How much do you save for your kids' college?

[punkin]

Hopefully the $100,000 isn't your final number, and you're still saving. DD is off to college this year. A private university currently costs $40-$55,000/year. Our best state university is $28,000/year.

...and only going up. I don't know how these costs are sustainable. Then again, I said the same thing back when tuition was an "astronomical" $25K per year.

 

[Pigeon]

Do you only have one child? I think that makes a difference too.[/QUOTE

Good point. We have two...11 years apart. DD16 is the youngest and her brother chose the local University and lived at home so he didn't spend much college money. No doubt if they were closer in age or we had several, we would have different plans.

I wonder how others feel about the relationship between college choice and field of study. DD16 wants to study something that isn't offered everywhere. We want her to go to a well respected college for her chosen major. Those two factors increase the potential cost. If she were interested in nursing or teaching, I would steer her to the local University as those programs are well respected here and there would be little benefit to spending $20,000- $40,000 for a degree elsewhere in those fields.

If she wanted to study something that wasn't very marketable, I would also try to steer her to a less expensive option.

If she was undecided on a major, I would steer her to the more affordable options until she made a choice.

I'm seeing grad school in my kids' futures, and I really don't think where the undergrad comes from is a huge deal.

 

[disykat]

This advice is unfortunately doled out way too often.

The general (and very general) way FAFSA looks at assets/income -- income is the most important component -- they will take a HUGE chunk of it (about 25% - 30%, there is a portion that is protected based on the number in the family, but this is generally what I have found in the past 2 yrs of FAFSA we have filled out for our family of 4) and allot that to what they expect you can pay for the year. They will take about 6% of the parent's savings - there is a holdback number based on the age of the parents. They will not look at parent's retirement savings. Money in a 529 is considered a parent's asset - so they still only take 6% of that into consideration (I know it sounds ridiculous and is counter-intuitive). Income and assets of the student - they take about 30% of that.

They also 'put back' into your income any untaxed 401k contributions - they feel that you should be using that money for tuition instead.

Now, if you're applying to a private school that uses PROFILE or their own financial aid form - they may or may not take more of your hard assets and expect you to tap into equity.

So, in really simple math, and really approximating as an example
$100k income, $10,000k in savings, $100k in 529 - EFC will be about $36,600
$100k income, 0 in savings - EFC will be about $30,000
$30k income, $200k savings, $200k 529 - EFC will be about $34,000

Of course, these are just suggested numbers as to what you can pay - if you go to a 'does not meet need' school, these numbers mean nothing and the person in the 3rd example will be very happy they saved all of that money.

This is something that I learned after being shocked by my EFC number sending my daughter - I wish someone had it explained it to me better to me back then.

I suggest that everyone look at the collegeconfidential boards - there is a lot of valuable information there. You will see a lot of complaining on the financial aid boards around January.

This is a GREAT post! I can't believe how many people are still falling for the "don't have savings or you'll get dinged" story. They're not just looking at savings. If you have a decent income, you're going to get dinged so be prepared.

The estimated EFC on this post is probably a little on the high side based on my personal experience, but you will be expected to spend income you have regardless of a lack of savings. In the example above, the person who got dinged on savings had a disproportionately high savings to their income. THEY were the ones who that hurt, but it wasn't a realistic savings amount. People that can save large amounts probably have larger income.

Yes, they will expect you to spend some of your savings if you have it. However, they expect you to spend a BIG chunk of your income, so you'd darn well better have savings if you have income!

 

[StephMK]

We are dealing with this now as DD18 is headed off on Monday. While we didn't save enough for all 4 yearsf but should be able to pay so that she has no or few loans. We saved enough so that between the savings, cash flowing some of her later years and a few small loans to be sure we don't wipe out the funds too early, I think we'll be able to cover it.

My best advice is to start early!! I started w/$50 a month when she was a baby. My g-parents left or gave her some smaller inheritances that added to it. I quit contributing a few years back but what was in there has grown enough to be a decent sum and would have paid for her in full if she'd gone local & lived at home. I just don't want people to think that if they can't save huge sums, not to save at all.

 

[scottmel]

Thanks everyone....great food for thought...I too am wanting to keep a cushion in there.....

