<p>Jolynne said, "My parents totally shielded me from the financial aspect of college (paid back all my loans themselves, etc.). While good-hearted, I don't think that was realistic or beneficial for learning about financial/life realities and the value of an education."</p>
<p>Good for you!!!! I totally agree. We did the same, paying only for room/board/medical costs.</p>
<p>A student who is financially responsible for a significant portion of their college education become more appreciative of the education opportunity and learns valuable life lessons.</p>
<p>Student shielded from this responsibility get an unrealistic attitude of entitlement which can be unhealthy later in life.</p>
<p>To be successful in life, we must take responsibility on ourselves, learn to set priorities, defer gratification, learn to plan ahead among many others. These lessons are best learned early in life and there is not better place to begin in earnest than in college. Our children are becoming truely independent adults for the first time in their lives.</p>
<p>We could have easily footed the whole thing, but where would be the attitude of investment by our son???</p>
<p>Kirmum, as I've said before, it's a family tradition for each generation to pay the next generation's way. Has been since my great-great-grandparents managed to pay for all 10 (who survived to adulthood) children to go to college. My kids know their day will come, and are aware of their future committments--and are thrilled that, unlike many of their peers, they will graduate loan-free.</p>
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<p>I'm wondering how parents in the position to just write the check get their kids involved.<<</p>
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<p>Remind them that we could buy a new expensive BMW every year that they are in college. That puts the tuition amount in a context they understand.</p>
<p>Actually, we do talk about how her college expenses are a very large amount of money and that all in the family make sacrifices so that we can pay it. So it is incumbent on her to get the most out of her college experience-- academically, socially and extra-curricularly (I know, not a word).</p>
<p>We were opening another 529 with the kid as the owner and beneficiary (necessary because cashing in EE Bond that is in his name and TIN) and noticed that you can make a qualified rollover from a UGMA/UTMA to a 529. </p>
<p>{Unsuccessful at this time because the financial institution screwed up and gave us a receipt showing me and my TIN as the owner of the bond. This is going to screw up my taxes, kid's taxes, and delay us in paying tuition. Damn do I hate banks that hire young, sweet, recent graduates but have no practical experience. Well, what the bank saved in wages, they will lose $ for time and effort to correct this error.}</p>
<p>What this means is that you can enjoy UGMA's flexibility and tax options until near the age-of-majority and at which time you roll the UGMA's assets into a 529 and thereby retain control for child's educational benefit. Simple.</p>
<p>I was unable to roll the assets of a UGMA into a 529 when I set up the latter a few years ago. I don't recall why, but I think it may have been because child was the "owner" of the UGMA account, and would not be the owner of the 529, maybe? I can't remember... but I do remember that I had to keep the UGMA open with its balance, and just start fresh with the 529.</p>
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I'm wondering how parents in the position to just write the check get their kids involved.
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kirmum, although we are in that position and that is what we will be doing, we feel it very important to get him involved and to understand that this situation did not just fall from the heavens. So we[ul][<em>]told him at the start of the search that we were very happy to say that he would not have to use finances as a criterion for college choice, because we had worked, saved and invested to be fortunate enough to make that possible [</em>]have required him to work every high school summer (except one where he took an academic course) to begin his own savings and earn some of his own spending money[<em>]have told him that his job is to be a student, and to do his best at that job (in his case, specifically to maintain the GPA required to retain the merit award he received)[</em>]will have him, in the next 2 weeks before he takes off, take a stab at budgeting for his miscellaneous expenses - so he will begin to learn to anticipate costs, live within a self-imposed budget[*]have decided not to fully fund his "mad money" expenses nor to require him to fully fund them. We feel fortunate to allow him to bank most of his summer earnings and he has been putting the max into a Roth IRA. However, just as you have put it, we think he should "be involved", so we have decided to give him what we believe is a "low-end" monthly allowance ($125/month) and he will use his summer savings if he wants more discretionary spending than that[/ul]I'd be interested in your/other's ideas. The whole goal of all this, in our view, is to enable him to become a financially responsible and independent adult and, ideally, to find himself in the position to Pay It Forward to the next generation.</p>
<p>Mine did not save any. :/ Not that it is a problem...but it's probably a good idea to save. I wonder how much college tuition will be when the children of current CC students go to college. :O</p>
<p>Grandpa did the state prepaid tuition plan, (only grandchild) which because she is going to private school out of state will pay a little each semester, but helps. He also kept getting her EE savings bonds. Those were cashed in for 1st semester, and others in my name will be cashed for the next 2 years. Luckily, most were in my name, so that helped with FAFSA. She has opened her first Roth IRA this year, and plans on adding to it through the years.</p>
