To parents of full-pay private college students

Parents Forum
21

We are full pay. Our oldest wound up at Case Western with merit. He chose that over full price at Hamilton. We would have paid full price.

Our middle is at Belmont University with a small merit scholarship. He chose that over full price at NYU. He is a music major so although NYU is a better school Belmont has a better music school. We would have paid for NYU.

Our youngest is heading to Haverford in the fall. We are full pay at Haverford.

  1. What is/was your income?

Significantly higher than yours.

  1. What geographic location do you live in?

Southeast Florida

  1. What is your retirement funding situation?

We have retirement money put away and can pay for college without touching retirement money.

  1. Were there any special circumstances that allowed you to decide to go full-pay at $50K+/year? (you are expecting a large inheritance down the line, a rich uncle partly funded, etc)

No.

  1. Any specific regrets/advice?

This is a very personal decision. Do what works for you without regard to what other people think about it. I also wanted to add that at your income level it seems it would be very difficult to be full pay at private schools without any merit scholarships. We find it difficult and we make significantly more.

22

We are very militarism financially and COA.

We can pay 60K a year but are only willing to pay around 35K a year. Right now she has several options on the table that meet that criteria-

Willamette offered her a 25K/year merit scholarship
UC/Cal State/Cal Poly, haven’t heard from all of them yet, but any of these would be in that range
Accepted at St. Andrews in Scotland, Durham in England- top schools at around this price point with no aid.

23

I know several friends in the same financial situation that are full pay. So far, no regrets… But its still early on in the college journey. I would think that if the student ends up in a very low paying career, there may be regrets later. For my friends- it was all about fit. For us, my senior’s top choice was a match school with merit- but we did not allow any consideration of non-merit schools from the beginning. No visits, no research, etc. To fulfill curiosity, we did allow / encourage a couple of tippity top Ivy’s in case the kid won the lottery at ivy but drew the short straw at the merit schools. Not the case so far (has some nice merit EA results) so even if the lottery school comes through, we won’t be full pay there (because it was not the best fit).

24

I could see us going either way. We will have 2 in college next year, son is going to a reasonable public. Daughter has a full range of schools she’s applied to. So far early results have come with nice merit offers, bringing COA to low 20’s for her. If she gets into a dream school with a little aide, bringing it to the 40-45k range I think it may be worth it.

25

Not sure we fit your scenario but – we are full pay, with substantial college savings, but still with a gap at private schools of about $15k per year at current cost of attendance at most privates. We do not really have enough in retirement, and we are in our 50s/60s. We live modestly, our kids haven’t been on an airplane in 15 years and have never been to Florida or California (many of their friends go skiing over winter break and to Florida or the islands for spring break), we are a 1 car family.

Kid 1, very intellectually curious and driven, chose OOS public flagship – Wisconsin – bringing his cost of attendance down to what we could afford using only our current college savings, with money left over to cover the unpaid summer internships he worked in his area of interest. Kid 2, who looks better on paper than Kid 1 is but not really intellectually driven in the same way, wanted small school. All LACs which did not give merit came off his list because we could not rationalize being full pay at a school like Bates, Bowdoin, etc. over good merit at St Lawrence, Dickinson etc. Kid 2 is thrilled with his school, gets 1/2 tuition merit award, and is being challenged very hard by his faculty and peers – just because a school is not in the top 25 does not mean it is not a strong education.

So, we were, perhaps, in a similar financial situation as the OP, and chose NOT to go full pay route.

