How much do you save for your kids' college?

[goodeats]

We set up 529s through Vanguard as soon as we received their SSN. We started with $3K and then we put in a paltry $100/month per daughter plus any monetary gifts they receive. My in-laws started one too with a significant amount per girl. Personally, I plan to heavily push the idea of an in-state school versus a private school for undergrad. DH says it's wherever they want to go. We'll have a hefty amount, but also plan to cashflow a lot of the living expenses when the time comes. When you figure that people pay $1,500/month for daycare around here that will go a long way towards rent and books!

Our parents paid for our undergrad and we want to do the same for our daughters. We fund our retirement and are willing to work longer

 

[Crystal824]

Wow! We put $25/month in DD8 and DD6 accounts. I'm still paying my grad school loans, so this is what we can afford. We put $1000 or so in when we opened them. At least they will have something. Many of our friends don't even have college accounts for their kids. They are all college or grad school graduates but many do not have college funds for their children.

We do something similar to this. We do $30.00/mo right now, which we started a couple of months after she was born. We only have one child, and she just turned 2. I want to try to increase the contribution a little each year. DH and I both have grad school loans. Unforutantley, neither of us had any college savings when we went to school, and we had to do it all ourselves. Of course, we are still paying for that. I figure something is better than nothing. I also put in all money she receives for birthdays, baptism money, etc. At this point, she has a little over $3,000.

 

[disykat]

I think people also underestimate how much "cash flow" people in middle income families can use. Like someone else mentioned, start saving daycare fees, preschool fees, orthodontia fees, etc. as they outgrow these things. In our case, we paid off our mortgage and use that money. Put away lumps from overtime, tax refunds, gifts, etc. Give up a luxury you might use this money for otherwise. Not a breeze, but POSSIBLE if you/they make the right choices.

We didn't save when the kids were younger, but started putting it away the way I mentioned above as our kids got older and as our income increased.

I have one student in college and another one starting in another year. Most of my friends have college aged kids. What I've found is that many of my friends with low income get considerable financial aide, and those of us with higher incomes (but not high enough to pay easily) have found ways to use cash flow as effectively as we can. That, along with the students making good choices that are cost effective for their families, I don't know people taking out the HUGE loans you read about.

I think reading those articles, it's easy to panic. The reality is, it costs a lot of money, but you have choices to make. The people who get those HUGE loans for undergrad are people with an entitlement mentality thinking they have to have it all. The students choose the most expensive school options, parents aren't willing to make any lifestyle changes to help make any payments,students won't work summer jobs because they're busy being a kid. People think "I can't possibly pay for all of this" so they end up paying for NONE of it. Schools offer loans for the full amount, and people take them!

I know MANY people who are paying through a combination of student and parent sacrifice and as small a loan as possible (we're hoping 0 for our kids, but we'll see.)

I think it's GREAT that people are saving, but I don't think there needs to be a huge panic if you're not saving huge amounts from birth.

I do know some people who weren't really honest with their kids about what they could afford or were willing to pay. We've told our kids EXACTLY what we could afford and also told them that they would lose our financial support if they took out more than X amount of loans a year (in our case it was 5K.) That gave them a figure to deal with as their offers came in. They knew certain schools were out of reach without a large scholarship amount and that getting accepted to those schools didn't necessarily mean going - it depended on whether the numbers worked. We also gave them our stipulations such as 4 years, working summers, unmarried, passing grades, etc. so there are no surprises.

 

[MrsPete]

An answer to the OP as well as numerous comments to other people's responses:


First, don't panic too much about those huge numbers that magazines like to flount about. They were using huge numbers when my kids were born too, and now that we have reached the college years we see that it was largely hype: When all is said and done, my daugther's education will cost me about 20K out of pocket over four years. (Yes, we live in an area with a low cost of living, but the other side of that coin is low salaries.) Part of this inflation is that the people throwing these numbers about tend to be investment professionals, and they want to encourage you to invest -- fine, but look at what "they" include in those numbers. Many of them include details like clothing, entertainment, even a car in the cost of sending a kid to college. We were PUSHED to borrow 150% the cost of her entire freshman year, which is crazy. Just be sure that you're looking at realistic numbers; yes, the cost will be high, but it's not as high as Smart Money magazine and its ilk would have you believe.

