How do most middle to UMC families pay for college?

[Anonymous]

Anonymous wrote:Like many other families on this thread, we saved early and often in 529s. I opened both 529s for each kid (2 total, with a 6-year gap between them) while still pregnant with each. Funded the first at $1500/month, and once #2 came, put in $5K/year ($2500/each). Oldest is 9 years from college and youngest is 14 years, and we have $260K+. We also cash flow private school, so will shift that expense to help cash flow college.

Colleges are very well aware of 529 balances. They don't have an incentive to lower tuition. The money is there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How the hell are people going to afford med school?

Most med school students have doctor parents, it's sort of a family trade. It is very hard to become an MD from a LMC family. The truly exceptional ones get full ride at Cleveland or NYU, but still need around 40k-60k for postdoc or highly competitive residency matching. I guess they don't think we need a lot of MDs now, if people will die from Medicare and Medicaid cuts.

It's so messed up - we'll lose so much talent and create an even worse caste system instead of a meritocracy. It will disincentive hard work for kids who have the brains and the drive, but not the access to funding needed

[Anonymous]

Why is college so expensive in the US? Is it because of class size? Or first class labs? In my country there were I think 3000 people in my Microeconomics class. It was in a big auditorium. There was 1 big exam you needed to pass to go to the second year..the exam was designed not to test your learning but to make sure that only 1/3 make it to the second year. By the fourth year about 20% or so of your classmates in your first courses are left. I don't know how I survived lol.

At least in the US you pay for an EDUCATION. But that education is very expensive. I don't have kids yet, but the rate at which tuition is increasing is very scary.

[Anonymous]

Anonymous wrote:Why is college so expensive in the US? Is it because of class size? Or first class labs? In my country there were I think 3000 people in my Microeconomics class. It was in a big auditorium. There was 1 big exam you needed to pass to go to the second year..the exam was designed not to test your learning but to make sure that only 1/3 make it to the second year. By the fourth year about 20% or so of your classmates in your first courses are left. I don't know how I survived lol.

At least in the US you pay for an EDUCATION. But that education is very expensive. I don't have kids yet, but the rate at which tuition is increasing is very scary.

It doesn’t have to be. I know tons of smart, hardworking kids with great grades and scores and prizes who have received full rides or near full rides at various state universities or regional private universities. They then have all their college savings to devote to law school or med school.

[Anonymous]

Anonymous wrote:Things are returning to before Obama reformed student loans. Tuition is going to stay high but students who can't pay will have to take out supplemental private student loans with high interest rates and no protections.

Hmmm….wonder who will benefit from those loans?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I for the life of me do not understand how this country let college cost be determined by parent income. Middle class and UMC are in no more financial position to pay for college than those making 50-60k a year, unless those MC and UMC forewent houses, cars, etc. - which would undermine a large portion of the economy. The fact that the equity in my home is considered accessible to pay for college is ludicrous. The whole system is broken, very broken.

This is ludicrous, as it relates to UMC families. We are UMC, and have saved more than $300k in various 529s for our rising senior's college tuition and other college expenses. That's sufficient, when including available cashflow, for one kid to attend a private college, or two to attend state schools. And that was not, by any means, the limit to what we could have saved; we stopped dedicated college savings a few years ago and redirected to a taxable account, to provide more flexibility.

It requires planning, and dedication to savings, but UMC families can (and should, in my view) absolutely pay for their children's college. Or are you one of those people who whines that you shoudl get financial aid on your $350k income because you have overspent for decades?

Also, please tell us why why home equity shouldn't be included in financial aid calculations, and if it isn't, how abuses can be curtailed.

You are the exception. You still are not in a position to pay full freight at Gettysburg College or Washington and Lee without an impact on you. But in the latter, a kid’s whose parents make $80k or below goes for free.

The system also does not account for the fact that people make more money as their kids grow up, so capturing the income made the year prior to college is just a snapshot.

If we are the exception, it's because other people choose not to prioritize college savings.

Also, you have dramatically shifted the goalposts - from "UMC are in no more financial position to pay for college than those making 50-60k a year" (which is obviously nonsense) to "well, you can't pay for a private college 'without an impact on you.'" Sure. If the measuring stick you are using is that "college is unaffordable if you can't pay for it out of pocket change," then of course virtually no one will satisfy it.

Rather than nit picking my personal situation, please address the larger point - that if UMC families start saving early and stick to it (as another PP said, slow and steady) they will have substantial college savings by the time their kid(s) are college age. How much for any given college depends on a variety of factors, such as market performance, number of children, etc. And as you say, their incomes likely will have risen by then, which means they can pay for some costs out of earnings. Unless, of course, they have increased their lifestyle in conjunction with their larger paychecks - which, again, doesn't make college unaffordable. It just means that they didn't prioritize it.

