How do you save for kids college fund?

[disneysteve]

One problem I've seen with the "my kid can pay his own way like I did" theory is that times have changed. College costs have risen much faster than inflation or wages. When I was in college in the 80s, it was perfectly possible to work your way through without killing yourself and still have time for classes and study and social activities. Today, costs are 4-5 times higher but wages aren't. Working a reasonable number of hours just won't cut it any more.

 

[MrsPete]

Something else to think about is possibly needing more than 4 years to finish an undergrad degree. In my state, like most others, the state schools are completely full. We know quite a few good students who are struggling to get into classes and it can end up dragging out your time in school. (For classes that have to be taken in a specific order) If your child changes majors it most often can lead to extra classes.

I keep up with a number of my old students, and I hear that people need extra time to get through school in a number of situations:

- They mess up the first semester /year and have to repeat classes. Sometimes failing a specific class in fall means they aren't qualified to get into another specific class offered only in the spring.
- They change majors.
- Circumstances prevent them from taking "full loads" -- they can't handle X number classes, they're sick or have family obligations, or they work more than part-time.

But I don't hear my former students saying that they're graduating late because they're unable to get into the classes they need.

So its best to have Less in the Bank......

Within reason, yes. Money in your retirement accounts and money paid into a mortgage on your primary residence is "yours". Money sitting in your checking account is fair game. Money in your child's savings account will be "first out the door".

On the other hand, don't take this to the extreme. If you earn $250,000 a year and have only ten dollars in your checking account, the FAFSA people will think you've been frivolous with money -- and that won't help your cause. Also, if you have $500,000 in savings when you fill out your FAFSA for your child's freshman year in college . . . and then you have nothing when your child begins sophomore year, the FAFSA people are going to wonder where you've hidden it.

So it's income AND savings.

You can find books on how to manage your money in such a way that you'll maximize your chances on the FAFSA. But don't expect them to work miracles for you. The government absolutely thinks you can afford more than you think you can afford.

She is well aware though that if she does not go to college that money goes right back to me and my brother-its not hers to just go out and party with.

Oh, that goes without saying! I've scrimped and saved and done without . . . and now that my first child is in the process of choosing a college, I'm very pleased that I'm able to pay for an education that'll take care of her and her future family for the rest of her life. Nothing else I could possibly buy would bring such a return.

But if she chose not to go to college, my retirement house'd be a little nicer, or I'd travel a little more in retirement. The money isn't hers to do with as she likes! It's for education . . . or it stays with me. I'll scrimp and save for her to get a college degree, but I'll not scrimp and save so my adult child can have a fast new car or nice clothes or whatever else.

One problem I've seen with the "my kid can pay his own way like I did" theory is that times have changed. College costs have risen much faster than inflation or wages. When I was in college in the 80s, it was perfectly possible to work your way through without killing yourself and still have time for classes and study and social activities. Today, costs are 4-5 times higher but wages aren't. Working a reasonable number of hours just won't cut it any more.

I agree. We're about the same age, and I did work my way through college -- though at times I wondered if it was going to kill me. Today, without extraordinary circumstances, it's exponentially harder.

I think many people think, "I'll never save enough, so I'm not going to try -- my kid'll just have to take out loans." But that's faulty reasoning. Maybe you can't do it all, but whatever you can do will be helpful to your child. If you can swing half the tuition, it's half the tuition that the child doesn't have to come up with. If you can pay the tuition and leave room/board to the child, that's smaller loans/fewer working hours that the child has to manage.

Thinking back to my college days, just a small amount of financial help would've been wonderful. To think that my parents supported me in some small way would've made such a difference to me. Even if they'd just been able to pay books (which was only about $200/semester when I was in school), I would've been so grateful.

 

[disneysteve]

iI think many people think, "I'll never save enough, so I'm not going to try -- my kid'll just have to take out loans." But that's faulty reasoning. Maybe you can't do it all, but whatever you can do will be helpful to your child.

Absolutely! I think some people see the projections of what college will cost in 10 or 20 years and get scared off from saving anything.

