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Joe's Blog
The '529 Guru' offers his random thoughts.
Most Recent Blog
07/02/2009:
There's been a fair amount of press over the last couple of weeks reporting the "simplification" of the federal financial aid form (FAFSA). Well, don't get too excited. What they--the U.S. Education Department--are doing is making the online application process a little more user-friendly.
Not that it didn't need an upgrade. The paper and online FAFSA forms were poorly designed from the start, and the improvements should help families navigate them. Some who simply gave up in the past may now make the effort to apply for aid. But don't call it a simplification of the financial-aid formula. That remains a horrendous calculation that just about no one gets right.
The Obama administration and the Education Department are calling for some changes in the underlying formula, but those will require Congressional action. And anyone familiar with the history of the income tax laws knows how that typically plays out: efforts to simplify end up with even more complexity.
The only way to really simplify the FAFSA is to essentially eliminate it. Financial-aid eligibility should be tied directly to three years weighted-average adjusted gross income (AGI)from the family's income tax returns, perhaps with the addition of tax-exempt dividends and interest.
Three years weighted average? Isn't that a complicated formula? No, not really. Most students learn it around 5th grade, so they should be able to handle it by the time they apply for college.
Past Blogs
05/29/2009: Hooray, hooray, it's National 529 College Savings Day. (5-29-09. Get it?) No, your kids don't get the day off from school. But what you parents are supposed to be doing today is fortifying your college funding war chest, or at least making plans to do so. In honor of the occasion, Sallie Mae and Gallup have today released a report detailing its survey of over 1,200 parents of under-18 ch... Read More
04/20/2009: Vice President Joe Biden was in St. Louis last Friday to hold a meeting of his Middle Class Task Force on the topic "Making College More Affordable for our Families." At the meeting, the VP announced that the Task Force would be looking to Treasury Secretary Tim Geithner ... Read More
04/02/2009: We're about to test my theory. I've previously written about a new college financing opportunity under the economic stimulus bill recently signed by President Obama: Have your college student purchase a house and claim the $8,000 tax credit for first-time homebuyers. Well, we're getting ready to see just how good (or bad) that idea really is. Our own 19-year old son, who is finishing... Read More
03/14/2009: Will prepaids survive? It doesn't take a rocket scientist to spot troubles on the horizon when a prepaid tuition plan (1) promises to pay your child's future tuition bills, (2) has no control over annual increases in tuition, and (3) must achieve investment returns greater than tuition inflation in order to have enough money to pay those bills. Proof in point: I'm no rocket scientist, y... Read More
02/25/2009: If you didn't receive last week's monthly newsletter from Savingforcollege.com, you can click here to read the feature article "How the stimulus act affects your college savings." (Sign up for future newsletters HERE. It's free and easy.) One thing to notice: many of the provis... Read More
02/17/2009: It's a little disappointing to see that the President's economic stimulus act adds computer expenses to the list of 529-eligible expenses for the years 2009 and 2010 only. To many people, including me, the explicit inclusion of computer expenses was needed to correct an oversight, and not so much to stimulate the economy. In fact, if Congress had failed to amend the law, there was a pretty good ch... Read More
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