Recommendations for Funding College

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP are you insane or just stupid? You make $400k, have $2m+ in retirement accounts, and you're stumped about how to pay for college for your kids? You've been banking on the (mistaken) assumption that your kids would get merit scholarships to Ivy League and near peer schools?

I've got to say, as a two-nonprofit household that has forgone every luxury to be able to afford the best schools that our two kids might be able to get into, people like you just blow my mind.

OP again. I’m definitely not stupid nor am I insane, but I do appreciate your candor. We’ve programmed a great deal of discretionary spending into our budget. We have no debt with the exception of our mortgage, which is less than 20% of our base take home pay. I think we can make some significant spending cuts to make this work and augment, if necessary, with temporary cuts to our retirement contributions. Sort of feels like colleges expect parents to liquidate all savings and take out both loans and second mortgages, which is something I just didn’t see coming when we started putting money into 529 plans 16+ years ago.

And, yes, I was definitely surprised to learn that merit-based scholarships are not available at Ivy League and comparable schools.

DH has a PhD —a RESEARCH degree—and you guys didn’t google this a tiny bit over the last 3-10 years??

OP, I’d love to know the answer to this question. And also, you found your way to DCUM. Did you never check the College and University forum? You are getting good advice here about financing college, but it sounds like you also have very unrealistic expectations of where your rising senior is likely to end up, high stats notwithstanding. You need to head there for a reality check after you’ve come to terms with the advice here.

[Anonymous]

Why do you want other people to pay for your children's education, just because you forgot to save?

That's basically what you are doing when you are asking for financial aid. That is fine for someone with a low income, but why do UMC expect others to pay for the education of the UMC children? The UMC parents should be paying for that themselves.

We have the same HHI as you, but we plan to pay for our children's education, rather than trying to free ride off of others.

[Anonymous]

Anonymous wrote:

Anonymous wrote:op, my household makes 110k but used to make more like ninety and we currently have sixty thousand saved for our ninth grader and sixty five thousand saved for our tenth grader. Which we are now realizing isn’t enough. We are going to have each kid go instate, take the maximum of 5k per year of loans, and tighten our belts and cash flow the rest.

The fact that you have saved so little while making 400k and assumed your kids would get scholarships to cover much of the costs is just insane. Why should YOUR kids get scholarships to places like Cornell?

Unlike OP, your kids are well positioned to get financial aid so I wouldn’t write off non state options. Congrats on saving so much relative to your hhi and best wishes for your kids!

Our HHI is that and we have similar savings but most of the financial aid we were offered was loans--or not enough to bring private schools of a similar caliber of state schools to close prices. The FAFSA determined our EFC as 34k/yr.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:op, my household makes 110k but used to make more like ninety and we currently have sixty thousand saved for our ninth grader and sixty five thousand saved for our tenth grader. Which we are now realizing isn’t enough. We are going to have each kid go instate, take the maximum of 5k per year of loans, and tighten our belts and cash flow the rest.

The fact that you have saved so little while making 400k and assumed your kids would get scholarships to cover much of the costs is just insane. Why should YOUR kids get scholarships to places like Cornell?

Unlike OP, your kids are well positioned to get financial aid so I wouldn’t write off non state options. Congrats on saving so much relative to your hhi and best wishes for your kids!

Our HHI is that and we have similar savings but most of the financial aid we were offered was loans--or not enough to bring private schools of a similar caliber of state schools to close prices. The FAFSA determined our EFC as 34k/yr.

Why do you think you should get aid on that income?

[Anonymous]

Anonymous wrote:Why do you want other people to pay for your children's education, just because you forgot to save?

That's basically what you are doing when you are asking for financial aid. That is fine for someone with a low income, but why do UMC expect others to pay for the education of the UMC children? The UMC parents should be paying for that themselves.

We have the same HHI as you, but we plan to pay for our children's education, rather than trying to free ride off of others.