Next, don't feel that it's necessary for you to offer your child "the whole college experience" at any school he chooses. We told our kids that we can pay tuition, dorm and meal plan at an in-state public school for four years. We cannot pay additional semesters, we cannot pay for an apartment, we will not pay for sororities and spring break trips -- but if they want these things, they are free to figure out how to make up the difference. Our oldest starts college in just days . . . with these boundaries, she fell in love with two schools, and either would've been a great choice for her. That she couldn't choose ANY school in the whole world wasn't a problem for her. So tell your kids (from about the time they're freshmen in high school and can really figure what this means) exactly what you can and can't pay. If you can pay just tuition, they'll be ahead of many of their classmates.

Then, keep in mind that you will continue to have income while the kid is in college. If you can draw part of the cost from savings and part of the cost from your current paycheck, you'll likely be okay.

Also, we had a back-up plan in mind: We've deposited into our 401Ks from our very first professional paychecks, and we're on our way to a comfortable retirement --our back-up plan was to STOP adding in new money, which would essentially give us a raise during the college years. Withdrawing money from retirement is always a bad choice, but if you already have a good start stopping contributions and just letting what's already there continue to accumulate is a different story.

If you reach the college years and just don't have enough, less expensive options are always available -- but they don't tend to send you postcards in the mail like the private loan companies, and they aren't always the student's first choice. Knowing what I know now about how hard it was for me financially to get through school, if I could suddenly be 18 years old again, I would join the military. It's not exactly what I'd like to do, but it'd have been an easier start in life for me. Community colleges can be a good starting point, though they come with their share of problems. Few of us can write our own tickets, but less expensive opportunities do exist. Your options will vary, of course. You aren't stuck with paying what "they" expect . . . or doing without altogether.

What you should not do is count on scholarships. Scholarships are not nearly so plentiful as some people would have you believe, especially not these days. My daughter did pretty well with scholarships, but she graduated with a tip-top GPA, loads of extra-curriculars, and she's going into a scholarship-heavy major. The vast majority of her friends, also excellent students who genuinely tried to get scholarships, were awarded a big, fat nothing.

Also do not count on financial aid. Unless you are earning so little that feeding your family is genuinely a concern, you're not going to be awarded big bucks in grants. Loans are another story: When people say that they "got financial aid", they often mean that they got federal student loans -- it all goes through the FAFSA. One poster commented that the students have more time available (to pay loans) than we have time (to save). This isn't really true. Students who come out of college with debt face tough choices: Can they afford to buy a home? Should they delay children? Should they pay down the loan or begin saving for retirement? If they don't start saving for their own retirement, then they're going to be caught up in the same financial crunch -- that is, they'll be unable to save for their children's educations, and they'll end up in debt too. Loans don't correct a problem; they just pass it on to future generations.

As for "things changing" so that college'll be easier to pay . . . I wouldn't count on it.

Some students whose parents are paying it all will goof off.
Some students whose parents are paying nothing will goof off.
This isn't a one-stop factor that'll predict the student's success or failure in college -- but it is an excuse that plenty of people use not to save. Many factors go into the student's success or failure: Whether he's emotionally ready for college, whether he is sure of what he wants to study, whether he has a girlfriend to take up his time, whether his roommate is serious about school or proves to be a distractor, whether he is internally motivated or you've been pushing him to do his work in high school . . . the list could go on. Whether he's paying or not may influence how serious he is about school, but how you've raised him for the last 18 years is a much more important indicator.

Saving for college is a realistic goal -- if you look for places you can scrimp. We just upgraded phones, and the guy at the phone place says he can't believe how low our phone bill is. It's $143/month for four phones, and I think it's outrageous. He pushed us hard to go with Smart Phones, but that would've been around $220/month -- right there, that's $70-80 that most people are spending and I'm not. How many times a week does the average family eat out? I know that my co-workers tend to bring in restaurant left-overs a whole lot more often than I do. Live in a slightly smaller house, drive your old car another year or two, rent a Redbox instead of going to the movie theater, stay at the All-Stars instead of the Polynesian. Make 2-3 choices like that a month, and over the course of 18 years you'll have a decent nest egg. Couple that with working a few years more than you expected, along with your student working a full-time job in the summer and part-time during school, and a middle class family will have at least a good dent in the cost of college. If you really are making all frugal choices and still can't afford to save, you probably will be a candidate for Pell Grants.

