Advice re underfunded college savings & well funded retirement

[Anonymous]

Anonymous wrote:OP if your kid is aiming for a top 30 school then he is likely to go to graduate school. I encourage you to insist on no loans for the undergraduate degree which is reasonable given that you can afford to spend approximately $30k a year.
You did not mention your state or what your kid wants to study. If VA, UVA, VT and W and M are all fine options depending on his interest. If he is interested in a small liberal arts college there are a number of SLACs (Denison, Kenyon, Oberlin, Earlham to name a few that are great and many are mid priced and many offer generous merit based aid.
Don’t jeopardize your retirement security or your spouse’s medical care or your child’s financial future because it is tough to have these conversations with him. Tell him the truth with love and empathy. You are actually doing really well financially given your ability to maintain a robust retirement account, take care of significant medical bills and afford $30k a year for 8 years. There is no need for your children to feel financially insecure unless you jeopardize this to pay $75k for 8 years

I completely agree with this.

OP, read the book The College Solution. The author has a blog by the same name and both are very informative and helpful.

[Anonymous]

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Anonymous wrote:I just checked the us news rankings for first time in 20 years. NYU is 30th. That may be my cut off for worth it for loans.

Your kid should probably just go to UVA.

UVA is ranked higher, if you care about this sort of thing.

I am not as familiar with majors and rankings nowadays. I was one of the NY posters and never heard of UVA before moving to DC. I did know a girl at Yale who went to UVA undergrad but I didn’t know UVA from Penn State or Rutgers.

Once upon a time, NYU was at the top for finance and law.

I also dont hear about Columbia or Cornell around here. I am sure it is geographic.

Honestly? It boggles my mind that anyone would choose NYU (much less over over the University of Virginia, or for that matter the University of Maryland). Big classes, very high tuition, expensive housing, all about the rankings, lack of focus on undergraduate teaching. If you’re going to a larger research university as an undergrad, then pay in-state tuition and be done with it.

Pp here. My kids are still young. I will support my kids where they want to go. It doesn’t really matter if tuition is 100k of 20k per year for us.

If you can comfortably afford it, that's great. I would love to send my child to a $100K school and we are saving but there is no way we can reasonably do that and fully pay. My goal is to fully pay for college and graduate school to give them the easiest start to life as my parent gave me.

BUT, OP has a special needs child who may need an expensive college depending on the child's needs and where they can get in. That is a completely separate issue. Other child does not. The best plan is to go to a school where OP can comfortably help as much as possible. Did you read about the costly medical care for the spouse? Realistically if that keeps up and they are going into savings now, that's a huge issue. So, do they spend $100K on a fancy school or $25K and parent gets medical treatments? You are lucky you don't have to make those choices. I am on a medication that out of pocket is about $1K a month. We have no choice but two pay it.

[Anonymous]

In less your child is going into finance, big law or speciality medicine, they should go to the best school you can afford. Most careers don't require an IVY and schools when we grew up are very different in terms fo getting jobs and what people are looking for. Air Force wants a degree. It does not matter from where or what. My sibling is a doctor who went to Ivy schools and my spouse went to a no name school via the military and is making more than her. If you don't go into speciality medicine and are just working at a hospital/clinic that assigns you patients, it doesn't matter if you go Ivy or state.

[Anonymous]

Just get student loans. Pay them off later when you retire into a better tax bracket. Before you sell the rental property can you move back into it for two years before you sell it to beat the capital gains tax?

[Anonymous]

Anonymous wrote:In less your child is going into finance, big law or speciality medicine, they should go to the best school you can afford. Most careers don't require an IVY and schools when we grew up are very different in terms fo getting jobs and what people are looking for. Air Force wants a degree. It does not matter from where or what. My sibling is a doctor who went to Ivy schools and my spouse went to a no name school via the military and is making more than her. If you don't go into speciality medicine and are just working at a hospital/clinic that assigns you patients, it doesn't matter if you go Ivy or state.

This is true. I have nephews who graduated from Harvard and Brown who make less than my kid that graduated from George Mason. The major is more important than the school.

[Anonymous]

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Anonymous wrote:So you have about 16 months before your first starts school and five years before the second? Stop all retirement saving now and pad that 529 while you can. You may actually get some aid considering your spouse's high medical needs. Then do a cash out refinance or home equity loan to cover the gap.

OP is 58. This is terrible, terrible advice.

+1 OP should absolutely not stop saving for retirement. With a disabled spouse and sky high medical bills (that will not go down) they need MORE for retirement.

OP, I understand you say you can afford ~25k per year. But with your situation, you need to be considering community college only for the first two years and a state school for the last two. If your child can gather the scholarships/aid to attend a different school at the same cost as CC/State school then great.