This is not umc. They are wealthy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:op, my household makes 110k but used to make more like ninety and we currently have sixty thousand saved for our ninth grader and sixty five thousand saved for our tenth grader. Which we are now realizing isn’t enough. We are going to have each kid go instate, take the maximum of 5k per year of loans, and tighten our belts and cash flow the rest.

The fact that you have saved so little while making 400k and assumed your kids would get scholarships to cover much of the costs is just insane. Why should YOUR kids get scholarships to places like Cornell?

Can you step through the math on this for us? How have you been able to amass $125K for college savings over the course of about 15 years on a $90-$110K HHI? Even at an aggressive ROI of 8%, this means you’ve been saving $5K of your net HHI per year on average. But, you wouldn’t be doing this unless your were first contributing 20% of your gross HHI to retirement savings, as all financial advisors recommended. So, on a $110K HHI, you’ve been operating on a MAGI of $88K, a take home of maybe $72K and then an available budget of roughly $67K after your college savings. So all your remaining expenses are covered by $5,600/month, including your mortgage and/or rent?!? Seems unlikely. Explain it to us.

How hard is this to understand? We are doing it as well. Our income has gone up over the years but its simple. You aren't taking vacations, you drive older paid off cars till they basically die or not worth fixing, shop at Aldi's and Marshalls, Target, Walmart and buy a small house close in or a larger house further out. Our mortgage has always been $2K or under (less with refinancing and recasting). So, yes, we could cover everything on that and save. We did prepaid college funds when our kids were born and put off things like house repairs that we could not DIY till we could save for that too and pay cash.

At $400K, there is zero excuse for OP not to have $200-300K per child saved over 18 years.

It is hard to not see past the classic DCUM humblebrag. “I make only the median HHI, yet I’m virtuous enough to have 3X the median college savings for my kids.” This puts you at the 99th percentile of college savers given your income level. So, you’re basically patting yourself on the back for being in the top 1%.

I am very proud that we saved money and are financially responsible. We will also have our house paid off when ours hit high school. Our priority is our kids. When I am dead taking a vacation or living in a fancy house will not matter. My kid having a debt free education and doing well is the future for me.

[Anonymous]

Anonymous wrote:DH has a PhD —a RESEARCH degree—and you guys didn’t google this a tiny bit over the last 3-10 years??

OP, I’d love to know the answer to this question. And also, you found your way to DCUM. Did you never check the College and University forum? You are getting good advice here about financing college, but it sounds like you also have very unrealistic expectations of where your rising senior is likely to end up, high stats notwithstanding. You need to head there for a reality check after you’ve come to terms with the advice here.

OP again. Lots of interesting insights and feedback, which my family and I appreciate. Here are some takeaways:

1. We are apparently below average savers and really dropped the ball on the 529 front.

2. Tapping home equity, applying for parent loans, and pulling from retirement are techniques no one seems to use, so we’re eliminating these from consideration.

3. Our HHI is high enough that most seem to think – including college net price calculators – that we can absorb this cost as a matter of cash flow management.

4. Many recommend that we consider less expensive schools. Perhaps, if it just so happens to work out this way. But, we are committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor.

Here is the plan for the estimated $640K we think we will need starting in 3Q2023 and running through 4Q2028 (63 months) so we have full funding available just after DC#2 enters her senior year of college.

1. We have $173K in 529s now, which we believe we can grow to $190K before it gets withdrawn. This leaves $450K remaining.

2. We are currently saving $1K/month for 529 contributions. We’ll simply continue for the next 75 months. This is another $75K (ignoring interest and investment compounding) and now leaves $375K remaining.

3. Our annual bonuses ($60K) are pretty reliable and are currently spent entirely on travel and other discretionary purchases. Easily redirected, as this is on top of monthly travel ($1K) and discretionary ($1K) budgets taken from our base HHI. We’ll have seven bonuses between now and 4Q2028. These work out to be around $33K net each, which is another $231K. This leaves $144K remaining.

