Parents, how do you pay for college ?

Parents Forum
21

Okay, so you now know that you aren’t going to get any aid except maybe at those schools that cost over $70k. How much are you willing and able to pay?

You have some 529s in place. That will cover some of the costs. How much are you willing to take out of your savings, how much can you tighten your daily living budget to pay out of current income towards college for the next several years?

Then the question comes about how much would you be comfortable borrowing? Borrowing is not terrible when you do so with a realistic plan for repayment and you can afford to do so.

We borrowed $45k each year for 4 years for my oldest. We did this because we had other kids in private schools, activities and some special needs that we wanted to continue. We also had had some exceptional expenses and were looking at high cash flow out of the house on some things we felt were important for the time and the future. We did not want to take money out of savings or retirement funds. We did not want to move to less expensive dwellings. It was decided that stretching $45k into a ten year commitment leveraged everything wanted to do even with interest involved. So we took out that PLUS (parent loan)and Son took out Direct Loan of $5500 and we immediately started paying both back on a ten year repayment plan. We did the same each year for four years and had about 10 years of payments on our end of the loan after 4th year. Student loan got repaid early.

Our second child got a scholarship and went in state, so he actually cost us less for college than he did while in high school.

We repaid the loan in full by the time the last kid started college, and struggled to pay his private college costs, and did so with some family help—all the older siblings, mine and his contributed, and he worked summers and during the year covering all his expenses—got free room and board his senior year.

We did not expect to get financial aid. It was our choice to live as we did and send our kids to private schools, expensive activities, and to colleges that were more expensive than need be. Every single one of my kids had low cost, some of them free college options. We CHOSE to go a more expensive route. We chose to live where we did.

So look for some. low cost options, state schools, merit money. It appears as though your student has some possibilities for good merit money. It may be the case that one kid or other needs more than the usual amount of money or attention. Things do happen where it’s good to have the funds to address such issues.

22

Saved before children, so smaller mortgage was paid off when oldest in middle school. Did not change lifestyle as income increased during the MS and HS years. We lived as if we made much less, completing our own home improvement projects and vehicle maintenance. We maxed 529 contributions until tuition payments started.

Our children have paid lab jobs during the school year and paid internships over the summer while living at home, rent free. They are responsible for food, books and other living expenses. That totals almost 9K according to the university budget costs.

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@thumper1
I am sorry if I am behind times, but are you sure 529 balance won’t affect aids? Let’s say the income is 100K but the kid has a 300K 529 (from grandparents), enough to pay all 4 years COA, do you think any school will grant aid to this scenario?

24

@inthegarden
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.

I do not expect any subsidies from other in fact well aware that we won’t get any help from any program out there. I just wondering what other parents do when they are too rich to get any help but too poor for the elite education.

25

529s owned by kids and parents are counted as parental assets by FAFSA and hit at 5.6% after asset protection allowance. How PROFILE treats them is up to the individual school and there are schools that do hit hard. Google CSS PROFILE and 529 to read up and ask each college using PROFILE on kid’s list how they treat 529 accounts in student’s name, owned by student, in student’s name , in other name , owned by parent.

Grandparents 529 should be googled and the rules and treatment of those handled carefully. They are not counted by FAFSA as assets. By PROFILE, they can be if in the student’s Name , though owned by Grandparents. Also, if there is any current intent to use those funds on behalf of the student as there is a direct question on PROFILE asking if student has other sources of college cost payment. Grandma is better off putting another name in that 529, and paying the last two years of college costs, because the FAFSA and PROFILE tend to be two years behind in income, Otherwise any payment from that 529 towards that student is considered untaxed student income and hit hard.

26

@BunnyWu, many parents too poor to afford an elite education don’t assume their child MUST get an elite education. Just like someone too poor to afford a Ferrari must not buy a Ferrari when a Honda will do. No one will die from the lack of an elite education.

If you feel poor enough to need help, then perhaps examine your choices.

Sorry, it’s hard for me to relate to your troubles. I live in an area where most working people struggle to send their children to the local community colleges and state directionals. Often, I feel embarrassed by our relative wealth, having a spouse with a tenured job, a steady income and a small home that will never be foreclosed. I tend not to even mention to most folks in my community that our daughter will likely attend a liberal arts college, because it is out of the realm of possibility for so many hard-working people I know. Being able to send their kids to the state flagship would be a big step up for them.

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“Our second child got a scholarship and went in state, so he actually cost us less for college than he did while in high school”.

Love this comment… Lol

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And, to answer your direct question, I think parents too rich for help and too poor to pay examine their priorities and tighten their belts if need be. Surely, an income of around $300,000 gives you a bit of wiggle room, even after taxes.

29

Yes, but it does reek of privilege. We did hamstring ourselves in terms of paying for college because we sent all of our kids to private schools.

We did get a return in cost with that by our second child.