You need to have a serious conversation with your children about what you can afford. And they need to be more aware of what is going on in your family. It seems they don’t have a clue about how ill/costly the treatments are for the disabled spouse.

Actually, they might have a clue and be afraid to bring up the subject. Talking about it with your kids would probably alleviate a lot of stress all around and add needed clarity, Please have this talk, OP.

Doubtful. The OP stated “Kid does not understand reality; will reach out to school college counselor.” How would the kid not understand reality of finances and have a clue at the same time?

OP again. Kid thinks that banks will loan to him the delta between what we can contribute and the cost. Haven’t many others on this board experienced times when their teenage boy lost touch with reality? Unfortunately he got the message from school counselor that merit awards would be unattainable. Perhaps counselor assumed he was going after merit at reach schools. There are schools that are lower ranked but where he could have a shot at their Honors College or merit aid. This could equal in-state tuition, which would be doable. All of kids friends are aiming for top 30 schools, he is having difficulty accepting he can’t count on attending same type of school due to finances, esp given this is a change from several years back.

Then, OP, have your kid look at academic safety schools -- private schools where his grades and stats are in at least the 75th percentile. Those will be his financial safety schools. He might get a merit award package that's cheaper than in-state school.

[Anonymous]

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Anonymous wrote:So you have about 16 months before your first starts school and five years before the second? Stop all retirement saving now and pad that 529 while you can. You may actually get some aid considering your spouse's high medical needs. Then do a cash out refinance or home equity loan to cover the gap.

OP is 58. This is terrible, terrible advice.

+1 OP should absolutely not stop saving for retirement. With a disabled spouse and sky high medical bills (that will not go down) they need MORE for retirement.

OP, I understand you say you can afford ~25k per year. But with your situation, you need to be considering community college only for the first two years and a state school for the last two. If your child can gather the scholarships/aid to attend a different school at the same cost as CC/State school then great.

You need to have a serious conversation with your children about what you can afford. And they need to be more aware of what is going on in your family. It seems they don’t have a clue about how ill/costly the treatments are for the disabled spouse.

Actually, they might have a clue and be afraid to bring up the subject. Talking about it with your kids would probably alleviate a lot of stress all around and add needed clarity, Please have this talk, OP.

Doubtful. The OP stated “Kid does not understand reality; will reach out to school college counselor.” How would the kid not understand reality of finances and have a clue at the same time?

OP again. Kid thinks that banks will loan to him the delta between what we can contribute and the cost. Haven’t many others on this board experienced times when their teenage boy lost touch with reality? Unfortunately he got the message from school counselor that merit awards would be unattainable. Perhaps counselor assumed he was going after merit at reach schools. There are schools that are lower ranked but where he could have a shot at their Honors College or merit aid. This could equal in-state tuition, which would be doable. All of kids friends are aiming for top 30 schools, he is having difficulty accepting he can’t count on attending same type of school due to finances, esp given this is a change from several years back.

I posted previously that child can take out loans. Top 30 schools should be worth it. This is your child’s life and future. I would make damn sure he has a major that could easily pay off those student loans.

Kid cannot take out loans for the $160K delta. The maximum amount a student can borrow is $25,500 over four years.

Thank you for mentioning this. A lot of parents decide not to save at all for their children's college, saying the kids can just take out loans if they want it badly enough. No, they actually can't. This is the reality.

[Anonymous]

Anonymous wrote:

Did she state that somewhere?

Well the she should sell the house if that was the purpose of the house. All financial issues solved.

. It was their choice to put investments into a illiquid second home, but that doesn’t mean it is not there to use for college expenses. College savings are not just 529s. 529s are vehicles that people can use but it is not required. They also have a federal pension, TSP and $2M in 401k retirement accounts- that is more than enough- Feds get health insurance too which makes things easier too.


what federal pension are you talking about, in addition to TSP?

https://seekingalpha.com/instablog/428250-michael-clark/123287-examining-the-great-government-pension-myth

[Anonymous]

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Anonymous wrote:I just checked the us news rankings for first time in 20 years. NYU is 30th. That may be my cut off for worth it for loans.

Your kid should probably just go to UVA.

UVA is ranked higher, if you care about this sort of thing.

I am not as familiar with majors and rankings nowadays. I was one of the NY posters and never heard of UVA before moving to DC. I did know a girl at Yale who went to UVA undergrad but I didn’t know UVA from Penn State or Rutgers.

Once upon a time, NYU was at the top for finance and law.

I also dont hear about Columbia or Cornell around here. I am sure it is geographic.

I'm curious, how large was the rock under which you lived?