When I went to college, costs were about $7,500 first year and $10,500 by year 4, so about 36K all together. I graduated with $14,500 in debt, so my parents covered the remainder, plus living expenses. Of course, along came med school and by the time I was done with that, my debt had hit 102K but that's another story. The point is my parents helped with undergrad and limited what I had to borrow.

As I said, we currently have a little over 40K in DD's 529. She's a sophomore. I know that won't cover 100% of college but it'll make a nice dent in the bill. We'll cover some of the rest out of cash flow (won't be putting $300/month into a 529 anymore, may have the mortgage paid off right around then, etc.).

 

[MrsPete]

Absolutely! I think some people see the projections of what college will cost in 10 or 20 years and get scared off from saving anything.

When I went to college, costs were about $7,500 first year and $10,500 by year 4, so about 36K all together. I graduated with $14,500 in debt, so my parents covered the remainder, plus living expenses. Of course, along came med school and by the time I was done with that, my debt had hit 102K but that's another story. The point is my parents helped with undergrad and limited what I had to borrow.

As I said, we currently have a little over 40K in DD's 529. She's a sophomore. I know that won't cover 100% of college but it'll make a nice dent in the bill. We'll cover some of the rest out of cash flow (won't be putting $300/month into a 529 anymore, may have the mortgage paid off right around then, etc.).

Agreed on all counts. In the 80s, I think my tuition was about $500/semester. Room/board wasn't a whole lot more, but minimum wage was only $3.35, so it wasn't easy. It's skyrocketed.

 

[mtomlin66]

Mrs Pete -
If you don't mind my asking... what state are you in? I'm thinking that I may need to encourage my daughter to look outside of the Pennsylvania / New Jersey area!

 

[disneysteve]

In the 80s, I think my tuition was about $500/semester. Room/board wasn't a whole lot more, but minimum wage was only $3.35.

And now, tuition is $2,900/semester (using your numbers) so almost 6 times as much but minimum wage has only a bit more than doubled. Perfect illustration of what I was saying about no longer being able to work one's way through school. And that doesn't even count the insane textbook prices today.

 

[DawnM]

Are you talking about tuition only or tuition plus room and board?

It looks like many NJ colleges are around 10K-12K for tuition. I know there are fees and books, but if a child could live at home, costs can be cut by about 40% to 50%.

It may not be ideal, but it is what we can offer our kids. If they wish to live on their own, they will need to fund that portion.

In our area of NC, local public tuition for college is less than most K-12 private schools.

Dawn

Here in NJ, the state schools are already over 20K and we've got 3 more years to go so certainly over 25K by the time DD starts and probably 30K by the time she's done. That's over 100K for 4 years just for tuition, room and board. That doesn't count books, supplies, computer, living expenses, etc.

So anyone who thinks they don't need to save much because they're going to send their kid to a state school might be in for a shock.

 

[disykat]

I don't know how y'all can afford to live in New Jersey. No wonder our schools are full of your students; even with out-of-state prices, our prices are so much better.

Here's what my daughter's #1 school choice, a mid-sized well-respected state school, costs:

Tuition & fees, includes textbook rental -- $5742 per year
Dorm room -- $3800 per year -- this is an average; basic dorms are lower, while on-campus apartments are higher
Meal plan -- $2140 per year -- this is the "standard meal plan"; lesser and greater meal plans can be chosen

Her second-choice school, also a mid-sized well-respected state school, though on the other side of the state, is a little more expensive:

Tuition & fees, does NOT include textbooks -- $5672
They group dorm & meal plan together -- $7900

You can seriously do tuition, books, room, and board for less than $12,000? Here in Washington state it's around 20K at state schools as well - about 25 at the two highest ranked state schools.

 

[Julia M]

We have one in college and two in HS (9th and 11th grades). All our kids have (or are currently) in Catholic school, so we have not put alot away for college. On the other hand, we are already used to paying tuition!

