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Would you trade 20 years earlier FIRE for private education for your kids?
Old 02-06-2011, 12:01 AM   #1
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Would you trade 20 years earlier FIRE for private education for your kids?

I have a friend who sends his boys to my old alma mater (Catholic middle & high school), where tuition is going up to $6K/yr now, up from $2.5K/yr for the local parochial elementary school. Taking this further, let's say the children go to a regular private liberal arts college that runs about $15K/yr (even after grants) more per year rather than State U, and we'll presume 5 years of college, since most kids seem to take 5 rather than 4 years to graduate as they would rather take the minimum load instead of the recommended load to get out in 4 years. This would be an after-tax cost of $128K per child. So let's presume that standard 3 kids, for a total of $384K in extra costs.

Let's presume a standard professional 2 income family, earning $70K per year in the net 15% federal, 6% state, 7.65% FICA tax bracket. The $384K after tax cash would need to be earned in about $538K in pre-tax earnings. Assuming a strong FIRE savings plan of 17% 401K + 6% match + $5K IRA each, the lost savings opportunity would be about $26K/yr, which would take about 20 years to recoup. Hence, for a hypothetical set equally socioeconomically situated couples, in which one couple decided to give their children a fine private education while the other just sent them to the local state public schools, the private school paying couple would basically be throwing away 20 years in the goal of FIRE - one couple slaves away until 65, while the other takes it easy at 45.

Would it be worth it?
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Old 02-06-2011, 12:15 AM   #2
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Well, maybe. Twenty seem a bit extreme but only one young dependent here, but I definitely would have worked longer, 10?, if younger son could have gone to CALTECH, Stanford, MIT or the like. Good science student (but not absolute top of the class) in a good California district. I'm a NASA dad and that would have been fine by me. But...since junior high he knew what he wanted to do, its music. He is at a Cal State school with a very good music dept, he could have gone elsewhere but chose that. He is happy, remarkably diligent, on the dean's list, not in jail, GFs not pregnant, works part time. Does gigs for free food. I agonize about how he will ever make a living. Whats a dad to do? If working longer would have made a difference I would have done so.
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Old 02-06-2011, 12:19 AM   #3
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I won't try to debate the pros and cons, but I will say that I think you are incredibly light on the cost of a private four year college. You are looking at more like $50,000 per year. So with your hypothetical three kids that's $600,000 easy. Add an extra 5th year and that's another $150,000.
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Old 02-06-2011, 01:10 AM   #4
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I won't try to debate the pros and cons, but I will say that I think you are incredibly light on the cost of a private four year college. You are looking at more like $50,000 per year. So with your hypothetical three kids that's $600,000 easy. Add an extra 5th year and that's another $150,000.
On the other hand, a 2 income "professional couple" making only $70,000 per year would be a bit of an outlier. What professions would that be?

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Old 02-06-2011, 01:46 AM   #5
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I wouldn't. I didn't.

I didn't really think about it that though as to how it affected FIRE. I just don't feel that private universities are worth the cost.

We had high enough income that even for the most expensive university our kids wouldn't qualify for aid. I thought about it and I just couldn't justify the costs which I equate to highway robbery. I also don't recommend kids going into 6 figure debt to get educated.

Now...I will say that I have 3 kids with very different education before college. One son had lots of unique needs and attended private school for 6 years at high cost. I don't regret that in the least. It was very important for his situation. Sending him to state university even living in a dorm will be a decrease in costs for us.

Another son graduated from public school. He had no particularly unique needs and a good public school was a good place for him.

Our daughter (9th grade) is being homeschooled by us.

Three different kids, with different needs, so three different solutions.
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Old 02-06-2011, 03:41 AM   #6
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Let me just assume a position where I want/have children, and want the absolute best for them (in reality I will probably not have children).

Under most situations, the answer would be no. As mentioned before, the difference is, usually, marginal. Sometimes though, such as with inner city schools, K-12 public schools can be extremely bad, and so there is an actual return for sending children to private school. For college though, I would almost categorically say that private school offers no tangible advantages that outweigh attending the best state school is for that particular state.