What you cannot do -- unless you're a high wage earner with few debts -- is to wait 'til the student is almost college age and try to start the savings process. At that point, skipping a few meals out won't make any difference. And it's much harder to save once you have teenagers. They really are more expensive.

 

[goodfood4ursoul]

DD had planned on commuting there, plus she is getting her AA before she graduates HS so we were saving tons. It wasn't until about 6 months ago that we were talking to someone about that university and found out how overcrowded it is. Her upper level classes in her major would have 200 - 400 people in every class. While I expect that for general ed classes, no way is that acceptable in my book for upper level classes. All of those classes are taught by TA's. Quality of education is our number one priority and DD would not get that at this university (in her major) after researching it more. Guess what that means? Commuting is out of the picture now. The next closest college is 2.5 hours away which makes commuting impossible.

While scholarships are wonderful and we hope DD gets some this spring, they aren't a guarantee. She has done all the right things but it still doesn't mean she will get tons of money thrown at her.

I'm glad you aren't finding it expensive but I am guessing you are in the minority.

Great job on encouraging your daughter to get her AA.
Our rural county high school offers dual enrollment as well,
and we found that to be a great money saver for our son,
who earned his AA in high school too.
Had he not earned it in high school, he would have gone to community college
to finish it before going on to university.
Community college is the best bargain for general education out there!

One thing to be cognizant of is this-
check with your prospective colleges on transfer credits and what they accept.
Not all universities apply dual enrollment credit the same way.
We knew this in advance and met with the folks at the university
during his sophomore year of high school, and took home a
college credit transfer guide.
This enabled us to choose classes that we knew would transfer as
the actual course for credit instead of just as an elective.

As a result, he had all his general education requirements completely met
when he left home for college, and he was able to focus on his major.
Seriously, the kid turns 18 one day and literally starts college the next
taking 300 and 400 level classes. crazy
This has saved us more than $50,000
He will finish in 5 semesters.
There are over 12,000 students on campus but in his 300 & 400 level classes, only about 19 students per class.

And yeah, we had next to nothing saved.
Due to the economy, which was severely in decline in rural areas
far before the sheets hit the tub everywhere else
we were lucky not to lose our farm and home
(And on principle, we've never paid for TV, cable, smart cell phones, texting
or data packages, new cars, fine furnishings, fashionable clothing)
But God is good and finances have improved some

Just because your kid is not valedictorian does not mean
there isn't financial aid out there to help.
DS was no where near Valedictorian but he applied for many,
many scholarships, received only a few, but they help.
FAFSA done, he gets a number of different kinds of aid, including work study and a student loan
(he takes on about $4000 of loans each academic year).
We help him out as best we can, and his grandparents saved for him since he was a baby, so they help him as well.
But he has to work hard and earn it, and that gives him incentive to keep his grades up.
He has worked full time this summer, and $1,000 of his earnings
will go directly to pay for his fall semester.
He tells us it is a great feeling to be contributing to paying his tuition with money he worked hard for.
And he has done well, but he definitely feels the pressure (in a good way)
to keep his grades up not just for university granted financial aid, but also
because financial help from grandparents is predicated on good grades too.

If you have been able to save $$$ for your child's college,
I commend you- be thankful that you are in a good financial situation.
For those parents who have not- it's not that we are unwilling,
in this economy it is more about keeping a roof over a family's head and food on the table.

 

[crisi]

...and not everyone has a valedictorian on massive scholarship either.

And you can't bank on "they'll get a scholarship" when they are two or seven or whenever you should start saving. I know far too many parents for whom "they'll get scholarships" did not pan our...their kids just weren't that talented. If they turn out to be that talented and you've saved, it isn't like you are going to burn that money. Help them get going post graduation or use it towards your own retirement. Or buy the sportcar, trip around the world, really nice house you always wanted.

Fully funded to me is $50k per year per child. It will cover tuition at almost all schools, although room and board may need to be supplimented at the time. If my kids choose a more reasonable school, they get the difference to grad school, or a downpayment on a home.

 

[disykat]

Yes, fully funded really means different things to different people. To Crisi, it means 50K a year so they can go anywhere, to us it means 25K a year (tuition, room and board at a state school, or the same with merit aide earned at a mid-level private school), to others it may mean 12K a year (tuition only), and to people with even cheaper tuition available it may mean less.

