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June 19, 2006

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Having recently completed Grad school and now havings twins of my own, saving for college has been on my mind a lot lately - and so far I've decided to do it the way my father handled it with me.

For the first year of college by dad agreed to pay for 100%.

The second year it was 50%, the third year 25%, etc. The thought being that as I progressed in school I would have a better handle on time management and studying effectively so that I could work as well as go to school. I thought this plan was very effective because it allowed me to get my feet wet Freshman year, have that true "college experience" but then it eased me into reality.

All of the comments that you quoted seem to have very well laid-out and logical positions. My wife and I have not yet decided our strategy for college payment. We are already putting away small amounts of money in an account for college, although we don't yet have any kids.

In my case, my father told me that he would pay for four years of college tuition at in-state costs. My mother was responsible for paying for my books (my parents are divorced). My undergraduate degree took 5 years to complete, because I changed schools after the first year. My father held to his word and paid for the first four years. My mother paid for books for all five years. I funded the fifth year with student loans.

I then decided to enter into a one-year intensive MBA program, which was funded mostly by a scholarship. I funded the remainder through student loans. I did work through my five-plus-one years of college to pay day-to-day living expenses, additional school fees that are tacked onto tuition, etc.

This plan worked out, for my father at least. He makes a rather respectable income, and my stepmother was able to purchase a new Lexus when they stopped paying for my college. My father is also driving a brand new car, and they live in a McMansion. I, on the other hand, am living with $20K in student loans, the payments on which would make a nice monthly contribution to my Roth IRA if I did not have the loan burden.

Honestly, I'm not sure whether or not my father took the right path in setting a hard limit to what he would fund. I suspect that my stepmother had a lot to do with the end of his funding of my college. If I were as well off as they are, I would almost certainly continue to pay for my child's college rather than purchase a new Lexus. However, if my income does not rise at higher levels through my career than it has since graduating college (I got a job 1 year after graduation making less than half of the average MBA graduate salary) I'm afraid that I will have to set limits on how much of my childrens' college I will be able to fund.

When it was time for me to start looking at colleges, my parents basically just said, so, where've you decided to go? I didn't get any guidance from them on what we could afford, and we only visited a few schools. I really wish my parents had taken the time to sit down with me and look at various schools, the difference between state and private, etc etc.. things might have been a lot different. As it was, since I had heard about getting scholarships and loans and so you didn't have to pay the full cost, I applied and got in to an expensive private school. Naturally the scholarships and loans weren't enough, so I bet at that point my parents were wishing they had pointed me in the direction of a state school! They did support my decision, but I wish they had talked to me about what was involved first, since at the time I wasn't particularly invested in going to that school over any other, and probably would have been amenable to going someplace a lot cheaper if they had brought it up. I just didn't know it mattered to them.

There are a number of calculators out there to help one decide how much college will cost in the future. I used one of these calculators to figure that if I put about $22K aside for each of my children, when they were born (2 months ago and 2.5 years ago) then their tuition should be covered. Basically the price of a car in today's dollars.

Using the power of compounding to pay for college seemed like a good idea and a lot less painful than worrying for the next 18 years.

A quote: "I am in disagreement with the let the children pay for it. My core belief is that it is the parents' primary responsibility to help their children grow and prosper in our society."

This is a total non-sequitur. Letting the children pay for it -- requiring them to make their own investment in their own future -- does not in any way contradict helping their children grow and prosper. In fact, it could be argued that it encourages the children to grow and prosper as adults.

I will not make that argument here; I just wanted to rebut the unstated assumption the poster who said the above was making.

(It seems to me that either decision could be right; it would depend on how the parent brought the child up.)

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