Does Saving For College Hurt Financial Aid Eligibility?

Saving for College

Sometimes the best source of advice and information comes from readers’ comments, which are always so valuable to review. Ron Lieber, a personal finance writer for the New York Times, recently wrote an article titled Why It Makes Sense To Save For College Now. His main point was to debunk the myth that if a family doesn’t save for college, they are in a better position to receive financial aid. This is a completely unfounded myth because financial aid offered by the federal government is based heavily on a family’s income, not savings. Private colleges do scrutinize more closely parent’s assets, but it’s more likely that additional aid will be offered in the form of loans rather than grants or scholarships.

Mr. Lieber’s message missed the mark when he writes “not saving also puts your family at risk of picking the college that is the best financial choice and not the one that has the best shot at helping your child thrive.” Why are these two factors mutually exclusive? With college costs where they are, why can’t students find a college that is a fit both academically and financially? And as reader’s chimed in with their comments, if a student has to pick one factor over the other, finding a school that is a financial fit may be more important in the long run.

Katrox from Minneapolis wrote:

With all due respect Ron, this piece contributes to the problem of student loan debt, not the solution. The solution is to stop talking about sending children to expensive private colleges if parents CANNOT PAY FOR THEM IN FULL. This is not revolutionary, but somehow it has gotten lost in the conversation about college education in this country.

Let me suggest some solutions: When your neighbor says, “Oh, where is that [State] school on the US News ranking?” You say “We don’t care”. Instead of spending summers at language camps or church charity projects for Fancy College essay fodder, teen gets summer jobs and saves most of the money, because State schools are not free. When it’s time to tour colleges, you say, “Sweetheart, there are only 2 schools we can afford, and they’re nearby. Let’s go check them out!” No applying to 10 schools, most of which are too expensive.
Once accepted to State school, child chooses practical course of study. Then, child has smart idea: apply to be RA, get accepted, one year of tuition paid for! And great experience. Graduate in 4 years, NOT 5. He’s learned resourcefulness and applies to grad schools that pay stipend for Masters program. Graduates in 2 years. Two months later, after a brief stint at Trader Joe’s, he gets his first professional job. Yay! He can afford great apartment because HE HAS NO STUDENT LOAN DEBT.

That’s our son, and we did it together. He’s off getting the UHaul right now, and moves out today.


Madeline Conant from the Midwest:

First of all, get over the idea that your child is going to get financial aid. The first shock is going to be finding out how much you are expected to pay. The second shock is sitting down with your kid and explaining why they can’t go to the private college they have their heart set on, because they (and you) don’t want $200,000 in debt when they graduate.

For middle class families, financial aid is a myth.


Roberto from New Jersey:
I am disgusted by the colleges and the financial aid scam. My child had 2100 SAT’s and a 4.0 with a good amount of extracurricular activity. Every financial aid “award package” included the maximum Federal student loan for freshman and for good measure they told me I could take out parent PLUS loans.


 B.H. Blacksburg, VA:

“……I think many families make the choice to avoid financial sacrifice–to avoid living a simpler, less expensive life–while sending their kids to college. In our case, we don’t go on vacations, we consider every expense carefully, and we haven’t renovated any part of our aging house. My daughter got lots of grant aid from her college, and that, together with our up-front payments from minimal savings and yearly salary, means that she (and we) will graduate loan free. Did she go to the school that gave her the most aid? Yes. Was that a bad decision? No. It gives her tremendous freedom.


  1. We are not a wealthy family and like most middle class or middle upper class families, we were shocked by the total lack of aid offered. We had many different criteria for determining the best possible fit for our child and for the field of study. I don’t judge any family who has done their research for choosing to take on debt or not. Families make the best decision they can. While some may sign on the line without understanding the financial impact, we did not and chose a private college because it was the very best fit and so far, we have not been disappointed. We never carry personal debt, drive used cars and don’t regularly upgrade cell phones or have a Pottery Barn home. Instead we’ve made the choice to work very hard to pay off these loans as quickly as possible. Debt or no debt, families need to truly understand what they are signing for and taking on when they agree to loans. The transparency of the process leaves a lot to be desired.

    • It sounds like your family approached choosing a college in a very sensible and knowledgable manner, very much aware of the financial impact of your choice. As you mentioned, many families do not do their research and as a result accept loans without truly understanding the total debt burden that will be incurred by the time their student graduates. We couldn’t agree more – the college admissions and financing process lack of transparency is shameful and only seems to get worse each year. Thanks for sharing your experience.


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