TheHaitian
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Post by TheHaitian on Dec 4, 2018 15:57:39 GMT -5
To legally underrepresented your actual income? For financial aid purposes...
So let’s say Family A earns 150k, contributes little to nothing to retirement so adjusted gross income is still high.
While Family B earning about the same, max 2 retirement account, 1 HSA thus considerably reduce their Adjusted gross income.
So as for as Financial aid is considered (assuming here) Family B is more likely to get aid vs Family A and more. Did family B cheat?
We are talking Private school tuition (not college).
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geenamercile
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Post by geenamercile on Dec 4, 2018 16:00:43 GMT -5
When we were looking at private schools for ODD they wanted a copy of paychecks too so they would see that. But no if you answer the questions they ask honestly I wouldn't think it is cheating.
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hoops902
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Post by hoops902 on Dec 4, 2018 16:05:29 GMT -5
It's not cheating to honestly answer the question being asked. It IS cheating if they ask for your gross income, and you make up your own definition of gross income in order to obscure the real number. So it just depends on what they're asking, and how you're responding.
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dannylion
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Post by dannylion on Dec 4, 2018 16:13:46 GMT -5
Since not counting the retirement/HSA in the income that is considered in making aid decisions is legal/acceptable to the organization giving the aid, then would be sensible financial planning, not cheating.
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Deleted
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Post by Deleted on Dec 4, 2018 16:14:13 GMT -5
If they ask for AGI and you give AGI it's not cheating no matter how much you have withheld. I've never completed the applying for financial aid at my son's school because it gets to the question "How much do you feel you can afford to pay per year?" and I have to honestly answer more than they're charging, so I quit. But, I've gone through the rest of it and they do ask about retirement contributions as well, so they know how much is going in. They also ask about car loans and credit card debt which bugs me, but whatever.
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TheHaitian
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Post by TheHaitian on Dec 4, 2018 16:46:30 GMT -5
They also ask about car loans and credit card debt which bugs me, but whatever. Why?
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Deleted
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Post by Deleted on Dec 4, 2018 16:59:55 GMT -5
They also ask about car loans and credit card debt which bugs me, but whatever. Why? Why does it bug me? Because I don't think it should factor into financial aid. If you have two people with the same income and one is driving a beater and saved and the other a brand new car with a $500/month car payment and no savings, why should the second be considered more in need? I would like to think that they only use it for extenuating circumstances and that any debt payments have to have a good reason behind them or they're disregarded.
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Tiny
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Post by Tiny on Dec 4, 2018 17:59:04 GMT -5
It's not cheating to honestly answer the question being asked. It IS cheating if they ask for your gross income, and you make up your own definition of gross income in order to obscure the real number. So it just depends on what they're asking, and how you're responding.
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sesfw
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Post by sesfw on Dec 4, 2018 20:49:59 GMT -5
I guess I'm strange but about 1965 DH#1 and I decided to send our daughter to a private Christian school. I found a factory job so we would have the funds to do this. School aid was unheard of.
However we were asked many times if we resented paying school property taxes and our answer was 'no'. It was our CHOICE to send DD to the private school instead of the public school a couple of blocks away. And we were still willing to help with the expenses of the public schools.
One of the fastest ways to get my nose out of joint is for someone who obviously can afford to send their kids to any school they want ………. receive a school voucher. This is BS.
I believe in school vouchers up to a certain income level …… TBD. Phoenix has several well-to-do areas, and if the parents are so lousy at handling funds they want vouchers, then the parents need classes in basic finances. Even I know you don't spend a dime if you have a nickel in your budget.
As far as your basic question, no I don't think it's cheating for people to contribute to their retirement funds and lower their AGI. As a retiree I know IRS gets their share through RMDs, but we still pay our bills without any assistance. We didn't overspend and planned for our future.
