Oh, it doesn’t end with college. Sometimes getting them set up for a career can cost., especially if it involves moving to a high rent area, not nearby. Then weddings , grad schools, home purchases. Part of having some extra money is being able to make things a bit easier and better for your kids.
Sometimes things don’t work out quite as planned, and using funds to ease difficulties can make a world of difference.
And then the grandchildren
Yes, quality of life IS important. But where/how one lives is still a choice one makes; a choice with consequences. Most people in this situation COULD take a job in a lower cost of living area if they chose to. Maybe that would mean a less dazzling career. Not that they should choose differently…but there are upsides and downsides to everything. There are people who seem to manage it all, but I don’t think anyone should be dismayed not to be one of these people.
Personally, I would enjoy living in an area with the cultural, educational, intellectual, gastronomical amenities of a high-COL area. I would love to have lived in city where my daughter could take pre-professional ballet lessons, for example. Heck, I would like to live in a place with a functioning aiport less than 120 miles away. But it didn’t happen that way. My husband (with recognizeable degrees that could take him almost anywhere) was determined to live in a small town far from the madding crowd. I went, kicking and screaming (a bit). But the upside is… low cost of living to go with the lowish income and low stress. We were able to save and live simply and savor having more time with our daughter (not to mention fresh air and a ten-minute commute). Choices. We have it good. A job that’s not going away. Other people in this town lose jobs month after month as employers leave. They have few choices. No one is buying their homes if they do leave. State schools are for those well off to send children to college at all.
Sorry folks, guess it’s the former Peace Corps volunteer in me coming out here…but $300,000 per year ain’t really roughing it, even if it doesn’t buy you everything you want in life.
$300k is way above middle class. If you live like an actual middle class family, making $150k, you could easily pay $70k a year out of current income.
If top 2% income is needed to be “middle class”, then that implies that 98% must be “poor”.
Or live like a median income household (about $60k in the US overall, up to around $100k in higher income areas other than tiny enclaves of the super rich) and save even more money.
What it says that where you live can have profound effect on income you need to be middle class and your expenses. $350K in SF or Manhattan will not put you in top 2%, it will put you in top $20%, though I live in NJ close to NYC I believe that even in SF or Manhattan $350K is way above middle class and the article referenced is total garbage. Middle class families do not send their kids to private schools.
Really it is, if you go for an instate public or chase merit. As someone else pointed out, if your kid is ivy material he is likely to get major merit a bit further down the rankings. You may in fact find you have money left over.
What is being addressed here is that the very most selective schools-in this country cost a large % of income. Those who are wealthy enough to pay it out of current income don’t give it much of a thought. We are talking about an ever so small sliver of our population.
Those who are below the threshold of being considered able to pay for these schools get full financial aid and it can be free.
Those in between those extremes have to pay something If you did not prepare for paying those amounts by saving, you may not be able to afford these schools without turning your current life upside down or borrowing money.
IMO, our system of education does deprive a huge population of young people the opportunity to go to the schools that make the top of the rankings, are considered pretty much the best, the elite, etc because Admissions to them depend very much on THE PARENTS. Not the kid, but the parents. Not only are parents crucial in providing the environments most conducive to gaining entry to these schools, they have to be willing and able to pay for it. Few exceptions to this.
These schools are not getting the best of the best, because they are ignoring the large demographic of kids whose parents won’t fill out the financial forms, won’t pay what the financial aid formulas say they should. Game over for kid because parent didn’t save, won’t pay out of current income or savings, won’t borrow.
I am convinced that Vanderbilt’s and UChicago’s big rises in their ratings are in part due to their financial aid policies that gives kids with NCP an opening.
There is no entitlement to private school. It’s just a shame that the most desired schools in this country are private and cost a lot of money, shutting out those kids whose parents can’t or wont pay.
I did not believe focusing on these top schools as a goal was important enough to sacrifice other amenities and , what I felt were needs,certainly more necessary than going to a private college. Yes, we could have saved enough for each kid to easily afford the top cost college. But not without cutting out things we felt were more important in life. I’m not complaining or wailing about this. I’m just saying that the way things work with top schools does cut out a lot of the best students through no fault of theirs even as these schools insist that their mission is to get the best minds in the country, the most promising young people when , they exclude a significant portion of it.
An 18 year old high school grad is severely limited in getting higher education without parental involvement. He can join the military, marry, enter contacts, treated as a adult in the judicial system, but is a dependent for college financial aid purposes.
A combination of an inheritance, merit aid, loans and savings.
Savings, living on less during the kids’ college years - less vacations, less impulse spending and so on – and future $$…I think this is pretty typical. I did not retire when I planned to. We paid off our mortgage before the kids hit college years. We had them use federal loans which we are paying off and paid off to spread out cash flow which was our biggest challenge in order to preserve capital. We drove our cars into the earth during college years. We set a budget for the kids before they got their heads in the sky regarding where they could go to college. The most important being to figure out just how much you ARE willing to pay and making sure the kids understand it. Parents get to make that decision and should make that decision. If the kids are unhappy - so be it. Everyone has unhappiness occur at one point or another in life.