I have always lived on the east coast, and yet somehow the knowledge that the University of California is a fine school has penetrated my consciousness. I also have managed to become aware of the University of Washington, Cal Tech, Arizona State, Univ. of Michigan, and quite a few other schools more that 200 miles away.

And you don't hear about Columbia or Cornell here? Do you not know *any* high school kids?

I find it very difficult to believe you went to Yale. Or do you mean you worked on the line at Yale forklift?

Actually I don’t know any high school students. We know toddlers and preschoolers. College isn’t a topic we talk about often at play dates.

And of course I heard of UC schools. UMich was a popular back up school. I lived in an affluent neighborhood in NY. Sorry, I never heard of UVA. That isn’t to say it isn’t an excellent school.

I'm one of the NY posters from above. I have an 8 year old and a 6 year old. My knowledge of college comes from hazy memories of High School and what I have started to pick up on this board. I really have no knowledge of rankings and such. I, too, have heard of Columbia and Cornell because I knew kids from High School that went there. It's probably regional and probably because I'm in my 40s. I don't think the college brand name mattered that much when I was a kid -- most everyone I knew went to SUNY. I'm happy to lurk on DCUM and learn more.

[Anonymous]

Anonymous wrote:Just get student loans. Pay them off later when you retire into a better tax bracket. Before you sell the rental property can you move back into it for two years before you sell it to beat the capital gains tax?

This is terrible, terrible advice.

[Anonymous]

Can you do a cash-out refi on the rental to fund the 529s?

[Anonymous]

Anonymous wrote:

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Anonymous wrote:So you have about 16 months before your first starts school and five years before the second? Stop all retirement saving now and pad that 529 while you can. You may actually get some aid considering your spouse's high medical needs. Then do a cash out refinance or home equity loan to cover the gap.

OP is 58. This is terrible, terrible advice.

+1 OP should absolutely not stop saving for retirement. With a disabled spouse and sky high medical bills (that will not go down) they need MORE for retirement.

OP, I understand you say you can afford ~25k per year. But with your situation, you need to be considering community college only for the first two years and a state school for the last two. If your child can gather the scholarships/aid to attend a different school at the same cost as CC/State school then great.

You need to have a serious conversation with your children about what you can afford. And they need to be more aware of what is going on in your family. It seems they don’t have a clue about how ill/costly the treatments are for the disabled spouse.

Actually, they might have a clue and be afraid to bring up the subject. Talking about it with your kids would probably alleviate a lot of stress all around and add needed clarity, Please have this talk, OP.

Doubtful. The OP stated “Kid does not understand reality; will reach out to school college counselor.” How would the kid not understand reality of finances and have a clue at the same time?

OP again. Kid thinks that banks will loan to him the delta between what we can contribute and the cost. Haven’t many others on this board experienced times when their teenage boy lost touch with reality? Unfortunately he got the message from school counselor that merit awards would be unattainable. Perhaps counselor assumed he was going after merit at reach schools. There are schools that are lower ranked but where he could have a shot at their Honors College or merit aid. This could equal in-state tuition, which would be doable. All of kids friends are aiming for top 30 schools, he is having difficulty accepting he can’t count on attending same type of school due to finances, esp given this is a change from several years back.

I posted previously that child can take out loans. Top 30 schools should be worth it. This is your child’s life and future. I would make damn sure he has a major that could easily pay off those student loans.

Kid cannot take out loans for the $160K delta. The maximum amount a student can borrow is $25,500 over four years.

I don’t think that is true. We know recent med school grads with 500k debt. 200 was from undergrad.

The girl I’m thinking of was from a family who earned 150k and did no quality for much aid so it was mostly loans. She did go to very prestigious top 5 schools.

I thought this too, because I borrowed more than the $25k limit, but it looks like the change happened for loans disbursed after July 1, 2008. Also, that applies only government loans.

FWIW, there is always the possibility that schools will offer "merit" aid or other scholarships with nebulous qualifications. At the end of the day, particularly among top colleges, tuition payments are only somewhat relevant to their operation. And it is generally a better deal for them to capture extra students that either won't hurt or will help their entering class stats. Assuming that there are a dozen kids in a similar boat as your son (able to pay $30K+7K in student loan per year) that's at extra $1.75M less the small marginal costs of having an extra 12 students. Yes, there will be demand from others that can pay full-freight, but that may or may not impact the all-important USNWR rankings via incoming class stats. Which is to say, have the conversation about what you can contribute, let kid apply where he wants, then haggle. If it doesn't work out, then it's done. And there are a lot of great schools that aren't in the Top 30. Schools that will still set you up for prestigious graduate degree programs. It's not Ivy league or community college. Or even Ivy league or state school. But if you are a well-qualified applicant, good schools will fight for you.