30

Retiring early is a choice. Colleges don’t care if you choose to retire early. If you have the means, you will pay full price. You have some time to work on this, so if I were you, I would research schools that offer generous merit aid. This won’t be dependent on your income.

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@Massmomm

We are working on it trying to put together schools with merit scholarships in file. Thanks!

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@cptofthehouse. Hopefully you didn’t take it the wrong way. I find it funny that high school was more expensive the college. (wasn’t thinking of private school)

We were spending money on dance, voice, theater, painting, art lessons /classes etc for one of our children. Once she entered her Bfa program we joked it would cost us less and definitely saved us a lot of time getting her here and there.

I didn’t read it the same way you did. Just thought it was a humorous comment.

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A lot of times parents go on the assumption that if their kids do well in school, get the high test scores, they will get a full ride scholarships to anywhere they want to go. They think schools will be lining up to pay for their kids.

My brother reports that there are big time college fairs in CA where you’d think that they are paying for students instead of the other way around. Until the accept letter with Cost Of Attendance laid out, the road to filing that application is filled with financial aid seminars , “how to fund your education” talks all laden with promise and possibilities.

I have a cousin who is convinced his kid is pure gold because of all the mail he’s getting wanting him to apply. He doesn’t believe me one bit that it’s going to take a helluva lot of work and luck to get the cost to $15k unless kid commutes to a state school

It’s a bitter awakening that in the US, the most highly sought after schools are private, cost more than a middle income (by my definition, a danged good income) and it’s not just pure academics that get you a seat in those schools. Plus no merit money. This is completely different from most all other cultures

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Meaning that you have $300k or so income or high assets?

If so, just live like someone earning $150k income and save the rest.

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@BunnyWu - Historically, college costs have increased at 5-7% a year, so you can project where those 70k in 2019 institutions might be when your kid would be ready for them. If you are in a position to continue to save like mad in the 529, or another vehicle of your choice, you might be ready when the time comes. It also is OK to decide that that you have other ways you’d prefer to use your money, and plan now to tell your kid that you will cover the cost of the home-state U, and anything beyond that has to be in merit aid from the place the kid likes better than the home-state U.

36

To OP’s question, “Parents, How Do You Pay for College?”:

We started saving for our two kids’ colleges early on, I think when the oldest was 3 years old or around there. It’d have been better if we had started even earlier. A portion of our paychecks went to 529 College Savings automatically. In retrospect, we should have taken more percentage out of our paychecks.

In retrospect, too, however, we made a good decision when I gave up my professional career to raise our two boys full time when they were little. I don’t think we could have done the kind of quality things if we both had kept our professional career. If we had kept our career, too, then we’d have ended up a full paying family for both our boys in college. Instead, our reduced single-earner income, while good enough to live comfortably – just not extravagantly – and save and pay off our mortgage, has helped us to receive a pretty good FA from my second son’s private college where his college fees came to about the same as my first son’s in-state school with a modest President’s Scholarship. Now that my first son’s graduating a semester early this year, the fees for my second son’s college went up but offset by no longer having to pay for my first son’s college fees after this semester.

Fortunately, we like to live a simple life, not by conscious choice but naturally inclined. We enjoy outdoors and nature more than anything, so our travels and vacations, mostly by road trips, are lot cheaper than visiting large cities both domestic and international. We’re also fortunate in our interest in cooking, so we prefer to cook at home rather than dining out. It’s a lot healthier habit, too. I also like to fix, repair or renovate just about everything around the house, so that has kept us from spending lots of money on such expenses. Our lifestyle has helped us funnel our tight funds into our kids’ music and sports related expenses and other EC activities.

One thing we promised our kids is that their undergraduate college years will be fully paid for without having to incur any loan debts, but their graduate (both pre-meds) years are their own responsibilities.

With a bit of fiscal discipline and planning things in advance, one could effectively manage one’s goals. I haven’t worked since I became a full time stay-home dad, and my wife just retired at age 54. She maximized her company retirement savings benefits to the full for the past 25 years that she’s been with the company, as well as our disciplined approach to investments during the same period. Neither of us has rich parents for any inheritance money to be handed down. We don’t envy others that do. We believe in the good old self reliance and self discipline.

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@TiggerDad
Thank you! Your encouragingly experience is appropriated:-) Congratulations to your 2 boys.

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We knew we wanted kids to have options we didn’t get ourselves so we always lived as frugally as possible, saved as much as we could and tried to earn extra but not give in to the urge of elevating our lifestyle.

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We have been saving in three different 529 since our kinds were born. All bonuses were deposited into 529s plus we contribute $250/month to each of three 529. Two twins who are going to college in 2020 have $120K each in their 529, third one who is in elementary school has $90+K. We’re a bit lucky due to significant stock market gains in last decade. However these funds are not enough even for two years at MIT/Harvard/UPenn… How we are going to pay rest, I really don’t know.

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@Al73

How many of your kids overlap in college years? Whatever the years they overlap, that really should help with private colleges.