Jeff’s post on Harvard’s price cut for rich students generated an interesting discussion. Many families are “penalized” because, instead of spending money on nicer vacations or a bigger house, they “saved” it for college. Consider these three examples from current Williams students:

my parents sacrificed a lot to make sure they’d be able to send me wherever I wanted to go. It just frustrates me to see people crowing about how fantastic Williams’ financial aid is, or how lots of 100k+ families are getting massive aid packages, when there are still middle-class families being asked to essentially hand over their life savings.

not a high income, but effectively penalized for choosing to save instead of spend. No FinAid whatsoever.

my family’s definitely not in poverty, but we’re far from high income and my parents are putting three kids through college, and I get no financial aid simply because my parents planned ahead.

Lesson? Read EphBlog! I have been pointing out for years that colleges, Williams included, are not your friend when it comes to money. They want your money. You want your money. There is a conflict. (Background rants here and here.)

So, if you think your child will be accepted at Williams or a place like it, you should:

1) Have no money in the child’s name! This is the key piece of advice. Colleges will subtract that money, dollar for dollar, from the aid that they give to you. If you have already saved money in her name, then spend it before the colleges see it.

2) Have as little money as possible in non-retirement savings. Williams wants your money too, but they don’t expect you to blow out your 401-k. Your regular bank account is another story. Best place to put that money is probably your house. Pay off that mortgage.

There is other stuff that one can do to maximize the amount of aid that Williams and other elite colleges will award you, but these are the two most important. Please leave other suggestions in the comments.

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