Student and financial positioning
How to reduce the cost of college, even as a high-income family.
There are two sources of free money
Merit scholarships come from the school. Need-based financial aid comes from the school and the government. Positioning works on both, and the two need different work.
The formula looks at your income and your non-retirement assets, which has an uncomfortable consequence: saving into a 529 can quietly count against you.
How positioning actually works
Three pieces of work, in the order they pay off.
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Position the student
Grades, SAT and ACT scores, and the extracurricular record that makes an application stand out. The work of moving a student from gifted in other ways toward exceptionally gifted.
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Choose the right schools
Pick schools where your student sits in the top percentage of the applicant pool. It raises the odds of a merit scholarship and the odds of acceptance at the same time.
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Reposition the assets
Move what counts against you toward what does not. Roth IRAs and cash value life insurance are treated differently in the formula than 529s and taxable brokerage accounts.
The honest limit
Then my own income went into the multiple six figures, and I found the edge of this. Income is the single largest input in the formula. Past a certain point it does not matter how carefully the assets are arranged, because the income line decides the outcome on its own.
That is an uncomfortable thing for a planner to tell you, and it is also the reason the next three strategies exist. The only lever left on a high income is the income itself, and the tax code is what moves it. Lower taxable income is a smaller tax bill and a lower aid number at the same time.
Would positioning move the number for your family?
Book a free strategy callA lower aid number does not mean free money
This is the part that gets misunderstood most often. Your eligibility is the Cost of Attendance minus your Student Aid Index, and the SAI comes out of the FAFSA and CSS Profile you complete during your student's senior year.
It used to be called the Expected Family Contribution, and that name caused real confusion, because families assumed the EFC was the bill. It never was. It is one number inside a formula.
Lowering your SAI increases eligibility. Whether eligibility turns into money depends entirely on the school.
Two things to get right before you move anything
School choice decides it
- Most schools using the CSS Profile will not accept business losses as a reduction to your SAI.
- Eligibility on paper is not money in hand. What a school actually meets varies enormously.
- Choosing the right school remains the single largest factor in what college costs you.
Run the numbers before repositioning
- Taking money out of a 529 for anything other than a qualified education expense means tax on the gains plus a 10 percent penalty on the gains, not on the whole balance.
- Spending it on private high school is one alternative.
- I have met families who were told to move everything and were never going to qualify in the first place.
The secret cost of college
$300,000paid for college
That money is not there for your retirement, and you have also given up everything it would have grown into over the rest of your life.
That is the opportunity cost, and it is by far the largest cost of college. Reducing the cost of college also means reducing what paying for it costs you later.
From a family who did this
Having a real plan for college costs gave us peace of mind and freedom we never thought possible.
These are the experiences of individual Legetty clients, in their own words. Individual results depend entirely on your own income, tax position and circumstances, and nothing here is a guarantee, a projection or a typical result. Figures mentioned are what those clients say happened to them, not what this site offers or predicts.
How you pay for college is ten times more important than how much you pay.
Lance Morgan, founder
All four strategies
Each one helps on its own. Combined, the savings from one pay for the next.
- Tax scholarshipsTurn part of the annual tax bill into assets you own.
- Student and financial positioningLower what college costs by positioning the student and the assets.
- Scholarship housesProperty that produces deductions and cash flow, run for you.
- Leave a legacyPay for college without interrupting your own compounding.
Book a free strategy call
Tell us about your family, your income, and when the first tuition bill lands. We will walk through which of the four strategies apply to you, and what putting them in place would involve.