<p>^^ are you serious ?
It’s the most bizarre reason for parent not to take on children’s education debt.
By the way, Direct Parent PLUS loan do get discharged in case of parent OR student death.</p>
<p>As a parent, I think that it is my responsibility to provide an education for the children that we bring into the world. If my kids don’t want to take the money, then it is their option.</p>
<p>Hopefully they are paying off an education that everyone profits from.</p>
<p>How much education, BCEagle? Are there any limits on your responsibility? $200K for an Ivy? The cost of undergrad plus medical school, vet school, law school? </p>
<p>If there are limits on what you see as your responsibility, then we are not far apart in our thinking – then the only matter is where one sets the limit.</p>
<p>We saved up $250K per child for college. At the moment, we’re able to mostly pay for college out of current income but that’s mainly because our son chose a very inexpensive university.</p>
<p>We chose the “skin in the game” route, not because we were parsimonious but in order to promote our DS’s journey toward being a mature and responsible adult.</p>
<p>So far it has turned out wonderfully. He graduated college with honors, been accepted into a good grad program, moved to SoCal and setting up his first apartment. Our graduation gift-$1500 to buy apartment furnishings.</p>
<p>He is doing college Broyhill-that would be Ikea.</p>
<p>BCEagle, the question was whether there are limits on your responsibility. You realize, I’m sure, that most people cannot possibly save up $250K/child, right?</p>
<p>If you have a limit, then I repeat: the difference is then where one sets the limit. If you have a kid who wants to go through a PhD program and then on to a JD and MD, is it your responsibility to pay for all of it? If your income dropped and you lost all your money – unlikely, I’m sure – would it still be your responsibility to pay $200K for an Ivy education, and would you borrow that much, assuming you could with the drop in income, to meet that responsibility?</p>
<p>originaloog, I’m a “skin in the game” person, too, because I would hope I’d raise my son to want to take that kind of responsibility, to not totally rely on his parents. IMHO, kids should want to take on adult responsibilities as they become adults, and being responsible for part of the cost of their education is part of that.</p>
<p>And lol on “college Broyhill”! </p>
<p>(I will not mention where nearly all the furniture I’ve purchased as an adult has come from… :D)</p>
<p>Our bookcases have all come from “college Broyhill” – until we took a plunge last year and bought a bookcase from Costco!!! Of course, we have so many bookcases (including in bathrooms) that this is a considerable investment… ;)</p>
<p>We told the kids long ago that our FA plan does not include a) a vehicle and b) grad school. Do well enough to find funding, or work for a few years until you decide grad school is worth your time and $$. If S2 were to take a major/full ride someplace, we might reconsider the car. (But we’d be heading to Carmax, not the Beemer dealership.) </p>
<p>We got S2 a yellow Corvette for his 16th birthday. Took it to school, told all his friends, then pulled the little matchbox car out of his pocket. Fooled many of them – there are kids at his school who do get spiffy vehicles for birthdays.</p>
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<p>Color me stunned. Is there any parent here who really would consider loan dischargement upon their child’s death as part of the calculus of figuring out what they can pay for college? I can’t think of anything less likely to influence our decisions about paying for our children’s education. </p>
<p>One of my brothers died an untimely death, shortly after his college graduation. No one “profited” from his college education. I suppose by this logic my family can consider itself fortunate that he didn’t attend an expensive private school, and that the debts he did incur for his education died with him. Not to mention that not having to pay any outstanding school loans really eased my parents’ grief.</p>
<p>Life insurance is what takes care of the debts of young people, and can take care of the debts of older people. It’s only so much easier on families that most of educational loan programs discharge the debts if the debtor dies.</p>
<p>^ The insurance feature was part of the decision to enroll in a high cost education, just as the deduction for the interest on education loans was a feature in financing the college expenses. The risk for death before the loans are paid is apparently low enough to offer this feature but high enough to be a concern. S consolidate loans are for 15 years (Stafford) and 25 years (PLUS) with the parents at 56 and 59.</p>
<p>The college financing algorithm is not an easy as buying a house or car. We were a 100 EFC family with the total expenses for undergrad ~$160K (2002-06). How much to allocate the college savings, current income, loans, future earning power of S and parents, return on investment, taxes, retirement, elderly parents (high 80’s), and S future career and establishment of residence, are all part of the changing problem.</p>
