How did you decide who pays for college and to what extent?

Parents Forum
61

<p>H and I have set aside about 15% of our gross (not net) income for our two kids’ college ever since the kids started elementary school. We didn’t add on to the house or install a pool or take cruises or buy new cars. We bought used cars and saved for college. We’ve lived in the same house for 17 years and haven’t increased our first mortgage balance when refinancing for a lower rate.</p>

<p>When the kids start college, we pull money out of their college savings. When that runs out, we have a home equity loan.</p>

<p>S is at an expensive LAC, we were able to pay over 70% of his college bills before turning to the Home Equity Loan (the first 5 semesters plus most of 6th semester). D will start at a mid-priced college this fall, we have enough saved to pay about 85 - 90% of it. </p>

<p>We had automatic payments going monthly to their 529 plans, when S’s 529 savings ran out and we took out the HELOC, we just switched that automatic payment from going to the 529 to going to the HELOC. Same will happen for D. Zero change in our cash flow.</p>

<p>However, this all worked because throughout all the years no one got laid off, we had no major medical expenses etc.</p>

62

<p>My H and I enjoyed very much of our DINK (dual income no kids) life for many years. We traveled, bought a lot of designer clothes and bags, and went out to a lot dinners. Once we had kids, it was all about them. We decided to spend all of our disposable income on them. We have friends who decided it was better to put their money in a trust fund for their kids. We thought the best way to do it was to spend it on their education. We probably could have had a bigger nest egg if we didn’t commit to pay for thier private education. My H and I both feel it is our responsibility to provide our kids with the best education we could afford. In turn, both of kids understand importance of education, and they put a lot of effort into it. </p>

<p>I don’t think money spent on education is a waste. But I would never want my kids to go into a huge debt for it.</p>

63

<p>

IIRC, you mentioned that the last overseas trip you took, a lovely european business trip to Italy and Germany, included meals/wine on the sales dept budget. What about all those $200-300 meals you’ve talked about before? Those also on someone else’s budget? Doubtful that the brand new car, the camera gear, the island vacation, the bicycle ( soon to be purchased), the kids trips abroad were all paid for by someone other than you. If so, I want them to adopt me. If not, please have the courtesy to answer Thumper’s questions. Nobody can walk in your shoes because you don’t tell them what they are walking in.</p>

64

<p>Like Oldfort, we made a commitment to education for our children. When we built our house many years ago, we chose a town noted for its fine school district, particularly in the areas of interest to our kiddos. We were fortunate to be able to provide opportunities to enrich them outside of school as well. Once they started college, all “discretionary” income went away…and was instead diverted to college costs. In addition, both of the parents in this family work and one income was solely (and completely) used for college expenses. During the college years…no cars, no fancy dinners out frequently, no remodels in the house, no big vacations, no unneeded discretionary spending. </p>

<p>Our funding model was this and in this order:</p>

<ol>
<li>Parent funding</li>
</ol>

<p>Minus
2. Merit aid
3. Stafford loans
4. Jobs kids had for their discretionary spending including clothes and books.
5. Earnings from kiddos’ summer jobs again for books and clothes.</p>

<p>And if the kids hadn’t gotten merit aid, we were prepared to pay the full price for tuition room board.</p>

65

<p>Couldn’t break the wok here. Too many mouths to feed. True that H is fed by business lunches, dinners more often than most, but with 5 kids and 2 grandmoms, that amounts to a drop in the bucket. </p>

<p>It’s wonderful to have the money to send your kids to whatever college they want. If they get generous merit money or if the financial aid works out well, congratulations. I do envy you that. Folks who end up in that situation don’t need to worry about how to pay for college. It also isn’t useful to tell those who aren’t so lucky about your windfall. It’s too late to teach someone how to swim when s/he is drowning. At this point, a rescue is needed and the options are limited to that end.</p>

