Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
College costs
Old 09-18-2006, 09:28 PM   #1
Full time employment: Posting here.
Arif's Avatar
 
Join Date: Jun 2005
Posts: 761
College costs

Talk about long term! Our son is turning four next month and I'm trying to determine if we are on track to have half of his expenses for college. When we started the 529 plan we estimated his total college costs for four years would equal $140k. This estimate was not based on an Ivy league education but rather a small private school similar to the one we attended. My question for those that have been down this path already with kids in college is, "was your planning close to reality when it was time to send junior off to school?" And also what percentage was covered by scholarships, grant etc.?
__________________

__________________
You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
Arif is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: College costs
Old 09-18-2006, 10:16 PM   #2
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: College costs

Won't work for every family, and it was just dumb luck more than planning, but we lived in a very education-friendly state, and paid the taxes to prove it (Wisconsin). Between my two kids, we paid for 13 years of university tuition and it never cost us more than $10K per year including room and board. In retrospect, the U. of Wisconsin neutralized all the high property tax we ever paid. Both kids were good students who might easily have gone to pricey private schools. Couldn't talk either one into going elsewhere.

I myself went to a high quality state school at a very fair tuition (not so rich family). So, just saving a ton for kids college may not be the only strategy to consider. Schools like Virginia, North Carolina, Wi, Michigan, Florida, UC Berkeley, SF or LA, Wa, Oregon and many others offer top notch education at reasonable in-state tuitions, plenty suitable for even the best students.

Just something to consider as the time approaches. To answer your original question, we overplanned as a result of the above. All set to do the home equity thing but never needed to. Go Badgers!
__________________

__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 10:39 PM   #3
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,619
Re: College costs

Quote:
Originally Posted by Arif
My question for those that have been down this path already with kids in college is, "was your planning close to reality when it was time to send junior off to school?" And also what percentage was covered by scholarships, grant etc.?
I have a spreadsheet (of course I have a spreadsheet!) updated annually from the survey data at CollegeBoard.com.

We started in Nov 1992 at $400/month with EE bonds for the first few years (the Peter Lynch approach). Later we rode the '90s and the tech wreck with Heartland Value & Tweedy, Browne Global Value. When Berkshire Hathaway went on sale in 2002 we picked up a chunk.

529 plans were a lot more exotic then so we started with a UTMA (lower tax basis) and later just fenced off some parental money. She'll probably be penalized for her UTMA assets but we're trying to figure out other approaches.

Our savings return has tracked just fine with the spreadsheet costs (not just tuition but also room & board, books, and so forth). Worst case is a fully-funded local community college/UH. Best case is whatever she's willing to chase scholarships & work & student loans for, although we'll probably have between $120K-$160K by 2010.

The accumulation phase has gone just dandy, but now we need to start minimizing taxes on the cap gains (beginning in 2007? 2008?) and moving the money to CDs. We'll keep putting money aside through 2010 but by then we expect to have a much clearer picture of costs.

Of course our kid's recent interest in a military academy has #$%^ed up all that planning... in a good way!
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 10:41 PM   #4
Recycles dryer sheets
 
Join Date: Dec 2004
Posts: 273
Re: College costs

DD's costs will have run about $15k for a 4 year double major at a small state 4 year university. *Saved enough to pay for 4 years, 1 wedding and enough left over to buy 1/2 of a decent car. *
We had put it in custodial trust because there weren't many other options 20 years ago. *Her savings did affect her ability to acquire scholarships because alot of them were need based and filling out the FASFA didn't help either because of our assets. *She did receive some academic scholarships that saved about $4000 total. *
All-in-all, save as much as reasonable (but don't let it cut into your retirement savings plan), apply for scholarships early and often and as many as possible and realize that it is not a bad thing to have your kids work their way through college to make ends meet. *Good luck, report back in 15 years
__________________
time flies like an arrow, fruit flies like a banana
larry is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 10:43 PM   #5
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 899
Re: College costs

I have one in HS and one in JH and I'm assuming a U of CA campus and budgeting $20k/year/kid.

Agree with R_in_T on high quality state schools and would add Minnesota and Illinois in particular to his list.

Problem is if you are not a state resident.

MB
__________________
mb is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 10:46 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Re: College costs

Quote:
Originally Posted by Rich_in_Tampa
Schools like ... UC Berkeley,...
Add Cal Tech.* Really tough to get into.* *For some majors they could make Harvard and MIT look like a cake walk.

If you lived in Alaska you will pay instate tuition at many State schools because of interstate agreements.