4. DH just started receiving ISOs and RSUs and these vest monthly and quarterly, respectively. Each RSU grant is worth about $7K at today’s stock price (which, BTW, is a small-cap high-tech growth trading at a value that is 66% of what it was in November 2021). Each ISO grant is worth about $2K today. We’ll have 75 ISO and 18 RSU grants between now and 4Q2028. This is another $276K gross or at least $152K net. This leaves $0 remaining. As an added hedge, if the stock returns to its November 2021 value prior to 4Q2028 (which seems very likely), the RSUs will be worth $104K net while the ISOs should be worth at least $227K net, which is an extra 180K we can push to savings, if needed, or to cover unforeseen expenses or cost escalation elsewhere.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:op, my household makes 110k but used to make more like ninety and we currently have sixty thousand saved for our ninth grader and sixty five thousand saved for our tenth grader. Which we are now realizing isn’t enough. We are going to have each kid go instate, take the maximum of 5k per year of loans, and tighten our belts and cash flow the rest.

The fact that you have saved so little while making 400k and assumed your kids would get scholarships to cover much of the costs is just insane. Why should YOUR kids get scholarships to places like Cornell?

Can you step through the math on this for us? How have you been able to amass $125K for college savings over the course of about 15 years on a $90-$110K HHI? Even at an aggressive ROI of 8%, this means you’ve been saving $5K of your net HHI per year on average. But, you wouldn’t be doing this unless your were first contributing 20% of your gross HHI to retirement savings, as all financial advisors recommended. So, on a $110K HHI, you’ve been operating on a MAGI of $88K, a take home of maybe $72K and then an available budget of roughly $67K after your college savings. So all your remaining expenses are covered by $5,600/month, including your mortgage and/or rent?!? Seems unlikely. Explain it to us.

How hard is this to understand? We are doing it as well. Our income has gone up over the years but its simple. You aren't taking vacations, you drive older paid off cars till they basically die or not worth fixing, shop at Aldi's and Marshalls, Target, Walmart and buy a small house close in or a larger house further out. Our mortgage has always been $2K or under (less with refinancing and recasting). So, yes, we could cover everything on that and save. We did prepaid college funds when our kids were born and put off things like house repairs that we could not DIY till we could save for that too and pay cash.

At $400K, there is zero excuse for OP not to have $200-300K per child saved over 18 years.

It is hard to not see past the classic DCUM humblebrag. “I make only the median HHI, yet I’m virtuous enough to have 3X the median college savings for my kids.” This puts you at the 99th percentile of college savers given your income level. So, you’re basically patting yourself on the back for being in the top 1%.

I am very proud that we saved money and are financially responsible. We will also have our house paid off when ours hit high school. Our priority is our kids. When I am dead taking a vacation or living in a fancy house will not matter. My kid having a debt free education and doing well is the future for me.

Ok, that’s you. Congratulations on winning your particular version of life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DH has a PhD —a RESEARCH degree—and you guys didn’t google this a tiny bit over the last 3-10 years??

OP, I’d love to know the answer to this question. And also, you found your way to DCUM. Did you never check the College and University forum? You are getting good advice here about financing college, but it sounds like you also have very unrealistic expectations of where your rising senior is likely to end up, high stats notwithstanding. You need to head there for a reality check after you’ve come to terms with the advice here.

OP again. Lots of interesting insights and feedback, which my family and I appreciate. Here are some takeaways:

1. We are apparently below average savers and really dropped the ball on the 529 front.

2. Tapping home equity, applying for parent loans, and pulling from retirement are techniques no one seems to use, so we’re eliminating these from consideration.

3. Our HHI is high enough that most seem to think – including college net price calculators – that we can absorb this cost as a matter of cash flow management.

4. Many recommend that we consider less expensive schools. Perhaps, if it just so happens to work out this way. But, we are committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor.

