How Should We Think About College Savings?

[StillTired]

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...

 

[studbucket]

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.

 

[Shanky]

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.

 

[bltkmt]

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.

 

[RunningBum]

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.

 

[Mulligan]

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.

 

[Htown Harry]

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.

Future Owls

 

[Nords]

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.

I thought it was just meaning that people attend MIT, Stanford, or Harvard because they can't hack the heat at Rice...

 

[bltkmt]

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.

 

[Shanky]

I'm not clear on your point. A 31 ACT would be around the 25th percentile at Rice.

Future Owls

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.

 

[studbucket]

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.

I hope it works out! I attended the University of Iowa starting in 2004, got a 32 ACT and had a 3.987 GPA: I got $500 from the governor and managed to make the top 100 for the UIowa presidential scholarship. So I really got nothing but a pat on the back.

Hopefully your son gets more, but of all the merit-based scholarships I found while on campus, only 3 of them weren't for minorities or females, for which there were tens. As Ben Folds once said "Y'all don't know what it's like being male, middle class, and white".

(Not asking for pity at all, I'm thrilled with my college experience, but I think the scholarship system is broken (based on scholarships I got my Senior year that were completely un-needed))

 

[Mulligan]

I hope it works out! I attended the University of Iowa starting in 2004, got a 32 ACT and had a 3.987 GPA: I got $500 from the governor and managed to make the top 100 for the UIowa presidential scholarship. So I really got nothing but a pat on the back.

Hopefully your son gets more, but of all the merit-based scholarships I found while on campus, only 3 of them weren't for minorities or females, for which there were tens. As Ben Folds once said "Y'all don't know what it's like being male, middle class, and white".

(Not asking for pity at all, I'm thrilled with my college experience, but I think the scholarship system is broken (based on scholarships I got my Senior year that were completely un-needed))

University of Iowa still appears to tight with the merit based scholarship money. University of Mo offers full 4 year ride including room and board and books with a 33 ACT renewable with a modest 3.25 GPA for instate students. I attended a northern Mo university back in the 80s and about half my fraternity was from Iowa. They said it was cheaper to pay out of state double tuition, than it was to attend an instate college.

 

[studbucket]

University of Iowa still appears to tight with the merit based scholarship money. University of Mo offers full 4 year ride including room and board and books with a 33 ACT renewable with a modest 3.25 GPA for instate students. I attended a northern Mo university back in the 80s and about half my fraternity was from Iowa. They said it was cheaper to pay out of state double tuition, than it was to attend an instate college.

Funny, that's what all the students from Illinois say when they attend Iowa (Chicago makes up 40-50% of the campus).

 

[Mulligan]

Funny, that's what all the students from Illinois say when they attend Iowa (Chicago makes up 40-50% of the campus).

Times have changed from the 80s, Im sure. The mentality used to be to "sock it to the out of staters". Some colleges due to funding issues are looking to recruit the out of state populations and are offering better deals than back in the old days. Illinois must have higher costs as I read recently that some MO colleges are going after Ill. students, too.

 

[Bestwifeever]

A lot of public Midwest universities offer reduced tuitions to out-of-state residents from other Midwest states because of this: MHEC : Student Access: Midwest Student Exchange Program (1)

Is the MSEP a scholarship program?

The MSEP is not a scholarship, but a tuition reduction program.

What is the Midwest Student Exchange Program?

The Midwest Student Exchange Program, or MSEP, is a multi-state tuition reciprocity program. Through the MSEP, public institutions agree to charge students no more than 150% of the in-state resident tuition rate for specific programs; private institutions offer a 10% reduction on their tuition rates.

Which states participate?

Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, or Wisconsin.

 

[Nords]

Some colleges due to funding issues are looking to recruit the out of state populations and are offering better deals than back in the old days.

I think the colleges are also trying to diversify their student population. The competition among local NYC residents for local NYC colleges can be vicious, and every USNA wannabe knows that the application process is greatly complicated by being a resident of DC, Maryland, or Virginia.

Judging from the snail mail we used to get a few years ago, all those Mainland colleges were backflipping through fire hoops to recruit a surfer grrrl from Ha-why-uh.