Is there a calculator or benchmark for how much college we can afford?

[Anonymous]

My first is a senior and going through the college search and application process. We have saved about $70,000 in a 529 for her and make about $175,000.

We have filled out the FAFSA (EFC of $46,000) and gone through the net price calculators that show us how much we can expect to pay, but I don't have an idea of how much we can afford.

When we bought houses and got a mortgages there will all sorts of calculators and rules-of-thumb that gave us an idea of how much house we could afford. I can't find anything similar for college.

Any guidance that worked for you all?

[Anonymous]

How much do you save each month?

How much do you downs on their school/activities/food/etc?

[Anonymous]

The rule of thumb is your retirement is your priority not college for your child. You can't borrow to fund your retirement...

Instate vs out of state will drive your cost question.

Another rule of thumb is 1/3 of the cost paid for by 529, 1/3 by cash flow and 1/3 on loans by your child.

IMO, $70K funds 2.5 years of instate, so you have a good foundation.

[Anonymous]

My rule of thumb is that colleges expect you to pay roughly 25% of your income each year. At $175k that would be at least 40k. The poster above had good rough numbers on that split.

Another way to look at this is opportunity cost. Plug in the cost of four years of college into a compound interest calculator at 7% for 10 and 20 years. This gives you a sense of how much worth the education costs would be compared to future investment growth. It really reinforces the goal of trying to keep college as cheap as possible.

[Anonymous]

Anonymous wrote:My rule of thumb is that colleges expect you to pay roughly 25% of your income each year. At $175k that would be at least 40k. The poster above had good rough numbers on that split.

Another way to look at this is opportunity cost. Plug in the cost of four years of college into a compound interest calculator at 7% for 10 and 20 years. This gives you a sense of how much worth the education costs would be compared to future investment growth. It really reinforces the goal of trying to keep college as cheap as possible.

Trying to understand the college expectations. Are you saying that colleges expect you to pay 25% of your gross income? If that's the case, no wonder higher education is broken. That's absurd.

[Anonymous]

70k will get you one year at a private maybe

[Anonymous]

How much you can afford is very personal to you. I know families who can "not afford private college" but still vacation in Europe every year or need a new volvo after 3 years.

[Anonymous]

Many colleges did not meet the EFC amounts. We had to pay more.

[Anonymous]

My kid is at a big SEC school with in-state tuition thanks to the Academic Common Market. We don’t qualify for any financial aid and he didn’t get any scholarships or merit assistance. We pay around $30k per year for tuition, room and board. We pay out of pocket, and make less than the OP does.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My rule of thumb is that colleges expect you to pay roughly 25% of your income each year. At $175k that would be at least 40k. The poster above had good rough numbers on that split.

Another way to look at this is opportunity cost. Plug in the cost of four years of college into a compound interest calculator at 7% for 10 and 20 years. This gives you a sense of how much worth the education costs would be compared to future investment growth. It really reinforces the goal of trying to keep college as cheap as possible.

Trying to understand the college expectations. Are you saying that colleges expect you to pay 25% of your gross income? If that's the case, no wonder higher education is broken. That's absurd.

And assets count.

[Anonymous]

Anonymous wrote:My first is a senior and going through the college search and application process. We have saved about $70,000 in a 529 for her and make about $175,000.

We have filled out the FAFSA (EFC of $46,000) and gone through the net price calculators that show us how much we can expect to pay, but I don't have an idea of how much we can afford.

When we bought houses and got a mortgages there will all sorts of calculators and rules-of-thumb that gave us an idea of how much house we could afford. I can't find anything similar for college.

Any guidance that worked for you all?

I think people are hopeful as opposed to realistic regarding what the school is going to provide. How much can you afford?
How much retirement savings do you have? How old are you? What is your absolute fixed expenses each month?
How many other children do you have? How old and how much saved?
(The financial aid calculator changes when there are more than 1 child in college)

You need to work it and put it all on the table to see what your next 6 years of cash flow looks like.
My guess on how much you can afford:
17.5 per year from 529
3 K per year from child earnings
12K - 18K (1K- 1.5K a month from other family sources)
5K loans
You can afford ~37 to 43 K

[Anonymous]

What state are you in?

[Anonymous]

Anonymous wrote:

Anonymous wrote:My rule of thumb is that colleges expect you to pay roughly 25% of your income each year. At $175k that would be at least 40k. The poster above had good rough numbers on that split.

Another way to look at this is opportunity cost. Plug in the cost of four years of college into a compound interest calculator at 7% for 10 and 20 years. This gives you a sense of how much worth the education costs would be compared to future investment growth. It really reinforces the goal of trying to keep college as cheap as possible.

Trying to understand the college expectations. Are you saying that colleges expect you to pay 25% of your gross income? If that's the case, no wonder higher education is broken. That's absurd.

Yes. Not state colleges, but private colleges where the COA is around $60,000 to $70,000 a year. They may offer some aid, but they expect families earning above a certain threshhold to be able to spend roughly 25% of their income. However, the wouldn't expect that all comes from cashflow. Rather, that about 1/3 of that (amount = to about 8% of your income) comes from savings (either a 529 or just your general savings), an amount = about 8% of your income comes from cash flow, and an amount = about 8% of your income comes from loans you take + loans your child takes.

So if your HHI is $200,000, and the COA is $65,000, they might expect you can contribute $50,000/yearly towards college costs and might offer a $15,000. They would expect you could fund $16000 yearly from savings (maybe you have $60,000 in a 529?); pay about 1600 each month from cashflow (stop retirement savings if necessary); and take a loan for the remaining 16000 needed. (Student borrows $5500, parent borrows $10,500 in parent plus loan, takes a HELOC, etc.). If you do not want to borrow money, you would need to contribute more from savings, have a student earn money in summer or during the school year, etc. If you have more in your 529 then you have to borrow less. ETC.

[Anonymous]

In-state at UMD is $30K.
Your savings are good for 2 out of the 4 years.
I hope this is an only child and you can afford to pull the rest out of your income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My rule of thumb is that colleges expect you to pay roughly 25% of your income each year. At $175k that would be at least 40k. The poster above had good rough numbers on that split.

Another way to look at this is opportunity cost. Plug in the cost of four years of college into a compound interest calculator at 7% for 10 and 20 years. This gives you a sense of how much worth the education costs would be compared to future investment growth. It really reinforces the goal of trying to keep college as cheap as possible.

Trying to understand the college expectations. Are you saying that colleges expect you to pay 25% of your gross income? If that's the case, no wonder higher education is broken. That's absurd.

+1 seriously? especially with inflation the way it is?