$2100/month for food, $650/month for vacations, $400/month for clothes, $350/month for baby items?? There’s a lot of fluff in here! Normally I ignore housing costs because they are what they are, but the way everything else is inflated, I wonder if the only “middle class” worthy homes in that area are 1.8M. Once those kids are out of daycare/preschool they should be able to save 60K/year for college. But my guess is suddenly pricey private school will be “necessary”.
Plus, who pays 24K in mortgage interest, 22K in property taxes and $3600 in charitable giving and just claims the standard deduction?
I live in a high cost region too. I have to bite my tongue when I hear about the costs that folks actually believe are “built in” to living around here. Your job is in NYC and you “must” live in New Canaan where the zoning is mostly one and two acre? I don’t think so. One more exit off the parkway is Norwalk. The only town in NJ that you can live in is Montclair or possibly Short Hills but that’s a longer commute? Uh, no. The public schools in Greenwich aren’t good enough because you are zoned for the district south of 95 where the children of the people who clean the mansions and mow the lawns of the country clubs live? So private school is a must? When Greenwich has some of the best public schools in country?
If you aren’t going to have time to mow your lawn, why are you buying a house that sits on an acre? If you won’t have time to vacuum, why must you own a 4,000 square foot house for two adults and two kids?
People really do believe that their high structural costs are necessary- when so many things involve choices. Everyone is entitled to spend their dough however they wish. But a bigger house is a choice which leads to higher taxes, higher heating bills, higher maintenance and insurance costs-- let alone the juicy mortgage payments-- and that means less discretionary income for everything else.
@blossom , you are absolutely correct about the bigger house. It leads to bigger expenses. But a big family, extended family … Well, a big house can mean a lot of hours of comfort.
Also public schools—My siblings and I excelled in public schools. Our kids, not so much. The best investment a parent can make in their kids’ educational future is to get the optimal school for them. They spend ever so many hours a day at school and with a big family, a business, ailing elder parents, well… not that much time to be on those kids each day. Then you have their free time , and one gets a life threatening hit and, yes, the school environment becomes all important. To scrimp on those formative years in education so you can pay for private college for them when they are adults doesn’t make sense to me.
We placed our kids in the schools that best suited them and were accessible to us from the get go. And it cost us. Those schools tended to earn every penny of what they charged us too, for some of our kids. You don’t see me on the Braggin’ Thread about my kids school years.
But these are all CHOICES. I do find it ironic that people accept that you gotta pay for private school, boarding school, but outraged they have to pay for private college and for their kid to board at college. They think the colleges are going to pay for their kid??
I’ve been involved heavily in hitting at getting community college free for all. I don’t think free college tuition at state schools is too lofty a goal either. In my state, we are almost there, but not quite. There is still that gap when parents will not cooperate in filling out the financial aid forms or won’t pay their EFC, a kid can’t afford college through no fault of his. Sadly there are those parents.
Totally agree just thought the article was interesting.
Taxes also make $150k a lot less, too. I’m sorry, $300k in income and $200k in college savings for a family with 1 middle school aged child can’t claim to be middle class. And I live in a very high cost area with crazy property taxes.
https://smartasset.com/taxes/income-taxes says that a family with married parents and 4 total with $300k income in California pays $89k in income and payroll taxes for an after tax amount of $211k. Those taxes are more like 30% than 50%, though marginal rate may be higher.
But that income is still in the top ranges even in expensive areas, rather than actual “middle class”.
@artloversplus your EFC per FAFSA INCLUDED your 529 accounts assuming you did the FAFSA correctly. Having 529 accounts are not what made you full pay.
And yes, 529 accounts count…on the FAFSA as well as the Profile.
Your EFC included your 529 accounts, and your additional real estate assets. But so did the FAFSA.
My point was…the 529 isn’t what made your full pay…and neither were your other assets…all of which were on the FAFSA.
Grandparent owned 529 account balances are not on the FAFSA…or Profile…BUT any distraction used to pay colleges costs for the student WILL be included in subsequent years. @BelknapPoint right?
Agree with the above statement, but it can be generalized to most colleges, not just elite ones (see my suggested changes above). Indeed, many states’ public universities and even community colleges have in state costs and poor enough FA to be unaffordable to many in state students.
529s only hit at 5.6% on FAFSA regardless of parent or student owned. PROFILE schools may look at it differently. There is no telling how they assess 529s. It’s an individual school thing.
Grandparents, aunts, friends owning 529s can be excluded if handled properly. Have to read up exactly on how they should be treated. Especially on PROFILE. They are not a FAFSA asset but disbursements to the benefit of the student is counted as untaxed to the student when that tax year comes around and it can really make the student portion of the EFC sky rocket if the student has income over $6600 (?) that year because students get hit at 50% of income over that threshold towards their EFC.