IMHO make sure your kids get the best k-12 education possible, and while they are hitting the books set aside resources to pay for college. *When the time comes the best school for your student may not be in-state. *I have my biases based on the resources a state devotes to public primary and secondary education. *
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 10:50 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Re: College costs

Someone called in to Bob Brinker's radio show Saturday. He had just refinanced his house, taking down a $445,000 loan at 6 3/4%. The family lived in NYC. He has a son and daughter attending private schools- son at Boston College at $43,000 per year as I remember, and daughter at NYU @ $47,000 pa.

Now get this- the DD is studying nursing!!!

Not a bad career, but imagine having to amortize the expense from nursing wages if her father were not paying. Judging from the tremor in his voice, I think he was not in a really good place to be doing this.

Holy cow, she could go to CUNY for probably 1/10 of that, and get the exact same job. She could move to Zimbabwe, and go for 1/00 of that, and come back and get the same job.

Parents are crazy.

My sons both put themselves through UW, both are very successful, and one has 0 loans and the other has $2700.

The idea is if they are going to be on the hook for whatever it costs, they are going to be damn sure that they get what they want and need in a cost effective manner.

I would and did give any amount of time to them, and still would. But it doesn't make sense to me to mortgage my life as I get older, instead of them mortgaging theirs if it had been needed.

Also, I believe the Daddy Warbucks thing is bad for family dynamics. My kids started college, they were adults. They knew it, I knew it. No temptation for me to tell them how to lead any part of their lives, which IMO is as it should be.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 11:17 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,152
Re: College costs

I do not understand why many parents feel obligated to pay 100% of their childrens' college costs. My opinion is that this is usually harmful for the child. I generally advise parents to pay 40 to 70 percent of their kids' undergraduate costs (depending on the child and circumstances), and zero percent of their kids' graduate school costs, and that these are the cost targets that should guide their saving.

My parents paid zero percent for me. I do not recommend this at all (and, in fact, I am still incredulous at my parents' lack of planning at that time and in the present, too). But it certainly made me a better person in many ways. Also, I was the most serious student of all time during school. And I did my master's degree in electrical engineering in nine months and had a large number of job offers 10 weeks before I graduated. Accumulating debt has a way of focusing the mind.

Also, I was able to get a job in my field during my last two and a half years of undergraduate, and this experience actually helped form my whole career. I probably would have turned this job down to begin with (I started it working for free the first three months while working another job and taking an upper division summer class) if mommy and daddy were paying all the bills.

What I see in many college-age kids is a lack of adult responsibility, which I think is often exacerbated by parents paying full freight.

Kramer
__________________
kramer is offline   Reply With Quote
Re: College costs
Old 09-18-2006, 11:24 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Re: College costs

HaHa and kramer, I agree. *

Each of my kids had some of their own skin in the college tuition game. *They considered the cost of schools in their decisions. *The other reason for having some of their skin in the game is to keep them focused on completion (and not choose underwater basket weaving as a major).

One went to an out-of-state school and quickly figured out how to qualify for in-state tuition (we had saved for his education in a UGM account which held over two years of living expenses - he was emancipated), the other took college loans to attend a selective private university (we helped her re-pay after graduation). *Her talents, and her education, have enabled her to do very well.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 12:11 AM   #10
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 899
Re: College costs

Quote:
Originally Posted by Brat
Add Cal Tech.*
Cal Tech, great school, but it is private not state,

MB
__________________
mb is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 05:11 AM   #11
Recycles dryer sheets
 
Join Date: Jan 2006
Posts: 116
Re: College costs

we took a little different tack. Kids are done with school. There were no 529 plans at the time. When we looked into the Fafsa we realized they counted the kids assets at a higher rate than the parents. Therefore, although we had a high income, we looked like we had no assets, it was all in retirement plans and house, which we agressively paid off. When they attended school all of my wages went to them as one half of a dual income family. They were aware that if anything happened, like layoffs we would not be able to continue.
We paid four years on instate tuition/room/board. The one that went to private school paid the difference himself, but because he qualified for grants he only paid a few thousand a year more.

They both got professional degrees, one an engineer. They both have made more than me from the first year on the job. They are very greatful for all we did.

I have no regrets, but we focused first on our retirement money. I figured we did not have the time to make it up if we did not save enough. They had plenty of years to pay for loans etc. if we were unable to help them. You cannot predict what state your family will be in fifteen years down the road.

I don't know how the current laws count assets, but I never regretted paying off the house or fully funding retirement accounts.
__________________
shorttimer is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 08:43 AM   #12
Recycles dryer sheets
 
Join Date: May 2006
Posts: 144
Re: College costs

Don't forget Texas' excellent flagship schools - Univ Texas and Texas A&M.

