Future college costs - what am I missing?

[Anonymous]

We have a 5 month old and have been very lucky to have received about $30k from grandparents to start her 529. We are also contributing $600 a month. When I put these numbers into a college savings calculator, assuming average returns (which feels optimistic currently), we will still have a shortfall of nearly a year if she attends an in-state school. I am very perplexed. How will anyone be able to afford college in 20 years?

[Anonymous]

You're not missing anything. College costs are rising at a rate that far outpaces inflation, and have been doing so for quite some time. Plan for her to go to school in-state and either increase your monthly contribution, or plan to pay for the last year out-of-pocket from future current earnings.

[Anonymous]

You'll be earning a lot more in 18 years, so you cash flow the 4th year, and keep saving during the first 3

[Anonymous]

Your calculator is wrong. Which calculator are you using. You should have plenty for in-state.

[Anonymous]

Anonymous wrote:Your calculator is wrong. Which calculator are you using. You should have plenty for in-state.

I’m using the Schwab calculator.

[Anonymous]

Similar numbers as OP and the Maryland 529 calculator also gives me a shortfall. It’s depressing.

[Anonymous]

The instate options for MD suck outside of College Park (if you are in MD).

[Anonymous]

OP, my child is in college NOW and all I have in her 529 is about $40,000.

We are managing. She's borrowing $5000 per year, and earning another $5000 from her summer job that she contributes. That's $10,000.

I take $10,000 from the 529.

And I cash flow $10,000 (about $1,000 per month).

That's $30,000 for the year which covers her out of state tuition, room and board, more or less. (she has a merit scholarship bringing cost of attendance close to in-state.)

So I cannot comprehend how you won't be in a MUCH better position if you already have $30K in your kid's 529 AND you are contributing $7200 annually?

[Anonymous]

Anonymous wrote:The instate options for MD suck outside of College Park (if you are in MD).

OP here, I’m in VA.

[Anonymous]

Anonymous wrote:OP, my child is in college NOW and all I have in her 529 is about $40,000.

We are managing. She's borrowing $5000 per year, and earning another $5000 from her summer job that she contributes. That's $10,000.

I take $10,000 from the 529.

And I cash flow $10,000 (about $1,000 per month).

That's $30,000 for the year which covers her out of state tuition, room and board, more or less. (she has a merit scholarship bringing cost of attendance close to in-state.)

So I cannot comprehend how you won't be in a MUCH better position if you already have $30K in your kid's 529 AND you are contributing $7200 annually?

Just FYI, once she is through with college, I plan to help her pay off that $20,000 I needed her to take in loans, again through cash flow. I wish I had been able to save more when she was younger. At least now I am in a better position to help her pay the loans down.

[Anonymous]

Anonymous wrote:You're not missing anything. College costs are rising at a rate that far outpaces inflation, and have been doing so for quite some time. Plan for her to go to school in-state and either increase your monthly contribution, or plan to pay for the last year out-of-pocket from future current earnings.

+1

Or find a way to add another $100/month now. Do that for the next 2-3 years and you should have enough. As relatives to contribute to the 529 rather than giving yet another gift/toy that will only get used for a few months and that you likely don't need.

[Anonymous]

I dont mean this in a mean way but maybe change your perspective?

Don’t look at trying to pay for your kid’s entire college, look at paying what you can. Fund your retirement first, have an emergency fund THEN add what you can to their 529. When it’s time for college, the amount in the 529 will help you fund and at that time you can finance, pay out of pocket, get scholarship or something else. Also, I’d be willing to bet if your generous parents gave you some now, they might give more later too.

[Anonymous]

Anonymous wrote:OP, my child is in college NOW and all I have in her 529 is about $40,000.

We are managing. She's borrowing $5000 per year, and earning another $5000 from her summer job that she contributes. That's $10,000.

I take $10,000 from the 529.

And I cash flow $10,000 (about $1,000 per month).

That's $30,000 for the year which covers her out of state tuition, room and board, more or less. (she has a merit scholarship bringing cost of attendance close to in-state.)

So I cannot comprehend how you won't be in a MUCH better position if you already have $30K in your kid's 529 AND you are contributing $7200 annually?

Congrats to you! You have figured out how to "make college affordable". Kid works, kid takes fed loans (it's not that much to pay off). But key is you find a school that is only $30K, which outside the T40 schools is not that difficult to do. Trust me when I say your kid will be happier with minimal debt than at a "higher ranked U"

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, my child is in college NOW and all I have in her 529 is about $40,000.

We are managing. She's borrowing $5000 per year, and earning another $5000 from her summer job that she contributes. That's $10,000.

I take $10,000 from the 529.

And I cash flow $10,000 (about $1,000 per month).

That's $30,000 for the year which covers her out of state tuition, room and board, more or less. (she has a merit scholarship bringing cost of attendance close to in-state.)

So I cannot comprehend how you won't be in a MUCH better position if you already have $30K in your kid's 529 AND you are contributing $7200 annually?

Just FYI, once she is through with college, I plan to help her pay off that $20,000 I needed her to take in loans, again through cash flow. I wish I had been able to save more when she was younger. At least now I am in a better position to help her pay the loans down.

And if she is your only kid then you will be able to help her pay that $20-27K in loans ($27 is the max federal loans) in 2 years easily. Much better than parent loans

[Anonymous]

Save $1000 a month and play to cash flow some of it when she gets there.