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Old 01-12-2008, 03:01 PM   #21
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Also I'll reiterate that this exercise of mine is not, repeat not being used as an input into the decision as to whether or not we have a kid. I'm just planning ahead because thats what we FIRE types do.

..... my approach will be to set aside a chunk of money that I estimate to be sufficient for 4 years of undergraduate education at an elite private school, 20 years hence.

You are the consumate planner! That's for sure.

Any kid(s) you have will be lucky to have you for a dad. I have no doubt you will have their college costs covered.

Here's another, slightly contrary thought: Would you be robbing your kid(s) of the chance to gain some sense of achievement and accomplishment for themselves if you pay the full freight for 4 years at top private colleges?

Perhaps you can build a pot to pay for 4 years at public college. Then if they are achieving enough to qualify for elite private college, tell them the deal is--I pay 4 years equivalent of public university cost, and you pay the difference if you want to go to elite private school. That way you fund the "basic needed" college education, so to speak, for their future success. But leave them free to earn/achieve/accomplish the "deluxe version" education on their own.

Besides, how many employers, really, when you think about it, ask "What college did you go to", as opposed to asking "Do you have a college degree"? Percentwise, I am convinced jsut getting a coolege degree is the relevent question, and in the majority of cases it does not matter what college they went to. There even have been some studies of this via looking at college grads later salary rates vs what type colleges they went to.

With you feeling compelled to only have to fund 4 years at public college, it eases your burden drastically, while at the same time leaving a chance for the exceptional kid to make his/her own achievement at funding their own "exceptional" college costs.

At any rate, good planning, good luck, and good night. (Picture Edwin R Murrow).
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Old 01-12-2008, 05:40 PM   #22
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Comments on my approach?
Can I be your kid?

Putting the money aside for a 4 year elite school before the kid is born is definitely a planner.
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Old 01-12-2008, 06:04 PM   #23
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We'll probably pay everything but play money for the first year as our circumstances did not/do not allow them to work pt jobs during hs. After that, its probably tuition and books only...they have to come up with the rest. If they don't pay for some of it, it will be "our" education, not theirs, and they will not be as grateful for it.
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Old 01-12-2008, 08:03 PM   #24
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Two cents

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My actual approach will be to set aside an equivalent amount of iBonds (which I already own) for this, taking into account that the iBonds grow at a rate higher than inflation. Assuming that my iBonds grow at inflation +1.2%, I could set aside around $235,000 worth.

The other advantage of using iBonds is that, under current policy anyway, the interest on them will be tax free, at least for the part that goes to tuition, as long as I can engineer an income below the cutoff those years, which I should be able to do in retirement.

Comments on my approach?
Yes - I am not sure why you would go to the trouble of trying to keep your income down to qualify for this. In 2007, the limit was about $98k..Just use a 529 plan and you can count on it being tax-free. You have no worry about your income growth. You can most likely roll your I Bonds into a 529.
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Old 01-12-2008, 10:12 PM   #25
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Besides, how many employers, really, when you think about it, ask "What college did you go to", as opposed to asking "Do you have a college degree"? Percentwise, I am convinced jsut getting a coolege degree is the relevent question, and in the majority of cases it does not matter what college they went to. There even have been some studies of this via looking at college grads later salary rates vs what type colleges they went to.
My employer (high-tech company) only does college hires from a few select universities. So they don't ask, because you didn't even get an interview unless you went to one of these schools. So I think your first job can definitely be affected by where you went. 24 years ago I felt I was a bit limited in my choices because of where I went to school, even though I had top grades and relevant part-time work experience.

But with experience, it doesn't matter which school, if any, you went to at my company. I worked with 2 guys with no college education, and they were top performers. I used to do a lot of interviewing and had a lot of input on hire/no-hire decisions and I rarely paid attention to the school, and then only if I wanted to chat about something non-technical.

We're waiting to hear back on college apps for DD. I'm rooting for public schools, I think it's a better value overall, especially considering the in-state public schools we have to choose from are good. She's got apps in at UVa, JMU, Texas, Duke and Stanford.
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Old 01-13-2008, 06:00 AM   #26
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Thanks for the comments, everyone.

Re the question of whether or not to pay for school, it would be interesting to see who here (of those who went to college anyway) had their parents pay vs. paid on their own. It would be most interesting to see how that shifts with age, since it seems to be more common now than 20 and certainly 40+ years ago.

In my family its was considered an obligation. In fact, even my mother's father (the first college graduate in my lineage, MIT class of '28 ) paid for his kids' education in the 50s and 60s, when it was probably quite unusual to do so.

My parents paid for my two sisters and me in the 80s (which probably pretty much wiped out their savings). In the quiet suburb of Rochester where I lived it was pretty typical for people to pay for their kids schooling if they could afford it.



Of course I knew kids in college that pissed away their opportunity, dropping out in the first year and wasting their parents money. And of course, this would almost certainly never happen if the kid was paying for it himself. Hopefully by the time my kid (should he come to be) is 17-18 I'd have pretty good insight into his personality and would know how much of a risk that would be.

Re 529 plans, I've heard mixed things about them, I guess much depends on your states plans and its restrictions. I'll certainly research them more over the next few months and no doubt I'll be posting my questions here.
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Old 01-13-2008, 06:08 AM   #27
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My actual approach will be to set aside an equivalent amount of iBonds (which I already own) for this, taking into account that the iBonds grow at a rate higher than inflation. Assuming that my iBonds grow at inflation +1.2%, I could set aside around $235,000 worth.

Interesting coincidence - I just was looking at NYS' 529 plan, and the maximum balance it can have and still be eligible for contributions is exactly $235,000. I wonder if someone bureaucrat did the same math I just did?
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Old 01-13-2008, 06:32 AM   #28
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I'm 46 and paid for my own college on my own. I had a full tuition academic scholarship + $500/yr, so it was just room and board after I moved out after the first year.

I think they paid for the first year of my older brother's tuition, after that he was on his own too.

DD's mother and I will be covering the cost of a public school. We'll have to talk if she winds up at a private school.
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