Hi all, i am wondering how middle class families paying for college? We have one smart kid who currently in middle school. Our State schools are great cost of attending is about 25k which we can afford but what if he wants to try the Ivy League at 70k/year? Do we even allow him to apply and if he miraculously get in we can only help him half way? We wont be eligible in any of base need and FAFSA. Thank you for input.
Run the Net Price Calculator, projecting the situation the year of your son’s college application, with each of Ivy League schools that you and your son are interested in. Depending on your income, investments and assets, family size, number of siblings in college, home equity (Harvard and Princeton don’t consider this), etc., your affordability can fluctuate quite a bit. For “middle income” families (don’t know what your definition of “middle income” is), you could very well end up paying less than the in-state schools.
Here is the bottom line on how parents and students are expected to pay for college: past, present and future earnings.
When a baby is born, once upon a time, parents would start a college savings account. . A piggy bank for coins, a safety box for Savings bonds and cards that accompanied gifts of money. As the kid grew bigger, so did the balances. Some parents these days stash money in 529s as well as 401ks. This is past earnings.
When the kid goes to college, most households tighten the proverbial belt because of the additional costs that ensue Maybe a parent takes on an extra job., goes back to work, finds a home business to bring in extra. Kid might be working summers and school year to pay some of the school costs. By the way, colleges do expect students to take on some of the costs. They include that in their financial aid packages. That’s where present earnings come into play
Then there are loans. Kids get an automatic $5500 in Direct loan possibilities freshman year. Total of $27k over 4 years regardless of whether they get financial aid from the school. Parents Have the PLUS . Program that can stretch out each year’s costs over 10-20 years. Also other loan options available.
For those who qualify for financial aid, there is that. For those kids who get merit awards, that can bring down costs. Also, going for lower sticker price schools brings down college costs. Commuting to school is a viable option, for some, for example, one I see used a lot these days in my neck of the woods. .
As to how to start the process, find out how much you, as a family, are expected to pay for colleges at various schools. You are way early, but to get an idea how much you’d be expected to pay for college in the 2020 school year, pull out your 2018 income tax returns so you can use those AGI figures which are relevant, and fill out some NPCs for a number of schools. What does your state flagship expect you to pay right now? What does Harvard expect? How about Hardwick College? Or Haverford? Fordhsm University? An Out of State public that interests you? Your spouse’s and your alma maters?
That would tell you what you’d be facing in costs if you had a high school senior applying to colleges this year.
I did run the Net Price Calculator most are projected us to pay anywhere from 75,000-100,000 /year.
If you are truly middle class you might qualify for financial aid. When you have more than one kid in college at the same time they take that into account. Our kids got some outside scholarships, some financial aid and we paid the rest. Ways to save money include not letting them have a car on campus, living in a sorority/fraternity house, etc… We tightened our belts and didn’t go on expensive vacations, didn’t buy new cars, rarely went out to dinner, etc…
Put away as much as you can now. Make it a habit like any other bill. You can do this without sacrificing too much. You’ll amass a pretty decent number. Based on academics and ECs, your kid may get some decent merit money at really good schools. Add that to your savings and you may have some interesting options outside of your state schools if that is of interest.
I don’t know how you could end up with the NPC results of “75,000-100,000 /year.” In fact, it’s not even possible to get the NPC result of $100,000/year considering that no colleges, whether Ivy or not, have that kind of price tag per year. Also, in order to come up with full pay, you’d have to earn upwards of $250,000 and with sizable assets or less than $250,000 but with lots of assets, investments and home equity. That’s hardly a “middle income.”
- If you really can’t afford a $70,000 college, then you can’t afford a $70,000 college.
- Your kid is a middle school student...not going to college for 4 or more years. Sure, you could run net price calculators, but these will be very very rough estimates of possible aid 4 years from now. These calculators and the school formulas, and the policies for awarding need based aid and merit aid change annually. What you get now might very well have no relationship to reality when your kid actually applies to college.
- Tell us what you think “middle class” means in terms of annual income, and assets.
- Your kid doesn’t have one high school grade yet. There is no way to even predict what colleges he will or won’t be a strong candidate for in terms of acceptance.
- I agree...save. Save now. If you think you can contribute $2000 a month towards college costs, put that in a dedicated savings starting this month. Do it for at least 6 months...and decide it you think it’s sustainable for four years of college.
Oh…and if this savings plan seems to work…then continue to do it. In four years, you will have about $100,000 in college savings which would be great for one kid.
- How many kids do you have to consider? If there are younger siblings, don’t forget about them.
- How do you know you won’t be eligible for any need based aid? Is your income that high?
Here is a possible scenario, all the top schools look at FAFSA and CSS, some times they have their own version in addition to the two, if you have too many assets or have a big 529, you are not going to get any need base aid.
I, for example, had an EFC of around 40K, but css showed a large 529 and other assets, so we have to pay full COA, the only thing we could do is loans if we really need it.
Don’t overlook colleges that offer strong merit awards. But please understand that doing welll in middle school is a far cry from the challenges of high school. Plus, what it takes to get into top colleges is A LOT more than grades and a few school activities.
The best plan may be to get him aware of the great opportunities at a range of colleges. Sometimes, that’s just talking about them. Let him experience some events on campus at your state school, whether a football game or some other happening. It demystified things for my kids and made them aware there’s lots more to college than classes.
- How do you know you won’t be eligible for any need based aid? Is your income that high? Yes. We wanted to retire early.
