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Old 03-05-2012, 03:03 PM   #41
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Originally Posted by alexbalex View Post
interesting, thanks for pointing this out. I'll try to do some research into this, when I have more time. Sounds like it could really result in some fantastic savings.
It was our experience. We are in Virginia. Others may have different experiences. Don't know.
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Old 03-05-2012, 03:12 PM   #42
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My wife and I are ~40 with two boys, currently 6 and 8. We have a 529 plan for each boy and we have been making generous contributions to these plans since they were born.

Recently I did some detailed research on what a private school college education is likely to cost for them, based on current tuition & fees and current annual increase rates. This was a sobering exercise: Tuition and fees (private school) are on track to hit $100K/year when our 6 year old is a senior in college.

I would greatly appreciate any wisdom you can offer on this topic. How should we be thinking about college savings as part of our overall savings picture? Do we just keep contributing $10K/year (each) to the 529 plans for the next 15 years and then pay the full sticker price when they go off to school? Am I missing something here? Thank you.
Compare the cost of saving $10k per year "now" vs the amount you pay annually to your mortgage "now".

My guess is you might be paying more than $24k per year to your mortgage ($250k financed 30 years at 5%...)

I would use a timeline approach... look where you want to be in 10 years, is it the plan to set aside the $100k and see it compound to maybe $150k (conservative allocation as time gets closer)? Or is the plan to have a retirement with a paid off house in 15-20 years?

Use the timeline, maybe move the house to be paid off in 10 years, then for the 6 years you have kids in school, apply the $34,000 you spend each year annually "now" ($24k mortgage+10k college contribution).

This way if one kid does not go to college (like the younger one) you don't have a huge 10% penalty... you have a paid off house and liquid cash in taxable accounts.
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Old 03-05-2012, 03:28 PM   #43
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A young woman friend of mine lived in an upper midwest state with a very good public university system, including the flagship school which was almost right in her neighborhood. But after high school she decided to make a lateral move to an adjoining state and attend their flagship school, also a highly regarded state school. She funded this mostly through loans, rather than on the backs of her parents. Later she borrowed to get a mid-tier private MBA, which her husband would not pay for- so although he handled her living expenses, she had to borrow the full tuition amount.

Now she is divorced, working at 2 very so-so jobs, and making loan payments that exceed her studio apartment rent as a budget expense. She is really strapped.

I think we often do not consider what a snow job school guidance counselors and the whole academic system puts on students. They rarely have time to step back and consider whether any of this really makes any sense. Many people are also not yet aware that the major state universities are now very competitive in admissions. In any state with a large East Asian population, our sons and daughters are going to be studying all night just to keep in the middle of the curve. Anyone been on the Berkeley campus in the last 10 years?

Or walked down University Avenue in Seattle?

To get an education equal to, let alone better than, this type of environment is going to take the top Ivies or Stanford, or a few other very elite schools.
Parents need more authority over their kids, but this isn't going to happen in modern media-driven America.

Ha
This post struck a chord.

The community college dialog is a good one
The bigger question should be occupation...

If interested in Business (for example), working during college, gaining experience in a field of interest would be of decent importance. Community colleges would improve the ROI by adding income to the student, lowering costs and really not delaying any career path.

On another side, if being a doctor or lawyer is of interest, getting into a good 4 year school which prepares students for the complexities of applying to law or med school is more important (IMO) than saving a few dollars at a community college which meets the credit requirement, but might give less guidance to the student.

The most important part of college is graduating with a piece of paper and making friends which last a lifetime. If a person does not value one or the other, community colleges will fit that bill.

The contacts I made in college 15-20 years ago are still really important to me today, and I am glad I went to a college which gets 99% of their graduates employment in industry after 5 years. This network is quite valueable when looking for specific contacts which do specific things.

I have had similar college conversations with numerous adults, and vocational occupations (plumbers, electricians etc...) are in demand, but few students are educated by their counselors as to making those careers a viable option.