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giramomma
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Post by giramomma on Dec 5, 2018 7:15:14 GMT -5
Our school asks for a copy of tax returns. You fill out an application, too. When you ask for money you also have to show how you are serving the school and church community, ie, how much time are you giving. We did ask, and receive 2K of scholarship for the two years we had three kids at the same time...We still paid 10K in tuition those years. So yes they could guess how much was in DH''s taxable account based on his dividends. I said that's for retirement. We don;t spend it, just as one should not spend 401K money. They saw our snowflake $$ that went to IRAs. I explained our those making it snow provide to enough that we shouldn't ask for more help. One of those years we received scholarships, I was working three jobs, and DH was working, two. I can't work 4 jobs. And DH can't work 3.
When we just had 3, I figure we'll have paid 100K in tuition. With 4, it will be 150K or so. I don't feel bad about asking for 4K of scholarship money in 25 years because my limit was with three jobs and three kids. ETA: The school does not make scholarship decisions. The scholarship application goes to the church's financial council who then makes financial decisions.
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tractor
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Post by tractor on Dec 5, 2018 7:32:41 GMT -5
It’s not cheating, it’s fraud. You shouldn’t lie about you financial resources when you’re asking for a handout from someone else.
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alabamagal
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Post by alabamagal on Dec 5, 2018 8:13:10 GMT -5
I don’t think it is cheating or fraud if you follow the rules.
The people setting up the scholarships are not stupid, you cannot “trick” them into getting money. They generally put their criteria in front of you. They use the documentation that they request to make their decisions. If they ask for tax returns, they can see if you have assets that result in dividends. If they ask for your pay stub and see a lot going to retirement accounts, they can figure that into their decision.
We never got financial aid for my kids going to private school. I have almost always had a salary too high. But there were 2 years that we were able to get Pell grants for my kids in college. Circumstances just worked out. My husbands business was not doing well and we were able to claim some losses. My salary was lower due to taking a lower paying job so that I didn’t have to move ( and kids lose state sponsored scholarship). And year I had 3 in college ( even though one finished just as #3 started). It was a little gaming the system, but certainly not cheating or fraud. Just taking advantage of some of our not so good circumstances.
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garion2003
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Post by garion2003 on Dec 5, 2018 8:41:37 GMT -5
For the private school, it depends on their methodology. If they only ask about AGI then family B is not cheating. For college aid purposes, retirement savings do not count as assets. However, pre-tax contributions are counted as untaxed income and should be reported. I believe it's box 12 on the W-2. fafsa.ed.gov/fotw1920/help/faadef23.htm AGI would also be reported correctly, but AGI is not the only factor. But again this is for Federal aid only.
The school may have their own way of performing the calculation. Private colleges that give out aid generally ask for tax returns and W-2's so they would be looking at Box 12 and adding back those amounts.
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TheHaitian
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Post by TheHaitian on Dec 5, 2018 9:37:38 GMT -5
It’s not cheating, it’s fraud. You shouldn’t lie about you financial resources when you’re asking for a handout from someone else. How is Fraud when you are following the set rules set by the school. Ex: one of the school we are considering: Another school request are: - your last year tax returns - utility/monthly bills - rent / mortgage information - a list of debt / special situations The parents are providing the schools with exactly what they request to make a decision when it comes to financial aid.
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Deleted
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Post by Deleted on Dec 5, 2018 9:51:33 GMT -5
It’s not cheating, it’s fraud. You shouldn’t lie about you financial resources when you’re asking for a handout from someone else. How is Fraud when you are following the set rules set by the school. Ex: one of the school we are considering: Another school request are: - your last year tax returns - utility/monthly bills - rent / mortgage information - a list of debt / special situations The parents are providing the schools with exactly what they request to make a decision when it comes to financial aid. So, why do you feel that putting money into a 401K might be considered cheating? It's highly doubtful they're just going by AGI if they're asking for all that info. On the FAFSA pre-tax contributions are added back in. It's actually WORSE for the one with a ton going towards retirement because untaxed income is considered available tpwards the EFC but you don't actually have access to it.
