What percentage of people pay cash for college?

[disykat]

We also have an optional Pre-paid tuition plan where you purchase tuition or tuition + housing up front, so when the kid actually goes to college most of the costs are already covered. If you go to a non-state school (either in-state or out of state) Prepaid will pay the Florida resident rate of tuition for that college. So you might be paying $400/credit hour of more, but Prepaid would only pay $220/hour or whatever the current lowest tuition rate is for one of our state schools.

This is what we had done ahead of time , but we only had two years prepaid saved - enough to cover one of them for the two years they both would be in school since we knew we would be cash flowing. We started this prong of our plan once they started school and we had some cash to dedicate because we knew we'd have two in college at the same time. (A good point - you aren't out of luck if you don't start when they were born. When the kids start school and no more daycare expenses or parent at home is a great time to start.) We definitely cash flowed the other 5.5 years of college (7.5 years total between the two of them since one of them graduated early, another way to save $, 2 of which were prepaid) - but it would be a huge misnomer to say "the college student" did it! My kids worked as part of the plan, they applied for tons of scholarships and got a few, they chose schools where they would pay the rate of instate tuition, they moved off campus into budget friendlier shared housing after the first year, we claimed the appropriate tax credits, I increased from half time to full time employment, and we had timed paying off our mortgage with our oldest starting college so we had that money too. It was definitely a shared thing.

I would almost guarantee that most students that are able to cash flow school (that aren't wealthy) have a multi pronged plan that includes making a smart school choice for their circumstances, saving ahead, working during, parental help of some type - room and board or cash, using cheap housing options, etc. etc. I think a big part of the problem people have is that they are so consumed by the idea that it's out of reach that they don't even try to avoid or minimalize loans. We planned, planned some more, sacrificed, and prioritized. Obviously we have enough income and were fortunate to be able make that work for us, but even people who don't can plan and find ways to lessen the loan burden.

 

[tvguy]

Wait, you made a 34k return on your investment? Is my math right? You put in $100 x 12 = $1200 per year x 17 years = $20,400. Now it's at 55k. That's a return of $34,600. That's remarkable.

I don't know, you could do it with good investing. My wife put $4,500 over three years (1979, 1980, 1981) into and IRA. She became eligible for a 401k in 1982 so she forgot about it. We retired in July and that IRA is over $80,000 now.

 

[DLgal]

That's great. You did it the right way. Since he isn't going to college, and if he doesn't end up going to trade school, do you have another kid you can use it for? I understand there is a penalty plus taxes on capital gains if you don't use it for educational expenses.

Nope. He is autistic as is his younger brother. Both accounts have the same amount of money currently. Neither will go to college. However, they will both be eligible to open ABLE accounts, which are tax advantaged investment accounts for adults with disabilities that were diagnosed prior to age 22. With those you can roll over 529 funds tax and penalty free ($16,000 per year). So, we will do that. ABLE accounts allow these adults to have assets that are not counted towards disqualifying them when applying for government aid such as SSI. These account fund can be used for pretty much any living expenses, tax and penalty free, just like qualified 529 withdrawals.

ETA: We have used some of the money to fund a masters for my husband. We opened up an account in in his name in 2020 and transferred over a total of about $15k so far, split between the two kids accounts. Even doing that, we are up from where we were before we made those withdrawals. 2020 and 2021 returns were in the 25% range.

 

[DLgal]

Wait, you made a 34k return on your investment? Is my math right? You put in $100 x 12 = $1200 per year x 17 years = $20,400. Now it's at 55k. That's a return of $34,600. That's remarkable.

Yep. We got lucky with the crash in 2008. Opened the accounts in 2004 and 2006. Chose the most aggressive investment options and let it ride. Our account performance over time is about 10%, which mirrors the stock market pretty closely. I didn't do any of those options where you put in your child's HS or College graduation year. I go high risk in all my investments. None of this "rebalancing" to more conservative investments. You don't make money that way.

The magic of compounding is real.

 

[Skippy918]

Yep. We got lucky with the crash in 2008. Opened the accounts in 2004 and 2006. Chose the most aggressive investment options and let it ride. Our account performance over time is about 10%, which mirrors the stock market pretty closely. I didn't do any of those options where you put in your child's HS or College graduation year. I go high risk in all my investments. None of this "rebalancing" to more conservative investments. You don't make money that way.

The magic of compounding is real.

Same. My son was born in 2008 so we opened his 529 a few months after that and the market was at the bottom. It’s grown a lot. It will cover a good chunk of his schooling.

 

[dvc lover 1970]

Kids who go to state schools probably make the most of those who graduate without any debt.

