How do most middle to UMC families pay for college?

[Anonymous]

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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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

Having a lower income and not being able to save is different from someone making 150-600K or mor eand screaming poverty.

Do you think a family of 4 with a mortgage making say $300k/year in high cost of living area will be able to fully save for their own retirement to last then 30 years and also for full college for their 2 kids.

I'm single and make $130k. I know I can't. So I'm wondering if a couple with 2 kids making twice my salary combined can do it.

I hope you're joking. Yes of course a family making $300k per year can save for college. They have to choose to not spend their entire $300k on the house and vacations and other expenses, of course.

[Anonymous]

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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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

What you are saying will fall on many of the maniacs death ears on this forum. I'm very fortunate and wealthy. I do consider myself lucky and sympathize with people who arent so fortunate. It's actually true some people just don't make enough. It's funny, the reason many of us are wealthy is because there are generations of Americans who are stuck in low wages loop and work in the service sector that serve us at low costs. The peoples kids are likely going to serve our kids as well.

But the "not having money left over" is all relative. I know people who don't save yet they dine out a few times per month th, drive newer cars, take vacations, etc. they have ways to save some if they wanted.

We all know about anecdotes. Most people of lesser means do not live beyond their means. This is one of the biggest myth or propaganda that people who "made it" believe. These people you are talking about take public transportation, buy used clothes, skip meals, live in 1 bedroom apartment etc

[Anonymous]

From 1999 to 2019, median household income grew by only 15.7% (inflation-adjusted), far trailing college cost increases (84% for public four-year tuition inflation-adjusted). There’s no way to keep up with the increases.

[Anonymous]

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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 should 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.

I am the person you are having this exchange with, and I don't think retirement accounts should be excluded as long as the 10% penalty for withdrawing from them before 59.5 is waived. (Not the taxes, but the penalty.)

But, abuse of the current system is curtailed by the limits on tax-deferred/free retirement account contributions each year. There is no such limit on home equity - a parent could theoretically dump all savings into paying off a large mortgage and then apply for, and receive, financial aid.

Still waiting for a compelling reason not to include home equity . . .

[Anonymous]

Anonymous wrote:

Anonymous wrote:The medical school loan cap is a disaster for countries such as mine that offer free medical education. My cousin finished med school 2 years ago. His entire education was paid of by the government. She was the only surgeon serving in an African city and was doing several surgeries a day. Guess what? She is in the process of moving here. She got a special visa I don't know the details to come practice medicine here. In my country she couldn't even afford a car. Essentially the US will suck up a bunch of doctors from overseas. Sounds familiar? That's how wal street shiped jobs to China in the 90s. That's how the Valley imported cheaper Tech workers. The American capitalist system is obsessed with getting richer and richer and richer.

This is a disaster because the medical training of an American is of higher quality than that of an African. My cousin told me that apparently you start med school right after HS in my country.

Yes in many, many countries, med school is three years of school after high school and no residency program, etc. That's one step up from Dr. Google.

I can share some information about the medical school program in Senegal a country in West Africa because I was admitted into the public medical school after obtaining my HS diploma in biology. So in Senegal it's a 7 years program. You are admitted after having excelled in one of the scientific HS programs. The freshman year is brutal. Less than 20% continue into the second year. And every what after that the cutting continues. By the 7th year you have less than 5% of the original class left. Once you have completed the 7 years, you need to do a 3 years residency program. Next, you often go abroad to do your fellowship for another few years because by then there are so many scholarships available foe the few students left.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The medical school loan cap is a disaster for countries such as mine that offer free medical education. My cousin finished med school 2 years ago. His entire education was paid of by the government. She was the only surgeon serving in an African city and was doing several surgeries a day. Guess what? She is in the process of moving here. She got a special visa I don't know the details to come practice medicine here. In my country she couldn't even afford a car. Essentially the US will suck up a bunch of doctors from overseas. Sounds familiar? That's how wal street shiped jobs to China in the 90s. That's how the Valley imported cheaper Tech workers. The American capitalist system is obsessed with getting richer and richer and richer.