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TheHaitian
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Post by TheHaitian on Dec 5, 2018 9:52:01 GMT -5
I guess I'm strange but about 1965 DH#1 and I decided to send our daughter to a private Christian school. I found a factory job so we would have the funds to do this. School aid was unheard of. However we were asked many times if we resented paying school property taxes and our answer was 'no'. It was our CHOICE to send DD to the private school instead of the public school a couple of blocks away. And we were still willing to help with the expenses of the public schools. One of the fastest ways to get my nose out of joint is for someone who obviously can afford to send their kids to any school they want ………. receive a school voucher. This is BS. I believe in school vouchers up to a certain income level …… TBD. Phoenix has several well-to-do areas, and if the parents are so lousy at handling funds they want vouchers, then the parents need classes in basic finances. Even I know you don't spend a dime if you have a nickel in your budget. As far as your basic question, no I don't think it's cheating for people to contribute to their retirement funds and lower their AGI. As a retiree I know IRS gets their share through RMDs, but we still pay our bills without any assistance. We didn't overspend and planned for our future. These are private schools and no vouchers being used. The cost of those schools are between 35k - 50k. At first I was against them because no way we could afford them (we cannot) but then I met families making 150k-250k that qualifies for financial aid at those schools... so came around to “maybe”: The financial aid package does not cover full tuition, ex one school it covers $27,986 or 77%... And the gross income stats for the families receiving aid are: < 100k —> 29% 100k-150k —> 24% —-> we are here 150k-200k —> 19% —-> and here depending on bonus / business income 200k - 250k —> 28% But after deductions we are below <100k usually. So yeah after meeting those families I was more open to the idea. We will definitely apply to a few charter schools that we like and also apply to a few of the private schools (because those are dependent on how much financial aid we do get).
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hoops902
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Post by hoops902 on Dec 5, 2018 9:54:21 GMT -5
It’s not cheating, it’s fraud. You shouldn’t lie about you financial resources when you’re asking for a handout from someone else. How is Fraud when you are following the set rules set by the school. Ex: one of the school we are considering: Another school request are: - your last year tax returns - utility/monthly bills - rent / mortgage information - a list of debt / special situations The parents are providing the schools with exactly what they request to make a decision when it comes to financial aid. You make it "sound" like fraud when you use terms like "underrepresent", when in fact, you are representing precisely the accurate amount. If they ask what your AGI was, and you tell them your AGI, then you haven't underrepresented anything. If you DID underrepresent something, that WOULD be fraud.
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TheHaitian
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Post by TheHaitian on Dec 5, 2018 10:16:19 GMT -5
How is Fraud when you are following the set rules set by the school. Ex: one of the school we are considering: Another school request are: - your last year tax returns - utility/monthly bills - rent / mortgage information - a list of debt / special situations The parents are providing the schools with exactly what they request to make a decision when it comes to financial aid. You make it "sound" like fraud when you use terms like "underrepresent", when in fact, you are representing precisely the accurate amount. If they ask what your AGI was, and you tell them your AGI, then you haven't underrepresented anything. If you DID underrepresent something, that WOULD be fraud. I did not say that, someone else assumed it would be cheating. Maybe underrepresented was the wrong word to use. What I said to the person was: our adjusted gross is low because we have a lot of deductions; not sure if that makes a difference or not. (Ex last year our adjusted gross was 92k vs ~140k gross : I did not share actual #’s with them just posting it here). The reply was: isn’t that cheating or gaming the system. I did not feel like it was; the same way I will List my wife heavy student loans on the application. Is her having a lot of student loans compared to another family having less cheating or gaming the system if that give us an “extra” towards financial aid?
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TheHaitian
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Post by TheHaitian on Dec 5, 2018 10:21:46 GMT -5
How is Fraud when you are following the set rules set by the school. Ex: one of the school we are considering: Another school request are: - your last year tax returns - utility/monthly bills - rent / mortgage information - a list of debt / special situations The parents are providing the schools with exactly what they request to make a decision when it comes to financial aid. So, why do you feel that putting money into a 401K might be considered cheating? It's highly doubtful they're just going by AGI if they're asking for all that info. On the FAFSA pre-tax contributions are added back in. It's actually WORSE for the one with a ton going towards retirement because untaxed income is considered available tpwards the EFC but you don't actually have access to it.
I do not feel it is, heck I don’t even know how they calculate their financial aid really. All I know for the 4 private schools we are considering is what they request for the financial aid package. Someone else felt is was cheating or a misrepresentation because (I am assuming here) in their mind the school will go with your adjusted gross income to make a determination vs looking at the overall big picture that maybe before my adjusted gross was 92k my gross was actually ~140k.