Still waiting for some principled reason as to why home equity shouldn't be considered in financial aid calculations.

Home equity comprises part of people's financial plans in that it is generally considered the best practice to pay off the mortgage on the primary home before retirement. This enables retirees to live on a fixed income more easily.

For older parents especially, this is very important. If a parent will retire within a few or several years of having children in college, the parents have no time to recoup the loss of home equity that was tapped for college expenses.

[Anonymous]

Anonymous wrote:My daughter already told me she will only go to a Top 5 college. I told her we can't afford it, she kind of rolled her eyes and pretty much told us to figure it out. She has good grades. Got perfect SAT score, taking AP calculus, physics and chemistry next year. She has as 4.05/4.0 GPA. I am not sure if the credentials will be enough for a Top 5. She does competitive dance for extracurricular.

If you can't afford it, you can't afford it.

Who is in charge in your house?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I for the life of me do not understand how this country let college cost be determined by parent income. Middle class and UMC are in no more financial position to pay for college than those making 50-60k a year, unless those MC and UMC forewent houses, cars, etc. - which would undermine a large portion of the economy. The fact that the equity in my home is considered accessible to pay for college is ludicrous. The whole system is broken, very broken.

This is ludicrous, as it relates to UMC families. We are UMC, and have saved more than $300k in various 529s for our rising senior's college tuition and other college expenses. That's sufficient, when including available cashflow, for one kid to attend a private college, or two to attend state schools. And that was not, by any means, the limit to what we could have saved; we stopped dedicated college savings a few years ago and redirected to a taxable account, to provide more flexibility.

It requires planning, and dedication to savings, but UMC families can (and should, in my view) absolutely pay for their children's college. Or are you one of those people who whines that you shoudl get financial aid on your $350k income because you have overspent for decades?

Also, please tell us why why home equity shouldn't be included in financial aid calculations, and if it isn't, how abuses can be curtailed.

You are the exception. You still are not in a position to pay full freight at Gettysburg College or Washington and Lee without an impact on you. But in the latter, a kid’s whose parents make $80k or below goes for free.

The system also does not account for the fact that people make more money as their kids grow up, so capturing the income made the year prior to college is just a snapshot.

If we are the exception, it's because other people choose not to prioritize college savings.

Also, you have dramatically shifted the goalposts - from "UMC are in no more financial position to pay for college than those making 50-60k a year" (which is obviously nonsense) to "well, you can't pay for a private college 'without an impact on you.'" Sure. If the measuring stick you are using is that "college is unaffordable if you can't pay for it out of pocket change," then of course virtually no one will satisfy it.

Rather than nit picking my personal situation, please address the larger point - that if UMC families start saving early and stick to it (as another PP said, slow and steady) they will have substantial college savings by the time their kid(s) are college age. How much for any given college depends on a variety of factors, such as market performance, number of children, etc. And as you say, their incomes likely will have risen by then, which means they can pay for some costs out of earnings. Unless, of course, they have increased their lifestyle in conjunction with their larger paychecks - which, again, doesn't make college unaffordable. It just means that they didn't prioritize it.

Still waiting for some principled reason as to why home equity shouldn't be considered in financial aid calculations.

Home equity comprises part of people's financial plans in that it is generally considered the best practice to pay off the mortgage on the primary home before retirement. This enables retirees to live on a fixed income more easily.

For older parents especially, this is very important. If a parent will retire within a few or several years of having children in college, the parents have no time to recoup the loss of home equity that was tapped for college expenses.

This translates to either "it is not financially optimal to use this asset for college" or "if I use this asset to pay for college, I may not be able to retire as easily as I otherwise might."

Neither of those is compelling. In fact, they're both ridiculous. At the end of the day, you are still asking for financial aid so that you don't have to tap one of your assets.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How the hell are people going to afford med school?

I worked in a hospital and interacted with a a lot of residents. Many from modest backgrounds joined the military to get med school paid for.

This is one way, although you will have very little flexibility in terms of speciality.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I for the life of me do not understand how this country let college cost be determined by parent income. Middle class and UMC are in no more financial position to pay for college than those making 50-60k a year, unless those MC and UMC forewent houses, cars, etc. - which would undermine a large portion of the economy. The fact that the equity in my home is considered accessible to pay for college is ludicrous. The whole system is broken, very broken.