The most important thing is to make sure your kids can handle working, and know what background to get for a specific occupation.
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Old 03-06-2012, 07:15 PM   #44
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Tell me why you are considering private college for your kids? I went to a private college and my daughter now attends a private college that we are paying full list price for. Bummer. Is it worth it? I have no idea,
I'm glad I picked a state college when I was facing with the multiple choice.
a) state college - about $4k a year after 2 yr at a cc
b) private university - $40k a year

yeah, b talked about the usual corp. connections, alumni etc but how many graduates could actually land a job by having those connections. I'm glad I went the practical route and with my current income level, it's the best ROI. I think what you study/major in has far greater impact on your job outlook. Some of the people I've worked with at mega corps went to private universities. we work the same job, get similar pay but their piece of paper they got on their walk cost many, many times more.
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Old 03-10-2012, 11:58 AM   #45
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I think it depends a lot on which private school you are talking about.

I think I would pony up for a degree from Harvard or MIT.

I would be less likely to spend the money on the little local liberal arts colleges.

+1 there is a wide range in quality and income potential at different colleges (both public and private). Having attended a top 10-15 college, I think that I benefited from significantly better career opportunities then a lot of my friends from HS who attended State U (even though it was much cheaper). Painting all private colleges with the same brush would be like saying it doesn't make sense to spend $XX,000 dollars on a car and not specify whether it is a lemon, a dependable used car, a mid-range new car, or a Bugatti. While the costs are important, it is also important to understand you are getting....And the reality is that top schools (both public and private) provide a lot of great career opportunities to graduates, and some other colleges (again both public and private) offer little beyond student loan burdens.
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Old 03-10-2012, 01:16 PM   #46
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When you say no one pays sticker, how do they avoid it? I'm saving for my kids now, and am just wondering how people go about getting money off the sticker price.

I was fortunate enough to have my parents pay my college, so I'm not as familiar as I should be with the process.
Many private colleges do advertise their scholarships on their websites. Most of these are academic, but there are other merit-based awards available. Here's a sample of academic scholarships that I just pulled off the website of one of our children's schools:


Competitive Full Tuition Presidentís $14,000 Provostís $12,000 Deanís $10,000
These levels are based on high school and test score performance. There are also awards for athletic, music, art, dance, and theatre. What is not on their website is that they have other very generous aid, such as interest-free loans and college-based grants. Some of these are need-based. DD received grant money from the college her junior and senior years. With athletic and academic scholarships, grants and interest-free loans, we paid about half the "sticker" price. Still a sacrifice for us, but it was the perfect school for her, and we are very happy that we were able to do it.

(And yes, the academic scholarship was more than the athletic one.)
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Old 03-10-2012, 06:43 PM   #47
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Rice University just announced their retail rate sheet for this fall, which allows families to spend the summer discussing the financial situation.

Rice's policy is "If a family has a combined income of less than $80K then Rice will meet all financial need with some combination of grants, work study, and merit-based aid."

Of course tuition has doubled over the last decade, so Rice is trumpeting "only" a 4.9% rise for next year. Be sure to click on the graphic in the attached article.

Tuition up 4.9 percent, less growth than past - The Rice Thresher - Rice University
Quote:
Incoming undergraduate students at Rice will be paying $36,610 for the 2012-2013 school year, 4.9 percent more tuition than current students are charged. This increase is a continuation of a trend that included a 5.4 percent rise in 2011-2012 and a 5.3 percent rise in 2010-2011.
In addition, the cost of room and board for 2012-2013 increased 2.7 percent to $12,600, bringing the total annual charge for undergraduates – including tuition, mandatory fees, and room and board – to $49,887, a 4.3 percent increase over last year.
I guess they're determined to hold the line on that $50K/year number.

Our daughter's sentiment can best be expressed as "Free tuition from NROTC, and the Navy's going to let me go submarines too?!? Woo-hoo!"

Second-generation sucker for a good deal. And a paycheck too.
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Old 03-18-2012, 07:47 PM   #48
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There are an awful lot of very fine, lesser known small liberal arts colleges that tend to be very aggressive in giving merit based aid in order to attract students. This can make the cost of attending a private school competitive with attending a state school. I don't think attending a private school is necessarily better than going to State U, but for some kids, they may benefit from smaller class size, instruction from profs instead of grad students, the ability to participate in NCAA athletics (not everyone is a Division I athlete), etc. For other kids, they may get more out of attending a larger university---more diversity, more options academically, better research opportunities (especially in the sciences), etc. If your kids hit the books while in high school, they should have multiple options given you are putting money away now in a 529.
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Old 03-19-2012, 08:20 AM   #49
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Kettering guarantees fixed-rate tuition | Kettering University