We have one in college and one on the way and are very impressed with the both universities, especially at in-state tuition rates.* Even more so with the prepaid tuition plans we were able to get them before the prepaid tuition plans were discontinued.

We are funding their tuition and room and board.* Summer jobs fund books, misc expenses and fun.

Graduate school is at their expense.* Let's see how creative they can get...
__________________
BarbaraAnne is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 09:08 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,505
Re: College costs

I think a responsible thing a parent should do is save a reasonable amount for their kids college ideally from the moment they are born.* I started out with $150/month, but i backed it down to $100/month into a 529 plan, asset allocation type mutual fund.

My dad paid for my tuition/room/board in undergrad; the balance that wasnt covered by my scholarships.* I also voluntarily took on a work study for 15 hours/week to pay miscellaneous expenses.* * I had full tuition remission for graduate school, and got paid quite well as a TA in grad school so i was fully on my own by them.

In contrast, my wife's dad (parents split) didnt help her at all and her mom was pretty poor so she only* helped the little bit that she could, so my (now) wife had no choice but to load up on loans.* We actually got married, and it got to the point where she might have had to drop out of college.* *Predictably, my dad came to the rescue and basically paid for several of her loans.* *Before i allowed my dad to do this, i actually confronted her dad about the matter, so that he knew that my dad was bailing his daughter out of a financial situation she couldnt handle.**

Yes, i was married to her, but I was 20, still a college kid making 8/hr in a work study, and clearly not of the means to pay something as substantial as her college tuition.* You might say maybe i wasnt in a financial position to marry her yet, but my counter to that is that it collectively cost us less/year to live together married in one cheap apartment than it did for us formally to pay dorm fees times 2.* *

In short, this didnt bother her dad one bit.* Not surprisingly, it doesnt bother me either to have nothing to do with him every since then.* *In my family we help each other when we need it.* *His idea of family and mine clearly differ.* I guess the idea of reaping what you sow is still alive and strong.

As you can tell, i feel pretty strongly that its a moral obligation for parents to help on college costs which are clearly very excessive and a substantial amount to handle even for parents with great jobs.* *These are 18 year old kids that are in no position to fully handle the burden of the tuition at a decent quality school.* *Sure there are scholarships and grants, but those rarely cover everything.* Its adults like me that are in a position to save for them to help, and I just feel its a moral obligation.

I hold her dad accountable for being callous to my wife's former predicament.* If he wants to make amends with me, then he can pay for this 11K dollar sallie mae loan of her's i'm still paying for.* *He also owes my dad about 30K dollars.* So until he's ready to sat things straight, he gets to drive 10 hours everytime he wants to see his grandson.

My theory on those here defending their parents for not paying anything is just that they are used to a family setup where every man/woman is out for themselves.* That's how my wife's family is.* *She can call her dad/brother/aunt, and tell them about a bad financial crisis, and basically the response will be "I hate it for you!".* * In contrast, my parents/family would be figuring out what they could do to help.* * I think its ironic by having that helping attitude, that everyone actually ends up more well off/more wealthy than they do with the selfish attitude.

My son's only 3, but I just cant understand abandoning him on something like that when he's 18.* *Its literally beyond my comprehension. I wont necessarily pay everything either, but he should have a nice chuck of change in that 529 by then. And i'm sure i'll keep the deposits going while he's in school too, and step them up, if need be.

Azanon
__________________
azanon is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 10:25 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: College costs

Quote:
Originally Posted by mb
Problem is if you are not a state resident.
You betcha! Sent son to Purdue and we live in Illinois. Very satisified with Purdue for an engineering education, but darn pricey for out-of-staters!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 10:54 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: College costs

Quote:
Originally Posted by BarbaraAnne
We are funding their tuition and room and board.* Summer jobs fund books, misc expenses and fun.

Graduate school is at their expense.* Let's see how creative they can get...
That's exactly how we did it.* I was making pretty good money at the time and we were able to pay tuition, room and board out of current earnings, so we did.* He co-op'd and more than covered books, personal expenses, etc.* Then he went to work at MegaCorp and they paid for the engineering MS done part time.