One way families can avoid this is to just live in a suburb with a good public school system, the property values tend to be fairly inflated in such areas, but it is quite possible this extra cost is not as bad as having to send multiple children to private schools.
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Old 02-06-2011, 04:34 AM   #7
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no, perhaps I am lucky in that my daughter got to go to a charter school (part of the local university), only extra cost is $600 "contribution" I make each year, other than that just the normal costs associated with HS.

She graduates in May and will 1+ years of college completed, I think she needs to take one math class while in college to finish off her GE.

Before plunking down that kind of dough I would check all other options first.
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Old 02-06-2011, 06:48 AM   #8
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Many have done it the other way around.

But since they cannot/will not be able to work until they are real old... they will cut their lifestyle substantially and live off of SS.


Let's see if Junior and Sissy pay their parents 25% of their paychecks since mom and pop spent all their retirement savings providing for the kids every whim.
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Old 02-06-2011, 06:49 AM   #9
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On the other hand, a 2 income "professional couple" making only $70,000 per year would be a bit of an outlier. What professions would that be?

Ha
In my neck of the woods, that would be schoolteacher and school custodian.

And to answer the OP's question: No, it would not be worth it.

I live in an area with outstanding public schools and outstanding private schools. Half the college-bound graduates from both types go to state flagship university. Indeed, there is no difference in outcomes as far as I can tell, so why would you pay extra for something you don't get? The answer appears to be (a) parents went to private K-12 schools and (b) parents have incomes above $300K a year.
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Old 02-06-2011, 07:25 AM   #10
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I won't try to debate the pros and cons, but I will say that I think you are incredibly light on the cost of a private four year college. You are looking at more like $50,000 per year. So with your hypothetical three kids that's $600,000 easy. Add an extra 5th year and that's another $150,000.

He said $15K MORE than public... so if public costs $20K... then he is putting private at $35... I think there are a lot of private that run in that range... sure, you can get higher.. but a lot would receive grants etc... which also was in the OP...
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Old 02-06-2011, 07:26 AM   #11
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I will answer easily.... NO....


Public education is pretty cheap and pretty good... I have not seen studies where they show private schools producing better students...
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Old 02-06-2011, 07:54 AM   #12
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DW and I were products of public school system as was our DD. I paid my way thru university for DW and myself. My parents had the means to pay for my college expenses but chose not to help.

When it became my turn, I bit the bullet and paid for 5 years of tuition, books, room & board and spending money for DD. When she started out in the working world she had zero debt, a new car, and a sizeable bank account. She graduated about 7 years ago, changing jobs three times, (her own choice), and has finally landed a very good position at DePaul University in DT Chicago. She has been financially independent and very successful since graduation. She is working on her master's degree while working full time.

Nearly all co-workers my age have one or more of their adult children living back at home or never left, some with the grand kids and and few with children's BF or GF.

When I look back on it, I think the big investment made in my daughter's education may have had no negative impact on my eventual retirement date, and may have even reduced it. It really means a lot to me when something comes up in a conversation with my DD and she again thanks DW and me for paying her way and allowing her to be in the position she is now. How do you put a price on that? Money isn't the only measure of wealth.
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Old 02-06-2011, 08:46 AM   #13
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I do not see that private is any better than a good public school. We tried both with our two sons. Charter schools are the best for elementary , middle and HS. Had a friend that announced to each of his children upon graduation from HS that they had been awarded a full scholarship to any public university of their choice compliments of DD and DM. Any thing beyond that would be at their expense. Guess which one they choose.
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Old 02-06-2011, 08:55 AM   #14
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Tom52 is correct. The point is to give your children a good education and the ability to make a living in a career they enjoy and can sustain themselves, lest they move back home. A child that graduates from collage with no debit compliments of DD and DM has a great start in life.
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Old 02-06-2011, 09:05 AM   #15
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I did send my children to private colleges . It did not even cross my mind that it might delay my retirement . It was just something I wanted to do for my children and it's where they wanted to go .
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Old 02-06-2011, 09:21 AM   #16
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I would probably not spend the extra $$ for private schooling unless it was an unique situation (education was not available via State university). The decision would not be solely based on $$ and/or early retirement.

