College costs in 2030

[enginerd]

My current plan is to retire in about 8 years when my two DD's will be in high school. At least for planning purposes, we want to fully pay for their college educations without having to worry about limiting college choices based on costs. I realize this means we have to plan to fund 8 years at a top tier private university, targeting years 2028 to 2034.

For disclosure, DW and I both went to a top tier private university. But we both had blue collar parents, so we both received quite a bit of aid. We want to offer our children the same opportunities we had, however with our high incomes, we don't expect they will receive any aid.

So the question, how much will I need to save? Where can I find an updated college costs forecast? In all my Google searches, I can only find forecasts that are 4 years or older and they all seem to be written by a doomsday planner.

Right now I'm thinking $90,000 per year. That's $720,000!! Maybe about $200,000 in 529's and the rest in after-tax accounts.

 

[NgineER]

If you are retired, will you have high income?


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[enginerd]

Most of my money will be 72t SEPP withdrawals from a regular IRA/401k which counts as ordinary income. As my daughters will be just entering their teen years when I plan to retire, I dont expect my expenses to be less than what they are now. So, if I had to pick a number today, our income will be at the top end of the 28% tax bracket. I'm guessing that's still out of finacial aid territory 14 years from now

 

[DrRoy]

I understand the desire to do for your daughters what you were able to do. I would just point out that lots of us have been quite successful with a public university degree. You can look at studies that evaluate colleges and universities for cost vs subsequent pay of graduates to see if that private schol degree is really a good deal or not.

 

[FIRE-2030]

American Funds has a college savings calculator that will let you figure costs based on your child's current age and you can even pick to model after a specifi school or just national averages.

https://www.americanfunds.com/individual/planning/tools/ext/college-savings-calculator

 

[greydog17]

You're right about your projections. DD is junior at a highly ranked private univ and costs have gone up each year, but not as fast as the percentage increase at state univ where state subsidies are under budget pressures. Here is an article with projections thru 2030. The costs shown for the two private categories for 2015-17 track with our experience.

https://www.goodcall.com/news/college-could-cost-as-much-as-334000-in-4-years-037

 

[enginerd]

Thanks for those two links. That was exactly what I was looking for. I think I am close with my current plan. Maybe a little shy of their estimate, but I am still far enough out I can reevaluate in a few years.

To Dr Roy's point, I agree 100%. I don't plan to push the private university as a first option and really hope for a more reasonable option. That's why my plan is to save only so much into the 529 plan and the rest into an account that can be repurposed. However, if DD gets into MIT or Harvard and we had to turn it down because I wanted to retire early and we hadn't set aside enough money....well let's just say DW would not be happy.
One more anecdote: I had a colleage who went to the same university as me (although 30 years prior) His son had his heart set on attending the same school as his father and getting the same major. My colleage was devastated after they received their financial aid package, they received no assistance and he had to tell his son it wasn't going to happen. I don't want to be in that situation.

 

[Aiming_4_55]

Perhaps the calculator at this link may help. I use it for general planning.

World's Simplest College Cost Calculator

Take a look at the projections, perhaps more in the 529 can help with other college related expenses and/or grad studies. I'm of the opinion that if I over fund the 529, I'll just leave it there for grand kids or a needy student, invested for 10 - 20 years =)

 

[ivinsfan]

Thanks for those two links. That was exactly what I was looking for. I think I am close with my current plan. Maybe a little shy of their estimate, but I am still far enough out I can reevaluate in a few years.

To Dr Roy's point, I agree 100%. I don't plan to push the private university as a first option and really hope for a more reasonable option. That's why my plan is to suave only so much into the 529 plan and the rest into an account that can be repurposed. However, if DD gets into MIT or Harvard and we had to turn it down because I wanted to retire early and we hadn't set aside enough money....well let's just say DW would not be happy.
One more anecdote: I had a colleage who went to the same university as me (although 30 years prior) His son had his heart set on attending the same school as his father and getting the same major. My colleage was devastated after they received their financial aid package, they received no assistance and he had to tell his son it wasn't going to happen. I don't want to be in that situation.

The guys was devastated, really, 1st world problem that resulted from lack of planning, devastating is a child with cancer, or hooked on drugs, or things of that nature. Real life requires adjustments and living with the ups and downs.

 

[Bamaman]

What about when you've scrimped and saved in order to save for that Top Tier university, and the kids don't rate?

The top tier Ivy League universities have 93% to 95% rejection ratios.