 

[tiggspring]

This is a GREAT post! I can't believe how many people are still falling for the "don't have savings or you'll get dinged" story. They're not just looking at savings. If you have a decent income, you're going to get dinged so be prepared.

The estimated EFC on this post is probably a little on the high side based on my personal experience, but you will be expected to spend income you have regardless of a lack of savings. In the example above, the person who got dinged on savings had a disproportionately high savings to their income. THEY were the ones who that hurt, but it wasn't a realistic savings amount. People that can save large amounts probably have larger income.

Yes, they will expect you to spend some of your savings if you have it. However, they expect you to spend a BIG chunk of your income, so you'd darn well better have savings if you have income!

One thing you did not consider is that many, many people now have a significantly lower income than they did while saving for their kids education the last 17yrs. And that those of us with income below 75,000 don't have a lot if anything left over unless you live in parts of the midwest or south where cost of living is less. We left RI because it was impossible to stay employed and make ends meet. We moved to west virginia and our expenses decreased by 40percent making savings easy. Then we had to move to Pittsburgh area for work and our expenses increased by 20pect. We could own a house in a fantastic area with public schools that rivaled private (which was never an option in New england) but savings well that was hit or miss when car/house repairs came due. Paying 25pect of your income when you make less than six figures and you have another kid or student loans of your own(DH and I both worked full time and went to school full time with no help from family) is not as easy as some would make it seem. Many of us do save only to have it lost from a financial hit. That has happened to us three times over the last 13yrs taking aprox 2yrs to recover each time. Thus not much in savings for college.

Op if you find you are making less than before carefully look at how your savings will help/hurt you. Every situation is quite different.

 

[MrsPete]

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.

AP credits don't always mean finishing college early -- sometimes they mean finishing "on time" while double majoring or being able to take a more leisurely course load. Still worthwhile.

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.

The awarding of scholarships varies widely. Some take financial need into consideration, others do not. Most of the scholarships for which my daughter applied did not question her about our finances.

This is an interesting article I heard about yesterday on a local talk news show. A university student called in and said there is a huge difference in students who have their education paid for by their parents, college to a lot of them is a party experience; compared to those who pay their own way, *loans which have to be paid back or working while going to school.

I agree with the article. I see more and more of that in my classroom every year -- kids who are unwilling to do the reading, unwilling to do more than the most basic question-and-answer worksheets, yet they and their parents expect a passing grade!

However, the article doesn't even mention college students, and I personally saw no relationship between who's paying and grades when I was a student. For example, my roommate had parents with deep pockets who provided "above and beyond" for her. She was a very serious student. My parents barely recognized that I was alive and were actively against me going to college -- they certainly didn't give me any money. She made all As, I made As and Bs because I was working so many hours. Neither of us took anything for granted.

If you're looking around for a student who illustrates the "parents are paying, I'm partying" mentality, you can absolutely find more than a few! However, you'll find just as many who fall into the "parents are paying, and wow am I doing everything I can to be appreciative" category.

This "if you pay, they won't appreciate" thing is a myth -- most likely perpetuated by those who want an excuse not to save and pay for their kids' edcuations. The reality is that you've raised this child for 18 years. In that time you've taught him to appreciate things -- or you haven't. That is more powerful than who pays the bills in college.

Yet, if they don't have a lot saved and they have some bills, fafsa will help them get more financial aid. I almost wish we didn't save.

Ahh, but that's only half true: FAFSA may be their saving grace . . . but the ones who earned as much as you, but spent it all won't get free-money-grants. They'll be offered plenty of financial aid . . . in the form of loans. Yes, their kids will be able to head off to college next fall with your kids, but they'll be doing it with "starter debt" that'll hinder them in their early professional years.

You and I are not smucks for having saved.

This is a GREAT post! I can't believe how many people are still falling for the "don't have savings or you'll get dinged" story. They're not just looking at savings. If you have a decent income, you're going to get dinged so be prepared.

It's perpetuated by the same people who say you shouldn't pay off your mortgage because you'll lose the tax deduction.

 

[Finnishwife]

One child. Mortgage paid off. We have $110,000 in college savings. DS has one more year of high school.

I feel we are fine if he chooses a college that has a net price of $35,000 a year.

