<p>hello parents, I have been reading the forums and find the CC forums to be very helpful, but I am sort of shy and haven't been posting at all. Now I feel I should just bare my soul and see if there is someone out there who has some suggestions. Or if this has come up in other threads, can point me to them.</p>
<p>Basically I am just confused about the money, and about my feelings about how to spend it. I always figured that no matter what I would just pay for my child's education. It was a given. We only have one child, so I think I always just expected that if I could pay, I would pay.</p>
<p>But now, faced with the reality, and surreal prices on education, my heart is skipping a few beats. Is it reasonable to pay $40K per year for undergrad education? When I know that there are other options that may be just as good for less money? Do I encourage looking into state colleges or less expensive options even though with some belt tightening we can probably (how!!?!) come up with the $40K?</p>
<p>internally torn, guilty for feeling tight-fisted, wanting to do the best by my child, hoping for ideas for ways of looking at this issue and reaching an understanding!</p>
<p>It's a confusing subject, with no easy answers. In some sense, we are lucky, in that we could never even come close to $47k/year ($40k is a thing of the past!) for my two kids. In fact, we could sell absolutely everything we own, including our house, and still not have enough. So, for us, it was either we would receive a major discount from the list price (I think of this as the schools "renting" our kids, in a seller's market), or they would go elsewhere.</p>
<p>Having been the recipient of an "elite" education myself (though in those days I could actually pay for the entire thing through work during the school year, and 70 hours a week in the summers), I think the $100k over four years differential between it and a good state university MIGHT be worth it. BUT if one actually had that extra $100k, about 90% of the time, I think most people could "purchase" a much better education by going to a good state u and actually spending the extra $100k now freed up on other educational opportunites. Two years of grad school or a year and a half of med school. Two years living in Europe doing archaelogy or learning to paint. Taking lots of unpaid internships without having to worry about paying the rent. Working and learning as part of a missionary health team in Africa. Paying for an MBA after two years in the world of work following undergraduate degree. </p>
<p>Or simply the downpayment on a big house that provides a base for going out and doing something else. </p>
<p>What I am suggesting is that there are two questions that engender your confusion. Is it reasonable to try to come up with the money? And if the answer is yes, is the $47k/year actually the best option for spending it? (And a third - if the answers thus far are yes and no, would you be willing to spend it on those other opportunities for your child?)</p>
<p>Good luck teasing it out! I expect there will be other parents with incomes/assets closer to yours who may have other opinions.</p>
<p>thank-you for your reply, I too received an elite education, and graduated without debt. Those were the days. But I never worked 70 hrs in the summers. You must have had some stamina!! </p>
<p>But I just realized that I didn't explain much about my financial situation. Though I believe I shoudd be able to come up with the money, I have no idea how we will do it. Month by month the salaries come in, the bills go out. Not a lot left over! Both me and my partner work hard and have decent salaries for our region. We own a modest home, and our cars are 8-12 years old. Not at all a fancy lifestyle. </p>
<p>So in answer to your question "Is it reasonable to try to come up with the money?" I don't know how to answer it!!!</p>
<p>Secondly, is it the best way to spend the money? I am equally unsure. Probably my inclination is to say no. But that may be the crux of the problem. I am not convinced that an education at that price is worth it.</p>
<p>I think a further issue for me is that we don't have much in "savings" either because we were both slackers until our mid-30s and didn't save or put anything toward retirement. Now I am working, and I could stop contributing to my retirement, which would free up some cash. But with neither me or my partner being financial whizzes, the idea of retiring before we are 80 also seems impossible!</p>
<p>Do not, I repeat, don't put your retirement on hold for your kids' education. Your kids will end up hating you for it, especially if they end up having to foot some of the bill. </p>
<p>If you can't come up with the money without risking your retirement, well that's just the way it is. Puts you in the same category as 95% of the population. There might be some fine schools out there that will rent your kid. Or you might end up spending less than half as much at the state u. Won't be the worst thing in the world. You owe your kids an education. But you don't owe them one you can't afford.</p>
