<p>My 401K is now a 201K........a little recession humor here!</p>
<p>I like ericatbucknell's definition of the middle class as those who can attend a private for less than the state university. Fits us to a tee.
For those with incomes of $125,000 to $250,000, get a grip. You are in the luxury market, whether you choose a BMW or Haverford, it's a grown-up choice. No whining.</p>
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My 401K is now a 201K........a little recession humor here!
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<p>It's better than a 104K. :)</p>
<p>The top 10 privates will see no reduction, but as one moves down the pecking order, it may be more difficult for parents to justify spending the money on a private versus a top state university.</p>
<p>It's better than a 104K. </p>
<ul>
<li>I expect that my 401K will get to be 104K in next few days, and then possibly dry up completely down to big fat ZERO. If the speed of going down continues 700 points down / day, it will take only about 12 days to get to finish line. We do not worry about our 401K any more. We hope to have our jobs and be able to buy food. We are thinking about stocking up on tuna cans now.
As to our D. in college, we will have to see what will happen to her Merit Scholarships. We already did not see any reasons for her to go to top school 2 years ago. Instead, she opted to state school that gave her tons of Merit Scholarships. These schools treat top applicants very well. If they continue to perform exceptionally well academically at college, opportunities for these top students are endless. I do not know how many people realize that to be tops at the state school might create much more opportunities for students than to be a face in a crowd at elite college.</li>
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<p>"I think we might see a trickle down of applicants with family incomes of say $100,000 - $150,000, who will be accepted to but get very little aid at the Top 20 schools, choose a Top 50 instead where they will get quarter or half tuition merit scholarships. It's going to be a VERY interesting April as merit and scholarship money is evaluated."</p>
<p>DunninLA - our strategy EXACTLY!! D is applying to two top 20s (where we are not expecting any aid offer but who knows?), rest are top 50/top 100s, many for which she has already qualified for merit aid because of her scores and GPA. This crisis had better be over in time for med school!</p>
<p>Market bottomed at about 7980 today as I was getting into the shower. Ten minutes later, it had shot back to 8300.</p>
<p>I think we hit bottom.</p>
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<p>I'm sure the grass looks greener from the south side of $125K, but in fact it's no small feat for a family of 4 to pay for a Haverford education with that income level. After federal, state, and local income taxes, that's maybe $90 to $95K in after-tax income. Take another $20 to $35K off that for mortgage PITI in any moderately high-priced market and you're in the $70K range. Out of that you need to pay utilities, life and health insurance, out-of-pocket medical and dental costs, transportation costs, contributions to your retirement account, and put food on the table. I think DunninLA is right, if you're frugal you can maybe squeeze out $20K/year to pay for junior's education, not the $50K Haverford expects you to pay. That expectation is based on the idea that at that income level you should have enough equity in your house, savings set aside from previous years, or ability to borrow (e.g., PLUS loans) based on your general credit-worthiness to be able to raise the $30K/year difference between what you can squeeze out of present income and the schools COA. Problem is, each leg of that expectations stool---home equity, after-tax investments, and ability to borrow---has been blown out of the water for very many people in the current market. Call it whining if you will, but I'm just predicting that a whole lot of families in the $125K to $250K income range are going to be hunting very hard for schools that give merit aid and/or lower-cost public alternatives this year, because they can't pay full freight at the Haverfords anymore. Nor can they afford the BMW.</p>
<p>It doesn't affect me immediately. We're still a full year away from needing to come to grips with the finances. Hopefully by then the stock market will improve, home prices will start to creep back up, and the credit market will begin to open up again. But I look for applications, yields, and selectivity to show a discernible uptick at both privates with merit aid and at the top publics this year.</p>
<p>^^ Dow closed in positive territory at 8,666, up 1.01%. I'm not sure the market has found a bottom yet. There could still be a lot of volatility, especially if more major financial institutions collapse. But I do think 8,000 is a big psychological barrier; any time the market goes below that level, or hovers around it, bargain hunters will swoop in and look to score some cheap pickups of undervalued stock in companies with strong fundamentals. Heck, I'd buy myself if I had any cash left. But I don't.</p>
<p>^ Oops! My bad; that wasn't the close. I misread the clock. Stay tuned.</p>
<p>Coworker had an order to buy SPYs at $84. I think that he missed it by a few pennies. $6 would have been sweet. My instincts said to short the pop. But I didn't. We have options expirations coming up next week so I expect wild volatility next week. As if we already didn't have enough.</p>
<p>bclintonk...
I can tell you want the world for your daughter. Good luck. I'm sure it will work out in the end.
The strongest asset in the financial calculus is a smart teenager hitting on all cylinders. And it doesn't appear in the EFC.</p>
<p>Every year at our college night for seniors (and juniors in the spring) I try to showcase colleges within a 12 hour driving radius that offer great merit scholarships. This year I don't think even those will be appealing enough. Instead will be concentrating on NSE and study abroad our publics offer as well as WUE. Gotta do what you have to do :(</p>
<p>I know a LOT of people in the $100k - $200k range. We get no financial aid, and I do think this downturn will affect this group. I agree that the cumulative effect of losses in 529, home equity and retirement hits this group hard - even if the biggest hit is psychological. </p>
<p><<529's did NOT tank for those currently in college">> Only if people were smart and invested in age-based. My kids' 529's are in age-based accounts, and they are 16 and 19, and their now-conservative accounts are still down 7% and 10%. There are many otherwise intelligent people whose 529's are invested more aggressively, and their losses will be greater. </p>
<p>Most college parents are in at least their late 40's, many are older and looking at retirement in 10 -12 years. A nearly large drop in a 401K - and the market is down almost 40% from it's high of 14,000 to a current 8,700ish - will take MANY years to recover from, even in a normal/good market.
A previous poster said people's retirements will be ok in 5 years - sorry, no. If an account drops 40% this year, then goes up 40% next year, the net effect is still a 20% drop. And I don't see any super-rapid recovery in the near future. </p>
<p>We are among the people counting on home equity to fund a large part of our kid's college. Lucky for us, home prices in our area are only down about 10%, and we bought our house 15 years ago and didn't re-finance, so we have a lot of equity, but many others weren't as fortunate or frugal.</p>
<p>I expect applications at state schools to go thru the roof. I expect the deeply rich top schools (HYP) will be relatively unaffected. I expect the mid-range privates without deep pockets to increase financial aid to be looking at tough times, if things don't turn around in a year or two. I expect donations to all non-profits, including colleges, to drop and people feel scared and hold onto what cash they have. </p>
<p>Interesting projection about the non-return rates for freshman to sophomores.... I hadn't thought of that but I bet that rate will indeed rise, especially at the expensive privates.</p>
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and the market is down almost 40% from it's high of 14,000 to a current 8,700ish - will take MANY years to recover from, even in a normal/good market.
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<p>The market needs to gain 75-80% to get back to the previous level. Pretty daunting isn't it?</p>
<p>well, today we are facing 7500, and it looks it is not going back to normal any time soon.
I talked to a few college admission officers and did not get any additional information from them.
Eather they have no clue what is going on or they don't want to share any information.
Most college that we visited have need blind decision. Looks like we are going to have very interesting April...</p>