<p>But even those in that category, do the same thing: past, present and future income of the parents and kids, along with whatever financial aid, merit awards, tuition discounts. The past funds are from savings and investments, the present is from current jobs and other income and the future in terms of work commitments and loans. That is what we did in varying proportions.</p>

66

<p>Lafalum,</p>

<p>You are fortunate to have never faced a layoff or big medical expenses. During these past several years we have provided personal and financial support for my aging father, and my H and older s both dealt with job loss due to their employers becoming victims of the economy. Fortunately everyone is now employed (DS starts officially in a week or so). Job loss is definitely no fun. </p>

<p>We did exhaust the $ we had allocated/earmarked in savings for older s’s college, as the merit scholarships he received were modest. He also got a number of outside scholarships, but they were not renewable. We made cutbacks, I worked harder (we are a 2 income family) and we managed just fine. </p>

<p>Fortunately DH’s job loss happened during younger s’s schooling. Older s’s was all paid for. Younger s was fortunate to get nice merit aid, so we will have $$ left from his college fund for med/grad/professional school. </p>

<p>We have a relative who is a major moocher. He doesn’t manage his money sell- he spends money on needless “toys” for himself (Ipad, motorcycle, travel, you name it) and then looks to others to help him out financially because, even though he makes more than 6 figures, he always manages to be short on money and in need of other family members paying for his extravagances. Oh, and one of his 3 kids is a special needs young adult. Has he saved money for his care/needs? No. He will surely expect us to “contribute” to his “need”. This to me is unacceptable. People like him need to learn to live within their means and manage money appropriately. They do not need to whine about having no money and then brag about their latest unnecessary purchases.</p>

67

<p>Oh, Jym, it seems that every family has some of those stinkbugs.</p>

68

<p>Am I too late to jump in? The two kids have a combination of UTMA, UGMA, 529, & Virginia Prepaids. Our best decision ever was to <strong>live on one salary</strong> and bank the other in the years we had it. Our second best decision was for H to stay in the Navy 20+ years as the retirement check is now a nice supplement for the college funding. (He retired before the current “family share” VA college benefit). </p>

<p>Paychecks go to Savings accounts and then funds are transferred to checking account as needed. All refunds, expenses account checks, rebates, insurance reimbursements, Flex reimbursements, bonuses, and extra paychecks (those months with three) go to savings and long term investments.</p>

<p>We have saved and spent for a rainy day. We had thousands of dollars of unreimbursed medical expenses – that eventually yielded our two healthy kids. You can read between the lines on that. We have done some remodeling (no remaining bills), but we have only purchased two “new” cars in 26 years of marriage. While we travel a good deal for sports, we tend to eat at burger joints, and we always bring food along. This week we’re planning to go out for a very late “report card dinner” (3rd and 4th quarters combined!)–which will probably be about $100. While I took our daughter on a special graduation trip, there will be no family vacation this summer.</p>

<p>Our plan is to pay tuition from savings and use current funds for room-and-board. Daughter is responsible for her own spending money – and will take her own loans for any international study.</p>

<p>H had been ROTC at a well known university, and I was very fortunate to have my parents be able to fully pay my college education. We knew that was a terrific financial advantage from the start, and H and I began a joint savings program before we were married.</p>

69

<p>I have a hard time with parents who decide not to pay for their kids college tuition because they would rather spend it on themselves. Their excuse is they paid for their own college education, why shouldn’t their kids. The problem is the cost is so high now, there is no way for a young kid to do it on his own. I am in the camp of parents should do as much as they can, but I don’t believe parents should bankrupt themselves for their kid’s dream school.(plain leather bag is just as functional as a Prada bag)</p>

70

<p>DH’s parents paid everything for his education (Rose Hulman, private engineering undergrad school). He was an only child, they had him later in life, they were in a position to do it. He then went to work as an enginner for 18 months, went to Purdue for his Master’s (using money he’d earned and with the blessings of “work”), where he went back after finishing his Master’s. Then worked for another year and went back to Purdue for his Ph.D. (paid for by Purdue). </p>

