This is not real life - paying for college edition

[Anonymous]

and you don’t receive millions, only whatever money college where you enroll offers is what you get. You can be eligible for million dollar in scholarships but have zero if you are attending a college not offering merit and you not being eligible for need based aaid.

[Anonymous]

Anonymous wrote:When people read about students getting millions in merit money and attending on full rides, they assume, this is a norm for top students. They don’t know that most of this is aid and million dollar figures come from applying to hundreds of low ranking schools.

I agree with this. We fell into this trap ourselves. Didn't expect our kid to get a full ride but based on early returns of decisions from schools (T50 and lower) that did give very generous merit, assumed that she'd also get a similar amount from better ranked schools. Now I understand that certain schools don't give merit unless you're very competitive which our child is not.

[Anonymous]

Anonymous wrote:Which part is not real life? Yours or those you are talking about?

Ours. I'm guessing that most people on DCUM are in the top 5% of earners in the U.S. If not the top 5% then the top 10%. I don't know too many people who are in the 90%.

[Anonymous]

Lots of us have been paying $60K per year for HS, so paying $75K per year for college isn't exactly a huge change.

[Anonymous]

Anonymous wrote:Another thing I noted in those parent FB groups is that despite any nod to budget constraints some of the HS graduation parties in other parts of the country were incredible. Elaborate and expensive and so over the top! I kept seeing pictures of these parties and thinking the math was not going to add up come tuition time.

Ha, yes, I saw that too. Lots of fancy parties all around. Meanwhile, the parties I've been to around here have been relatively low-key affairs and mostly catered by Wegmans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been living inside the DCUM bubble for a long time. My first kid is going to college this fall, and I've joined a few college Facebook groups. I am absolutely gobsmacked by the lack of financial resources and acumen among most people in this country. Many parents seem to be surprised that they can't afford the college their kid got into, or are strategizing about how to take out loans for the entire 4 years.

I recognize that most of us here are privileged in one way or another. Either we are high earners, we've diligently saved for school, or we understand that you shouldn't go somewhere that you can't afford. It's insanity out there.

Our family can full pay for our DS, but even we underestimated the cost because we didn’t think he would be attending an expensive private. Many kids don’t start focusing on the schools they want until sophomore and even junior year (like us!) and, by then, it is too late for their families to financially plan for paying the COA.

Fortunately, we had set aside a fair amount in a 529. It is also worth noting that financial planners don’t always understand the cost, either. We had one tell us to cap the 529 at $200,000.

That was good advice. You should cap the 529 at around $200k and save the rest in a more flexible account. If you save for a private in a 529 and then your kid goes to a flagship, or gets a big merit scholarship, you will wind up with a bunch of money stuck in the 529.

+1, capping your 529 doesn't mean you stop saving, it just means you diversify vehicles.

We capped our 529 and then shifted savings to a Roth IRA, which can be used for education expenses. If our kid goes to a state university, the 529 will cover everything. If she goes private or OOS, we will have supplemental funds in the IRA. Withdrawing from the IRA for school can have some downsides, but that's okay because we only want to do it if there is a strong argument for her attending a more expensive school. The downsides will be worth it for some schools, not others, and that dynamic can help guide decisions as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been living inside the DCUM bubble for a long time. My first kid is going to college this fall, and I've joined a few college Facebook groups. I am absolutely gobsmacked by the lack of financial resources and acumen among most people in this country. Many parents seem to be surprised that they can't afford the college their kid got into, or are strategizing about how to take out loans for the entire 4 years.

I recognize that most of us here are privileged in one way or another. Either we are high earners, we've diligently saved for school, or we understand that you shouldn't go somewhere that you can't afford. It's insanity out there.

Our family can full pay for our DS, but even we underestimated the cost because we didn’t think he would be attending an expensive private. Many kids don’t start focusing on the schools they want until sophomore and even junior year (like us!) and, by then, it is too late for their families to financially plan for paying the COA.

Fortunately, we had set aside a fair amount in a 529. It is also worth noting that financial planners don’t always understand the cost, either. We had one tell us to cap the 529 at $200,000.

That was good advice. You should cap the 529 at around $200k and save the rest in a more flexible account. If you save for a private in a 529 and then your kid goes to a flagship, or gets a big merit scholarship, you will wind up with a bunch of money stuck in the 529.