Oldest ds (in college) helped us out alot by becoming a RA, which covered all his room and about 70% of board. He also worked this summer and made some good money. So things are stable this year and next. We do have a rough couple of years in the middle, so I expect we'll borrow something.

We have told the kids that they need to keep their costs to what a public CA school costs. That may have been a miscalculation, because the UC costs are rising pretty fast. DD wants to go out of state-I have told she needs to attend a school that will give her some type of waiver for out of state tuition. Youngest ds will go to school in CA, I am sure.

My expectation is to pay for my kids colege, but at the same time, I expect them to work and get good grades in college.

Julia

 

[tnkrbell13]

When my kids were younger(but still a little old to be just starting) I got a raise at work, I figured out the amount I would bring home and divided it between the two of them and had it taken right out of my paycheck and into a credit union account. I never missed the $$$ and it was a good start for one kid's community college expenses, and mostly books etc... for other kid's University expenses.
They still both will have loans, but this helps them with extras. Money still goes into the accounts, so there is usually enough for books, parking passes, whatever extras they need each semester.

 

[disneygals]

So its best to have Less in the Bank......

Do a google search for asset protection allowance

 

[buckirj1]

Lots of good ideas. Here's a few more:

1. If you can, find work at a University. Most of them offer grade-based scholarships no matter where the student attends, or reduced/free tuition if the student attends the employee's university. I'm childfree, but many colleagues have used this program. One even doubled up, as his wife took work in another nearby college. Don't blame 'em...it's gotta be tough having all your kids in college at the same time.

2. Encourage high-school internships at government agencies. A colleague's daughter did this. She parlayed her part-time internship into a full-time job offer where the agency is paying for her to attend college part-time for something she would have majored in anyway. This is a longer path, but her future is bright if she sticks with it.

3. There's always military service...

 

[MrsPete]

Mrs Pete -
If you don't mind my asking... what state are you in? I'm thinking that I may need to encourage my daughter to look outside of the Pennsylvania / New Jersey area!

NC, but keep in mind that the prices I quoted are for in-state students.

And now, tuition is $2,900/semester (using your numbers) so almost 6 times as much but minimum wage has only a bit more than doubled. Perfect illustration of what I was saying about no longer being able to work one's way through school. And that doesn't even count the insane textbook prices today.

Yes, though to be fair, it's worse than that: Room and board have increased more than tuition. In part this is because students expect "more" than we had: I know of several colleges that've taken rooms that were double occupancy back when I was in school and have made them all singles. And new construction student housing is all suites or apartments; they're not building traditional dorms anymore. Fancier finishes, more amenities . . . and those things cost.

Incidentally, we're in a quandry about books. We'd discussed what we'd pay and what we expect our girls to pay -- and we'd made those expectations clear to our oldest. One of our expectations was that she'd work full-time in the summer and save that money for books and parking sticker (if she ends up taking her car to school). Now, as it turns out, her #1 school choice uses $105 of the tuition to cover textbook rental. So if she ends up attending that school, part of her obligation just disappeared! I'm wondering if we should expect her to pay $105 of the tuition or if she should say, "Look, when we made the agreement, we didn't expect this. This is the new deal." and shift her obligation to something else.

It looks like many NJ colleges are around 10K-12K for tuition. I know there are fees and books, but if a child could live at home, costs can be cut by about 40% to 50%.

It may not be ideal, but it is what we can offer our kids. If they wish to live on their own, they will need to fund that portion.

Keep in mind that while that's perfectly fair, and while it's a great plan . . . it may or may not work out in the long run. For example, when my husband started engineering school, only two NC universities offered the major he wanted, and neither was drive-able from his father's house on the coast (NC State would've been the best option, and it was a solid 3-hour drive one way, 30 minutes of it in terrible traffic).

