Recommendations for Funding College

[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.

This^^^. Priorities and being responsible. Amazing that so few people think like this

[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.

So you are " committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor". If that's the case, then you should figure out how to do this without expecting Financial aid or assistance from others. That is a choice (IMO, not the brightest choice) and you need to deal with consequences if you choose that. because you could have easily saved $300K/kid with your income and it wouldn't be an issue. But you obviously choose vacations, nicer house, nicer cars, etc at some point instead of saving, so now you buckle down and live more frugally if expensive college is a goal

[Anonymous]

Anonymous wrote:

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.

Who has kids and doesn't want to prioritize education?!?!? I'd much rather be a kid with parents who do that than parents who prioritize a fancy house/cars/vacations---just might not realize that until I was in my 20s

[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.

OP, it seems you have cracked the mystery of why schools like Cornell expect you to be able to pay for college!!!

[Anonymous]

Figure out what you can afford, and steer your children in that direction.

Consider the many excellent schools that do offer merit aid.

Continue to contribute heavily while the kid is in school. (As my kid aged, I went from $50 a month to $1,000). My kid also won several new scholarships her junior and senior years. Finally, she contributed modest amounts once she started summer internships (2 summers of paid internships).

We got her through without any loans. She felt proud that her efforts/achievements cut the price of school basically in half.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Does anyone have any tips or recommendations for funding what will sure to be an expensive college experience for our kids?

We have two kids in high school, rising senior and rising sophomore. We’ve got $90K and $83K in 529 plans for them each, respectively. There is no chance we will qualify for need-based financial aid, even when both are in college at the same time. Several of the schools we’re contemplating are places like Cornell and Carnegie Mellon that no longer or simply don’t offer merit-based scholarships. So, we’re looking at $80K+ per year. 529 will cover about a fourth of the cost, but this is still $450K or so over 6 years. Kind of a lot to absorb as part of our monthly budget. What do most people do?

Outside, independent scholarships? Bonuses from work? Exercise stock options? Kids get student loans? Parents get loans? Refinance or second mortgage? Temporarily halt retirement contributions?

Are your kids rockstars or just regular DCUM smart? If the latter, then your state school, lower tier state schools that give you merit (Alabama, Kansas etc), or low tier privates that heavily discount. You choose which environment you want. This advice has been repeated nine thousand times on this forum.

Don’t know, but my rising senior has taken nearly every AP class available and has an unweighted GPA of 3.98 and a weighted one a lot higher. Took the SAT as a junior and got a 790 on math and a 740 on reading / writing on his first attempt. These seem like Cornell-worthy results.

That's regular DCUM/NoVA/MoCo smart. Smart kid, plays by the rules, hard worker. Still like buying a lottery ticket to get into a T20.

The lack of research you've done on college seems both broad and deep.

PSA. These scores are commensurate with performance at TJ…which is NOT even close to the substantially lower performance of regular DCUM/NoVA/MoCo smart. Let’s not start with the typical DCUM inflation and falsified bragging!

But I think what PP is saying, and as a parent of a kid with scores like these who has been through it, they just buy you the lottery ticket to Ivies and other T20 schools, not get you in. It's important for OP to know this because they are coming across as quite naive financially and about college admissions. Make sure to have target schools where your kid is above the 50th percentile in scores/GPA AND the school accepts at least 30%, and have safety schools where your kid is about the 75th percentile in scores/GPA and the school accepts at least 50%. Then you can apply for the lottery schools like Cornell (10% admittance) and CMU (15% admittance). You have enough money to send your kids wherever they want to go.

[Anonymous]

Anonymous wrote:So you are "committed to sending both of our kids to the absolute best schools they can attend and cost will not be a determining factor". If that's the case, then you should figure out how to do this without expecting Financial aid or assistance from others. That is a choice (IMO, not the brightest choice) and you need to deal with consequences if you choose that. because you could have easily saved $300K/kid with your income and it wouldn't be an issue. But you obviously choose vacations, nicer house, nicer cars, etc at some point instead of saving, so now you buckle down and live more frugally if expensive college is a goal

I don’t think OP ever said she was seeking Financial Aid, just that it might be possible to get merit-based scholarships for DCs that she believes are academically exceptional.

[Anonymous]

Anonymous wrote:

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.

DP. Put another way: OP you are a real a$$hole.

[Anonymous]

OP, you can ask your kids to volunteer for Ukrainian causes, enroll into a rowing team for example. They can still get something valuable on their resumer for colleges to consider sports teams or scholarships

[Anonymous]

Anonymous wrote:

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.

Seriously. Unless these kids are dealing drugs, I want to know where to get my DC to apply.