<p>You asked these questions. "Is it reasonable to pay $40K per year for undergrad education? When I know that there are other options that may be just as good for less money?" </p>
<p>I think somewhere in your second question is the answer.</p>
<p>Caveat: I am paying full price for my daughter's "elite" education.</p>
<p>Parents should never jeopardize their own retirement to fund their child's college education - never. I don't have a problem with delaying retirement for a couple of years to cover college - that's what we are doing, but if you are going to stop funding retirement completely AND you didn't really start until mid-30s - don't do that to pay for college!!!</p>
<p>What good have you done the child if s/he has to support you in retirement?</p>
<p>Decide now before your child starts applying!</p>
<p>Unless you have planned for many years in advance for your child's college costs or you have a mondo flow of disposable income, most people are not able to fund college expenses out of current cash flow. Don't be overwhelmed because you cannot do so.</p>
<p>Instead, many fund college by cobbling together $$ from a number of sources: savings, current cash flow, parent loans, student loans, student summer jobs and school year jobs, tapping home equity, school aid (if any), decrease in standard of living, having a previously non-working spouse re-join the workforce, etc. And for many, restricting college choice to a cheaper college (including spending 2 years at a community college) or to one that gives generous merit aid is part of the plan.</p>
<p>Something else to consider when you're asking whether the education is worth it -- what is your child studying? </p>
<p>An accounting major does not need Wharton to have his choice of job offers upon graduation. A pre-med major may be better off at a strong flagship research school, the better to have research opportunities and less debt when s/he graduates (there will be plenty of that with med school).</p>
<p>As one who is paying over $40,000 a year let me make a few comments. I could be paying out-of-pocket for four years (with a prepaid tution plan) at our state university, UVA, what I am paying to send my son to a private college for one year. I'm doing it because the program he is in is arguably the best in the country, because he worked hard to get accepted into it, and because, luckily, I can afford it.</p>
<p>I have not gone into my retirement funds and would not do that. Never, as Cangel advises, do that. So unless there is a compelling reason to do otherwise consider very, very carefully whether it is necessary to spend 40K per year.</p>
<p>So you join the crowd of parents who just assumed we'd be sending our kids to the "very best" colleges and somehow we'd find the money -- only to be surpirsed that we couldn't "find" $40K+ per year. For heavens sake I have friends who can't even figure out how they will write that very first check due in June!</p>
<p>We decided we could pay $25K/yr for each of our 2 kids. It's a number we can cover by using money we've saved for them and the rest coming out of our income. It still leaves our lifestyle pretty much untouched (we like to travel a bit) and our retirement fully funded -- both important things to us. Since my kids know the number, they'll plan accordingly. Eldest got "rented" by a great school that offers very good merit money (and he loves it), second is likely to end up at a bigger state U (probably not our state U) or with merit money.</p>
<p>I guess what I'm trying to say is that you are by no means alone! Crunch some numbers, figure out what you can pay, and just make sure you plan accordingly. Get over the guilt -- you've got a life to live too. So be it.</p>
<p>I don't think you should feel guilty for not being able to afford or being willing to pay $40k per year. </p>
<p>And do not dip into your retirement funds. DO NOT.</p>
<p>This said,
1. there are many terrific colleges that cost less than the most expensive. For example, Harvard next year will be $44k and Carleton will be about $36k. It's stlll a lot of money but some families might be able to swing the $36k and not $44k. Over four years, it's a difference of $32k, a not insiginificant amount.</p>
<ol>
<li><p>You may qualify for need-based aid at the most selective schools. Use a finaid calculator to figure out if you do.</p></li>
<li><p>take out loans, have your child work for some of the expenses. But do not take out so much or have your child work so much that it interferes with his/her progress and ability to make the most of the college experience. Spending free time with schoolmates is another way of saying networking, making connections, etc...</p></li>
<li><p>Go for merit money, both school-based and outside scholarships.
