<p>As a parent who does not qualify for any financial aid and pays $50K for an overpriced A list school the stock market drop/crash is getting pretty scary. I feel sorry for the kids who are writing in asking about all these high price schools this week knowing that the reality of paying for them may be getting slimmer.
That doubles for my second and third child in private school.</p>
<p>Article in our paper today saying that the public schools have seen an influx of kids from the private due to inability to pay the tuition.</p>
<p>TenthTimeAround, keep your chin up.:) Investing in your child's education is the best way to spend that money. He/she will get proven rewards for a lifetime, which is something that even the best broker on Wall Street could never promise. When your child graduates in a few years, this recent stock market crash will be a distant memory, and h/she will be rewarded with a solid career.</p>
<p>And if not, just send him to law school.</p>
<p>Anyone facing the need for college funds should have moved out of equities a long time ago. </p>
<p>Just for example, I sold stock right after my D's junior year HS and parked it in a liquid place so I was sure to have the funds for college. </p>
<p>Yes, the market continued to bubble a few more years, but I slept a lot better, knowing I did not need to worry about each downturn, too. Even in up markets, there are days where things are down. </p>
<p>So do I have much sympathy? Only for those parents of HS seniors. Even for them, they should understand what diversification and risk management means.</p>
<p>But yes, it is scary!</p>
<p>I know a lot of scared parents of Juniors. It always takes alot longer to go back up than to go down. I think we would be pretty set in other-than-stocks $$ for year 1, but will look to be moving more out sooner than later. And not that we were going to use it for college, but the mortgage company cut the size of our home equity loan max in half. Yes we're happy we have any home equity, but had been keeping this open for emergencies.</p>
<p>jackie, I think some colleges were really counting on some percentage of parents to tap HELOCs for tuition. Now that is no longer possible. I think that PLUS loans will still be there for parents with good credit ratings. Some of those parents who would have thought twice about those, will now think 10x before taking those out. It is going to be interesting for the non-elite private schools. Many parents will be pushing for ccs, and 4 year instate schools (at least many more than would have been pushing for this last year).</p>
<p>My kids' 529 are set up for their ages (i.e. less risk as they get older), but Son's (he's a senior) still had 25% in stocks. I'm worried about that 25%. I'm even more worried about the account of my 10th grader, since a lot more was in stocks.</p>
<p>Thank goodness we were able to graduate one this year from college. And we won't have to start paying tuition until next year. If we have to make decisions based on finances, we'll still have the chance to do so next spring when final college decisions need to be made. I'm just glad that I only have the two kids.</p>
<p>newmassdad, it seems to me that you should also have sympathy for parents of high school juniors, who, if they were to follow in your footsteps, wouldn't yet have moved the college funds from equities into something else.</p>
<p>missypie, I have a 10th grader, too. If he follows the traditional path of four years of high school/four years of college immediately after, I'll be paying tuition in the summer/fall of 2014 for that fall's semester, and paying for spring, 2015 even later. There's still some time before all the funds will be needed!</p>
<p>missypie: it's ok to have 25% in equities for a freshman, it may recover in 3 years.</p>
<p>I see more kids taking gap years and doing service in Americorps. This batch of kids may take 5 years or more to finish the first degree.</p>
<p>Being self-employed we try to keep 6 months worth of savings in mutual funds, we rarely touch them, but they sure went down and I hope business doesn't tank so I can avoid touching them whilst they are down</p>
<p>owlice,</p>
<p>Parents of HS juniors are in an interesting position - they could have some time to financially recover from the decline. But yes, they should have started diversifying already. </p>
<p>This is a tough environment, no question, and hard to "win" in these circumstances. But winning should never have been the goal - preservation of capital should have been.</p>
<p>newmassdad, I have a high school Jr. Her assets are mostly in index funds. Yes she is somewhat diversified, but when 75% of her assets are tanking while the rest are underperforming, I am extremely worried. It would take absolutely phenomenal growth in the next two years (not going to happen IMO) for us to feel comfortable. Looks like we'll be paying the majority of any tuition out of pocket, despite saving for many years. That's the breaks when you invest in the stock market. BTW, the reason her funds are still concentrated in the market is because she still has at least 6 years before she graduates college and that is considered fairly long term for investments.</p>