 

[bcla]

I had no debt. My parents paid for it. But I lived with my parents and back then a year at any University of California campus was about $1400 for in-state students. It was up to about $5000 per year by the time I graduated. Even grad school was cheap for me, where my classes were by the unit at about $300 to $350 per quarter unit. But the price has since skyrocketed.

 

[lifesavacation]

All 3 of mine graduated without debt due to athletic scholarships. Our 4th is currently in college also on a full ride athletic scholarship. They would have been at state universities if they didn’t receive scholarships. Their private colleges were 60k+ a year and there’s no way we would have paid that out of pocket for all 4.

 

[Pea-n-Me]

Ah, it’s been a while since we’ve had a good college debt thread here!

I wish our state had some sort of free tuition for all, but we don’t, so neither of mine got even a penny of help. And we had twins, so two at once. (I’m surprised I didn’t have a nervous breakdown, lol.)

Had ours gone to the regular state colleges (~9K/yr tuition only) they would’ve had enough cash to make it debt free, but they went to the flagship universities (~$17K/yr tuition only) and wound up taking out a small loan each for their last semesters that they’re working on paying down now. Overall, not bad. I work with some young people who are drowning in debt and wish they made different choices. (And I’m indebted to them for sharing their experiences with me when we were in the college planning stages.) Others are still paying down school loans long after they start their families, and they make no bones about hating it.

I really didn’t think either of mine would think about grad school for a while, if at all, but DD is already three classes into her Master’s, and paying monthly. Her employer will reimburse most of it, so when she’s done, her graduate degree will have only cost her about $5K out of pocket, which is great.

I agree with @disykat, the way we made it work was by setting money aside and using a combination of other strategies to get through it, including good planning, communication about realistic school choices, and lots of cash for everything besides tuition during those four years (eta both held part time jobs, too), which I’m really glad are behind us now!

Someone else mentioned their philosophy. Ours was that we felt it was important for our kids to have some skin in the game, and that we can’t take out loans for retirement. We were not going to do Parent Plus loans, either, which we felt would put us in a bad financial situation at a time when retirement planning would be kicking into high gear. Glad it all worked out. I think college planning for many is super stressful, and I hate to see people make bad choices just because they want to go to a hoity-toity school, especially if they don’t finish.

A HS teacher said something senior year to us parents that hit home. The HS liked to boast about where their graduates went to college, and what percentage of students went, etc. She told us the more important statistics were where they were the second year.

Other Dis posters also posted two things that I found really helpful, so thanks to them though I don’t remember who they were. Happy to Pay It Forward!

$110,000 In Debt

Debt Free U

Good luck to all!

 

[Meriweather]

All of ours were years ago, but myself, DH, DS and DD were all paid by graduation. No debt for any.
DIL had a debt upon graduating from law school. It took quite a few years for them to get that one paid off

 

[MamaMermaid]

I graduated from undergrad with no debt. I won Bright Futures (state of FL scholarship for gpa/test scores) and my parents enrolled in Florida Pre-Paid when I was little. My parents covered cost of books, etc. I'm grateful they were able to do such a massive thing.

I graduated with no debt and had money left over from Pre-Paid. I used that money towards my Masters degree.

When I had my son, my parents bought Pre-Paid for him. A big, big gift. He is set. We will cover books, meal plans, additional housing, etc. But the bulk is done. This is one of those rare times "#blessed" is acceptable.

 

[mco65]

I have 2 seniors graduating in 2022. 1 has chosen a State School and with academic scholarship money will have only a small tuition bill if any.. The other has chosen a small private school so that he can play baseball. Between academic and scholarship money he will still have a decent size bill. I will pay what i can upfront and either take out a 401k loan or by that time i can withdraw from my 401k with no penalty. Either way, i wont leave the bill for him to pay. So he will be debt free when he graduates but i may not.

 

[design_mom]

I don't think our state has any sort of "free tuition" program. I have a current college junior and a current high school senior. Paying for college is big in our minds.

I think (hope) we'll be able to pay for their undergrad and they will be able to live debt free. Both of them are paying/will pay *some* but not enough that they have to take out loans. We do not qualify for any grant aid through the FAFSA. We have definitely made it a point to save for college even if we sacrifice for it. (Our last trip to Disney was in 2015.)

Our son attends a state school and got a decent size academic scholarship. My daughter is still waiting to hear from a couple of colleges. Right now, her top choices (based on program) are a state school and a private school. The private school offered her a large scholarship (but not enough to offset the cost difference between it and several of her other schools -- and that seems to be a difficult thing for her to understand. Just because one school gave you a huge scholarship doesn't make it a better deal if it doesn't take the price as low as another school that has lower starting tuition.) We have told her, since the beginning, that we budgeted according to state school prices, so if she chooses a more expensive school then she'll need to make up the difference. But, I really hope she chooses a school that will allow her to graduate without debt.

