Requistionary Models of Financial Aid
A good friend of mine has applied to several top-ranked law schools. She is pretty confident that with her scores, records, and recommendations, she'll be accepted to one of them. Her first choice is Yale, but she might be enticed to accept Harvard or NYU: you get the picture.
Okay, here's the wild part. On April 15th, she has to file her FASA. When she files her FASA, the government in conjunction with her law school will decide how much money she should pay towards her law degree.
My friend--an ardent liberal, mind you, and one with a savvy sense of economics--has realized that whatever assets she holds at the time of her FASA filing will be considered available for paying her law school tuition.
Her 401K into which she scraped a few dollars during her college years and many more since she's been working like a demon as a legal assistant: that "retirement savings" will become an asset that will be swooped up and swallowed by her universities.
She's built up some savings, having worked overtime and a half (I've had a hard time scheduling outings with her, and half the time she's had to cancel...at 11 pm), for over a year, and now facing the FASA filing, she realizes that she'd be better off not having any savings because her universities will take whatever she has anyways and she won't be financially better off for having saved all this money.
She's a savvier economist than I am, and so I believe her when she says that she has reason to deplete her savings before the filing date of April 15th. We spent a fun couple of hours imagining what portable, expensive, worthwhile goods she could buy, but I remain ever so slightly furious that my friend (who came from no money, mind you) should be in this position.
Okay, here's the wild part. On April 15th, she has to file her FASA. When she files her FASA, the government in conjunction with her law school will decide how much money she should pay towards her law degree.
My friend--an ardent liberal, mind you, and one with a savvy sense of economics--has realized that whatever assets she holds at the time of her FASA filing will be considered available for paying her law school tuition.
Her 401K into which she scraped a few dollars during her college years and many more since she's been working like a demon as a legal assistant: that "retirement savings" will become an asset that will be swooped up and swallowed by her universities.
She's built up some savings, having worked overtime and a half (I've had a hard time scheduling outings with her, and half the time she's had to cancel...at 11 pm), for over a year, and now facing the FASA filing, she realizes that she'd be better off not having any savings because her universities will take whatever she has anyways and she won't be financially better off for having saved all this money.
She's a savvier economist than I am, and so I believe her when she says that she has reason to deplete her savings before the filing date of April 15th. We spent a fun couple of hours imagining what portable, expensive, worthwhile goods she could buy, but I remain ever so slightly furious that my friend (who came from no money, mind you) should be in this position.
Marilee Scott 2:46 AM
7 Comments:
Some people suggest getting an upgrade or putting something away for a rainy day...
She can only give under $10,000 to a family member, and anything she pulls prematurely out of her 401K will be penalized (not that the law school factors the penalty into the financial aid calculations). The girl's been working mad overtime for a year and a half--and, miraculously, putting money away into her 401K during her earlier grad student years. I think the total will probably come to rather more than $10,000.
And, Rilkefan, oddly enough, one of her ideas for how to spend all her money by April 15th actually did involve electrolysis.
She's getting grant aid for law school? Really? I don't understand that -- I've never heard of anyone getting need-based grant aid at a law school.
If she's just worried about the difference in interest rates between subsidized and unsubsidized loans, that is a shame, but it doesn't seem to justify spending down her assets.
(I may be wrong, and lots of people got law school grant aid, but I never heard of it.)
Actually, never mind -- just looked at my school's website and they did give out grants. I still have the strong impression that no one got all that much -- does she know what she's likely to get if she spends down? She should really think about whether it's worth it.
I wish I could give you a more precise answer, Liz. One data point: she's applying to the very top fleet of law schools.
Other than that, I didn't get much into the dirty details because she's the kind of smart-as-hell, pragmatic person whose conclusions I might not second-guess enough (but yeah, there was a certain amount of pique that seemed to be operating in her decision).
Oh, I already said that in the post.
(In other news, I think the two of you might get along.)
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