It's common for valedictorians with top grades and entrance exams to not make it in. There are a lot of very disappointed high school graduates every year as a 5% to 7% acceptance stacks the cards against any applicant.

I used to go up to Penn to visit my best friend getting his MBA at Wharton. My friend said the big joke was all the undergraduates paying the big money to have huge classes. And so much of undergraduates' tuition was going to pay the big salaries to famous professors only teaching in graduate school. So many of those in graduate school were from "lesser" universities (and even state colleges) and were only there for 2 years to get their Ivy League sheepskin.

 

[dvalley]

Here's my plan for DD:

Attend JC/community college for 2yrs
Attend University for the remaining 2yrs
Live at home during all this time (I don't trust her to even cross the street by herself let alone live elswhere, just no street smarts whatsoever but overall a very good smart kid).
Pick a decent degree that will be worth spending the money on.

If all above conditions are met then I'll fund $15k per year max for a public but decent university. $60k all in. Anything above and beyond she'll need to figure it out.

 

[ivinsfan]

how old is your daughter now...are you going to make her live with you after she is out of college? If not maybe you should help her pick up some street smarts instead of saying she can't even cross the road. I'm left speechless by that comment.......

 

[Sanstar]

Can't beat a US service academy like West Point for first rate education, guaranteed job upon graduation and solid academic foundation for graduate school with real life experience and leadership training from day one. One kid went West Point, another active reserves throughout his college years which really reduced the amount of parental support needed.


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[dvalley]

how old is your daughter now...are you going to make her live with you after she is out of college? If not maybe you should help her pick up some street smarts instead of saying she can't even cross the road. I'm left speechless by that comment.......

As a dad who was once a boy in college...heck yes, I'm keeping my little girl at home until she's 25 has MMA and gun training and finally allowed to date

 

[ivinsfan]

As a parent of 2 daughters, I don't find that remark funny..wait perhaps you can find a suitable man to marry her and cross the street with her.

These jokes might be funny about a toddler,but they sure aren't about a college age girl.

 

[Closet_Gamer]

Not to toss gasoline on a fire, but also consider that your kids may need a masters to compete in their chosen field. My oldest is now considering a pharmacy degree. Great track, huge financial rewards, and she's wired to be great at it ... but a very pricey 6 year journey to get there. We're fortunate and have planned since she was born to be able to swing big on college educations, but that will even stretch our position.

 

[laurence]

Fascinating that LBYM talk goes out the window once kids college comes up. My real world circle of ER types included. We looked up the anticipated cost for tuition at the University of California system the year our kids would attend, and plan on having four years tuition and books for them. If we have more to spare we'll help more, but that's the floor. We won't crush their dreams but if an ivy covered liberal arts college in New England is the only place they can fulfill their dreams they'll have to come up with the rest of the scratch themselves. A blank check has more downsides than up. I have a number of co-workers (six figure engineering types) working past their original retirement dates because their kids decided to go back to graduate school....sometimes for the second time. Same thought for my coworkers who buy into the best neighborhoods here "for the schools" and both parents are never home chasing the $$ to pay for that place.

 

[dvalley]

As a parent of 2 daughters, I don't find that remark funny..wait perhaps you can find a suitable man to marry her and cross the street with her.

These jokes might be funny about a toddler,but they sure aren't about a college age girl.

I wasn't trying to be funny

 

[Shanky]

I think higher education cost have to level out sooner as opposed to later. The customer base that can afford this is shrinking. If you look at higher education cost relative to top quintile income, the cost is hitting a wall on affordability. I expect increases align with top quintile income increases as we go forward.

 

[Pilot2013]

Free! Where have you been lately?

 

[Bamaman]

Not to toss gasoline on a fire, but also consider that your kids may need a masters to compete in their chosen field. My oldest is now considering a pharmacy degree. Great track, huge financial rewards, and she's wired to be great at it ... but a very pricey 6 year journey to get there. We're fortunate and have planned since she was born to be able to swing big on college educations, but that will even stretch our position.

They've done away with the old style pharmacist's degree and gone to Doctor of Pharmacy programs where they have to do residencies in hospitals, etc. working with M.D.'s. It's a great field, however the graduates so often come out with substantial student loans. Starting salaries in chain pharmacies are $100K with the managers making $120K--working long hours including weekends. Congratulations on having a motivated student/daughter.

 

[Bamaman]

My father ran the electrician, steamfitter, boilermaker, lineman and other apprenticeship programs for our giant power company.

The costs of universities in the future is almost enough for our children to go the skilled trades where they start you out in year one making $33K and getting a raises yearly for 6 years--without any student loans.