 

[TwoMisfits]

We cash pay from our personal funds and 529s for local (living at home) public state school, and made the selection based on my daughter's future job desire, which has no way to become lucrative. Funny enough, by turning down the qualifying loans, they gave us a $1K/year "pity" scholarship, probably so their "students receiving aid" number stayed very high.

Why didn't we go into loans? I have learned that if you expect someone to bail you out later, somehow, some way, you never qualify even if you should. So, my kids can decide where they want to go, but I've drilled in the "no one else will pay for this than you" lesson, and they seem to take that one to heart...

So, we are in the 42%, and will likely be for all 4 kids...although it is their choice...I just pay for 4 years of in state tuition...

 

[cvjw]

Wait, you made a 34k return on your investment? Is my math right? You put in $100 x 12 = $1200 per year x 17 years = $20,400. Now it's at 55k. That's a return of $34,600. That's remarkable.

Our investments have doubled in the pandemic. Less than 2 years and double the money.

 

[VandVsmama]

We had the “money talk” with our kids about 2 weeks ago. ODD is in 10th grade. The HS counselor recommended to set expectations re: how much you can afford to pay since HS kids will often get pie in the sky ideas of where they’ll go to school and it often disregards the cost.

We can afford to pay the cost of attendance for a 4 yr in state university. Told the kids that if they want to go out of state or to a private school, then they will need merit scholarships to make up the difference.

Next summer, we are going to have ODD read a Dave Ramsey or Suzy Orman personal finance book We have explained to her the financial power of graduating with no student debt since it will give you way more freedom in your job options than if you have the equivalent of a house payment to make every month straight out of college.

 

[mjkacmom]

It's possible due to the popularity of 529 plans. Those didn't exist when I went to college 25 years ago. I imagine many more students are able to have their college paid for by parents who opened these accounts when their kids were born 18-22 years ago, right around when they became popular.

We have enough in my 17 year olds 529 to fund 4 years of tuition, fees and books at the any state public school (either the UC or Cal State system) We literally opened the account when he was born and have only contributed $100/month. The account currently sits at $55,000. He isn't going to college, so if he goes to trade or vocational school, we will be able to fund it easily.

These accounts have made it easy for parents to save money for college over a child's lifetime.

We saved over $30,000 in each of our 5 kids 529’s, a drop in the bucket. Our flagship is over $120,000 with housing for 4 years. Room and board alone is $15,000 a year in this state. The only in state program is free CC for the top 15%. My kids who go OOS have even higher bills, even though they got top scholarships. Dd20 starts her 3 year doctorate program in May, I think it’s $130,000 after her $42,000 scholarship. Fortunately it’s in Boston so housing should be cheap. My oldest will have paid off $90,000 in 5 years by the end of 2023, her brother 2025.

 

[Sinder]

2 of my kids graduated from State schools debt free and my 3rd is currently attending one and it will be the same.
We started college funds for them when they were born. Between that and dual enrollment while in HS, and going to the CC for an associates, graduating from State U with a bachelors was affordable for them.

My state offers free 4 year tuition for certain income levels. R&B is not included.
We don’t qualify but for families that do that helps them afford school without having to take out loans. They are probably included in those stats.

 

[BroadwayHermione5]

I wish I could’ve paid it in cash!
I’m still paying off loans. Didn’t help my school went so in the red that they upped the tuition of all students astronomically every year (private 4 year). I had friends that went to private and public universities that maybe had only a couple thousand added to their tuition over the course of the four years. Some had grandfather claus type situations.
Not me and my friends from my college.
Easily over 10 grand was added to tuition in a span of a year. Thankfully I commuted and had great scholarships and it wasn’t nearly as bad as it was for some of my friends but it was rough.

Really look into finances of where you apply and how they are used fellow humans. Don’t be afraid to ask questions. Had I really looked and really paid attention to people I knew who went there and how they would speak about the college blowing money AND the board of trustees basically changing everything that was approved (the one year the town offered to pay to redo the quad under the condition a rep was there every day the board of trustees and other admins still overruled and went with a horrible contract for the sidewalk….guess what cracked the first winter it was in use?), I wouldn’t have gone.

 

[soccerdad72]

Fortunately, between regular savings and 529 accounts, we have enough saved to pay for college for our two boys (partially dependent on where our younger son chooses). Older son is in a 5 year program (mechanical engineering), but it's only 8 semesters of classwork, with 4 co-ops included. We could have had our son contribute to his tuition with his co-op salary (he made around $10k this past fall), but since we had told him we were covering his undergrad, we let him bank that income (he actually opened a Roth IRA with a chunk of it). We told him to start building a bit of a nest egg so he'll have a leg up when he graduates and moves out on his own.