And here’s another thought. You said you will be out of pocket for $52k, no matter how you slice it. Surely that figure is not in addition to the expense of rsising a child from birth to adulthood. Unless you never intended for,your children to get a college educstion, you signed up for it when they were born. The other option is to move to a country where higher education is virtually free. In fact, are you aware that your children can be educated for almost nothing in Germany? Check that out if you really want to save some cash.
@khanam Was your statement “based on my calculations, going to college to become a teacher is a pointless exercise.” directed towards me? It was my son not the OP who was interested in education. FWIW, I agree that $65K/ year to be a teacher would be silly. That’s why we are not looking a such schools. Our COA is $21K. After merit aid and Bright Futures, our OOP would be about $11K a year.
There is also the small matter that teachers need to be qualified degreed professionals so college is not particularly optional. That they are underpaid does not change that they must be qualified. If you are questioning why a young man with my son’s credentials wishes to teach, you would not be the first. But he would be the first to tell you that our system’s tendency to discourage intelligent people from pursuing careers in education is one of the biggest problems in our education system.
Education is as much vocation as profession. As such, we will help as we can so that he might help others.
Nevertheless, that has little to do with the OP dilemma. The question is how much can he reasonably expect his child to take on. The only pertinence of my son’s story is that I think the answer lies in part with the child’s goals. I encourage the OP to go over these things honestly and numerically to come up with a reasonable long term plan that the child understands. If loans and or work are required, the child should know exactly what that means for them both in the college years and beyond.
@delilahxc did not direct it at you. was using teaching / psychology or for that matter other non STEM majors as examples of majors that are difficult to justify given the cost of education without any scholarships.
I just want to know where I can put my money so that it’s compounding at 5% / year!
@PengsPhils 2 year Community college is pretty much free ($3,500 a year x 2 years). And you would stay with your parents. Entirely different total cost
@BelknapPoint We manage a Section 8 rental portfolio that yields, wait… drumroll, 7.5% for investors. Or you can buy at&t prefs yielding 5.4%.
Seems like your scenario can be simplified to: you will contribute $13,000 per year (and the in-state public school costs about $23,000 per year all-in). I.e. he has $10,000 per year to find. This seems to be the outer limit of what he can reasonably be expected to self fund with federal direct loan plus some work earnings; of course, if he earns scholarships, that can reduce the loan and/or work amount needed. (Seems like the assumption is that there is no eligibility for need-based financial aid.)
Those numbers are not inherently unreasonable, in that there are some reasonable options within that range. What people may have been reacting to when you made your first post (that he would be responsible for tuition and all other costs besides room and board) is that many are in states where in-state public tuition by itself is over $10,000, which means that tuition, books, and misc. costs at the in-state public school would be beyond the reach of a student’s self-funding ability.
Is that guaranteed? If so, please PM me a prospectus.
The underlying assumption then is that from an academic perspective, community college doesn’t hold significant value over other more expensive schools. I think some would disagree there for sure. Again, in the case of not loaned, Scenario 3 holds merit. Still, you didn’t address any of the problems and pitfalls of somehow getting a loan for $260k, buying a house, and going to community college and paying it back quickly either.
@BelknapPoint No one said anything about a guaranteed return. Thats a pointless thing to bring up - as someone once said the only things certain are death and taxes. Even governments default - ask the greek creditors. Historically, the US stock market has compounded at 10-14% rates. I haircut those rates and decided to put a conservative 5% estimate here. No one invests 100% of their portfolio over years in govt bonds unless you are either constrained by law, are japanese (so you like to commit financial harakiri over decades) or are a college professor conducting some odd market study. Here you go:
http://www.marketwatch.com/story/8-lessons-from-80-years-of-market-history-2014-11-19
And since you need proof of highly rated company prefs yielding high rates:
https://www.preferredstockchannel.com/ex-div-calendar/
And here is a prospectus for your reading pleasure (cant find AT&T but BankAm TRUPs should be good enough?)
https://www.preferredstockchannel.com/prospectus/?symbol=BAC.PRI
And I am absolutely happy to share our PPM with you, clearly proving the cap rates - if I can prove it with audited financials, will you commit to investing 100k?
@PengsPhils The point I am making is that the difference in average lifetime earnings of some 4 year majors is not materially different from that of 2 year community college majors adjusted for 2 years of extra earnings and 260k less 7k = 253k in savings.
Also you are misinterpreting me. I am assuming in all cases that your parent has 260k that they can give to you for college or buy a house for you with the same money. So only in scenarios 1 and 2 do you have to pay a mortgage. In case # 3 you get a house (your parents buy it for you from the 260k saved) plus a 2yr community college in exchange for your parents sending you to say Middlebury college to study Psychology (just chose a good LAC with a random major - not trying to offend anyone, just making a point!) and you then have to buy a house and get a mortgage on your own.
I am stating that unless you are studying a high paying major (mostly STEM), going to a 4 year college with full pay is not a great idea.
Just FYI, a STEM degree is not a 100% guarantee of financial stability either… just gonna guess that even with an MIT degree and a great paying job, I doubt that 260+k in loans would be a breeze to pay off. Just a guess though, I’m just a millenial with no financial knowledge 
so maybe I’m incorrect.
Not all four year colleges cost $260,000 at list price. Many are substantially less. Examples include University of Minnesota - Morris, Truman State, and South Dakota School of Mines and Technology (even for out-of-state), and in-state public universities if you have state residency somewhere. Of course, you can chase scholarships and financial aid as well to find lower net prices.
Also, the most popular STEM major is biology; career surveys do not indicate particularly high paid job prospects for new biology graduates.