<p>Her younger sister is currently even more aggressively invested, but since she has at least 6 years to recover before college even starts, I am not so worried.</p>
<p>Our retirement accounts have also been hit very hard and it is making me extremely nervous and less inclined to overextend myself for an expensive LAC when a perfectly good state school (which I can afford out of pocket) is available.</p>
<p>QM,</p>
<p>The timing of a move to safer (meaning less volatile) assets is no doubt the toughest investing decision folks must make. And it is greatly dependent on one's tolerance for risk. You sound like you're in a good position compared to many if you can afford out of pocket to any great degree. We managed by great scrimping to be in a similar position, BTW, where it turns out a good portion of D's expenses we paid out of current income. </p>
<p>Interestingly, even before the crash of the past few months, the actual returns from the stock market over the past 7 years have been pretty terrible, and greatly dependent on timing. Of course one could make money by buying just before the runup that started mid '06, and selling this summer before the drop, but who would have known in advance the timing of these events.</p>
<p>Conventional wisdom about stocks being the best inflation hedge is based on historic data that looks over very long time periods. But timing is everything, and the market has had long periods of essentially no growth, such as late '60s to early 80's.</p>
<p>Most people don't invest for college over 20+ years, so I'm not so sure the stock market is the place in any case, for such savings, but again, it depends on your risk tolerance. </p>
<p>In closing I will add: Retirement? You mean a mirage? Good thing I like my job and it is stable...</p>
<p>Not to get anybody too upset, but there is a big difference in your portfolios from the quarterly statements to today.</p>
<p>
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there is a big difference in your portfolios from the quarterly statements to today.
[/quote]
No kidding. I received a quarterly statement yesterday from my recent & tiny 403(b) that had a positive change in investments number. I'm sure that's gone and then some.</p>
<p>We have a freshman in college and a sophomore in HS. Their 529 accounts are invested in the automatic "years to college" investment. It goes from aggressive to conservative the closer they get to college. But my son (who is already in college) had his portfolio drop by almost 15% this month. This is money we can't afford to lose because he needs it soon. It just made me ill. I switched it into more conservative investments within the 529 plan for the time being, just to preserve the capital.</p>
<br>
<blockquote> <p>The timing of a move to safer (meaning less volatile) assets is no doubt the toughest investing decision folks must make. <<</p> </blockquote>
<br>
<p>The other wrinkle that comes into play when you have a junior is when to time stock (or other asset) sales so that it doesn't distort your income reportable for financial aid purposes. You don't want to sell assets from January of junior year to December of Senior year (especially exercising stock options that could count as ordinary income) unless you have to. </p>
<p>There are a lot of things to think about when deciding when to accumulate cash for college.</p>
<p>
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Anyone facing the need for college funds should have moved out of equities a long time ago.
[/quote]
</p>
<p>Exactly. These are indeed some scary times... but if all the money one intended to use to pay for a current or impending college bill is bound up in stocks then you just screwed up. It's not the market's fault. </p>
<p>Rule number one of investing (for retirement, education or anything else) is that as the date you need the money approaches you slowly but surely move more and more of the funds into 'safe' investments (generally bonds and money market funds). There's always some room for stocks in any portfolio, but if your kid is in high school (or in college now) then the vast majority of your money should have been out of the markets already long before things turned sour.</p>
<p>We are about as risk adverse as one can be. We saved for our kids' colleges...in a savings account. In a bank. Didn't make those big gains I assume people here had some acquaintance with. But we knew what we had, and what we didn't. Stocks go up, and they go down. I never liked that truth. </p>
<p>I guess I'm not a gambler!</p>