Here is the plan for the estimated $640K we think we will need starting in 3Q2023 and running through 4Q2028 (63 months) so we have full funding available just after DC#2 enters her senior year of college.

1. We have $173K in 529s now, which we believe we can grow to $190K before it gets withdrawn. This leaves $450K remaining.

2. We are currently saving $1K/month for 529 contributions. We’ll simply continue for the next 75 months. This is another $75K (ignoring interest and investment compounding) and now leaves $375K remaining.

3. Our annual bonuses ($60K) are pretty reliable and are currently spent entirely on travel and other discretionary purchases. Easily redirected, as this is on top of monthly travel ($1K) and discretionary ($1K) budgets taken from our base HHI. We’ll have seven bonuses between now and 4Q2028. These work out to be around $33K net each, which is another $231K. This leaves $144K remaining.

4. DH just started receiving ISOs and RSUs and these vest monthly and quarterly, respectively. Each RSU grant is worth about $7K at today’s stock price (which, BTW, is a small-cap high-tech growth trading at a value that is 66% of what it was in November 2021). Each ISO grant is worth about $2K today. We’ll have 75 ISO and 18 RSU grants between now and 4Q2028. This is another $276K gross or at least $152K net. This leaves $0 remaining. As an added hedge, if the stock returns to its November 2021 value prior to 4Q2028 (which seems very likely), the RSUs will be worth $104K net while the ISOs should be worth at least $227K net, which is an extra 180K we can push to savings, if needed, or to cover unforeseen expenses or cost escalation elsewhere.

Since you have a shorter time frame with the older child, you probably should be more conservative with how that 529 is currently invested. The stock market is currently recovering, but that trajectory isn’t certain in the short term.

[Anonymous]

Is your rising senior working jobs?

He/she should be able to pull in money this summer and next summer. I have 3 college students earning $12,000 for 12 weeks of work over the summer and plus on their second summer jobs they are pulling in around $5000 for the summer.

This summer and next summer your rising senior should be able to pull in around $17,000 for 12 weeks of work
or $34,000 for the two summers

[Anonymous]

I'm PP

The 3 students work for me. They are not my kids. All three have hustle.

[Anonymous]

You have a spending issue.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DH has a PhD —a RESEARCH degree—and you guys didn’t google this a tiny bit over the last 3-10 years??

OP, I’d love to know the answer to this question. And also, you found your way to DCUM. Did you never check the College and University forum? You are getting good advice here about financing college, but it sounds like you also have very unrealistic expectations of where your rising senior is likely to end up, high stats notwithstanding. You need to head there for a reality check after you’ve come to terms with the advice here.

OP again. Lots of interesting insights and feedback, which my family and I appreciate. Here are some takeaways:

1. We are apparently below average savers and really dropped the ball on the 529 front.

2. Tapping home equity, applying for parent loans, and pulling from retirement are techniques no one seems to use, so we’re eliminating these from consideration.

3. Our HHI is high enough that most seem to think – including college net price calculators – that we can absorb this cost as a matter of cash flow management.

4. Many recommend that we consider less expensive schools. Perhaps, if it just so happens to work out this way. But, we are committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor.

Here is the plan for the estimated $640K we think we will need starting in 3Q2023 and running through 4Q2028 (63 months) so we have full funding available just after DC#2 enters her senior year of college.

1. We have $173K in 529s now, which we believe we can grow to $190K before it gets withdrawn. This leaves $450K remaining.

2. We are currently saving $1K/month for 529 contributions. We’ll simply continue for the next 75 months. This is another $75K (ignoring interest and investment compounding) and now leaves $375K remaining.

3. Our annual bonuses ($60K) are pretty reliable and are currently spent entirely on travel and other discretionary purchases. Easily redirected, as this is on top of monthly travel ($1K) and discretionary ($1K) budgets taken from our base HHI. We’ll have seven bonuses between now and 4Q2028. These work out to be around $33K net each, which is another $231K. This leaves $144K remaining.