OP, I like the simplification above that your son needs to come up with about $10k per year. Several ways to do that. Work summers and breaks, work study, scholarships, loans. It’s also possible that picking different housing and meal choices for years 2-4 can save quite a bit of money. My nephew save a lot on meals; he’s worked at a sorority house (getting both money and meals), visits his mother and ‘borrows’ food (she goes to Costco and stocks up for him), restaurant work, eating at events, eats at his girl friend’s sorority. College kids get pretty crafty when it comes to their bellies.
Also depending on major, the pay can get a lot higher than minimum wage as the student gets experience and gets older. A 21 year old can serve liquor. Another nephew makes a lot of money as a waiter now. He made good money as a busboy at a fancy restaurant, but now makes the big bucks as a waiter (this weekend? $1000 or more on the Valentine’s day sweethearts). He scheduled all his classes for T-th, and works Thur to Monday nights. He’s 23, so no longer cares about living on campus and doing activities.
Wow, I had no idea room/board & airline tix in Germany were free.
@GMTplus7 , I said educated. Nothing about living expenses. I am taking strictly about the educational aspect.
Although I completely understand if parents are unable or unwilling to pay the total COA and need or want their kids to take loans, but I don’t see that as “skin in the game.” An 18 year old has no concept of debt-a great percentage of adults don’t even understand debt for that matter. You sign a document and you get money that you pay back “later.” Sure, they will feel the impact when it comes time to pay the loans back, but I think it is a rare undergrad that will be compelled to work harder or appreciate college more simply because they had to take loans Insisting that a student work a summer job and contribute a large share toward tuition and work a campus job to pay for extras makes a lot more sense, but how much can you realistically expect them to earn? Tuition plus? Unlikely.
@albert69 @ucbalumnus all points you raise are fair points and I acknowledge them. Yes, biology kind of doesn’t really get you a substantial advantage in getting a high paying job. Maybe because many kids simplistically see it as a gateway to a medical degree? And then decide to do something else? I don’t know, just not sure exactly what good jobs exist after graduating with a degree in biology. My guess is you either have to do a PhD or become a doctor to make decent cash. I’ve never understood the popularity of biology.
Also an engineering degree is definitely not a guarantee of a high paying job. 260k is a lot of money for anyone to pay back either way but the best chance to do so is if you graduate with a degree that positions you best for a high paying job
Finally, yes many universities headline number is not 65k - I just used that as an example for highlighting a kid graduating from a top ranked ranked lac (could be something like Claremont) with a non high paying major (could be sociology or similar).
Finally, I think different majors should cost you different amounts. Engineering requires greater resources at the college level (labs, computers and related technology), and pay the most. Life and physical sciences are in the middle and Social sciences require the least infrastructure and generally pay the least. Shouldn’t that be considered? The UK universities already do charge differently based on the major you choose. My first degree was in engineering but I’m honestly fine with engineering majors paying a lot more than say a philosophy major.
re: post #51 from the OP -
This is clearer now why/how you want your son to learn the value of what needs to be done to pay for things, but…
Keep in mind that, in order for him to keep his merit scholarship, he probably needs to keep a certain GPA.
Working part-time interferes with study time, and yes, joining clubs and other activities that would allow for networking opportunities and resume building in the future.
I know this from experience. I paid for ALL of my undergrad college education, and even back in the mid to late 80s, this was a challenge.
Ask yourself why you are sending your son to college in the first place. Did you go to college yourself, and work hard all of these years so your son could start out at the same level as first-generation college students from poor families - working in his free time, while other students who don’t have to work will have time and money for : extra research opportunities, study abroad, unpaid internships.
Your son, graduating with debt, will be limited in post-grad job searches as well. He won’t have the luxury of taking an unpaid internship or low-paying job that may give him better networking opportunities or experience for a more lucrative future job. No, he’ll be forced to take the highest-paying job that comes along because he is starting out in life saddled with debt - in an economy where entry-level wages, even for college grads, have shrunk lower and lower.
I get why someone who simply cannot afford to pay for their child’s education would have them take out loans, if that is their ONLY option for getting a bachelor’s degree.
But the disparity between wages and college tuition costs has increased exponentially since you and I went to college.
Now, you could consider paying everything for the school with the merit offer, with the condition that he keep said merit scholarship all four years; or if he chooses the full-pay school, THEN he will need to take out that loan.
In short, if you can easily afford to pay half of in-state tuition, why wouldn’t you?
I think coming up with $10,000 per year can be pretty draconian if it isn’t absolutely necessary. OP would your child have to purchase books and pay extras like lab fees or transportation to internships/jobs? What about clothing over the four years? Those things can all add up quickly before entertainment expenses even come into play, leaving the kid really pressed and burdened. My kids all had a skin in the game, but not a $10,000 per year skin in the game. That seems a very heavy burden to bear, particularly when he will then have student loans on graduation. Seems like four years and beyond of grinding struggle to me. All of my kids took small loans, and the older two weren’t horribly burdened with paying as they went, so they were able to take unpaid internships in freshman year in their own fields that led to very nice paying jobs and promotions in subsequent years. If they had to wash dishes to pay the bills (which is honorable if necessary), they would have had to pass up those unpaid internships that led to higher paying jobs and very nice ticks on their resumes in subsequent years. By senior year, D1 ended up making enough that she could have paid $10,000 if necessary, but that wouldn’t have been possible without the opportunity to step onto the career ladder in freshman year without going to great lengths to pay her bills. I understand it’s necessary for some kids to work and struggle that hard just to get the education and I applaud them, but my husband and I struggled so our kids could have it easier than we did and make better lives. All our sacrifices to this point would have been meaningless if we made their college experiences so much more difficult and precarious without good reason.