- How many kids do you have to consider? If there are younger siblings, don’t forget about them. 1
- I agree...save. Save now. If you think you can contribute $2000 a month towards college costs, put that in a dedicated savings starting this month. Do it for at least 6 months...and decide it you think it’s sustainable for four years of college.
Oh…and if this savings plan seems to work…then continue to do it. In four years, you will have about $100,000 in college savings which would be great for one kid.
We have been saving the day he was born into 529 we have Significant amount in it but at current point price in private school it would only pay for 2 years.
- Your kid doesn’t have one high school grade yet. There is no way to even predict what colleges he will or won’t be a strong candidate for in terms of acceptance.
You are right, as for now we treat state schools as a fall back place to go. We would like him to go toward to private ones since the chance of graduating with 4 years s higher than state schools.
- Tell us what you think “middle class” means in terms of annual income, and assets.
Less than 300k , 800k assets?
Our family’s strategy with an EFC of $60K for 1 in college and a little over $30K for 2 in college.
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We did not plan to depend on Federal aid, State aid or merit to fund our son’s college. Started a College savings plan when they were born.
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Birthday money from family and Grandparents went into this fund along with an automatic contribution each month. First, we started of small but each time either my husband and I got a raise at work, we would contribute more to the college savings plan and our retirement so our spending remained in check.
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We are not extravagant individuals and we did take some nice vacations but nothing over the top. The boys loved camping so many years were spent on good family fun with a minimal expense.
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Both son’s were given a budget based on what we had saved and any additional we could contribute from our current earnings or savings.
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If they wanted a school more expensive than the budget, they needed to find merit aid and work to make up the difference.
In the end, both son’s chose states schools where their 4 years Undergrad was covered by the 529 plan.
Both came out with no debt which gave them the freedom to accept jobs that were in their field of study but may not initially pay well at the beginning.
Older son now working with good benefits after 2 years in his field doing many temporary/seasonal positions but accumulating much needed experience.
Younger son was able to get a good paying job right out of college and doing well a year later.
@artloversplus please don’t mislead this poster. Your 529 accounts were counted as parent assets in the FAFSA formula as well. Most “other assets” are also counted on the FAFSA with the exception of the primary residence (your kid went to a school that only uses the FAFSA now…although maybe that was not the case when she was an undergrad).
If your family income is close to $300,000, you won’t be receiving need based aid no matter how small your assets are.
$800,000 in assets? Is this just regular savings, or what? If you pay off your car and house to the tune of $65,000 or so…this really isn’t going to make a dent in your financial aid picture if this $800,000 is regular assets. Plus, like I said, your home equity is possibly going to matter at some colleges.
With regard to graduating in four years…a lot depends on your kid…and not the college. If your kid keeps on track, and doesn’t lose credits anywhere along the way, the kid will graduate in four years. Many, many graduate in four years from public universities. Many.
Please don’t treat your public instate universities like “fall backs”. They are likely excellent options.
What state?
We were in your shoes with two kids in college now. 529 plans since age 6 but we put us first and put a decent amount in retirement plans. We own our own business.
So kids got combo of merit, financial aid since we have two in college and current income.
You might also need to stop putting money into retirement and concentrate on your child to build up that half amount quicker. That’s pretty much what we did and it seems to be working. We also only had like half in a 529 plan.
But I gotta tell you when my daughter got half merit when she switched Lacs that “extra” money is going to him that we were going to use for her. Plus kids can get scholarships but DON’T count on that. That is just the cherry on top if it happens.
As far as which schools he should go to. Start talking about that now and about school costs. Don’t say “we will worry about costs later”. Give realistic expectations now. If you can’t afford $70 000/year for college then join the club. Many other great schools that don’t cost that much. Ivys are just a few schools out of thousands.
Don’t want to sound unsympathertic, but I guess I am, unless you can tell us of some crazy medical expenses that you need to pay. I almost choked. I do know that there are high cost of living areas. However, I can’t imagine why a one-child family with approximately a $300,000 income and $800,000 in assets would expect their child’s elite education to be subsidized by others. Even if you do want to retire early.
Our income and assets are quite a bit less but I’m still proud that we will be able, if necessary, to send our daughter to college full-price if she doesn’t get merit aid. We will likely be full-pay (living on a modest professor’s salary) because of inheritance from frugal parents and a paid-off mortgage. And feel very fortunate and grateful to be in that position.
You have two years of college costs saved up? Fantastic! Surely, on a 300,000 income and those assets you can squeeze out up to 140,000 more for an elite education, and if not, the state schools are perfectly fine. Just working a few months longer than you pIanned would make up that $140,000 difference. I think sparse financial aid dollars really should go to those people stretching a true working class/middle class salary.
- Get substantial merit/talent scholarship. 2. Live at home. 3. Use current income to make monthly payments on college payment plan.
Live on only $200K a year and save $100 a year over the next 6 years. Then when they are in college you still live on $200K a year and use the rest to pay tuition (along with what you saved).
Don’t retire until your kids are done with college. That should help you cash flow during those big money years!
Taxes make 300k into less.
But let’s make this clear. No matter what you want that you cannot afford, 300k income and 800k in assets is not “middle class.” It’s pressing the bottom of the top 1%.
Monies in “Qualified Retriement Plans” are not considered when counting assets. Has to be a QRP, not self-designated.
For the record, some formulas do consider the age of the older parent, how close to retirement. But that income is above even Harvard’s cutoff.