DS plans on studying engineering. He understands that when he attends college his grades need to be good or we will stop paying.

 

[disykat]

One thing you did not consider is that many, many people now have a significantly lower income than they did while saving for their kids education the last 17yrs. And that those of us with income below 75,000 don't have a lot if anything left over unless you live in parts of the midwest or south where cost of living is less. We left RI because it was impossible to stay employed and make ends meet. We moved to west virginia and our expenses decreased by 40percent making savings easy. Then we had to move to Pittsburgh area for work and our expenses increased by 20pect. We could own a house in a fantastic area with public schools that rivaled private (which was never an option in New england) but savings well that was hit or miss when car/house repairs came due. Paying 25pect of your income when you make less than six figures and you have another kid or student loans of your own(DH and I both worked full time and went to school full time with no help from family) is not as easy as some would make it seem. Many of us do save only to have it lost from a financial hit. That has happened to us three times over the last 13yrs taking aprox 2yrs to recover each time. Thus not much in savings for college.

Op if you find you are making less than before carefully look at how your savings will help/hurt you. Every situation is quite different.

The whole point of this thread is that it is NOT easy to pay 25% of your income. That's why the savings is important.

It is difficult for most of us to save. However, not saving simply because you don't want to have it count in your FAFSA, as some have suggested, is what is also being addressed. You are "penalized" on your savings WAAAY less than you are your income. People with a large enough income to be ABLE to save, but don't do it for this reason will find themselves in a pickle.

The post I quoted quite aptly demonstrated how a very low income person with very high savings would be the one instance where this would be problematic. I doubt there are very many people out there struggling on small incomes while maintaining large savings.

 

[scottmel]

One child. Mortgage paid off. We have $110,000 in college savings. DS has one more year of high school.

I feel we are fine if he chooses a college that has a net price of $35,000 a year.

DS plans on studying engineering. He understands that when he attends college his grades need to be good or we will stop paying.

Sounds like we are in the exact same boat. 1 child, 100k saved but DD going into 8th grade but my dad breathes down my neck to SAVE more now he wants me to liquidate it on the private schooling....I think though as many have said before, my hopes of getting any free finanical aid is laughable. So I think I am going to pay her highschool monthly and not take it from Coverdale...And just have it grow for a few more years while I continue the Roth. HOPEFULLY that is enough for several years but geez oh whiz with the prices....Thanks for a great thread. You guys really got me to rethink my plan

 

[brymolmom]

This thread has been an interesting read.

We have 2 kids, 1 year apart in school - currently 4th and 5th grades. We save around $220 per month for each. Reading these posts makes me want to bump that up - and I will try to do that in a few months.

Neither dh nor I truly desire to pay 100% of college costs for them (good thing - cuz $220 per month wouldn't cut it), but we'd like to help a substantial amount, depending on their character, work ethic and responsibility when the time comes for college. When the 2nd one leaves for college - the mortgage will be paid and I figure the following 5 years will be a 'mortgage' of paying tuition. That will free up about another $21,000 per year. Hopefully between our savings and the mortgage $$ - we'll be able to pay a good bit of it.

I guess I might be ignorant since I haven't been there yet - but moving money around...and getting rid of college savings doesn't sound like a great plan to me. I think that most of us who are able to save like we are on this thread...and who are priviledged enough to have extra cash to enjoy Disney vacations (some of us frequently) are not going to end up with any financial aid. I've embraced this and consider myself lucky that our income will place us into that category. Those who get a lot of aid...likely haven't been on as many nice vacations as we have, etc. I know - those who spend and don't save shouldn't be rewarded - but I don't believe this is situation in most cases.

 

[Grumpy's Gal]

any one have any expereince with savings bonds and financial aid?

 

[huahuamick]

We are dealing with this now as DD18 is headed off on Monday.

 

[patsal]

Really didn't save anything because I was paying my loans and DH's loans for grad and undergrad. I figure I can always work myself to the bone by taking a night job or something in addition to my full time job. DS was a poor student who felt play was more important than work, I made the mistake of cosigning a loan for him and will never do that again! I just made the last payment on our final loan and will pay off the loan I cosigned for so it doesn't negatively affect my credit. DD is much more focused, hoping for scholarships but I am prepared to do evenings and weekends at a second job. Honestly,if they don't work for things they turn out like DS, so I'll let her pay and be the owner of her education especially if she plays the dream school card over the practical choice. Problem is I don't want her to be penalized for us making too much to get financial aid but not enought to pay cash for college.