As our oldest actually works towards college applications, I'm finding that MOST of our well-laid plans are working fine, but we're going to be forced to adjust some of them. In the post above, I just mentioned that our textbooks plan is questionable. Also, we'd told our girls that we could pay for 4 years/8 semesters of school -- we meant that we cannot pay for a 4-year degree to stretch out to 5-6 years . . . but now we find that our nursing-major daughter will have a MANDATORY 5-week summer school between sophomore and junior year (it's kind of a pre-clinical class, and is only offered in that summer school session). So we're going to have to give in on that point and pay for one summer school for her. It's not that we don't have the money; it's just that we can't pay-pay-pay for everything (we do have another child to educate, and we do have our own retirement to consider), and we wanted to start out with our limits up front.

Anyway, it's better to start out with your plan, but be prepared to be flexible.

You can seriously do tuition, books, room, and board for less than $12,000? Here in Washington state it's around 20K at state schools as well - about 25 at the two highest ranked state schools.

Yes, our flagship university (UNC Chapel Hill) runs around 16K/year, and our mid-tier schools run 10-12K. Several of our schools include textbook rental in the tuition cost. That is tuition, dorm, and meal plan; and these schools are superior to the average private schools in our area.

 

[Piecey]

Mrs Pete -
If you don't mind my asking... what state are you in? I'm thinking that I may need to encourage my daughter to look outside of the Pennsylvania / New Jersey area!

My brother graduated from WVU in 2006 and he said one year that there were more students from New Jersey in attendance than West Virginia.

It was cheaper for them to pay out-of-state tuition at WVU than go anywhere in-state in NJ.

 

[DVCLiz]

Incidentally, we're in a quandry about books. We'd discussed what we'd pay and what we expect our girls to pay -- and we'd made those expectations clear to our oldest. One of our expectations was that she'd work full-time in the summer and save that money for books and parking sticker (if she ends up taking her car to school). Now, as it turns out, her #1 school choice uses $105 of the tuition to cover textbook rental. So if she ends up attending that school, part of her obligation just disappeared! I'm wondering if we should expect her to pay $105 of the tuition or if she should say, "Look, when we made the agreement, we didn't expect this. This is the new deal." and shift her obligation to something else.

As our oldest actually works towards college applications, I'm finding that MOST of our well-laid plans are working fine, but we're going to be forced to adjust some of them. In the post above, I just mentioned that our textbooks plan is questionable. Also, we'd told our girls that we could pay for 4 years/8 semesters of school -- we meant that we cannot pay for a 4-year degree to stretch out to 5-6 years . . . but now we find that our nursing-major daughter will have a MANDATORY 5-week summer school between sophomore and junior year (it's kind of a pre-clinical class, and is only offered in that summer school session). So we're going to have to give in on that point and pay for one summer school for her. It's not that we don't have the money; it's just that we can't pay-pay-pay for everything (we do have another child to educate, and we do have our own retirement to consider), and we wanted to start out with our limits up front.

Anyway, it's better to start out with your plan, but be prepared to be flexible. Yes, our flagship university (UNC Chapel Hill) runs around 16K/year, and our mid-tier schools run 10-12K. Several of our schools include textbook rental in the tuition cost. That is tuition, dorm, and meal plan; and these schools are superior to the average private schools in our area.

This makes me laugh, Mrs. Pete - you have been the most inflexible poster on every single college thread for the last five years. Are you honestly telling us that because your daughter no longer has the more expensive book option, you'll make her pay some of her own tuition or make her pay for something else? And you actually begrudge having to pay for a summer session when you have already made out like a bandit compared to other parents by limiting her to a NC public university?

I will never understand how and why you think like you do about your daughters' educations.

 

[crisi]

My brother graduated from WVU in 2006 and he said one year that there were more students from New Jersey in attendance than West Virginia.

It was cheaper for them to pay out-of-state tuition at WVU than go anywhere in-state in NJ.

As I recall, North Dakota and Kentucky both have really reasonable out of state tuition costs as well at some (maybe not their flagship) schools. At least currently.

As for living at home, our kids have three choices in public colleges - community/technical college, Metropolitan State University or the University of Minnesota. The UofM is expensive even when you live at home. The other two are affordable, but degree options are limited.

We do have some really good private colleges.

 

[DawnM]

Yes, we are aware that things may need to change, but it is better to tell our kids the plan NOW so that they are prepared.

