[Mordachai]

My daughter is applying to colleges. The CSS profile asks what is in my 401k and IRA accounts.

My major concern is the principle of the thing: by what possible rationale do they have to consider a parent's retirement funds in evaluating the financial need of my daughter? Whether I will retire poor or comfortable seems to me to have zero bearing on her ability to pay for college.

[NeedKarma]

I wouldn't answer that question for sure.

[smearcase]

What if someone puts every penny into their retirement accounts and then expects scholarships to pay for their children's college education? I am not saying that is the situation in your case, but CSS is a financial aid process I believe. In the case of public colleges, taxpayers could be paying the bill for someone who locked up all their funds in protected accounts. They are trying to ascertain the assets of the applicant. The bigger question for me is why wouldn't they ask for that information.

[Mordachai]

What I should have asked is: Do they have the legal right to require this information?

[smearcase]

I am not a lawyer but I think it is a legal agreement signed by all parties. The following is a sample of a university form for requesting financial aid. All parties sign an agreement with some very specific financial information release and updating requirements. Discrimination based on sex, religion, race etc is illegal but there is no law against discriminating based on consideration of assets and liabilities when one applies for a loan or grant- to the best of my knowledge.
Many people work well past retirement age in order to put their children through college. Many others start various college savings arrangements when there children are very young. Some put their money toward their retirement and hope their children can obtain scholarships and grants. I am not judging any of the methods individuals may choose, but assets are always considered before loans of any kind are authorized, and IRA's and other retirement savings are assets.

Sample form:
" University Financial Aid Application Certification
Printed Student Name (university)ID number (leave blank if unknown) Date of Birth
IMPORTANT: The following individuals must read these certifications and sign below: student, both custodial parent(s),
noncustodial parent (if applicable), and student's spouse (if applicable).
By our signatures, the undersigned (referred to in this document as “student,” “parents,” and collectively as “we”) hereby acknowledge and agree to be bound by the following representations and statements:
□ All information in the student's financial aid application is correct at this time and that we will notify the Office
of Financial Aid and Student Employment promptly, in writing, of any changes in our financial circumstances and
provide any other requested information or documentation. We understand that these changes may result in
revisions to the student's aid package.
□ We understand that we must furnish signed copies of our tax returns, all supporting schedules, all W-2 forms, all
form 1099s, and we agree to provide official IRS transcripts at any time upon request by Cornell University.
□ We understand that Cornell may withhold or cancel financial aid if we do not provide any requested information.
□ We understand that Cornell may verify the accuracy of any information we provide.
□ We understand that if the information we provide is incomplete, inaccurate, misleading, or false, the student may
be subject to financial aid award delays or revocation; suspension; expulsion; or other University action, and
further that we may be subject to legal consequences.
□ We understand that information provided on the financial aid application and other documents may be shared
with the following: the applicant, other agencies from which we are requesting aid, and with donors. We also
understand that if Cornell determines we have provided information that is or may be inaccurate, misleading or
false, Cornell may share our financial aid information with appropriate state and federal agencies.
□ We authorize Cornell University to release our financial aid information electronically.
□ The student understands that if s/he is a Title IV federal aid recipient, this aid will be credited to the student's
account to cover all educational expenses. Such expenses may include, but are not limited to, tuition, fees, room
and board, and items such as extra course fees and the student health insurance plan. If the student elects to have
federal aid credits limited to tuition, fees, and room and board, the student will notify the Office of Financial Aid
and Student Employment, in writing, to this effect.
□ We understand that the sources of financial aid funding for which the student is eligible may be limited if all
required financial aid application materials are not postmarked or submitted online by the listed deadline.
Ink signatures are required from ALL parties who have supplied information as part of your application for
financial aid.


Signature of Student Date Signature of Student's Spouse (if applicable) Date
Are you a step-parent? Yes No
Signature of Custodial Parent 1 Date
Are you a step-parent? Yes No
Signature of Custodial Parent 2 Date
Signature of Non-custodial Parent (if applicable) Date
8/1/12 "

[ebaines]

Assets in the parents' retirement accounts (401(k), IRA, etc) and market value of the parents' principal residence are NOT counted by most schools in determining the student's eligbility for financial aid, and are are not included on the FAFSA forms. I suspect if the CSS application asks for this it's because there may be some schools that do incude it in their calculations. I suggest that you ask the school your daughter is attending whether they include retirement assets in their calculations. Some may - after all you are allowed to withdraw a certain from your 401(k() for higher educational expenses for you or your dependent without penalty.

However, voluntary contributions that the parents make to their retirement plans while the child is attending school ARE counted, because the contributions are untaxed income.

Mordachai - your statement that "Whether I will retire poor or comfortable seems to me to have zero bearing on her ability to pay for college" is inaccurate. Remember the primary responsibility for paying for college lies with the parents, not the child. So you should change this to "Whether I will retire poor or comfortable seems to me to have zero bearing on my ability to pay for her college."

[Mordachai]

I suppose that is the crux of the matter - the view of whether the onus to pay for one's offspring's college education is the responsibility of the parents, or of the young adult themselves.

For me, and literally millions like me, it is clearly the young-person's responsibility. So asking that the parent pay is a goofy concept, to us.

I know I am far from alone in this. It seems to me that blue collar folks know beyond a doubt that this is not their responsibility.

[ebaines]

Attending college is not a right, unlike attending high school. So tax payers don't cover all the cost. If the parents don't pay, and the child can't afford to pay, then who should get stuck with the bill? To some extent the answer is: the parents of other students who are not on financial aid. But under your scenario if those other parents didn't have to pay then the system wouldn't work. So unless the student is not a dependent of their parents, the student's parents must pay a "fair" amount.