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tractor
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Post by tractor on Dec 5, 2018 10:37:32 GMT -5
People do the same thing when it comes to applying for college financial aid. They underreport on the forms, or try to get creative with hiding their assets so the can get more “free” money. Some get away with it, some don’t (there was a case where a parent had to repay $160,000 to a college for his daughters tuition once it was discovered had had been lying on the financial aid forms).
What you are proposing isn’t fraud, as long as you follow the rules and don’t hide any assets they are asking you to report.
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Tiny
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Post by Tiny on Dec 5, 2018 11:18:50 GMT -5
So, why do you feel that putting money into a 401K might be considered cheating? It's highly doubtful they're just going by AGI if they're asking for all that info. On the FAFSA pre-tax contributions are added back in. It's actually WORSE for the one with a ton going towards retirement because untaxed income is considered available tpwards the EFC but you don't actually have access to it.
I do not feel it is, heck I don’t even know how they calculate their financial aid really. All I know for the 4 private schools we are considering is what they request for the financial aid package. Someone else felt is was cheating or a misrepresentation because (I am assuming here) in their mind the school will go with your adjusted gross income to make a determination vs looking at the overall big picture that maybe before my adjusted gross was 92k my gross was actually ~140k. There's the rub - your actual gross income doesn't really say much about how much actual money you have to work with. Even if you don't have any payroll deductions for 401(k) - 2 people with 100k salaries working for 2 different employers in the same city with NO retirement monies taken out might not have the same take home pay. Healthcare costs, pension contributions, weather or not they pay into SS, weather they get an expected traditional 'bonus' or 'bonuses' each year, can cause some dramatic differences in how much net pay each has. (heck 20 years ago I switched jobs and my "salary" didn't go up - but I had a heck of alot more net pay because I had a bigger 'compensation package' - my new employer had dramatically lower healthcare costs, commuter benefits, 2 fixed amount "bonuses" every year (based on service), and other stuff. Using the Adjusted Gross Income makes it a little easier to compare apples to apples. OK, from another perspective: Maybe it's not quite fair that a high income household could be sinking a lot of $$ into retirement and have a low enough AGI to able to take advantage of a highest discount on private school tuition while a household without so much income but the same low AGI CANNOT save as much for retirement while still getting the highest discount on private school tuition. so the wealthier family gets a better deal in the Big Picture - they pay less for education AND they score big time on retirement savings. But this is the 'traditional' olden days way that the wealthy benefit from "helping those with less" - the wealthy keep some of their money in not totally obvious way and get their kids a higher end education for a reasonable cost. The not so wealthy can ALSO get their kids a higher end education - they just don't get to utilize some of the 'savings' as the really wealthy can. It's a trade off. But it gives those without the higher incomes access to some of the same benefits as those with the highest incomes. And isn't that 'access' part of what makes America great? Limiting access to the 'good stuff' only to the 'special haves' is not exactly what America was built on.
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TheHaitian
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Post by TheHaitian on Dec 5, 2018 12:11:22 GMT -5
OK, from another perspective: Maybe it's not quite fair that a high income household could be sinking a lot of $$ into retirement and have a low enough AGI to able to take advantage of a highest discount on private school tuition while a household without so much income but the same low AGI CANNOT save as much for retirement while still getting the highest discount on private school tuition. so the wealthier family gets a better deal in the Big Picture - they pay less for education AND they score big time on retirement savings. But this is the 'traditional' olden days way that the wealthy benefit from "helping those with less" - the wealthy keep some of their money in not totally obvious way and get their kids a higher end education for a reasonable cost. The not so wealthy can ALSO get their kids a higher end education - they just don't get to utilize some of the 'savings' as the really wealthy can. It's a trade off. But it gives those without the higher incomes access to some of the same benefits as those with the highest incomes. And isn't that 'access' part of what makes America great? Limiting access to the 'good stuff' only to the 'special haves' is not exactly what America was built on. So you believe it is more unfair towards the family that their true adjusted gross income is similar ? Why? 1 family getting aid does not prevent the other from receiving it and they both will pay about the same towards the school since their max package only covers about 77% the cost of attendance.