Yes, scholarships are getting harder to come by. My 3.95 student (one of those kinds of students where everyone assumes "he'll get a full ride!") got nothing from his particular school, nothing. He got some local scholarships, but the competition was stiff! This year, he only has 1K of scholarship money and he's still a good student - on the dean's list. He had more last year as a freshman, hopefully he'll get more as he gets further into his program, but this year he's in limbo. My other child is a good student, but not a superstar. He won't be competitive for the local scholarships. We're realistically assuming he'll get nothing unless he gets a small merit stipend from a less competitive school.

Going off to school with an AA is great, but depending on the classes it may still take time. My son went off to college as a junior from AP credit, but still needs to take classes sequencially in his major. He'll probably get done in three years. It really depends on the major and whether the student is able to get the sequence of coursework started. Some community colleges are better at this than others.

 

[tajz90]

Scholarships are few and far between and sadly, even MERIT scholarships have a financial decision factor in them. Sad, but true. To us, it's work hard, save hard, get kicked in the rear. Party, goof and spend wildly, get a pat on the back.

 

[punkin]

Yes, fully funded really means different things to different people. To Crisi, it means 50K a year so they can go anywhere, to us it means 25K a year (tuition, room and board at a state school, or the same with merit aide earned at a mid-level private school), to others it may mean 12K a year (tuition only), and to people with even cheaper tuition available it may mean less.

Yes, scholarships are getting harder to come by. My 3.95 student (one of those kinds of students where everyone assumes "he'll get a full ride!") got nothing from his particular school, nothing. He got some local scholarships, but the competition was stiff! This year, he only has 1K of scholarship money and he's still a good student - on the dean's list. He had more last year as a freshman, hopefully he'll get more as he gets further into his program, but this year he's in limbo. My other child is a good student, but not a superstar. He won't be competitive for the local scholarships. We're realistically assuming he'll get nothing unless he gets a small merit stipend from a less competitive school.

Going off to school with an AA is great, but depending on the classes it may still take time. My son went off to college as a junior from AP credit, but still needs to take classes sequencially in his major. He'll probably get done in three years. It really depends on the major and whether the student is able to get the sequence of coursework started. Some community colleges are better at this than others.

Or he could decide, like my DD did, to double major in two totally unrelated subjects (in one of which she has just shown an interest in college - never took a single class before). Sure the AP credits help, but it will still take her 4 years.

 

[crisi]

Scholarships are few and far between and sadly, even MERIT scholarships have a financial decision factor in them. Sad, but true. To us, it's work hard, save hard, get kicked in the rear. Party, goof and spend wildly, get a pat on the back.

I got an honorary merit scholarship 30 years ago. "Good for you kid, you graduated at the top of your class, here is an honorary scholarship - the money is going to a kid whose parents don't make as much as yours."

 

[tajz90]

I got an honorary merit scholarship 30 years ago. "Good for you kid, you graduated at the top of your class, here is an honorary scholarship - the money is going to a kid whose parents don't make as much as yours."

And what's crazy, now they can make more than you. It all comes down to how you handle your money. We live modestly. We drive reasonable cars. Others with much bigger homes and much nicer cars receive a lot more help.

 

[DVCLiz]

Scholarships are few and far between and sadly, even MERIT scholarships have a financial decision factor in them. Sad, but true. To us, it's work hard, save hard, get kicked in the rear. Party, goof and spend wildly, get a pat on the back.

My daughter received a Merit Scholarship and they did not base it on anything financial - other than hoping she would choose their school so they could get the rest of the cash out of us

The other issue with Merit Scholarships is that sometimes you can choose a school that attracts students who aren't quite at the level your student is. They want to entice you to come to their school so they offer merit money. It worked in our case - DD18 got $13,500 a year for four years at a school that charges about 42K for tuition, room and board. That's 54K in merit aid and we did not apply for it nor did we reveal any financial information.

 

[tajz90]

I think that is a diff type of scholarship you are speaking of. My son was offered a scholarship at every college he applied to. I am speaking of certain Merit scholarships that require essays, interviews, release of financial records. It's a process. My son went thru several only to be denied for financial reasons at the end of the process. We were sent a letter each time saying he was being denied for financial reasons.

 

[DVCLiz]

I think that is a diff type of scholarship you are speaking of. My son was offered a scholarship at every college he applied to. I am speaking of certain Merit scholarships that require essays, interviews, release of financial records. It's a process. My son went thru several only to be denied for financial reasons at the end of the process. We were sent a letter each time saying he was being denied for financial reasons.