<p>“BCEagle, the question was whether there are limits on your responsibility. You realize, I’m sure, that most people cannot possibly save up $250K/child, right?”</p>
<p>I would agree with others that a bachelors degree is enough today. I really don’t earn that much (at least compared to some of the parents mentioned on this board) but we’ve been very frugal and I’ve been very lucky in the stock market.</p>
<p>As to whether $250K/child is a lot: add up what a professional adult or couple earns over 20 years of time and run it through a spreadsheet with interest compounded. Nice cars, nice houses, vacations, etc. that detract from savings can be worth a lot over time. I wouldn’t expect those below the professional class to be able to save this much without help from extended family, a company that is very generous with stock options, employee stock or bonuses or hitting the lottery.</p>
<p>“If you have a limit, then I repeat: the difference is then where one sets the limit. If you have a kid who wants to go through a PhD program and then on to a JD and MD, is it your responsibility to pay for all of it? If your income dropped and you lost all your money – unlikely, I’m sure – would it still be your responsibility to pay $200K for an Ivy education, and would you borrow that much, assuming you could with the drop in income, to meet that responsibility?”</p>
<p>I think that a parent should provide for a bachelors as that gets the student into the bottom rung of professional careers. I’ve talked to others that said that they would pay for a state education and that the kids could pay the rest with loans and others that will just write a check for the whole thing (for state schools and max-price ivies).</p>
<p>We’re not at the point of dealing with graduate school though our son will finish his undergrad at age 20 so he’s reducing the costs by getting done quickly. He’s basically learned to be as cheap as his parents are.</p>
<p>I’ve talked to other engineers about the importance of learning money management, markets, economic cycles, etc. and teaching your kids so that they are able to manage assets so that they can grow their own assets once they start getting a paycheck. Or so that they can manage household assets should one or both parents die.</p>
<p>Even with a professional salary, $250K/child in a college fund is not usual nor possible for many, even those who live frugally. You got lucky, which is great! Had you not been lucky, would you have still seen it as your responsibility to pay for an undergrad degree? Would you have borrowed money to pay for it?</p>
<p>I definitely have limits as to how much I 1.) can do; and 2.) want to do. I don’t think it’s my responsibility to fund the entire ride. I hope my son will want to take some responsibility for it; that means, to me, he’s growing into adulthood mentally AND physically.</p>
<p>“Even with a professional salary, $250K/child in a college fund is not usual nor possible for many, even those who live frugally.”</p>
<p>Let’s say a household makes $10,000/month, and saves $4,000 a month and gets a return of 8% a year. At the end of 20 years, they will have over $2.3 million. At a 6% return, they’d have about $1.8 million. With two kids, either scenario would leave a nice chunk of change for retirement too. Note that these figures are before taxes. The first example would be only $1.4 million if taxes are taken out annually.</p>
<p>“You got lucky, which is great! Had you not been lucky, would you have still seen it as your responsibility to pay for an undergrad degree? Would you have borrowed money to pay for it?”</p>
<p>I would still see it as my responsibility to pay but probably would have steered the kids to state schools. I think that I would have looked for resources within extended family before borrowing money. I did spend a lot of time learning about investing, finance, economics and trading on my own and I think that part of an education should involve learning how to navigate the rough financial waters.</p>
<p>I had our son read Technical Analysis of the Financial Markets when he was in his early teens and gave him access to one of my trading accounts and $20K to play with (supervised). We’ve also talked economics and finance at the dinner table for many years. Our daughter hasn’t taken an interest but I would like both of them to be able to manage household income and assets. In fact I’d like them to take it over so that I could do other things.</p>
<p>If they see you managing resources responsibly, they will most likely want to emulate your practices when they are older.</p>
<p>I definitely have limits as to how much I 1.) can do; and 2.) want to do. I don’t think it’s my responsibility to fund the entire ride. I hope my son will want to take some responsibility for it; that means, to me, he’s growing into adulthood mentally AND physically.</p>
<p><<10,000/month, and saves $4,000 a month >></p>
<p>but the people who are making that are in the top percentage of all wage earners. Way more are like me, clearing 3K a month (after taxes and retirement savings and health care premiums). yet I still pay my efc of 12K out of savings. Wanna see my 17 yo honda in the driveway :-)</p>
