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I keep seeing these commercials on TV usually by a bank or some other financial institution. In these commercials someone goes to see an adviser and saving for college for their kids is always part of the budget. So I went to a calculator on line and our child who will be born in March will need $300K to go to college, with a monthly contribution from us of $600. Are they insane?
I honestly don't know what we will do, but that amount seems absurd. My idea was that I would advise my child to get as many AP classes in HS as he/she can, possibly take some 101's at a cheaper school and transfer to a better school for the last 2-3 years. I went to school in Canada, my tuition was $10K a year as an international student. And we paid per class, not per semester. So during the summer I would take classes back home for cheap at the community college and transfer them in. We would like to save something, but looks like what we can save might not be enough for one year.
What are others doing?
Also, I think, with the internet and other technologies that there might be less costly alternatives for a college education. Or possibly that the bubble will burst at some point. That calculator is predicting that tuition will increase 6% per year. So what costs $25K now, will cost $72K per year in 18 years. Does that make sense?
I might add to this that both us still have our student loans to pay from our Master's degrees. If all goes well, we'll be done with those in 7-10 years.
I don't think tuition will rise to that degree, simply because almost no one will be able to afford it. There will be little to no demand at this price.
This will be the equivalent of a mortgage for many that has to be paid back within ten years and is not dischargeable in a bankruptcy. Considering the trend of how many graduates cannot find appropriate, it is financial suicide to pay $72k for education, even twenty years from now.
I don't think tuition will rise to that degree, simply because almost no one will be able to afford it. There will be little to no demand at this price.
This will be the equivalent of a mortgage for many that has to be paid back within ten years and is not dischargeable in a bankruptcy. Considering the trend of how many graduates cannot find appropriate, it is financial suicide to pay $72k for education, even twenty years from now.
I agree with you. I also think that things will change in the way the education system is structured. Right now, in my opinion, most majors don't prepare you for a job. I think it would make sense to have 2 years of basic training, all your 101's that can be done practically anywhere and then another 2 years of more practical training, internships, hands on learning. Obviously people will still want to major in the humanities, but I honestly think they will end up as baristas. I think the whole dynamic is changing, the types of jobs that will be available etc. I think there will be a shift back to the trades.
VERY few reasonably good students pay full list price for college. Sure, save what you can to help out but the reality is when they are in college there are scholarships to be had (academic and otherwise), your current income can be used to help pay for school, kids can earn money over the summers, and then add in savings.
If you have a student that is a B student or better with reasonable ACT/SAT scores, you can expect to pay 1/2 of the list price or less at private schools--state schools give very little in academic money and usually end up costing more for better students for the most part. Sending kids to community college to start can actually end up costing more in the end if kids qualify for scholarships at a 4 year college because transfer students just don't get the same money as freshmen.
$600/month would MORE than pay for what our current college students have to come up with after scholarships, etc. just from current income...actually $600 is more than they have to pay total right now....
Most financial advisors recommend placing your retirement savings at a higher priority than your kids' college savings.
We opened Coverdell Savings Accounts for our four kids. That's $2K/year per kid. At 10% annually that's $99K at age 18. We didn't do 529s because when 529s first came out they were considered assets of the child (now they are parents assets) which would have hurt financial aid eligibility.
Another thing you can do is gift shares of your own (not IRA or 401(k)) mutual funds to your kids at college time. The kid cash them out at his tax rate.
But the idea of doing two years at a community college while living at home then transferring to a state university is a good one. Best thing to do is major in something useful. An engineering degree from State while living at home and incurring very little if any student debt is almost always a better deal than going to an expensive Name Brand University and majoring in something in low demand.
Most financial advisors recommend placing your retirement savings at a higher priority than your kids' college savings.
We opened Coverdell Savings Accounts for our four kids. That's $2K/year per kid. At 10% annually that's $99K at age 18. We didn't do 529s because when 529s first came out they were considered assets of the child (now they are parents assets) which would have hurt financial aid eligibility.
Another thing you can do is gift shares of your own (not IRA or 401(k)) mutual funds to your kids at college time. The kid cash them out at his tax rate.
But the idea of doing two years at a community college while living at home then transferring to a state university is a good one. Best thing to do is major in something useful. An engineering degree from State while living at home and incurring very little if any student debt is almost always a better deal than going to an expensive four year college and majoring in something in low demand.
In real funds today, that 99K would EASILY pay for 4 years of college at 99% of the schools across the country.
Most financial advisors recommend placing your retirement savings at a higher priority than your kids' college savings.
We opened Coverdell Savings Accounts for our four kids. That's $2K/year per kid. At 10% annually that's $99K at age 18. We didn't do 529s because when 529s first came out they were considered assets of the child (now they are parents assets) which would have hurt financial aid eligibility.
Another thing you can do is gift shares of your own (not IRA or 401(k)) mutual funds to your kids at college time. The kid cash them out at his tax rate.
But the idea of doing two years at a community college while living at home then transferring to a state university is a good one. Best thing to do is major in something useful. An engineering degree from State while living at home and incurring very little if any student debt is almost always a better deal than going to an expensive Name Brand University and majoring in something in low demand.
Your strategy sounds good. We could do something like $2K per year.
As far as the bolded part, I totally agree with you. However, did you listen to your parents? I didn't I did major in something useful, but only really because it interested me and the humanities did not. If my kid says I want to go to school and major in Latin, what can I do, except not pay for it? But I don't want to create that tension either!
We put $200/mo in the 529 right now (she's 2 and I'm also paying for daycare). We have a second little one due soon... but I don't think I'm going to up the amount until daycare ($1000/mo) is done with. Then I can pull some of that over into the 529, but until then... $200/mo
I paid for college, my MBA and my law degree on my own. My husband's family paid his way through school but he paid for his DDS. We're finding a middle ground!
Good for you for starting already! We're mid and late 30's and our kids are already in elementary school and we just got started. We're contributing $500 per kid, per month. We were told we would need $500k for both of them. Our oldest has high functioning autism/add and I'm not all that confident he'll actually be capable of going to college, and that is why I'm not too concerned with having everything covered before he reaches 18. In the worst case we'll use his account to completely pay for the younger neurotypical sibling. Don't sweat it if you can't/don't want to meet that crazy number. You've got the right idea with AP classes, transfer credits, etc.. that's exactly what we want to do too.
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I did major in something useful, but only really because it interested me and the humanities did not. If my kid says I want to go to school and major in Latin, what can I do, except not pay for it? But I don't want to create that tension either!
