLS will 'expect' them to kick in $2k. This is your entire [Family Resources]. So your need is equal to $74k. You'll get loans for $42k and HLS might throw you a grant for the remaining $32k. You end up taking out $42k in loans every year.

Second scenario: You work like a dog this year and pull in $75k. Even if you spend it all, HLS will count some of this in your [Family Resources]. Since I don't know their exact formulas, let's say they expect you to live on $33k this year and save the rest. You have $42k in assets. HLS will want you to spend one third of that every year on your education, $14k. So now your [Family Resources]= $16k and your need is $60k. You get loans for $42k again, and HLS kicks in the other $18k. You end up taking out $42k in loans every year. The only difference is that you have more money to work with this year and you have a cash reserve that will be very helpful when moving, renting an apartment, dating, etc.

TLDR: Doesn't matter what you do, you're still taking out loans. Just have fun this year.

Edit: Links-
http://www.law.harvard.edu/current/sfs/ ... ytype.html
http://www.law.harvard.edu/current/sfs/ ... aging.html
http://www.law.harvard.edu/current/sfs/policy/need.html

HorseThief wrote:I've only read through Harvard's finaid materials, so I'll just respond to that half. Note, this is just my best understanding, but I may be mixing up some stuff.

The simplified formula for aid is $76,000 - [Family Resources] = Need. If your need is less than $42k, then you get nothing but loans. If your need is greater than $42k, then you get loans and a grant.

I'll run two scenarios for you. First, you quit your job and do nothing this year. You have no assets. If your parents make less than $60k, HLS will 'expect' them to kick in $2k. This is your entire [Family Resources]. So your need is equal to $74k. You'll get loans for $42k and HLS might will throw you a grant for the remaining $32k. You end up taking out $42k in loans every year.

Second scenario: You work like a dog this year and pull in $75k. Even if you spend it all, HLS will count some of this in your [Family Resources]. Since I don't know their exact formulas, let's say they expect you to live on $33k this year and save the rest. You have $42k in assets. HLS will want you to spend one third of that every year on your education, $14k. So now your [Family Resources]= $16k and your need is $60k. You get loans for $42k again, and HLS kicks in the other $18k. You end up taking out $42k in loans every year. The only difference is that you have more money to work with this year and you have a cash reserve that will be very helpful when moving, renting an apartment, dating, etc.

TLDR: Doesn't matter what you do, you're still taking out loans. Just have fun this year.

Edit: Links-
http://www.law.harvard.edu/current/sfs/ ... ytype.html
http://www.law.harvard.edu/current/sfs/ ... aging.html
http://www.law.harvard.edu/current/sfs/policy/need.html

The main difference is who pays the extra $14k per year. If you enjoy life and blow all your assets, Harvard will pay it. If you work like a dog and save the money, you'll have to contribute all of it.

I disagree that you'll have a "cash reserve" in the second scenario, since you will be expected to contribute that "dating money" over the last two years.

If I got into Harvard and had $100k in liquid assets, I would go on a 6-month trip flying first class and staying in luxury hotels across the world. I didn't design the incentive structure.

If you don't have a cash reserve, you'll need to wait until loans are disbursed before you can buy stuff. I can make certain times of the year hard financially, even if you end up with no difference in money actually spent.

Also, you'll likely be making some money over the summers, not all of which finaid expects you to contribute, so you can make up the difference in any money spent from the dating reserve.

HorseThief wrote:If you don't have a cash reserve, you'll need to wait until loans are disbursed before you can buy stuff. I can make certain times of the year hard financially, even if you end up with no difference in money actually spent.

Also, you'll likely be making some money over the summers, not all of which finaid expects you to contribute, so you can make up the difference in any money spent from the dating reserve.

Maybe I read this wrong... but my understanding was that there was a baseline of expected personal contribution per bracket of income. Say for example $50k income of student = $5,000.00 in expected contribution/savings.

It then seemed like they would take the higher of the two between the expected contribution ($5,000) and actual liquid assets (say $10,000 in savings).

Maybe I pulled this all out of my ass, but that's what it seemed like when I read some financial aid website.

sjgonzalez3 wrote:

HorseThief wrote:If you don't have a cash reserve, you'll need to wait until loans are disbursed before you can buy stuff. I can make certain times of the year hard financially, even if you end up with no difference in money actually spent.

Also, you'll likely be making some money over the summers, not all of which finaid expects you to contribute, so you can make up the difference in any money spent from the dating reserve.

Maybe I read this wrong... but my understanding was that there was a baseline of expected personal contribution per bracket of income. Say for example $50k income of student = $5,000.00 in expected contribution/savings.

It then seemed like they would take the higher of the two between the expected contribution ($5,000) and actual liquid assets (say $10,000 in savings).

Maybe I pulled this all out of my ass, but that's what it seemed like when I read some financial aid website.

That's for Stanford, but not Harvard.