How did you pay (or how are you paying) for college for children?

[LeavingOhio]

It will be interesting to see how closely your actual payment correlates with your anticipated payment. Then again, we've always been of the ant version of people, doggedly preparing to meet our obligations and then being penalized for it. No doubt the way you structured your assets helps. Sometimes it is not so smart to be prepared.

Yeah, those calculators don't promise exact numbers, but they are VERY specific with things...asking for line 7 on your 1040 and line 23 and so on.

Lots of ways to prepare to pay for college, and what we have done is make sure to be debt free (but for the house; we just have a 0% interest car loan at the moment aside from the house) when our youngest starts so that we can pay for most of it with income. Allowing her to take on some debt is so that she has ownership in the college choice, because the fact of the matter is that here in Ohio she has the grades and test scores to get a full ride to several state colleges (they have published criteria that she has met), and she could probably successfully get full academic rides at 2nd tier colleges if she were to apply. BUT, she has her heart set on a few different schools (all of which I agree would be GREAT fits for her, so I'm willing to pay a bit), so we're looking at those.

It is quite an exhausting process, so I'll be glad when it is over.

 

[LeavingOhio]

Originally Posted by 34rlsa View Post
I just want to commend all of you who have made it possible for your children to complete a college education. You are exceptional parents... congratulations.



There is more to enabling your kids college education than paying the bill.
Not all parents encourage higher education after high school.

This is a good point. Not all kids should go to college. I agree with that.

 

[sengsational]

I appreciate all the responses.

Some of them surprise me.

For example, my wife and I (she works half time) make right on $90,000 a year, and we qualify for HUGE financial aid provided by the schools we are looking at for our now HS junior daughter (we also have an 8th grade son). For example, most of the schools use all of the following to figure yearly cost:

Tuition
Room and Board
Books
Travel
Personal Expenses

With all of those things considered, the schools we're looking at all range from about $58,000-$62,000 per year. BUT, based on financial need only (using their online calculators), our costs are down to anywhere from $11,500-$14,000 per year.

We are actually going to let our daughter take a small loan to help...that will be her contribution. A loan of $3500 per year is figured in, so she would graduate with $14,000 in loans...that seems reasonable and acceptable to me, and who knows, depending on how things are going, we might help her pay those off when she's done (perhaps a nice graduation present).

So, our cost is expected to be anywhere from $8,000 to $10,500 per year. When you consider that $1300 of that is for "personal expenses" which we would be paying if she still lived at home anyway and some of that is for "board" which we would also be paying, this seems very doable to me.

One of the ways to get that type of financial aid is to make sure not to have a ton of liquid cash. So, we had started to accumulate some, so we did something about that...replaced the siding on our house now (it needed it soon) rather than wait until after she starts college, and we're going to pay our lone car loan off a year early...it's at 0% interest, but we don't want the extra cash sitting there in our bank account, because the university will just take it. Any additional extra money we accumulate from now until our financial awards are given next year will be thrown at the mortgage.

I don't want to cheat anyone, and we will be truthful about how much money we have (not going to hide cash in a jar somewhere and say we don't have it), but we will use the rules in place to our advantage.

The weird thing about all this college researching is that for my family, it costs significantly less to send my daughter to an Ivy League school or several other top-tier schools than it would be to send her to a mediocre private school and even most state schools. Ivy League schools don't give athletic or academic scholarships...it is all based on financial need.

Here's a list of colleges that meet 100% of demonstrated need (many of these have online calculators where you can get a very good estimate of the amount you will have to pay):

Colleges That Claim to Meet Full Financial Need - US News

Also, if the loan you get is a subsidized student loan (most are), then the government pays the interest while you are in school, so if you take $14,000 in loans while a student, it's just $14,000 on the day you graduate. If you have that money then, you can simply pay it off and never have to pay interest.

That is very close to what I ended up doing. As you say, internationally recognised schools don't really discount based on academics. My kids graduated top or top 2% of their hs class and high 90th percentile SAT, but only the locally recognised schools offered merit discounts.

One will graduate in May and the other is scheduled for 3 years from now. Both are in internationally recognized schools, one private and one public. The one 529 account is about gone (maybe started with 125k?).

What I had to do in order to make going to the private school work was to move after tax money into a retirement account. Since I already was maxing 401k, and Roth, I chunked money into a Vanguard variable annuity (a dirty word on this board, but useful in this instance, I think). I ended up with great discounts from the school. The kids are ending up with loans that can just be paid off from 529 assets that are left over. You can take money out of the 529 without penalty in the amount up to what they gave you in discounts (they call them scholarships and grants, but I call them discounts). You need to pay tax on the gains, though, just not penalties. Anyway, the discounts this year were amaaaazing! Reason being I had two kids in school at the same time.