<p>I went to a small state university (one of 3 children), and parents paid first 2 years. Anything spent outside of meal plan was on my own. Then they had me declare independency, took me off their taxes, and i did student loans, academic aid, and work to pay the remaining 2 years, with the discussion that Dad would pay back the loans for me. He “forgot” that promise, and my husband I paid back the loans w/o much hardship so I never called Dad on it.</p>

<p>I went to grad school at Purdue, who also paid my way … and met H. :)</p>

<p>Fast forward: We are paying for two kids in state schools at the moment. S is a senior and D’s a sophomore. She has more merit aid then he did. Both had opportunity to go OOS for undergrad, but we discussed ultimate plans with them, i.e. did they expect this to be their entire education. Both said no. S hasn’t wavered from goal of law school, and D’s deciding between a Ph.D. in chemical engineering or med school. So, we informed them if they stayed in-state keeping costs down (we have bright futures academic scholarship here in FL, which pays a portion of tuition), that we could help them graduate with no loans for their undergrad and financial help for post grad. We will be sitting down with S soon, as he’ll be applying to law schools … and we’ve decided that we can probably foot an instate tuition for law school, which he can apply that amount to any OOS schools he might want and take out loans for the remainder.</p>

<p>We will be telling D the same with med school. And, if she goes to grad school, we expect that the school she’ll go to will pick up her tuition/room/board (for her working as an engineering research assistant or T.A.) and we’ll subsidize so she doesn’t have to live quite so frugally as she might otherwise.</p>

<p>Both kids understand that everything is not necessarily “equitable.” Both kids have huge burdens to be frugal as possible with our money, thank goodness. I’ve watched them both when I’m in a “buying mood” and out with them and they’re like, “nah, Mom, wait a couple of months it’ll go on sale or I’ll watch online for a better price.” And they both understand this is a blessing in terms of how they are probably going to not have too much debt. Shoot … S is an economics major, he totally gets it when it comes to understanding how overwhelming too much debt can be. In fact, S has been employed since his freshman year, the past two years full time in work related to the type of law he’d like to practice. He knew he didn’t have to work to that degree, but it’s important for him to do so … he sees it as an investment for his future, and he’s banked most of it for living expenses while in law school. </p>

<p>zebes</p>

71

<p>cptofthehouse,
Stinkbugs. LOL- great term. I will remember that. Amazing how so many of us have these relatives who think our hard-earned income is meant to subsidize their frivolous lifestyle. When my kids were wearing hand-me downs, theirs were always in the newest fashions.</p>

<p>oldfort-
Totally agree that parents should not bankrupt themselves to pay for a kids education. They shouldn’t bankrupt themselves for <em>any</em> expense-- after all, isn’t that how this country got into the real estate debaucle it is now in? I also agree that expecting a student to fund college on their own, short of the student getting a full ride/military appointment/ ROTC scholarship is really setting up that student for a lifetime of financial challenge. Personally, I consider educating my kids not only my responsibility, but an investment in their future and hopefully their independence and success. As they like to remind me, they will be picking out my nursing home :slight_smile: I cannot understand parents who spend their money on themselves more than on their kids. Seems so selfish. As you said earlier, its fine to spend on yourself when you have no kids, but when the kids are born, priorities shift.</p>

<p>zebes and mom22039,</p>

<p>Great stories. Good financial planning, and educating our kids about food fiscal management is important from the get-go. My H did not want to take $ from his parents for college, so went on a ROTC scholarship. Moocher sibling (the moocher stinkbug described above) took from his parents AND my H when they lived together off campus. DH cooked and cleaned-- sibling bought expensive leather goods for himself. :rolleyes:</p>

72

<p>^^^
I think you need an “exterminator” for the stinkbug. ;)</p>

<p>zebes</p>

73

<p>jym, I hope you and your family never, ever, contribute a dime to the major moocher. Now that you are certain of what he is…I hope you have completely prepared yourself to always say NO!</p>