This is ludicrous, as it relates to UMC families. We are UMC, and have saved more than $300k in various 529s for our rising senior's college tuition and other college expenses. That's sufficient, when including available cashflow, for one kid to attend a private college, or two to attend state schools. And that was not, by any means, the limit to what we could have saved; we stopped dedicated college savings a few years ago and redirected to a taxable account, to provide more flexibility.

It requires planning, and dedication to savings, but UMC families can (and should, in my view) absolutely pay for their children's college. Or are you one of those people who whines that you shoudl get financial aid on your $350k income because you have overspent for decades?

Also, please tell us why why home equity shouldn't be included in financial aid calculations, and if it isn't, how abuses can be curtailed.

You are the exception. You still are not in a position to pay full freight at Gettysburg College or Washington and Lee without an impact on you. But in the latter, a kid’s whose parents make $80k or below goes for free.

The system also does not account for the fact that people make more money as their kids grow up, so capturing the income made the year prior to college is just a snapshot.

If we are the exception, it's because other people choose not to prioritize college savings.

Also, you have dramatically shifted the goalposts - from "UMC are in no more financial position to pay for college than those making 50-60k a year" (which is obviously nonsense) to "well, you can't pay for a private college 'without an impact on you.'" Sure. If the measuring stick you are using is that "college is unaffordable if you can't pay for it out of pocket change," then of course virtually no one will satisfy it.

Rather than nit picking my personal situation, please address the larger point - that if UMC families start saving early and stick to it (as another PP said, slow and steady) they will have substantial college savings by the time their kid(s) are college age. How much for any given college depends on a variety of factors, such as market performance, number of children, etc. And as you say, their incomes likely will have risen by then, which means they can pay for some costs out of earnings. Unless, of course, they have increased their lifestyle in conjunction with their larger paychecks - which, again, doesn't make college unaffordable. It just means that they didn't prioritize it.

Still waiting for some principled reason as to why home equity shouldn't be considered in financial aid calculations.

Home equity comprises part of people's financial plans in that it is generally considered the best practice to pay off the mortgage on the primary home before retirement. This enables retirees to live on a fixed income more easily.

For older parents especially, this is very important. If a parent will retire within a few or several years of having children in college, the parents have no time to recoup the loss of home equity that was tapped for college expenses.

This translates to either "it is not financially optimal to use this asset for college" or "if I use this asset to pay for college, I may not be able to retire as easily as I otherwise might."

Neither of those is compelling. In fact, they're both ridiculous. At the end of the day, you are still asking for financial aid so that you don't have to tap one of your assets.

Also, please tell us why why retirement accounts shouldn't be included in financial aid calculations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Life in the donut hole is brutal. Oldest went to Honors College at state flagship (small scholarship), second went OOS with large merit scholarship. Who knows what the third will do.

No, its not if you plan well and don't overbuy a house and cars and vacations.

Life in a sandwich is the hardest. Someone who starts with student loans, has to provide financial assistance to their parents, and then wants to save for their kids' college when they come along, has it tough. I am frustrated that we support our in-laws and kids. We make a lot, but it's hard to get ahead. I had to start the 529 plans and work with payroll to fund them directly from my paycheck; otherwise, the money would've been spent on DH's parents and siblings.

Sounds like a husband problem, not a fi a financial problem.

[Anonymous]

Save since birth.

[Anonymous]

We saved, my parents contributed, and we moved to a state with a great in-state college systems. We have 100% tuition saved in-state for 2 of 3 and are on target for the 3rd.

We've been clear since the kids were young that it's either Ivy League or in-state. The Ivy League bit is more there for them to have a stretch goal and not slam the door so they'd rebel (also MIT, Caltech).

There is simply no need for them to attend a SLAC for $80k/yr or $100k/yr by the time they reach college.

[Anonymous]

Anonymous wrote:Saving in 529 since birth. Typically about $2500 a year. At age 15 with $87k we are now putting in $5k a year. Will cashflow at least an additional $5k a year in college run through the 529 to keep getting the MD state tax benefit.

So you have managed to save enough for in state schools. With the college student contributing $10-12k from summer job/xmas break job and $5.5k for fed loans, that leaves you with $15-20k per year to pay (or less)
And your 529 will cover it

[Anonymous]

Anonymous wrote:

Anonymous wrote:Folks a lot of state universities even the flagship ones are under $50k per year all cost included. You don't need to go to Stanford.

Even 50K is a lot of money to front for most of us families. And for 4 straight years. And most of us have more than 1 kid headed to college.
And it's on top of the other normal big expenses that burden us.

My state has 3 great schools under $30-35k. And many privates where money flows.

There are lots of options that are not $50 k