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September 13, 2010

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I think you may be overestimating the say you get in choosing where your kids go to school :)

Then again, you have the money, which definitely gives you more bargaining power!

Hmmm... This makes me feel better about our savings plan. Which isn't great at the moment but will be ramped up considerably once the mortgage is paid for. That being said, I do not expect to pay for my children's school completely. I will split the costs 50/50 with them, with any scholarships, etc., that they get counting towards their 50%.

Perhaps I'll set up something where if they get a full (100%) ride to school, I will buy them a brand new car.

But I do expect my kids to pay for at least some of their college, and if that means them taking out loans I don't think that's the worst thing in the world.

Does it strike anyone else as ridiculous that college is so incredibly expensive these days? I went to a community college for two years, then a good public university for two years, so I'm on the debt hook for a lot less than some people I know, but I can't imagine my parents having saved that amount of money for me to spend in college.

These figures are refreshing, as I saw something some months ago on Suze Orman that placed the cost of college 18 years from now somewhere in the neighborhood of $600k, and I almost most my mind.

My daughter is 2.5 year old now - I have $10k saved for college and recently raised my monthly contribution to her 529 to $800 a month. Is that overkill? I am fully expecting private colleges to cost $100k a year when she goes. I am not counting on any financial aid but am hoping for scholarships.

I'm with you Jim. We're trying to save as much as we can now. I figure we can always slow down later if needed. Our daughter is 1 and we're saving $500/month but I'm considering increasing this amount. I'm definitely curious to hear what people think in terms of what is overkill.

My kid is screwed compared to yours.

I figure a local college (we fortunately have the UW Madison, Edgewood College and a good state technical school right here in town, plus a few other for-profit technical schools) and a steady part time job will cover the majority like I did back in the 80's going to the UW. I got a BBA in marketing and graduated with $3,500 in student debt. Worked part time during class and full time when class was out. My dad covered half my tuition and gave me $50 a week, but that was it - the rest I earned or borrowed.

We will help him a bit more the first year, but after that it's some help with tuition and books and Sunday chicken dinner and a few bucks a week - other than that he's on his own.

My retirement is WAY more important than him partying for 4 years like I did. $50K plus is insane to send the kid away to listen to a bunch of overpaid professors.

The older I get the less I value my education. It really wasn't worth that much. I did just fine without ever showing my diploma to anyone.

I've got twins--they'll both (hopefully!) be off to college in 6 years. But I have to come up with the $ for 2 college educations all at the same time. My cost guesstimates run about the same as FMF's---about $50K/child/year at a good state school (yes, like UW Madison!).

How I'm planning it:
- their Dad (we're divorced) hopefully pays 1/2. So I'll still need to find about $50K/year to pay for college.
- my kids are Hispanic--so hopefully some of the current awesome minority scholarships will still be around in 6 years! We'll try for academic scholarships as well, of course. Not counting on it, but it would sure be nice!
- I worked and took some loans for college--didn't kill me at all and working while attending college is great experience IMO. I'm definitely encouraging our kids to work and save themselves. I figure they can contribute approx $10k/yr from combined working and loans. Nothing like "skin in the game" to make a kid focus on finishing in 4 years and getting a degree in something useful!
- I have 529's for them funded at $500/mo that should be at about 45K each when they start college.
- That leaves me with a potential bill of about $30K/year.
- Even though we're not eligible for financial aid (both parents have high incomes), I currently save more than $50K/year, and I have a large amount of savings and investments. So I don't think it will be too difficult to cover the remainder from savings and income.

I think a college education is crucial. I grew up poor, and I'd still be poor if I hadn't gotten my education. I do think it's really expensive these days, but it's still by far the most likely ticket to a satisfying life. Sure Bill Gates can make it without college, but he is not typical.

No better way to provide your children with a real-world experience than to have them pay their own way through college. When I left for college, I left with my clothes and my car. I had scholarships, had to take out loans, worked a part-time job, worked a co-op job, worked during the summer, worked a side tutoring job, (I worked a lot!), and rarely had to borrow money from my parents.