 

[1Jackpot]

Hopefully the $100,000 isn't your final number, and you're still saving. DD is off to college this year. A private university currently costs $40-$55,000/year. Our best state university is $28,000/year.

No. If the college my children choose is more, we'll just write a check for the difference, no problem!

 

[DisneygirlTeacher]

any one have any expereince with savings bonds and financial aid?

Savings bonds aren't what they used to be. The interest on them now is very low. The other thing is this...I really respect those that are saving at all in these times. Many people just don't have the income to do that. I don't want anyone to feel bad if they are saving a small amount. It is something. If someone is saving $500 or $1000 or more a month, good for them. Not everyone can. I was raised in a great family, but there just wasn't anything left for college. So I worked...a lot. I still made it and loved every minute. We have the Prepaid College Plan and it pays everything except for a small fee and books. Books can be $100 or more but we have found DD can buy used books or even rent books she knows she doesn't want to keep. There is always a way to make college work. Maybe not at XYZ University, but I'm sure those that are saving $1,000,000 a month can do it...lol

 

[angierae]

DD17 is a senior this year and will be attending two years of community college (which we can pay out of cutting back on spending money for a year or two + what she's got in savings and what we have in savings.

Then two years at a local university (living at home) will be about $10k a year, and we can pay that too. I know not everyone is lucky enough to live close to a handful of universities, but we do. DD has no desire to live on campus and that helps us out too. But she definitely won't be attending a $40k a year school, both because we cannot afford it and because she doesn't want to, anyway.

And in the long run, if she has to take out loans, so be it. I don't see student loan debt as the end of the world.

 

[goodfood4ursoul]

I dont think this very do-able for most people.
Your kids are very lucky.

Agreed
We were not able to save anything.
And that is due to our own choices...
I chose to stay home with my kids when they were small,
which meant making ends meet with one income
while DH was also going back to school.
We chose to home school our kids for 6 years, again,
living on one income during tough economic times.
These are decisions that I absolutely do not regret and would not change.
There are more important things than money.

In our small rural community my job (7 years ago) started out
at <20K a year, and today still is <30K. (great benefits though and I love what I do )
This is only the second year that both DH and I have been fully employed.
for being fully employed!
And we are extremely blessed...
Many peope who are employed are under-employed in these times.
There are many people out there losing their homes and looking for work
and their kids want to go to college too.
Some people are using college funds to save their homes
and they still love their kids.

I love this thread in that we are all learning more about the
ins and outs of what is for many a stressful phase of life.
No, nothing is foolproof, even some who saved and invested
have lost some of that due to economic downturns.

You can't count on winning scholarships to save the day.

For most, it is a combination of all of the options:
Federal grants, loans, savings, academic scholarships, in-house aid, work study.

Has everyone checked with their insurance companies and
checked to see what college scholarships they offer?

Often times people overlook their insurance company...
Our life insurance company, Foresters, has given DS a $2,000 scholarship
each year- his check for this year came in yesterday's mail.

DS's cost for the fall semester are a total of $13,654 and
his grants/scholarships for this semester are $5150,
his loans are $3713, and we have been paying $4791 on a monthly payment plan since April.
We still owe a little over $800 on his fall semester, and DS will be paying that
so that the $2000 scholarship will go totally toward his spring semester.

I would never have pushed him toward his dream school had he not already had an AA first.
No sense in paying big bucks for general ed. classes...

I think the key is to keep turning over rocks and find a way to get to college,
and keep an open mind.
Community College/dual enrollment classes were the first rock we turned over
and that has helped alleviate the costs and allowed him to attend his dream school.

 

[Colleen27]

any one have any expereince with savings bonds and financial aid?

Not worth it. The interest rate these days is ridiculously low. My grandmother used to buy them for the kids, and the ones she bought in '98 when my oldest was born still haven't matured.

 

[ilovemk76]

How much can a student borrow each year in their own name?