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In 2012-13, Kettering will become the first STEM university in Michigan to guarantee fixed-rate tuition and eliminate all academic fees.
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Old 03-19-2012, 10:19 AM   #50
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Best of luck with them in finding ways to prevent "education inflation" that exceeds their ability to fund it with this plan. Some states, Texas included, have pulled the plug on new enrollments into "prepaid tuition plans" that lock in specific, predefined tuition for enrollment periods years into the future. These often became unsustainable for the same reason insurers are getting out of the LTCI market (or have to reprice with massive premium hikes) -- chronic tendency to underprice the risk posed by rapid inflation that can't be kept in check.
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Old 07-06-2012, 11:39 PM   #51
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My son used this website for a school project:

College costs: Find out how much college costs - Calculator - CNNMoney

It will give you the average price people from different income ranges paid for tuition/r&b/fees...
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Old 07-07-2012, 11:19 AM   #52
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As a recent college graduate (BS in '08, Master's in '09), I'm often shocked by how much folks think is needed for college.

The sticker price of college is often nowhere near what students actually need to pay as it includes no aid and assumes they need to pay everything possible. See more on sticker price vs. net cost from NPR's Planet Money:
The Real Price Of College : Planet Money : NPR
Figuring Out The Real Price Of College : Planet Money : NPR
The Price Of College Tuition, In 1 Graphic : Planet Money : NPR

So what the average person pays for college has actually stayed the same over the last 5 years, despite the sticker price rising by ~25%. One can effectively get a good public 4-year education for ~$10,000 out of pocket.

There's no need to save up $100,000 for some private school, when one could shop around and get a better deal at a different private school, or get an equivalent education at a public school.

It's just amazing to me that we get all these news articles about the price of college increasing so much, or people lamenting the $100k in student loans while the articles ignore the reality that the net cost of college hasn't even kept up with inflation, and has decreased in some instances.



Some anecdotal evidence from me
I spent 5 years at a Big 10 university with in-state tuition and never received any significant aid* until I got married before my Senior year. All of a sudden my last 2 years of college became free.

*I got a $500 scholarship here and there, but nothing noteworthy

I left college with ~$15k in debt, or only about $5000 for each year that wasn't "free", and most of that was from my freshman year. I only spent 1 year in a dorm (way more expensive than off-campus housing) and worked 15-20 hours a week during the school year, and 30-40 hrs/week when school was out, which really helped. I know a kid who triple majored and literally paid his way through college while working. He was crazy, but he did it.

It's flabbergasting to me that students don't think they should work while in college, or that their parents don't expect them to. The whole goal of college is to prepare you to be successful in your field (regardless of whether or not you get a degree). A big part of that is finding jobs and improving relevant skills.

Additionally, it's quite easy to get a $10/hr job on a university campus and work 15 hours a week. If a student does that, it's $600/month (with little taxes), which should cover a big chunk of their apartment/utilities bill (if not all of it).

What We're Doing
We are saving $124/month into the Vanguard-managed Utah Education Savings Plan (It's a 529 plan) for our daughter. This will give her ~$25,000 by the time she is ready for college. We think this should be enough for at least 1 year of college a public university, if not more.

Perhaps you feel more should be saved up for your kids, which is completely fine. We just believe that we should only supplement her college, not pay for the whole thing. If she's not fiscally responsible enough to take advantage of $25k, then we've got bigger problems.
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Old 07-12-2012, 01:41 PM   #53
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Repeating stuff already mentioned, but seriously reconsider the private school stuff. DS is a 25 y.o. engineer with MS from a state school. He scored a 31 on the ACT, so tuition was covered by scholarship. We paid room and board, etc. out of our current income (no loans). He only worked during the 3 co-op semesters and as an extreme LBHM type of kid, he stretched that co-op pay a mile! With no loans to repay all the savings we had for his education are now for his first house (still renting).