Many schools that give good merit money are as good and sometimes better than the most expensive ones.</p></li>
</ol>
<p>thank-you for your replies. I am feeling less alone.</p>
<p>I am going to do some number estimates, and see if I can figure out where my money currently goes. I will then come up with a number, as weenie suggests, as a maximum I believe I can afford.</p>
<p>I think that part of my problem is not having other people to talk to about this, most of my friends have kids in elementary school, or no kids. So thank you for listening to me ramble.</p>
<p>I also think I believed that if the FAFSA thinks I can pay that much, then it must be so, and it's just because I am dumb and not financially talented that I feel stress and confusion.</p>
<p>"I also think I believed that if the FAFSA thinks I can pay that much, then it must be so, and it's just because I am dumb and not financially talented that I feel stress and confusion."</p>
<p>As many of us have learned, this could not be further from the truth! Our expected family contribution was over $65K/year -- I don't think so!!! Maybe we're not financially talented - but we would like to eat and pay our mortage and maybe buy some gas to go to work. ;)</p>
<p>This all still begs the question of whether, even if you could come up with the money, it is the best educational use of it. (For the vast majority of students, and perhaps especially the brightest ones, I have grave doubts.)</p>
<p>The FAFSA calculation is based on an assumption that you will borrow -- in other words, it is considering the borrowing power of your income as opposed to the spending power. That doesn't mean they expect you to borrow it all -- but a family with an EFC of $15K might reasonably borrow $10K a year, while paying out the other $5K. Right now, with a fixed 8.5% rate kicking in for PLUS loans, every $8000 in loans translates to $100 in monthly payments.... so if you could afford an extra monthly bill of $300 it would mean that you can borrow $24K. </p>
<p>That doesn't mean you have to borrow -- it just means that you need to look at your EFC in that light. Since you only have one child, borrowing makes some sense -- you don't have to worry about another one coming up, and once the child graduates from college and is supporting herself, your own expenses will go down, which may enable you to accellerate payments on any loans you've taken and pay it all down more quickly.</p>
<p>You have 3 basic choices in financing the child's education:
1) Opt for a lower-priced, in-state public
2) Aim for schools which will offer your child generous merit aid, which generally mean schools that are less prestigious
3) Aim for the best or most desired school that your d. can get into, and pay and/or borrow whatever you have to do to make it all work out.</p>
<h1>1 and #2 are perfectly legitimate options and nothing to feel guilty about, as long as you sit down with your daughter and have the conversation about money before she starts seriously drawing up a college list.</h1>
<p>For many of us the money is not going to come out of cash flow or by cutting back on "luxuries." Many of us realize we will need to postpone retirement in order to make up for the money spent on tuition. I decided the extra years of work will be worth it due to special programs at a really great school. I had a much harder time considering the possibility of spending about 2/3 as much for a mid range private college. I sometimes wonder what would have happened if my D had not been accepted into her dream/reach school. I suspect we would have been more inclined to settle for the offerings of the State U.</p>
<p>Filling out FAFSA for the first time seems to be a a catalyst for questioning how we live for many. If your EFC is $5-10K and you can't swing it, you're probably totally typical. How can most making $60K swing taking that out of their daily living? Then there are those, many in my community, where the EFC (or with Profile) is over $50K and they are wide eyed about how that could be possible. It just seems normal to have spent the money on the big house, the cars and vacations. The thought of moving backwards for education seems outrageous. I think the big issue is that few realized how fast college tuition would go up. It's still hard for me to understand why tuition has gone up faster than just about anything. But if your EFC is more than $50K, you're making serious money and a look at priorities is probably in order.</p>
<p>My number 1 got lots of merit money from one of the few very top schools that gives it. Numbers 2 & 3 aren't the student or athlete he is. This has required much soul searching in this house. Do I go back to work full time? Do we move down in terms of housing? Eliminate vacations we consider cultural experiences for our children? Do we let our parents contribute knowing that a seriousness illness may require that money later? Do they go to our state colleges which are good schools but overcrowded, hampered by lack of funds and considere not the friendliest college exerience?</p>
<p>"It's still hard for me to understand why tuition has gone up faster than just about anything."</p>
<p>Elite school tuitions haven't risen faster than incomes of those in the upper 5%, which is where the majority of students come from. They've risen pretty much in tandem. Priced out the "middle class" (the lower ones weren't really part of the equation to begin with), which has made the schools less economically diverse. But state tuitions are rising rapidly, and the income of the families they were supposed to serve haven't. What that has meant for some institutions is heavy recruiting among well-to-do populations, creation of honors programs to bring in "top dollars", and recruiting of OOS students.</p>
<p>So did state school tuitions rise out of need or just because they could because privates were doing so? In my state a UC costs about $25K now while for my generation California's middle class families could easily afford them out of pocket. Yet they provide less now, bigger classes, less housing, longer time to graduate for many majors and many campuses can not afford physical upkeep. It's a mess!</p>