26
  1. What is/was your income? Roughly $200-300K per year, depends how my business performs. We are are 60 now, have/had 3 in college, no overlap. S2 has autism, spent his fund on a private aide, grades 1-12, which cost more than 4 years in college, but SO worth it for the outcome.
  2. What geographic location do you live in? Midwest, moderate standard of living. While we don't deprive ourselves, we drive our cars for years, don't own a McMansion, don't take luxury trips, don't eat out much, and live below our means. We could both retire, but we like what we do so don't see the point. We have been fortunate to have good health.
  3. What is your retirement funding situation? H will have a pension (teacher), plus we have IRAs, I have a Simple, much in non-retirement accts. Expect a large inheritance from FIL, who is 90. We have never included our home or my practice in our retirement plan.
  4. Were there any special circumstances that allowed you to decide to go full-pay at $50K+/year? (you are expecting a large inheritance down the line, a rich uncle partly funded, etc). We told our kids we would fund them 100% at our state flagship for 4 years. Anything over needed to come from merit. We funded 529s for each since birth so we paid college costs from savings and not current income. They all have ended up at the same LAC.
  5. Any specific regrets/advice? None. S1 is in a PhD program PT while he works FT, heading into college administration, D1 starts dental school this summer (some funds from 529, loans for tuition/fees, we will cash flow her living expenses), D2 is a college freshman and who knows where she will end up.

We did not let them apply to private schools w/o merit aid as I considered them unaffordable.

27

Check into Midwest LACs known for their generous merit awards. Your student has “geographic diversity” plus he’s male. Can get a 25% discount

28

How come the OP in 2013 was a junior applying to college and now is a married couple making 200k?

29

OP - if you don’t have any savings other than your 401K then you can’t afford full pay with 200K income living in NJ. Sorry to be blunt. Your net income would be around 120K after taxes, 401K contribution and insurance. I don’t think you could be living on 60K net/yr right now.

My kids are 5 years apart, and it wasn’t by accident. I knew we weren’t going to be eligible for FA even before the kids were born. I planned on only paying for one kid in college at a time, except I decided to send our kids to private school from K-12, and their tuitions were very close to college tuition. I paid their 17 yrs of private school tuitions out of my bonus. What’s left over went into the saving. There were few lean years when there wasn’t much left after paying for their tuitions, but I always thought it was well worth it. It was the best gift I could give to my kids.

30

Good catch @collegedad13

Op can you explain the age discrepancy?

You posted on

but today you post

How did you go from being a high school junior to in your 40’s?

If you are sharing an account with your child that is against the TOS

31

@woods1234 Both of our children attended private colleges and were full-pay. Well, our son had a modest ~$1,000/year National Merit Scholarship.

We were a one-income family. The vast majority of our savings was in a 401k (403b) at work (my job: college professor). The two kids were 3 years apart in age. This meant that we would be paying their costs for 7 consecutive years, including one overlapping year in the middle. We were committed to the idea that they could attend any college they were admitted to as long as they graduated in 4 years and worked during summers to help pay for incidentals (mainly books and entertainment).

529 plans and their ilk had barely been established when our kids were in high school. Over a number of years we amassed enough simple savings from my income to cover what ended up being 2/3 of costs of attendance for each child. When they attended the COA at their colleges was about $30-35K per year for each child. (Tuition was in the low-mid $20K’s – about half the published tuition rates at the same colleges today.)

So there was a funding gap. This was made up through the generosity of my parents, who some years previously had begun to contribute cash in the form of EE federal savings bonds which at maturity (or rather at the time we cashed them) provided about $40K for each child’s education. My parents made equal contributions to each of their 11 grandchildren. They weren’t rich! My father was an aeronautical engineer; they had 5 children. All of us children attended college paid for by my parents without any need for loans or scholarships. Three attended public universities (UCLA), two attended private colleges (Caltech and Reed).

My wife and I both have multiple college degrees. We value education. We treated our children’s college education the same way our parents treated ours: this was one of the most important things we could do for our kids. We saved money over many years – outside our tax-deferred retirement accounts. We spread out certain of our costs, e.g., kept 1 car for 11 years while the kids were in college. We didn’t have expensive toys. We didn’t have a McMansion. My salary was approaching its peak, and I was fortunate to have income from summer teaching and research as well. So above and beyond the mandatory contributions to my 403b we got just enough money together to cover the kids’ college expenses (with the grandparents’ help). This totally depleted our voluntary savings but had no impact on our mandatory 403b retirement savings. The latter savings are what allows us to live comfortably today.

So there you have it. One family’s multigenerational story.