True, but our advisor didn’t tell us to save extra elsewhere. Can also convert some, if not all, of any excess to an IRA for the your kid, I think.

[Anonymous]

Anonymous wrote:
True, but our advisor didn’t tell us to save extra elsewhere. Can also convert some, if not all, of any excess to an IRA for the your kid, I think.

Only $35K can be converted to an IRA, so you definitely don’t want to save $400K in a 529 and have your kid need less than half of it for education.

[Anonymous]

Anonymous wrote:DCUM area has high proportion of government workers who typically save save save - and are generally pretty fiscally responsible. Here in NYC area you have high earners / high spenders who just plan on covering college from free cash flow, like i’m doing now for two kids enrolled concurrently. Typical ant vs grasshopper lol

I'm the DC saver. Also a widow with a relatively low income - low enough that it was below the "dream" school's advertised "full tuition waiver." Guess what - no FA offered, and when I appealed, I was told that I have more non-retirement money than most parents of incoming freshman. And this is a school with lots of rich kids. I actually said to the FA counselor, "I find that really hard to believe" and I do. Plus, that money has to supplement my income until I retire because I can't meet my monthly expenses on my income alone. My appeal was rejected, and DS is not attending that school.

Sour grapes all around. I have done everything right. But at least I can easily pay for 4 years at the school where DS landed. And he's being great about it; he told me I should never apologize for saving money.

[Anonymous]

Did you honestly just realize this op? Have you lived your whole life in the dmv bubble?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been living inside the DCUM bubble for a long time. My first kid is going to college this fall, and I've joined a few college Facebook groups. I am absolutely gobsmacked by the lack of financial resources and acumen among most people in this country. Many parents seem to be surprised that they can't afford the college their kid got into, or are strategizing about how to take out loans for the entire 4 years.

I recognize that most of us here are privileged in one way or another. Either we are high earners, we've diligently saved for school, or we understand that you shouldn't go somewhere that you can't afford. It's insanity out there.

Our family can full pay for our DS, but even we underestimated the cost because we didn’t think he would be attending an expensive private. Many kids don’t start focusing on the schools they want until sophomore and even junior year (like us!) and, by then, it is too late for their families to financially plan for paying the COA.

Fortunately, we had set aside a fair amount in a 529. It is also worth noting that financial planners don’t always understand the cost, either. We had one tell us to cap the 529 at $200,000.

That was good advice. You should cap the 529 at around $200k and save the rest in a more flexible account. If you save for a private in a 529 and then your kid goes to a flagship, or gets a big merit scholarship, you will wind up with a bunch of money stuck in the 529.

You mean, “public” ? As in, your kid goes to a state school?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Which part is not real life? Yours or those you are talking about?

Ours. I'm guessing that most people on DCUM are in the top 5% of earners in the U.S. If not the top 5% then the top 10%. I don't know too many people who are in the 90%.

All of your kids’ teachers, their sports coaches, their tutors, their nannies, housekeepers, landscapers, etc are in the 90%.

[Anonymous]

This was my sibling. They thought the pricey SLAC would give their DC way more aid than DC got. They didn't run the NPC. They made too much. They couldn't float the extra, so their DC went to the local (20 min away) in state public. It worked out for them; they got a really good paying job out of college (while their friends went oos/private and are still paying off loans).

We knew we would get zilch in FA. And we were right. We only saved enough for in state for both kids. One decided to stay in state; the other is going oos but they are using part of their inheritance from grandparents to pay for it. They will come out of college a lot poorer than the DC who is going to in state, by a lot.

We are first gen immigrants. This forum actually informed me about the NPC. Never knew it existed until a couple of years ago.

It doesn't surprise me that middle America doesn't understand college costs.

[Anonymous]

Where are DC going? I have 3 DC in/ heading to college this year and have seen none of this nonsense. In fact, zero questions regarding financial aid or assistance anywhere. Notably, DC are in three very different types of schools, a Southern state school, a T25 private, and a SLAC.
We are in 2+ FB threads per school.

[Anonymous]

Anonymous wrote:DCUM area has high proportion of government workers who typically save save save - and are generally pretty fiscally responsible. Here in NYC area you have high earners / high spenders who just plan on covering college from free cash flow, like i’m doing now for two kids enrolled concurrently. Typical ant vs grasshopper lol

Same in California! So many kids are doing the community college to UC path because their parents never saved much. 529s don’t seem to be a thing here. They will either cash flow it or sell stocks.