Oh, I see. Yes, those are different things.

I'm not sure it is accurate to call it a Merit Scholarship if it's based in part on financial need, though. If they ask for your financial records and tell you you don't qualify, then it's probably a pool of merit money that is given to the best of the needy students, don't you think?

 

[tajz90]

No. These are actual merit scholarships based on grades, activism, etc. When it's whittled away to 2 or 3 candidates, then they ask for financials. It was only a few and it's a shame.

Really though, what I'm getting at, is its unfair how the dollars are being handed out.

 

[DVCLiz]

No. These are actual merit scholarships based on grades, activism, etc. When it's whittled away to 2 or 3 candidates, then they ask for financials. It was only a few and it's a shame.

Really though, what I'm getting at, is its unfair how the dollars are being handed out.

That's interesting - I haven't heard of any scholarships like that. Kids at our school either got need-based money or the kind of merit money we got - or they competed for the big name scholarships - Morehead, Robertson, etc. but those are strictly merit.

I see it from a different point of view too, as my oldest works in college admissions. There is a limited amount of money and they try to fill a class with a range of students. There just isn't enough to give every middle class better than average but not brilliant student a full ride. They are having to balance their aid money, too.

I agree it should be easier to get a college education and hope some day our country will figure out that investing in college students pays off down the road.

 

[tajz90]

These were outside scholarships. One through my husbands work. One was a big scholarship, everything paid including room and board, at college.

 

[LisaR]

My daughter received a Merit Scholarship and they did not base it on anything financial - other than hoping she would choose their school so they could get the rest of the cash out of us

The other issue with Merit Scholarships is that sometimes you can choose a school that attracts students who aren't quite at the level your student is. They want to entice you to come to their school so they offer merit money. It worked in our case - DD18 got $13,500 a year for four years at a school that charges about 42K for tuition, room and board. That's 54K in merit aid and we did not apply for it nor did we reveal any financial information.

If I am understanding you correctly, this is what my DD is hoping to do. We have 3 or 4 state universities that everyone and their brother wants to go to. Some of our other state universities are shunned for whatever reason (I've researched and I can't figure out why). It looks to me like the vast majority of people that are applying to these schools are the ones that couldn't get into our "top" schools. DD has the GPA & ACT score to get into any of our universities but if she applies to the ones that aren't as popular, she may have higher scores than many others applying. I am hoping that means she would have a better chance at the presidential scholarship. I don't know if it really works that way, though.

 

[FreeTime]

• We put in on $50 per month.
• Grandparent puts in money at each birthday, Christmas and all of his change saved for the year
• I fund my 401K over the max match amount (I want to be able to not work when I retire)
• My DH works at a University and the kids will get 50% of tuition paid. We have told them, we will help pay the difference. If they choose to go to another school, they will only get the difference, then they are on their own for the res
• They have to live at home
• Stay unmarried
• Have no babies
• Work in the summer
  
  

With DH working at a university he sees the kids whose parents pay for it all and they don't seem to care as much and have an entitlement mentality.

My parents have a great income. Far more than I will ever make. I worked through college, didn't finish (until a few years ago), and appreciated the degree that I WORKED for much more.

Also, off topic, but working in corporate America I have also told my kids that I have no issues if the decide to not go the college route provided that they find a job that can support them. My company may be a dying breed, but I have associates making $20-40 an hour without degrees, who do not have to take their work stress home with them each night. I have told them when the time comes they will need to weigh what makes them happy.

 

[tajz90]

If I am understanding you correctly, this is what my DD is hoping to do. We have 3 or 4 state universities that everyone and their brother wants to go to. Some of our other state universities are shunned for whatever reason (I've researched and I can't figure out why). It looks to me like the vast majority of people that are applying to these schools are the ones that couldn't get into our "top" schools. DD has the GPA & ACT score to get into any of our universities but if she applies to the ones that aren't as popular, she may have higher scores than many others applying. I am hoping that means she would have a better chance at the presidential scholarship. I don't know if it really works that way, though.

For our son, he was offered a scholarship which amounts to the Presidents or whatever it is called at each particular school based on ACT/SAT scores. It is my understanding that students in the top10% of grad class with these top scores automatically get those types. It should be in the admission guidelines.