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Tiny
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Post by Tiny on Dec 5, 2018 13:36:20 GMT -5
OK, from another perspective: Maybe it's not quite fair that a high income household could be sinking a lot of $$ into retirement and have a low enough AGI to able to take advantage of a highest discount on private school tuition while a household without so much income but the same low AGI CANNOT save as much for retirement while still getting the highest discount on private school tuition. so the wealthier family gets a better deal in the Big Picture - they pay less for education AND they score big time on retirement savings. But this is the 'traditional' olden days way that the wealthy benefit from "helping those with less" - the wealthy keep some of their money in not totally obvious way and get their kids a higher end education for a reasonable cost. The not so wealthy can ALSO get their kids a higher end education - they just don't get to utilize some of the 'savings' as the really wealthy can. It's a trade off. But it gives those without the higher incomes access to some of the same benefits as those with the highest incomes. And isn't that 'access' part of what makes America great? Limiting access to the 'good stuff' only to the 'special haves' is not exactly what America was built on. So you believe it is more unfair towards the family that their true adjusted gross income is similar ? Why? 1 family getting aid does not prevent the other from receiving it and they both will pay about the same towards the school since their max package only covers about 77% the cost of attendance. No. I don't think it's unfair. In your example I think it's fine.
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Deleted
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Post by Deleted on Dec 6, 2018 7:13:37 GMT -5
Paying for elementary school is crazy at any cost. At that cost, it is INSANE.
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TheHaitian
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Post by TheHaitian on Dec 6, 2018 12:20:11 GMT -5
Paying for elementary school is crazy at any cost. At that cost, it is INSANE. That is your personal opinion, not everyone feel that way.
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wvugurl26
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Post by wvugurl26 on Dec 6, 2018 12:38:32 GMT -5
I would say you shouldn't need to pay for elementary school. However, knowing how craptastic many of the DC public schools are, I understand looking at all the options available to you.
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TheHaitian
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Post by TheHaitian on Dec 6, 2018 13:03:45 GMT -5
I would say you shouldn't need to pay for elementary school. However, knowing how craptastic many of the DC public schools are, I understand looking at all the options available to you. Can you say it louder for the folks in the back? Public school is not even an option even as last resort in DC; while Public School was the only thing we considered when we lived in MA. That is why we are starting to look early and figure we will apply to a mix: - some good charters that came recommended from parents in our are - some of the more price conscious private schools (catholic) that runs between 10-15k - some of the private schools mentioned above that we will apply for financial aid . I am more for charters (free).while my wife went to catholic school and would prefer that and the expensive schools we are both on the fence about them for the same reason: how will your kid will adjust to being the financial aid kid or the poor kid of the the bunch. But cannot deny the opportunity they may offer and also one is the particular location. 2 of the private schools are within walking distance from my wife job so easy for her to Drop her off or be at the school really quick if there is an emergency.
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Deleted
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Post by Deleted on Dec 6, 2018 13:09:08 GMT -5
You have a few years. Is bailing on DC an option? I know you wanted out of your job, but not sure how close your wife works and if she wants to leave.
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TheHaitian
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Post by TheHaitian on Dec 6, 2018 13:25:32 GMT -5
You have a few years. Is bailing on DC an option? I know you wanted out of your job, but not sure how close your wife works and if she wants to leave. The goal was to move to VA that have better school options (Arlington) and be right outside of DC so commute is still not intense, or Bethesda/Chevy Chase... so good schools and not that far out of DC that commute will be hell. But Amazon moving into town might squash that; we are in the wait and see phase for that and considering our options if we do stay in DC. Yes for both of us but the federal agencies she wants to apply too are either in DC or short distance outside of DC and same for me in regards to other job options. Also easier to do the reverse commute if we get job outside of DC then having job in DC and commuting into DC. Don’t want the 1- 1.5 hours commute (one way) that a lot of people seems to consider normal. Either way we will figure it out ; we have 1 year before we start applying. She tarts PreK3 at 3.5 and we are ok with her going to PreK3 and PreK4 at a close by charter but by Kindergarten we need to have it figured out.
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