32

We are a two income family who went thru the college application process last year with our oldest ( of 2) and decided to go with a full pay college ( Stanford) over other cheaper options for our D.
What was hardest to turn down were not the full ride/large merit but much lower ranked schools, but rather higher ranked cheaper options like UC Berkeley ( and UCLA to a degree) since we are instate ( California) and those were 1/2 the price of Stanford. If my D had planned on going pre-med, the choice would have been different. However, since she will be pursuing Computer Science/Economics , for us, Stanford was the obvious choice. Also, our income is substantially larger than the OP, which means full pay wont be a financial strain/hardship for us or for our younger child.

33

We are a full pay family. We live in NY in a high cost of living area.
We (mostly me) agonized over the decision of where are daughter could attend. There was some uncertainty as it related to the stability of my profession and earnings. It was a very anxious time.
Our daughter was an excellent high achieving High School student. We planned very carefully in regard to where she applied. SUNY’s, LAC’s with strong merit aid and lastly reaches.
There are no inheritances coming, no assistance from kind relatives etc. We have no debt and are reasonably well positioned for retirement.
Our daughter walked away from huge merit based scholarships at LAC’s that were ranked in the high 20’s to mid 30’s to attend Harvard. She is a Junior and we have her under graduate education paid for. We had one year of tuition saved prior to her attending and we sold a rental property that we owned free and clear.
I had a lot of sleepless nights but we were very fortunate. I will say that I was and still am very willing to sacrifice the overall strength of our retirement to provide opportunities for our daughter.

34

In case it helps anyone:

  1. New College of Florida is a unique little LAC that sends a ton of grads to grad school where OOS costs aren’t much higher than in-state some places (for now).
  1. Yes, a decent number of LACs have partial scholarships that aren't extremely hard to get once you move a little below the very top tier.
35

We are a single income family in our mid-fifties with income a little lower than the OP but more saved for retirement and a house that’s fully paid for, living in the Southwest so lower cost of living. We did some investigating of merit scholarships. In fact, after D1 got into Pomona ED1, she got invited to interview for a full tuition scholarship at USC even though she had emailed them to withdraw (in fact it took multiple attempts via phone call and email to get USC to recognize that she had withdrawn her application and she continued to get housing forms for a while).

Part of what influenced us was what our own parents did. My parents sent me to Stanford and H’s parents sent him to Claremont McKenna back in a time when they as middle income parents could get some financial aid but also definitely sacrificed to make their contribution. We know we’re in much better shape financially than they were at the time we went to college. Being older parents also means we have a clearer picture of what we’ll have for retirement after sending the kids to college.

D’s experience has been overall positive. Her LAC has definitely lived up to the promise of close relationships with faculty. Over Winter Break she was in email contact with 4-5 professors (including department heads) about various issues including LOR’s for summer research positions, future course selection for her intended double majors and how to best prepare for applying to graduate school. In each case she heard back from the professors within 2 hours even though it was Winter Break. Yesterday she was texting me while saying she was also in the middle of a “email convo” with the head of the math department about course planning given her intention to apply for graduate school in economics.That sort of experience makes us feel good about our decision.

We also have one more to send to college. D2 has some LD issues and also wants to be pre-med, so in her case the selection of college will be driven primarily by those two factors and I think there’s a high likelihood she’ll end up at one of our in state universities.

36

My D goes to an Ivy which is need based so she did get some financial aid even though we make almost as much as OP does. We paid our part through 10 installments each school year. Trust me, the cost of her tuition each month is twice our mortgage. It is a choice we made. I decided not to buy a new car (drive a 2010 Honda Accord), not to redo my kitchen in my 20 year old home, replace carpets/floors, or a few other things. But we still go on vacations, eat out and basically have a decent life, just not an extravagant one. That was our choice and I do not expect others to do it. But I am just saying it is doable. Believe me, when she graduates in 2018, I am gutting my house and having a field day!!

37

I’ll answer. We were full pay for two kids between 2013 and 2019 …at One private and one pricy OOS Public colleges.

  1. What is/was your income?

Around 200k
2. What geographic location do you live in?

Chicago area… expensive Suburb .