So my way is not the cheap way out, but the kids got what I think is a leg up on life, and a cool way to enter adulthood...4 years of college with the only thing to do is do well in school, have a good time, and go to the federal workstudy cushy job to earn pocket money.

 

[mpeirce]

> We just filed out FAFSA for the formality.

There was no way DS was going to get need-based aid, so we skipped FAFSA. That was kind of fun.

He still was offered a modest merit based scholarship.

 

[kz]

Oldest son had tuition covered by military benefits so we covered room/board, food and transportation.
We paid tuition, room/board for second son. He worked part-time for his transportation costs.
Both had part time jobs while in school but we wanted them to concentrate on studies so work was very limited.
Since we spent much less on oldest son we made down payment on his first home and bought new appliances for his first and second homes.
We then gave them each approx. the same $$ for their weddings.
They are now on their own and we don't see them ever needing help financially from us.
Our next goal is to pay at least the tuition for our grandchildren.

 

[gozer]

For my college, I paid about 2/3 of the total cost by working three part time jobs. After my first 3 semesters, I moved in with my girlfriend (now wife), and my mom said, "I'm not paying for that." My response was, "That sounds fair." From that point on my girlfriend and I paid everything ourselves. My mom, was stunned. Don't think she believed I had it in me. My wife graduated a year and a half before I did with a 2 year degree and got a starter job that paid about as much as my 3 part time jobs. The last year of my college we were on easy street. Even bought our first car.

For my son we loaded up a state 529 plan which ended up paying all expenses and even has almost a semester of extra tuition left over. Over half of the money was earnings on the plan. We put most of the money in near the low point of the last recession. Our base incomes were very high and at that time we had a paid off house. The only financial aid my son received was grant type stuff he earned doing programming tasks for some DNA research project at the college. It was supposed to go to a grad student. But none of them knew C++ and when they had tried to use a Java trained grad student the year before it had not gone well.

 

[Gumby]

We have no children, so I can't advise on that. As for me -- my uncle Sam paid for my college education. I paid cash on my own for law school.

 

[daylatedollarshort]

I wouldn't consider mine and Ex's payments 100% altruistic in nature. I believe DD would be perfectly happy to stay at either parents house the rest of her life and be taken care of. Kicking her out to go to college and paying for it, seems a potentially cheaper proposition than the former.

+1. We think of college as a very good long term investment. Who knows when we are old and senile and hand over all our money to some nice your man from Ameriprise who dwindles it all away on commissions and fees, maybe our kids will be making enough to support us.

We realized after DH wanted to semi-ER we could arrange our income and investments to get both ACA subsidies and some financial aid for college. Combining public schools, tax credits, financial aid, community college and online course credits and paid internships, and so far it has been a pleasant surprise how little we've had to pay out of our own pockets, at least so far.

We found the payscale reports on salary by school, salary by major, and ROI by school very helpful:

http://www.payscale.com/college-salary-report-2014

We also work with them on clubs, internships, certificate programs outside of school, volunteer work, or whatever to help build up their resumes as best they can.

 

[Turboslacker]

Oldest son had tuition covered by military benefits so we covered room/board, food and transportation.
We paid tuition, room/board for second son. He worked part-time for his transportation costs.
Both had part time jobs while in school but we wanted them to concentrate on studies so work was very limited.
Since we spent much less on oldest son we made down payment on his first home and bought new appliances for his first and second homes.
We then gave them each approx. the same $$ for their weddings.
They are now on their own and we don't see them ever needing help financially from us.
Our next goal is to pay at least the tuition for our grandchildren.

Good grief. Now I know how the newest generation is considered the entitlement generation. LOL.

Sent from my HTC One using Early Retirement Forum mobile app

 

[Turboslacker]

This is a good point. Not all kids should go to college. I agree with that.

Skilled trade jobs are going unfilled yet we continue to pump out 50 times more education grads than teacher positions avail in this country.

 

[aja8888]

Good grief. Now I know how the newest generation is considered the entitlement generation. LOL.

Sent from my HTC One using Early Retirement Forum mobile app

One must consider when to pass assets to children as the 5 year look back period is in effect. That is, of course, if you want to help your children get a good start in life rather than spend your funds on yourself or give them to the tax man or Medicaid.