<p>I’d like to see a sample of US 4 person families earning $10,000 (even after taxes) and saving $4,000 per month. It would be very very small. About $5000/mo would go to house payments, taxes, insurance maintenance and utilities. Two cars $1000/mo. That’s it, out of money. More realistically they might save $1,000/mo.</p>
<p>“but the people who are making that are in the top percentage of all
wage earners. Way more are like me, clearing 3K a month (after taxes
and retirement savings and health care premiums). yet I still pay my
efc of 12K out of savings. Wanna see my 17 yo honda in the driveway”</p>
<p>I got 15% for households in the US from The Higher Ed Watch Blog.</p>
<p>Our current vehicle has 155,000 miles on it. We got rid of my previous
vehicle at 185,000 miles. And the one before that at 225,000 miles.</p>
<p>Even saving $1,000 a month at 8% returns comes out to almost $600,000
after 20 years.</p>
<p>“I’d like to see a sample of US 4 person families earning $10,000 (even
after taxes) and saving $4,000 per month. It would be very very
small. About $5000/mo would go to house payments, taxes, insurance
maintenance and utilities. Two cars $1000/mo. That’s it, out of
money. More realistically they might save $1,000/mo.”</p>
<p>Even saving $1,000 a month at 8% returns comes out to almost $600,000
after 20 years.</p>
<p>Just because it isn’t common practice doesn’t mean that it can’t be
done. One could rent a small apartment instead of buying property
(I’m sure that many that bought houses in California and Florida that
bought houses in the last four years probably wish that they had
rented). Or purchased way less house than they could afford. That
would decrease insurance, maintenance, taxes and utility. We manage to
get by on one vehicle. One friend I know buying a house picked a
property that’s next to public transportation so they will continue to
only need one vehicle. Their vehicle is already fuel-efficient.</p>
<p>If you want to see a lot of high and medium income people that live
on the cheap, visit the housing bubble blog.</p>
<p>Most people who bought houses in most areas prior to 2005 are doing just fine with their home values and have enjoyed very nice profits. The home I bought in Chicago in 1986 for $225,000 is now worth a conservative $700,000. My mother enjoyed a nice retirement because she bought her NJ home for $5,000 in 1955 and sold it for over $200,000 in 1989. Today that house is worth around $500,000.</p>
<p>What’s the point of having money if you can’t enjoy a nice home, cars, etc.?You can’t take it with you.</p>
<p>My family is very frugal and there is no way on $10K a month, we would save $4k a month. Why would somebody get rid of cars with 185k or 225k miles? We run them into the ground - 300K miles.</p>
<p>in 1991 I was making less than 15K. I didn’t break 40K until 2000, finally got to 60K in 2006. Not much room for saving 1K a month on that income. Yet I still saved about 60K. No, I don’t have a college degree. And I will happily spend my life savings making sure my son gets his.</p>
<p>Isn’t the US savings rate at something like a negative percentage??? </p>
<p>today was triple coupon day at the market, yippee!</p>
<p>“Most people who bought houses in most areas prior to 2005 are doing
just fine with their home values and have enjoyed very nice
profits. The home I bought in Chicago in 1986 for $225,000 is now
worth a conservative $700,000. My mother enjoyed a nice retirement
because she bought her NJ home for $5,000 in 1955 and sold it for over
$200,000 in 1989. Today that house is worth around $500,000.”</p>
<p>Summer 2005 was the peak of the bubble (not in all places). So as values
slide down, people on the upside of the bubble lose equity.</p>
<p>“What’s the point of having money if you can’t enjoy a nice home, cars,
etc.?You can’t take it with you.”</p>
<p>My home is adequate, requires little maintenance and I find it
comfortable. My car, while old with a lot of miles, runs just fine and
I don’t have to worry about driving to the seedy parts of town. There
are many people that enjoy making money just for the cerebral
enjoyment of making money. There are those with hobbies such as
sports, engineering, charities, etc. that don’t necessarily cost much.</p>
<p>“My family is very frugal and there is no way on $10K a month, we would
save $4k a month. Why would somebody get rid of cars with 185k or 225k
miles? We run them into the ground - 300K miles.”</p>
<p>My previous two cars were european cars with many bells and whistles
(the kind that break) and it got to the point where maintenance costs
were too high to justify keeping them. They were replaced with a
Toyota which has been about 95% trouble free. Certainly a car that
could last 300,000 miles. If I had it to do over again, I would have
picked something that had a much better track record on maintenance
costs. I also live in an area where salt eats cars over time. I didn’t
have a huge amoutn of corrosion on either car but that would be a
consideration for vehicles that don’t hold up that well here.</p>
<p>Good job on keeping your transporation expense down though.</p>