I'm a product of the public school system, so I rather assist with public school/state university, then new(er) car and first condo/home, if appropriate.
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Old 02-06-2011, 09:48 AM   #17
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Public education is pretty cheap and pretty good... I have not seen studies where they show private schools producing better students...
when i look at my property tax statement every year, the first thing that pops into my head is, "holy crap! that's spendy!"

all kidding aside...

as a parent (which i am not) my priorities would be for my child(ren):

1) self sufficient
2) happiness

are there any studies which mention those with a private education are more self sufficient and/or happier than those who go to public schools? my unscientific opinion is...no. and if you look at what goes into the US News and world report for "rankings," nothing mentions avg starting salary or job placement of graduates.

I'm sure there is more of a correlation between the "quality" of parenting in a child's education and their success later on (again, jmo).

either way, my conceptual child(ren) will attend public schools and/or be home schooled. when college rolls around, there will be funds for them to attend an in-state public school for 4 years.

the answer to the OP's question: no. a private education currently offers no incremental benefits for what i will want for my child(ren). nothing to do about when i get to retire. if things change in the next 20 years (which they most likely will), we will re-evaluate our plans.
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Old 02-06-2011, 09:57 AM   #18
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NO, and I didn't. My daughter attended very good public high school and excellent state university. She graduated college and has been working for over 6 years earning a good income in a job that she enjoys in the field of her major. I compared my daughter's career situation to many of her peers, many of whom attended expensive private high schools and universties and in most cases, she has done better than them (financially speaking). I don't see enough, if any, benefits for the significant additional costs of private schools/universities.
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Old 02-06-2011, 10:11 AM   #19
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[QUOTE=Katsmeow;1033748]I wouldn't. I didn't.
[QUOTE]

+1
Kids education came first. We've completed 46 of 48 yrs of tuition payments, so we're on the home stretch. Our tuition payments were much higher than your example. There are many additional costs beyond tuition. We always put the kids in the best situation possible. If the cost prohibited us from progess towards FI, we would react accordingly. Private is not necessarily better than public, anyway. Depends on the child, also.
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Old 02-06-2011, 10:17 AM   #20
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What surprising conclusions! If you happen to live in an area with top notch public schools, your kids can get a good education there! I would have never guessed!

DW and I attended the Chicago Public School system from K - 12. It turns out "Da Machine" was not as good at administering schools as it was at arranging ballot boxes to be stuffed or patronage jobs. If my mom hadn't gone back to work and been willing to contribute 100% of her paycheck toward my education at a fine, private college, I'd be even more illiterate today than I am. Yeah, I know, I could have been a better student even at CPS #57. I did learn how to roll a pack of Luckies up in my tee shirt sleeve and forge signatures on notes. But I didn't graduate prepared for college in any form, let alone a public university with a "1,000 students to a lecture hall" mentality.

At first I didn't realize how lucky I had gotten. Early in freshman year, when the phone rang in the dorm on a Saturday morning and it was my econ prof (the actual PHd, not some nerd grad assistant) calling and suggesting I stop by his house later that morning to talk about my first paper that he had just graded, I thought "trouble" and what I got was "help." I didn't know it at the time, but having prof's care and spend time with you isn't always common place at large, public schools.

Long story short, I got an attitude adjustment and made it through as a B student. I became one of those nerd grad assistants and attended grad school at, you guessed it, a large public university. So, I know exactly what it takes to succeed at competitive public schools. And a lot of not-so-competitive public school systems are incapable of providing a backgroud to marginal students to be that competitive.

So, yes private colleges can have an important role. Less so for gifted students who were lucky enough to attend top notch public school systems but very much so for average students struggling in public school settings where academics are secondary.

BTW, at the risk of pin pointing where I grew up and attended school, I went to the same high school as Jim Jacobs who wrote the musical Grease. And yes, that's how it was.......... Great times, but not much of a college prep atmosphere. Thank goodness for small, private liberal arts colleges!

Edit: Our son attended a suburban school system with good ratings. He went straight to a top ten, large, public engineering school and did well.

One size doesn't fit all.......
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