He is doing very well and enjoyed his college experience. Would he be in better shape now had he gone to a private school? No way to know, but he is very happy to have no student loans (a lot of his friends do have loans).
At many top schools, a 31 ACT is average, so merit based aid is unlikely. The key is if you child goes to the best university that will accept them, merit scholarships are less likely. If they attend a school where they are clearly above average, merit aid is more likely. Example would be some accepted at MIT, Stanford or Harvard, but attends Rice or U of Virginia.
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Old 07-12-2012, 01:59 PM   #54
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My 17yr old son just scored 32 on his ACTs, but his GPA is only 3.2ish. The above posts are making me hopeful that he will get some sort merit of aid offered.
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Old 07-12-2012, 02:45 PM   #55
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I think we've paid full sticker for my son's education at a state school. My ex- and I both looked independently at the FAFSA and say that it wasn't going to help so we didn't even fill one out. We both had money set aside and used that rather than burden him with a loan after school. He is starting his 9th and final semester and I'm hearing that my ex- might not be paying towards it, which I can 't really fault. IIRC our divorce agreement says that I pay for 1/2 of school and I don't think there was a 4 year clause so I'm going to at least pay 1/2 of it.

My concern was when he was looking at Duke and Stanford. I don't think he was going to get all that much help. We'd have been in that category of being able to pay for it, but it sure would've made me flinch. He didn't get in, so the issue was averted. Sometimes I wonder if the help is really appreciated, but I feel good that he has never come to me and tell me that the money has run out and he needs more, and I've never seen an unexpected charge on my credit card, which has a card for. And he actually did just this weekend say how much he appreciated it.
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Old 07-12-2012, 03:55 PM   #56
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My 17yr old son just scored 32 on his ACTs, but his GPA is only 3.2ish. The above posts are making me hopeful that he will get some sort merit of aid offered.
Of course which state you are in and which university your son wants to attend will affect aid received, but in my state that could get him by itself full paid tuition to a regional state university or at least several thousand dollars yearly savings tuition at the mothership. Many schools have sliding scales meaning the higher the ACT, the lower the grade point they will allow to get money. I assume he is a junior. I seen many kids grade points jump as they become motivated by seeing their ACT score. That is a nice score btw. It is probably inside top 3% nationwide. I assume you will have him try again a few more times? I have known several doggedly determined students get their ACT from 26 to at least 31 by taking it a half dozen times or more.
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Old 07-12-2012, 10:03 PM   #57
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At many top schools, a 31 ACT is average, so merit based aid is unlikely. The key is if you child goes to the best university that will accept them, merit scholarships are less likely. If they attend a school where they are clearly above average, merit aid is more likely. Example would be some accepted at MIT, Stanford or Harvard, but attends Rice or U of Virginia.
I'm not clear on your point. A 31 ACT would be around the 25th percentile at Rice.

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Old 07-13-2012, 12:21 AM   #58
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At many top schools, a 31 ACT is average, so merit based aid is unlikely. The key is if you child goes to the best university that will accept them, merit scholarships are less likely. If they attend a school where they are clearly above average, merit aid is more likely. Example would be some accepted at MIT, Stanford or Harvard, but attends Rice or U of Virginia.
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I'm not clear on your point. A 31 ACT would be around the 25th percentile at Rice.
I thought it was just meaning that people attend MIT, Stanford, or Harvard because they can't hack the heat at Rice...
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Old 07-13-2012, 11:20 AM   #59
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Of course which state you are in and which university your son wants to attend will affect aid received, but in my state that could get him by itself full paid tuition to a regional state university or at least several thousand dollars yearly savings tuition at the mothership. Many schools have sliding scales meaning the higher the ACT, the lower the grade point they will allow to get money. I assume he is a junior. I seen many kids grade points jump as they become motivated by seeing their ACT score. That is a nice score btw. It is probably inside top 3% nationwide. I assume you will have him try again a few more times? I have known several doggedly determined students get their ACT from 26 to at least 31 by taking it a half dozen times or more.
We are in CT, and he has his sights laser-focused on University of Denver (the "Stanford of the Rockies" or so they say). UD is a $50k/yr ticket that I would love to knock $20k/yr off.
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Old 07-13-2012, 11:59 AM   #60
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I'm not clear on your point. A 31 ACT would be around the 25th percentile at Rice.

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You are correct Rice is more selective and a poor example to make my point, in fact none of the schools I mentioned would consider at 31 ACT to be exceptional, so merit based based on test score would have to be augmented with exceptional GPA and extracurriculars. With a 31 ACT look at Universities ranked Around 100th nationally to be around the 75% percentile. All of the Universities I cited earlier were Top 25, and 31 would be below average making merit based aid less likely. Need based aid is a whole other discussion.

As a better example, UC San Diego is ranked 97th, and a 31 ACT would be about the 75 percentile.
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