4. DH just started receiving ISOs and RSUs and these vest monthly and quarterly, respectively. Each RSU grant is worth about $7K at today’s stock price (which, BTW, is a small-cap high-tech growth trading at a value that is 66% of what it was in November 2021). Each ISO grant is worth about $2K today. We’ll have 75 ISO and 18 RSU grants between now and 4Q2028. This is another $276K gross or at least $152K net. This leaves $0 remaining. As an added hedge, if the stock returns to its November 2021 value prior to 4Q2028 (which seems very likely), the RSUs will be worth $104K net while the ISOs should be worth at least $227K net, which is an extra 180K we can push to savings, if needed, or to cover unforeseen expenses or cost escalation elsewhere.

Damn! Not too shabby. I’m jealous of the lux vacations y’all have been taking

[Anonymous]

Anonymous wrote:Is your rising senior working jobs?

He/she should be able to pull in money this summer and next summer. I have 3 college students earning $12,000 for 12 weeks of work over the summer and plus on their second summer jobs they are pulling in around $5000 for the summer.

This summer and next summer your rising senior should be able to pull in around $17,000 for 12 weeks of work
or $34,000 for the two summers

You're suggesting a rising high schooler should be making $35/hour (and then working a full 12 weeks of 40 hours per week?)

What the heck is this kid doing? This 16/17 year old is making more than nurses with bachelors degrees or teachers.

My 9th grader is making $16/hour which I think is crazy good.

[Anonymous]

OP again. Lots of interesting insights and feedback, which my family and I appreciate. Here are some takeaways:

1. We are apparently below average savers and really dropped the ball on the 529 front.

2. Tapping home equity, applying for parent loans, and pulling from retirement are techniques no one seems to use, so we’re eliminating these from consideration.

3. Our HHI is high enough that most seem to think – including college net price calculators – that we can absorb this cost as a matter of cash flow management.

4. Many recommend that we consider less expensive schools. Perhaps, if it just so happens to work out this way. But, we are committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor.

Here is the plan for the estimated $640K we think we will need starting in 3Q2023 and running through 4Q2028 (63 months) so we have full funding available just after DC#2 enters her senior year of college.

1. We have $173K in 529s now, which we believe we can grow to $190K before it gets withdrawn. This leaves $450K remaining.

2. We are currently saving $1K/month for 529 contributions. We’ll simply continue for the next 75 months. This is another $75K (ignoring interest and investment compounding) and now leaves $375K remaining.

3. Our annual bonuses ($60K) are pretty reliable and are currently spent entirely on travel and other discretionary purchases. Easily redirected, as this is on top of monthly travel ($1K) and discretionary ($1K) budgets taken from our base HHI. We’ll have seven bonuses between now and 4Q2028. These work out to be around $33K net each, which is another $231K. This leaves $144K remaining.

4. DH just started receiving ISOs and RSUs and these vest monthly and quarterly, respectively. Each RSU grant is worth about $7K at today’s stock price (which, BTW, is a small-cap high-tech growth trading at a value that is 66% of what it was in November 2021). Each ISO grant is worth about $2K today. We’ll have 75 ISO and 18 RSU grants between now and 4Q2028. This is another $276K gross or at least $152K net. This leaves $0 remaining. As an added hedge, if the stock returns to its November 2021 value prior to 4Q2028 (which seems very likely), the RSUs will be worth $104K net while the ISOs should be worth at least $227K net, which is an extra 180K we can push to savings, if needed, or to cover unforeseen expenses or cost escalation elsewhere.

This is an amazing post in multiple ways. You are fortunate that you have so many income sources/high income to save. I am even more amazed that, even with your good fortune, 1) you asked for ways to cut down your responsibility to pay for your kids' college and 2) that you have not saved enough to ask this question.