I fully expect my daughter (9 months now) to do the same.

I have a friend who chose between retiring early or putting his son and daughter through college. His son started college this year and his daughter will likely FINISH college in 10 years.

Sorry to say it, but if I had to pick between my own early retirement and paying for my children's education, I'd pick the early retirement. There are many ways to pay for college.

FMF,

Your post is very timely since September is National College Savings Month. Getting the word out about college savings is always a good thing.

I think the figures released by fidelity regarding public and private expenses should not heavily relied upon by anyone. I have done comparison studies for individual families on public and private colleges and after factoring in the financial aid at the private college, the costs are more times than not pretty comparable (between a private and public college system). that is not always going to be the case but families should not automatically discount a private school just because of the sticker price.

On another note, you make note about choosing the best value college for your children. My hope would be that you choose the best college for them that they feel the most connected to and let finances play a secondary role. Reason being, if they are "forced" to go to a campus that they can not get acclimated to, you may end up spending more money after they withdraw from the university mid-semester and rack up all the expense but don't have any grade to show for it. Just my two-cents though...

Doug

One point. I went to a state school for all 4 years instead of the 2 in CC and then 2 at the major university versus my wife that did 2 and 2. The 4 years at the state school is a lot better in my mind. You build friends from freshman year to senior year, you have better teachers, you get to love and understand the university, you get to be away from mommmy and daddy so you can grow up.

Do not hold your kids down by making them live at home with you for the first two years.

@ Anthony... Your post sounds like my college years. Wouldn't trade them for anything and proud I did it myself.

I am sure I will change my opinion on this over the next 17 years (my boy is 1), but I would like him to assume that he will be figuring out his own way and that I will help when I can. Not sure how I will do this yet, but I do think it is very crucial for him to be self reliant as I was. I do have a 529 account started with less than 10k in it, but I try to add as much as I can without hampering my own investment plans.

Ronald is absolutely right. Freshman year at college was the most exciting (and most transformative) year of my life. Also, no offense to those who went the CC route, but you get a lot more out of a good university if you attend for four years instead of transferring in from a CC.

Pop - You may get a lot more, but you can also take CC classes over the summer when you are back home, as well as your senior year in high school - so you can graduate early from state school. For many people, the option of going for 4 years just isn't there.

Most of these college savings numbers seem inflated to me.

Just looking at UofMichigan (because I'm familiar with it as a school - and I know its on the more expensive side of state colleges) - undergrad is 12 - 14k tuition & fees (in state) with a budget of 24 - 25k total cost including living (again, instate).

Yes, if you go to an out-of-state school, tuition & living expenses total costs are estimated at 50k.

So, how much of your kids "living expenses" do you cover? Do you cover the dorm room & meal plan, but not the cell phone & hanging out with friends? At what point is the line drawn?

I just see tremendous value in having my kids help pay for their education. They are adults when they are in college - they are not kids. I hope I will have raised them to the point where they are able to make this step on their own. I expect that when they have a financial stake in it, and can appreciate how expensive it is, they will work that much harder to do well.

No kids yet so no savings. Even when they do show up (in the next year or two) we probably won't be saving right away. As much as I would like to help my kids with their college (as my parents did), paying off our debt and saving for retirement is much more important to me.

@FMF: You should fill out the estimated FAFSA online. You might find you are expected to contribute more than you think. Your "Expected Family Contribution" is based on both your income and your assets. If you have saved a lot, you will be penalized even if your income is low.

My EFC is $180K PER YEAR, so effectively my child will receive NO need-based aid. At high-end schools, ALL aid is need-based because everyone has merit. Did anyone notice that Harvard turns away a certain number of kids with perfect SATs and also some who were first in class?

Mark --

I'm expecting to pay it all (other than scholarships my kids earn). How could I be expected to contribute more than that?

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