<p>We are in a position to pay the bill (well...at least according to the FAFSA and Profile...). We are requiring our kiddos to take the full Stafford loans offered to them. Plus they have to provide all spending money (including books and supplies, travel, clothing, recreation/entertainment, transportation). We pay room/board/tuition/fees...minus the stafford loan and merit aid.</p>
<p>We saved twenty-thousand ($20,000) per year when our son decided to go to an out-of-state public school instead of one of the private schools that had accepted him. He literally stopped me from sending in his acceptance money as I was walking to the mailbox. That was two years ago, but we continued to save. He did very well in the public school and is transferring to a private school that has the major he likes. It took him two years to zero in on his real interests. But the private school is going to be a lot cheaper because it is only for two years! The point is, it is virtually impossible to know how much money you are going to need. It could be anywhere from $40,000 to $200,000. It all depends on your son's or daughter's goals and interests.</p>
<p>Another big <em>thanks</em> to everyone who provided info, experiences and perspective on the college funding issue!!</p>
<p>I just skimmed the book "How to pay for college w/out going broke" and am now trying to educate myself re: zero coupon bonds, etc. (my dad was an accountant, so is helping a bit w/that...)</p>
<p>All the info I've received here has been my starting point, and I really appreciate it.</p>
<p>(Of course, after extensive analysis of our finances last night w/hubby and an Excel spreadsheet--his conclusion was--'they'll both take out loans to cover the whole cost' [that's what he says his brothers & sisters did....]).</p>
<p>I'm now terrified, and planning on working more to save. He's very good-hearted though, and I think if I can <em>show</em> him that I can cut household expenses (food, gifts for friends, dinners out, etc.) and still maintain quality of life (his concern--"I don't want to live in poverty to pay for colleges") then it could work.</p>
<p>I cut up my credit card last night, and plan to operate on a cash basis for all food/household purchases/entertainment (take out fixed amt from bank each month, put it in the old-fashioned envelopes labeled w/category, and not exceed what's there for the month!!).</p>
<p>I'm also going to re-register for UPromise (hubby hated idea and wouldn't let me pursue it, prior). I think that will be most helpful for 3 year old (more time to accrue savings)</p>
<p>Of course there are upcoming expenses like CTY (hopefully) but ideally I can put $$ into the funds monthly. Savings, here we come!</p>
<p>Jolynne---a minor source of pain for us, that added up to way more than we expected, was to dump all our change at the end of the day into a change jar. In the end, we filled two 5 gallon containers with change between age 8 (when we moved and converted all the change from age 0) into two accounts, with around $1500 in each--but we'd added misc checks from grandparents, that kind of thing) and age 18, when we "gave" a 5 gallon container to each kid.</p>
<p>Jolynne-
re Upromise- one of the best ways i have found to build the amount earned at Upromise is actually to get a Upromise credit card - 1% of everything you spend on the Upromise card is rebated PLUS if you also get the grocery savings, you get additional savings if you buy with the Upromise credit card.</p>
<p>not trying to undermine your cash as you go plan - i know credit cards cause a lot of people to overspend. but if you can limit your credit card use to only what you budget for expenses and pay it off every month, this is a way that use of a credit card can actually work in your favor.</p>
<p>My wife and I have been big savers/investers since we've been together ... maxing out 401k/403b/IRA type funds as well as saving beyond those accounts. We are both pretty cheap and are careful spenders ... and there are a couple huge things that I believe help. First, cars ... we have bought cars (last year's model or used) with cash and kept them until we needed to shoot them beside the road to put them out of their misery. Second, credit cards ... in 20 years we've paid interest on a credit card twice (both my fault for messing up a payment). Those two things have seriously helped our cash flow.</p>
<p>When the kids started arriving it was clear we would not receive need based aid so we started accounts in the kids names ... currently we make monthly contributions to 529s for each of our 3 kids .... and if we come into any money we max out the $11,000 limit per kid per parent (we have 6 529s total). (come into money = bonus or family money, for example)</p>
<p>When we have the mortage and 3 "Harvards" (about $600k in today's dollars) covered then we can talk retirement. If we knew our kids were all going to go to a state school I believe we'd have them covered right now. We believe some private schools may be worth the expense ... not for the prestige but fo rthe experience. If we end up paying for private schools it will push out our retirement (a lot if all 3 kids end up going the expensive route).</p>
<p>PS - even if we have the bucks for school we plan on having the kids work some in school and take out (small) loans while they are in school (to be paid off upon their graduation; but they don't know that) ... so they will have financial skin in their education.</p>
<p>Each family needs to find the ways that work for them. In our family, we have & use creditcards, mainly to avoid having to carry around cash & write checks. We always pay off our credit cards in full each month & have done so all our lives (so no finance or late charges). We get back 5% cash rebates for grocery & drug store purchases & gas. We get 1% back on all other purchases. We get nice rebate checks each year.