Some people's preferences are to pass funds to children when they are starting out in life, other will leave them the remnants of an IRA instead, while other will not do either or will do both.

At 70 years of age, I helped DD with a new home purchase. We are helping fund our granddaughter's college expenses. I suppose that providing for the "entitlement generation" too?

 

[Letj]

I appreciate all the responses.

Some of them surprise me.

For example, my wife and I (she works half time) make right on $90,000 a year, and we qualify for HUGE financial aid provided by the schools we are looking at for our now HS junior daughter (we also have an 8th grade son). For example, most of the schools use all of the following to figure yearly cost:

Tuition
Room and Board
Books
Travel
Personal Expenses

With all of those things considered, the schools we're looking at all range from about $58,000-$62,000 per year. BUT, based on financial need only (using their online calculators), our costs are down to anywhere from $11,500-$14,000 per year.

We are actually going to let our daughter take a small loan to help...that will be her contribution. A loan of $3500 per year is figured in, so she would graduate with $14,000 in loans...that seems reasonable and acceptable to me, and who knows, depending on how things are going, we might help her pay those off when she's done (perhaps a nice graduation present).

So, our cost is expected to be anywhere from $8,000 to $10,500 per year. When you consider that $1300 of that is for "personal expenses" which we would be paying if she still lived at home anyway and some of that is for "board" which we would also be paying, this seems very doable to me.

One of the ways to get that type of financial aid is to make sure not to have a ton of liquid cash. So, we had started to accumulate some, so we did something about that...replaced the siding on our house now (it needed it soon) rather than wait until after she starts college, and we're going to pay our lone car loan off a year early...it's at 0% interest, but we don't want the extra cash sitting there in our bank account, because the university will just take it. Any additional extra money we accumulate from now until our financial awards are given next year will be thrown at the mortgage.

I don't want to cheat anyone, and we will be truthful about how much money we have (not going to hide cash in a jar somewhere and say we don't have it), but we will use the rules in place to our advantage.

The weird thing about all this college researching is that for my family, it costs significantly less to send my daughter to an Ivy League school or several other top-tier schools than it would be to send her to a mediocre private school and even most state schools. Ivy League schools don't give athletic or academic scholarships...it is all based on financial need.

Here's a list of colleges that meet 100% of demonstrated need (many of these have online calculators where you can get a very good estimate of the amount you will have to pay):

Colleges That Claim to Meet Full Financial Need - US News

Also, if the loan you get is a subsidized student loan (most are), then the government pays the interest while you are in school, so if you take $14,000 in loans while a student, it's just $14,000 on the day you graduate. If you have that money then, you can simply pay it off and never have to pay interest.

Does qualifying for financial take into account the amounts you have saved in IRAs and taxable account? If so, can the taxable accounts be considered your retirement account if you've earmarked it for retirement.

 

[Turboslacker]

We are helping fund our granddaughter's college expenses. I suppose that providing for the "entitlement generation" too?

No, no no, of course not...that would be the generation after the Entitlement Generation which has no identification yet.

 

[LeavingOhio]

Skilled trade jobs are going unfilled yet we continue to pump out 50 times more education grads than teacher positions avail in this country.

Do you have any stats to back up that? Everything I see says that there is expected to be a 5.5+% growth in public school teaching jobs between now and 2022.

 

[gozer]

Do you have any stats to back up that? Everything I see says that there is expected to be a 5.5+% growth in public school teaching jobs between now and 2022.

What Teaching Jobs Are in High Demand? | Everyday Life - Global Post

Article makes claims based on what type of teacher. Too many K-5 (oversuppy), but not enough science and tech types (undersupply).

ETA: Article feels right to me, based on what I see where I live.

 

[LeavingOhio]

What Teaching Jobs Are in High Demand? | Everyday Life - Global Post

Article makes claims based on what type of teacher. Too many K-5 (oversuppy), but not enough science and tech types (undersupply).

ETA: Article feels right to me, based on what I see where I live.

Ok...BIG difference between DOUBLE the k-5 teachers and 50 TIMES more teachers than jobs as the person I was responding to said.

Actually, with the Baby Boomers beginning to retire en masse, the school district we're in has set a record for number of retiring teachers the last 2 years, and they predict that will be the case for each of the next 5 years (which is pretty good because my daughter begins college in fall 2015 and wants to be a teacher...HS English). I think she will find a job quickly.