If they wish to get a degree that will require going away and spending more $$, they may need to start at the CC for the first two years.

If it costs $100K per child (we have 3) to go to school they will not go without their own loans to cover the difference. We simply are not prepared to pay $300K for college expenses. We don't have it.

At this point, we will have $10K per year per child. So, roughly $40K per child. Any more and they will have to find a way to cover the difference.

We certainly aren't saying they CANNOT go away to the college of their choice, we are just saying they will only get $40K from us (or whatever we have at that time.)

I don't even know if we will live in NC by the time our kids are college age. One thing that has been surprising to me is the lack of a more top tier school near Charlotte. We moved here from LA, where there were great colleges within driving distance.

Dawn

As our oldest actually works towards college applications, I'm finding that MOST of our well-laid plans are working fine, but we're going to be forced to adjust some of them. In the post above, I just mentioned that our textbooks plan is questionable. Also, we'd told our girls that we could pay for 4 years/8 semesters of school -- we meant that we cannot pay for a 4-year degree to stretch out to 5-6 years . . . but now we find that our nursing-major daughter will have a MANDATORY 5-week summer school between sophomore and junior year (it's kind of a pre-clinical class, and is only offered in that summer school session). So we're going to have to give in on that point and pay for one summer school for her. It's not that we don't have the money; it's just that we can't pay-pay-pay for everything (we do have another child to educate, and we do have our own retirement to consider), and we wanted to start out with our limits up front.

Anyway, it's better to start out with your plan, but be prepared to be flexible. Yes, our flagship university (UNC Chapel Hill) runs around 16K/year, and our mid-tier schools run 10-12K. Several of our schools include textbook rental in the tuition cost. That is tuition, dorm, and meal plan; and these schools are superior to the average private schools in our area.

 

[disykat]

This makes me laugh, Mrs. Pete - you have been the most inflexible poster on every single college thread for the last five years. Are you honestly telling us that because your daughter no longer has the more expensive book option, you'll make her pay some of her own tuition or make her pay for something else? And you actually begrudge having to pay for a summer session when you have already made out like a bandit compared to other parents by limiting her to a NC public university?

I will never understand how and why you think like you do about your daughters' educations.

And many of us will never understand why you don't seem to think offering four years of tuition, room and board at any school isn't generous?

Like Mrs. Pete, we've laid out pretty firm expectations for what we are willing to pay for - for us it was also up to the cost of 8 semesters tuition, room and board at any state school (the yearly cost of which is pretty much exactly what fafsa said we should be able to handle) and the expectation that they'll contribute for books and their own spending money. If my kids didn't have book expenses, I'd absolutely expect them to use that money to pay something else rather than having extra fun money. (I'm not going to sit counting my pennies at home so I can pay all the bills while they're out tossing money about. Fortunately they're good kids that would be mortified to do so.)

Like Mrs. Pete, we've laid out expectations. That doesn't mean there will be no changes. It doesn't mean we can't decide to pay for extra programs, etc. if we choose. What it does mean though is that our kids won't be flabergasted that we're not automatically coughing up more money on a whim if they take longer or run into unexpected costs.

 

[disneysteve]

Are you talking about tuition only or tuition plus room and board?

I'm counting the whole package. Living at home is not an option in our mind. We consider living away to be a very important part of the college experience. We've made it clear to DD all along that she will live away for college and she's perfectly fine with that.

 

[disneysteve]

her #1 school choice uses $105 of the tuition to cover textbook rental.

Textbook rental is a relatively new practice and I'm really not sure how well it works. For an unimportant class that you have to take to fill some requirement it might be okay. For classes related to your major field of study it probably isn't such a great idea. I was a bio major and I often referred back to my textbooks from earlier classes as I proceeded through college. In fact, a couple of my med school classes used the very same textbooks I had used (and owned) in college. Had I rented instead of buying, I would have needed to rent or buy them again at that point.

Buying used is probably a much better idea for the main books and $105 won't go far at all for that. Actually, I'm not sure it'll go all that far for renting.