We also have cars that we drive until the mechanic advises us they are not worth repairing (1983 Volvo is our oldest, also a 1992 car & 2000 van). We live fairly simply & save when we can, as much as we can.
We wish we'd saved more, but save what we can & are glad we bought the zero coupon bonds when we did when the kids were babies.
Our parents helped us pay for our educations & we will do the same with our kids. We told them we'll help them as much as possible, but if they get into & want to go to very pricey schools, they need to get merit aid or loans.</p>
<p>Jolynne-- I applaud you taking the bull by the horns!</p>
<p>A couple of obvious things to check out... make sure you're not over-insured. A low deductible on an old car is silly; many people do that, however. You should check your homeowners policy-- don't insure for things like having a $200 camera stolen; insurance should be for catastrophic losses, and you can quickly pocket the savings on your policies.</p>
<p>Have H check out his benefits at work. We discovered that we were paying a fortune for dental and eyecare coverage... for the annual eye exam and new glasses for H every other year it was cheaper to pay out of pocket at Lensecrafters than to insure. Ditto dental; money was coming right off the top of the paycheck and we were careless about tracking what we were insuring. We changed our coverage which immediately increased cash flow. I changed my GYN to someone in the plan (I had resisted this for a few years) and not only did we save the out of pocket costs for my annual physical, but the meds, diagnostic tests, etc. were now covered. It was a silly expense to pay out of pocket. Lesson-- go through the benefits book-- you can probably find some painless ways to either save or increase the paycheck. </p>
<p>If he works for a corporation have him check to see if there's a scholarship plan for employees children. Ours is quite generous... essay took our son about an hour to write; it renews automatically as long as he maintains a B average, check comes right to the house but written to the university. It was a huge surprise to us that we were eligible-- good for 4 years. A boon for people who make too much for need based aid.</p>
<p>We are not adverse to having kids take out loans. It made both of us appreciate our educations so much more since we had "skin in the game". It also made us very frugal during the early years of our marriage when we were trying to save for a downpayment plus pay off the school loans... not a bad lesson for those early years when the other DINKS at work are jetting off to the Islands or to ski for a weekend...</p>
<p>for some one looking at private college ~18 years from now: you must save or invest >$500/mn, 216 months, @10% rate-of-return, tax deferred or tax free, to make ~$300,000 COA. For a total contribution of ~$108,000. The first 9 years will get you >50% of the final COA, if no other payments are made in the last 9 years. </p>
<p>Alternatively you can borrow $306,000 at time of college, and amortize it off at $1834/mn, next 30 years, @6.00% interest. For a total payback of $660,240. The first 15 years, you'll will have paid off only ~$76,500</p>
<p>The opportunity cost, at time of college, is ($306000 - $108000) = $198,000!</p>
<p>If you save $500/mn for 30years @ just 6% Rate-of-Return = ~$505,000.
Isn't compound interest beautiful. To bad they don't teach it well, even at the college level, business & finance.</p>