 

[gozer]

Ok...BIG difference between DOUBLE the k-5 teachers and 50 TIMES more teachers than jobs as the person I was responding to said.

Actually, with the Baby Boomers beginning to retire en masse, the school district we're in has set a record for number of retiring teachers the last 2 years, and they predict that will be the case for each of the next 5 years (which is pretty good because my daughter begins college in fall 2015 and wants to be a teacher...HS English). I think she will find a job quickly.

Understand that I don't disagree with you. I was just throwing some info in that I was reading because of the discussion in this thread.

 

[Sesq]

I am saving in 529 plans. I plan to save a sum per kid greater than 4 years public, less than 4 years private. If they go private they will either need loans, aid or scholarships. If they did the community college and transfer route, I'd probably eventually pay them out the surplus, although I might hold the cash a few years incase they need it for grad school (or their kids perhaps).

My wife and I were both significantly helped, so we feel its appropriate to help our kids. We have saved a bit more than 50k so far, and the kids are 10 and 13 years away.

I'll add that I think the opaque pricing (net aid) is borders on used car sales tactics.

 

[hausfrau]

We are saving in a 529 plan. I'm not sure how much to save. I have no idea what the college landscape will look like in 13 years though or what kind of education DD will want. I went to a small private school and loved it (with F/A it was cheaper than our state flagship). I think I would have floundered in a giant state school though, but DD may feel differently. I'd like to be prepared for any possibility.

 

[steve88]

Is $25k a year for tuition considered expensive for an engineering degree?

 

[Katsmeow]

Is $25k a year for tuition considered expensive for an engineering degree?

Is that just tuition or does that include room and board and books?

To me, I guess that depends on what the alternative is. My son is a CS major. I would consider $25k a year for tuition to be very expensive since he can get a degree in CS for much less than that (first 2 years of credit at CC, then transfer to a state university). So, for him, I think that $25k in tuition would be very expensive when his tuition for a full year at the state school is much less than that (and was even less when he was at the CC).

On the other hand, if he didn't have that option, then maybe I wouldn't feel that way.

I would feel the same way if he was an engineering major (which he also considered as an option).

 

[bubba]

For us, educating our only child was absolutely our responsibility unless he blew up and the $ would have been wasted. We didn't qualify for aid, but he did receive full tuition based on test scores so meals, housing, books were our costs (state school). We cash flowed those out of current income (rather than use his college savings) plus he was well paid for his intern semesters. When he graduated (engineer) we gave him the $ we'd saved for his college as a down payment on his first home. He has turned out to be a really good kid, has a good career going and makes his parents very proud. So, we don't regret a dime of the decisions we made regarding his education costs.

 

[Turboslacker]

For us, educating our only child was absolutely our responsibility unless he blew up and the $ would have been wasted. We didn't qualify for aid, but he did receive full tuition based on test scores so meals, housing, books were our costs (state school). We cash flowed those out of current income (rather than use his college savings) plus he was well paid for his intern semesters. When he graduated (engineer) we gave him the $ we'd saved for his college as a down payment on his first home. He has turned out to be a really good kid, has a good career going and makes his parents very proud. So, we don't regret a dime of the decisions we made regarding his education costs.

Sounds like an exceptionally well grounded and rounded kid. Congrats!

 

[LeavingOhio]

We are saving in a 529 plan. I'm not sure how much to save. I have no idea what the college landscape will look like in 13 years though or what kind of education DD will want. I went to a small private school and loved it (with F/A it was cheaper than our state flagship). I think I would have floundered in a giant state school though, but DD may feel differently. I'd like to be prepared for any possibility.

I went to a small private school for undergrad and then a large state school for graduate school. I MUCH preferred the smaller school. My wife did the same (small college initially and then larger universities (not state schools though) for graduate degrees), and she also preferred the smaller environment, so my kids have heard us talk about that, and we have perhaps swayed them toward the smaller school. I don't think we steered them though, and knowing both of them, I do believe they would like the smaller school better (they do have our DNA after all!).

Regarding the 529 plans, I have heard people with kids in college both cheer and not cheer those. In part it depends on where your kid will go to school and what kind of student they are. Got a full tuition ride but need to pay for room and board, then the 529 works out well for that. Got a very smart kid who goes to a college that only gives aid based on need, then they will make sure to take all of that 529 money where if you didn't have it, your financial aid award would be much higher.

Too bad things aren't a little more cut and dried.

 

[bubba]

Sounds like an exceptionally well grounded and rounded kid. Congrats!

Thank you!