The grandparents gave us some money at Christmas to contribute to our kids' college funds. Sadly, the last time we contributed to their funds was last Christmas with money from their grandparents. In 2012 we made our emergency fund a priority. We are hoping to contribute a modest amount to each of our 3 kids' college funds monthly this year. Either $50 or $100 per kid each month, but it will depend on how DH's take-home pay shakes out when we see his first check of 2013 in a few weeks.
I should mention that both my parents and DH's parents helped pay for our college tuition. Both DH and I worked on campus during college, but the majority of our education was paid for by our parents without any student loans. We didn't realize at the time how lucky we were, but now as we see people struggle to repay student loans, we are so thankful for that gift from our parents. (We did each pay for our graduate school tuition years later--I took out a small loan but paid it off in a few years).
I really struggle with the kids' college funds for a few reasons. First, the calculators say that by the time my kids are college-aged, college will cost $150,000-$200,000 for an in-state school. For each kid. So we might be looking at $450,000-$600,000 total. Gulp. We have about $50,000 total saved so far, and over half of that has been from both sets of grandparents.
Second, all the experts say to prioritize saving for retirement. Which I totally agree with. Which is why this month we are back to 15% 401k contribution and extra principle payments on our mortgage, to put us in a good position when we retire.
I also feel like the cost of college is a huge guess at this point. I think at some point, if the costs keep rising at the rate they are, college won't be affordable for anyone. And maybe my kids will get scholarships, or go to community college for the first few years, which would cut the costs dramatically. The costs of college are just so unknown.
I did one of those online FAFSA guestimate calculators to see what our expected family contribution will be for college. It gave me an answer of $25,000 a year for my oldest. Which is basically the full cost of an in-state college with tuition and room and board.
I also struggle with just the balance of it all. Because sure, we could contribute more to their college funds if we didn't go on vacation ever again. But then we'd lose those experiences and memories, and our kids will never be this age again.
So I really hope that by prioritizing our retirement, paying off our mortgage early, but still having some fun memories along the way, we will free up some cash when our kids start college to help pay their tuition with current salary.
What are your thoughts on paying for college? Did your parents help you pay for college? Are you going to help your kids, and if so, how are you planning for it?
College Funds for the Kids
January 3rd, 2013 at 10:41 pm
January 3rd, 2013 at 10:59 pm 1357253952
We struggle a bit on the college issue too. I do want my children to contribute something to their college costs. I expect there will be some cash flowing of tuition, extra jobs, some from savings (we have about $20K), hopefully a scholarship and we do have some military tuition benefits that can be rolled to our children as well. Our children should overlap only one year while in college, so that helps too.
January 3rd, 2013 at 11:18 pm 1357255129
January 3rd, 2013 at 11:27 pm 1357255671
We're looking at college for five. Our oldest two are 9th and 8th grades. Both have prepaid college tuition plans for the local community college, two years worth - enough for a Gen Ed classes for BA. These are transferrable to younger siblings should they both get scholarships, which is probably a strong possibility since our oldest is already a scholarship recipient for her Catholic high school. We don't have a comprehensive plan (other than the prepaid plan in place) and we fund their savings mostly from birthday gifts and Christmas gifts and babysitting savings.
January 3rd, 2013 at 11:27 pm 1357255677
January 3rd, 2013 at 11:44 pm 1357256660
But a shorter reply to address a couple of things:
My response about college costing $200k-ish = I know the point is that financial advisors want to get people worried enough to plan ahead, and that is all well and good. But the idea that everyone is literally paying this much for college is frankly impossible. Would I pay $200k for a college degree? Um, no? I don't think any college degree is worth that much.
I am mostly not worried about it because college is so inexpensive where we live. The first thing everyone should do is actually look up college costs at potential universities. My college today costs 3 times what it did when I graduated in 1999. This means it costs $3k per semester instead of $1k. I am not worried about it. Look up "common data set" for universities in your area or potential universities of choice. VERY good information and very clear costs. Get some real facts and know what you have to work with. I have also heard good things about the book Debt Free U.
January 3rd, 2013 at 11:52 pm 1357257159
January 4th, 2013 at 12:11 am 1357258317
Me: Dad, I want to apply to Lehigh.
Dad: No.
Me: Why not?
Dad: Because you're going to get in, and I'm not going to send you because it's too expensive for me to pay it and you're not going to start your life off in debt.
I was disappointed, but ended up going to a different school for $12k/year that I liked very much, and which resulted in meeting my hubby and getting my job. So thankful for my dad standing firm.
January 4th, 2013 at 01:02 am 1357261344
January 4th, 2013 at 01:05 am 1357261516
January 4th, 2013 at 01:09 am 1357261797
If I were planning this in the current economy, I'd be funding with 'Snowflakes' + small cost avoidance in an aggressive Mutual Fund using the magic of long term compounding. If I had high school students, I would be insisting they research every small, scholarship and begin writing the type of application 'thesis' necessary. They need to clearly understand their job in university is to learn adult behavior and fulfill scholastic requirements.
Some of the DKs in my program would benefit by spending a summer in a third world country in a Peace Corp type project to appreciate their wonderful opportunities.
January 4th, 2013 at 01:56 am 1357264572
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January 6th, 2013 at 05:22 pm 1357492940
Jerry
January 7th, 2013 at 05:38 pm 1357580286
Our 9th grader had an assignment a couple months ago to pick a college (from a teacher supplied list) and:
- figure costs, tuition/expenses/
- what major degrees are offered
- what that school is known for academically
- what traditions are associated with that school
and more. It was simply a good start in the lingo and college world experience.
My first kid has not figured out what he really wants to study, nor where to go. My second kid is only 2 years behind but has a better grip on what type of career she might go toward. They are both incredibly high scorers so far. But my son is much less active outside of school.
We have explained the differences in private vs. public vs. out-of-state-public schools so far. We have not pressured them toward a less expensive option (yet).
I bought my high school freshman this book for a gift Major in Success co-authored by Jack Canfield (Chicken Soup guy) which is loaded with common sense advice for high school age students going to college.
It's a tad early for us, we need to go through SAT/ACT testing first. The I think the process will be:
- long list of where they are interested based on major area of study
- short list these especially with respect to financial aid offered
- actually apply and see where they are accepted
We have watched a number of neighbors and relatives put their kids' through college and it is DO'able.