74

<p>LOL, zebes! And busdriver-- this has been an ongoing issue. Right now he isn’t asking for $$, but it is a matter of time. And if something happened to him, his wife isnt working and claims she can’t, so they will have no $$ for the family (only 1 of the 3 kids will likely ever be independent and self- sustaining). Heaven help us if that happens…</p>

75

<p>jym626, yes we were fortunate not to have a layoff or big medical expenses. </p>

<p>Two years ago, 1/2 of H’s department was laid off, along with his boss’s boss. H survived, we don’t know how or why he was kept while others were not. </p>

<p>We have a group we get together with periodically, all couples who are parents of S’s friends. H is the only husband in that group who hasn’t been laid off in the past 3 years (One of the Hs is a Harvard educated lawyer with 20+ years at his company. Layoffs can happen to anyone). Our next door neighbor is 9 months into a layoff, and his wife told me they have already had to burn thru a lot of their savings. </p>

<p>So yes, I know that we were fortunate to be able to keep our savings plan on track. There are a lot of people who have been thrown financial curveballs in the past decade. </p>

<p>OTOH, there are a lot of people with big houses and pools and new cars and cruise vacations telling their kids they can only go to a state univ, or to a school that gives them a ton of merit money, because the parents “can’t afford it.” D has a few friends in that group. In my opinion, it’s not that they CAN’T afford it, it’s that they WON’T pay for it. Now we can argue till we’re blue in the face whether certain private colleges are worth paying 2 - 3 times as much as state universities, but the fact is that these parents have made it clear that they place more importance on living a certain lifestyle than on spending huge bucks for a private college education. Good or bad, I’m NOT judging - but I do believe it is misleading to tell a kid you “can’t” afford something when the truth is that you choose not to pay for it because there is a cheaper option.</p>

76

<p>We are paying tuition, room, board and fees for both kids through private colleges. We can only do so because of some need-based FA.</p>

<p>I was prepared to downsize to send them to college, but it didn’t come to that.</p>

<p>I always said I would not pay for a school with lesser academic chops that our best state school, but later on when the kids came of college age I saw that “fit” was important. I don’t think either kid would have done well at SUNY Binghamton, especially S academically but D socially.</p>

<p>Both did achieve Ivy-level schools but that stopped being important to me.</p>

<p>Each earned all his/her spending money.</p>

<p>I gave each a car (old, cheap car) and paid insurance and provided minimal support for D’s gap year because there is just no work here. She moved to Atlanta and basically supported herself but needed help.</p>

<p>We paid for law school app’s, basic start up costs for new apartment but she will pay rent/tuition from loans. She works for my H’s business for food/spending money.</p>

<p>She chose a public law school to keep costs down. H and I will split those loans with her if we’re able. I can’t predict that yet.</p>

<p>How did we decide? This is what I wanted to do. H’s parents paid for his education. Mine were pills with plenty of money. They paid, but complained so much that I funded my UG with scholarships and OVR (I have significant health problems.) I went to a fully funded PhD program with no out of pocket costs.</p>

77

<p>Lafalum,
The last paragraph of your post #75 is SPOT ON. That is EXACTLY what fries my cookies.</p>

78

<p>Thanks, jym. I fully expected to be flamed when I wrote it! :p</p>

79

<p>Well, as far as I am concerned, your post deserves a sticky! I just don’t get people who seem to be extravagant with (IMO) unimportant things, but chintzy with important things (like kids and education). BTW, my h’s layoff happened in the middle of our big kitchen/bath remodel. Thank heavens I’d saved up the $ for that, so it didn’t really affect the cashflow for the project from h*ll, and DH was here to oversee the *($&#^%@ contractor. I guess things happen for a reason.</p>

80

<p>Ironically, someone sent me a list of “Zen Teachings” today. I found this one particularly timely:
“Before you criticize someone, you should walk a mile in their shoes.<br>
That way, when you criticize them, you’re a mile away and you have their shoes.”</p>