  1. What is your retirement funding situation?

We started contributing the maximum to our retirement accounts when we were in our 20s H has a very small pension (maybe 500/month) after company Eliminated pension fully funded our 401ks, got company matching. Got lucky with some investment decisions. Over a mil in retirement funds.

  1. Were there any special circumstances that allowed you to decide to go full-pay at $50K+/year? (you are expecting a large inheritance down the line, a rich uncle partly funded, etc)

That was not our expectation. We funded 529’s. This year I had a maiden aunt pass away. She lived like a pauper. Turns out she was anything but. But we had no idea.

  1. Any specific regrets/advice?

H worked full time. Me part time. We started funding 529s the week older daughter was born. Lived off one salary minus day care expenses til girls were in 4 th and second grade. Then every cent of my salary to 529 ( girls were in religious school after school the 2 days I was in the office and that provided equivalent of day care)

One small vacation every other year, 10-12 year old cars, house cost about half of what our numbers said we could afford.

Save , save , save. Biggest thrill was talking to college counselor and answering " “No” to “Is cost a factor?”

38

OP–please respond to post 27.

39

We are full pay for DS14 and will be full pay for DD18. DS has a 22K annual merit scholarship which lowers the bill every semester but we have a deal with him that any leftover college funds are his for graduation so it’s not like we will see any of it. He, however, will graduate debt free with a nice start to his retirement and savings funds.

In any case, I’ll answer the specific questions asked:

  1. What is/was your income?

I retired 4 years ago in my mid-40s. At the time our combined income was north of 300K but now that I am retired we are around 200K. DH plans to retire in 6 years, at 60.

  1. What geographic location do you live in?

East coast, in a high cost of living area.

  1. What is your retirement funding situation?

See #1 above. If we wanted to spend down our entire retirement savings (given our life expectancy) we would actually have a higher income in retirement than we do currently.

  1. Were there any special circumstances that allowed you to decide to go full-pay at $50K+/year? (you are expecting a large inheritance down the line, a rich uncle partly funded, etc)

No inheritance or other windfall expected down the line. I am a first generation immigrant and my DH is a first generation college graduate, raised by a single mother. There is no family money ha ha.

We live well under our income, saved aggressively for both college and retirement, and were lucky with our investments.

  1. Any specific regrets/advice?

No regrets. From day 1, we have always said that we wanted our kids to be able to attend any school they wanted, without finances playing a role. DH and I both knew what it was like to struggle through college, and to be the kid who was rummaging through couches looking for change to buy ramen. Sometimes that was ok, but not every weekend!

So we saved about 250K for each kid fully anticipating to pay all costs associated with college. We have been upfront with them about that, but also told them that any leftovers would be theirs after they graduate. If they used it all up by going to an expensive school and not getting merit they could, but there would be nothing left. If they went in-state and/or got merit, then they would have a nice nest egg. First kid went the merit route as noted above, and the second kid is TBD.

40

Similar circumstances for us. Central NJ, high cost of living. Both parents work. 529s since birth for 2 kids. Mortgage nearly paid off. Retirement accounts are solid. Oldest, D, is full-pay and second year at a top-10 private, turned down scholarships at other schools to attend. We chased the merit aid and D applied to several private reach schools, getting into them but not getting merit aid. S is a senior with several EA scholarships to consider, but is looking forward to the regular decisions from his reach schools, which will likely also be full pay for us.

Here’s the rub. When we started the 529 accounts, we were financially OK, but often struggled to put in as much as we could each year. Some years we were able to put in more than others and we saved a fair amount, but in the end, college costs escalated so much over the past 19 years that we didn’t have as much as needed to cover all the costs for two kids for 4 years each. We’ve budgeted the costs over the next several years and can make it work. We also stipulated to our kids that we will pay their school costs but if they turned down schools that offered them merit, they would have to take work study jobs and take out basic school loans to help cover expenses and give them “skin in the game”. Turns out D loves her tech-related job and may have found a career niche.

We’re frugal; driving older cars and not eating out as much, but we feel the educational foundation is important so we’ve opted for the university that seems to be the best fit for our kids. So far … no regrets.