There has been a lot of talk about 529b plans on this thread.* Folks, don't forget about ESA's.* You can only put $2K/yr/child into them, but after funding an ESA, you can put the balance of the total amount you want to save into the 529b of your choice.* The ESA has greater flexibility.* I plop $2K/yr into ESA's for each grandchild.* **



*
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 10:59 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: College costs

Quote:
Originally Posted by youbet
There has been a lot of talk about 529b plans on this thread.* Folks, don't forget about ESA's.* You can only put $2K/yr/child into them, but after funding an ESA, you can put the balance of the total amount you want to save into the 529b of your choice.* The ESA has greater flexibility.* I plop $2K/yr into ESA's for each grandchild.* **
Yeah, I pretty much punted last year on the college savings thing, but I think I will definately be setting up Coverdells this year for my two kids, provided I am not over the AGI limitation. I cannot say I am that wild about 529s, but I will have to revisit the idea now that the tax treatment of these things has been made permanent.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 12:09 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: College costs

Quote:
Originally Posted by brewer12345
I will definately be setting up Coverdells this year for my two kids, provided I am not over the AGI limitation.*
Good point.* I forgot to mention the AGI limitation since the ESA's I fund for the grandkids are owned by their dad, my son.* Sadly, he's still not in danger of going over the AGI limit.........* So, for you old geezer grandparents out there, you can't own ESA's for the grandkids, their parents must own the accounts.* And the AGI rule applies to the parents.* But, drum roll, grandparents are allowed to provide the money to fund the accounts!* Aren't we the lucky ones
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 01:17 PM   #18
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Re: College costs

You all make me feel like a real piker regarding my kids higher education. Of course the first one graduated in 83 and the last one in 92 so this is really historic and may not be relevent to the times we live in now. Here is what I did (gosh this sounds bad).... Oldest Son went to a military academy (pratically 0 cost). Oldest Daughter almost went to an academy but she opted for the best school in the state (UVA) away from home -- Her Dad made her work and save her money from age 10 or so -- she also qualified for and took a ROTC scholarship for the first two years. Summer work took care of most of the next two years. Graduated on time with a RN Degree. Cost for Dad and Mom -- not much don't even remember. Nr 2 Daughter went to local college George Mason U, stayed at home, worked job part time, then transfered to UVA Nursing school and graduated on time. Cost to Mom and Dad not much, don't even remember. Nr 2 Son (youngest and last child) did not want to go to college. Told him he goes to college or the Army. Opted for the Army, stayed 4 years, finished his AD, got married while in the Army, moved to Florida to be nearer to Dad and Mom, got full time job, used GI bill at Community college first two years then transfered to Univ of No Florida to complete his remaining two years. (BTW his wife also got her 4 year finance and marketing degree at the same time). They both graduated after 4 years of school work. Son got a BS degree, accounting major, then went on and got his CPA. I myself did not graduate from HS and it took me until I was 35 years of age to graduate from college with a 4 years BS degree in Bus Admin. First one in my family that, up to that point, graduated from college. I know times have changed but sometimes I think parents are going too far with "paying for the education" and not far enough in "motivating" the children to "do it for themselves (at least somewhat)". I hope that this will start some meaningful discussion and not on how mean some parent (like me) are.*
__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 01:21 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,199
Re: College costs

I wonder whether colleges, when evaluating FAFSA info and deciding on scholarships, make a distinction between

1. Parents don't make money because they don't have a job
2. Parents don't make money because they are retired
__________________
Al
TromboneAl is offline   Reply With Quote
Re: College costs
Old 09-19-2006, 01:59 PM   #20
Full time employment: Posting here.
Arif's Avatar
 
Join Date: Jun 2005
Posts: 761
Re: College costs

Thanks for all the great replies. As I relook the college costs of our son I realize that it is a crap shoot with many unknowns. Since we are in Panama I guess we would be considered "out of state" for any college in the US although I do know that Florida State has a satellite college here. I guess we could use relative's address in the state that he might go to college(to qualify for in-state), but not sure if that is permitted. I did find this ranking of schools at Kiplingers website:

http://tinyurl.com/7htoe

Sorry for the long link. [MODERATOR fixed long link--astro]

The most interesting thing about the list is that it shows the average out of pocket costs after aid, which is significantly less than the total tuition. According to the site, aid does not include loans. I wonder how close that is to reality even though it is just an average.
__________________

__________________
You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
Arif is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Kids & College Empty Pockets Other topics 73 02-17-2007 10:49 AM
College Costs While ER'd Papi FIRE and Money 29 04-14-2006 09:16 PM
Retired college costs bongo2 Other topics 25 08-01-2005 09:29 AM
College savings and "fairness" malakito Other topics 23 03-03-2005 06:11 PM
ER Homestretch vs. Kids in College airstyle Other topics 6 02-16-2004 12:11 PM

 

 
All times are GMT -6. The time now is 06:53 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.