This is a disaster because the medical training of an American is of higher quality than that of an African. My cousin told me that apparently you start med school right after HS in my country.

Yes in many, many countries, med school is three years of school after high school and no residency program, etc. That's one step up from Dr. Google.

I can share some information about the medical school program in Senegal a country in West Africa because I was admitted into the public medical school after obtaining my HS diploma in biology. So in Senegal it's a 7 years program. You are admitted after having excelled in one of the scientific HS programs. The freshman year is brutal. Less than 20% continue into the second year. And every what after that the cutting continues. By the 7th year you have less than 5% of the original class left. Once you have completed the 7 years, you need to do a 3 years residency program. Next, you often go abroad to do your fellowship for another few years because by then there are so many scholarships available foe the few students left.

Some days I wonder why Africa is so poor. There were a few students from Africa in AE program at Georgia Tech and they were so good. One mu teammate was from Mali and I was shocked honestly that most of the math and physics we did in the first year he had already studied in HS and he told me he was in a regular program back in his country. It makes you wonder about our education system before college.

[Anonymous]

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Anonymous wrote:We save for it from the moment our children are born. And frankly, we don't have more children than we think we can pay for. (I'm not trying to be inflammatory or say that you had too many kids. I'm saying I would have had more kids if I had more money.)

This is WILD! I would say the majority of people I grew up with paid for college themselves - yes took out loans, some quite substantial. Exactly zero of them wish they hadn’t been born instead of going into some debt!

No idea how old you are, but I don't many UMC people that had to pay for college entirely themselves...even in the 1980s or 1990s.

Now, my Greatest Generation father did pay for it himself even though he grew up relatively well-off and his father was college-educated. However, you could attend Harvard in the 1950s for literally like $500 total (tuition, room & board for a full year), when the average HHI was like $4,000. It wasn't that huge of a lift even back then and he never had to take out any loans.

If the relationship between tuition and household income stayed the same, Harvard would cost a total of $10,000 today.

I think proponents of the new bill believe that by capping total borrowing, tuition will come down?

They're delusional. To achieve a relationship between tuition and household income that is the same, you would have to increase household income.

College costs have increased (partly due to state disinvestment, partly due to bloated mid-level admin, partly due to health care costs) far faster than incomes have risen. There isn't much to strip out of the cost unless states choose to re-invest in higher education, and that isnot going to be done in response to this bill, because the federal government has also handed other massive new costs to states.

What will happen far more often is that institutions will close outright. We are at the edge of a demographic cliff, as well.

Your post is, to put it politely, a bit clueless. The biggest growth area in higher education in the last 25 years has been the bureaucracy, not the teaching staff. And there's no question that unlimited cheap loans is part of the problem because schools could raise tuition knowing Uncle Sam would be there to dish out loans to anyone who asked for it. This bill is a step in the right direction. I don't like the administration's overall war on colleges but this is one area I fully support. If schools need to retain students, they need to be realistic about their own expenditures and costs and there will be losers (higher edu bureaucracy, lots of programs that really don't need to exist) but the winners will be a more cost effective educational model.

Regurgitating the heavily-investigated (and often debunked) Bennet hypothesis does not establish you as an expert. Here is a summary of the findings for and against it, for those interested: https://www.savingforcollege.com/article/history-of-student-loans-the-bennett-hypothesis

And nobody said anything about growth in teaching staff--I said health care costs, which are attached to all staff who receive benefits. A large--and growing--proportion of teaching staff do not.

At any rate, we're about to engage in a whole-of-nation test of Bennett's proposition, and I guess we'll see what happens. I don't expect good things.

[Anonymous]

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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

It’s funny then that financial experts use the term to describe people who can't pay despite having planned, yet don't qualify for FA. Huh.

[Anonymous]

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

Med schools are going to copy what the rest of the world is doing: Make it any 5-6.5 year program straight out of high school. One year of orened + 4-5 years of med school.

[Anonymous]

^ 1 year of premed + 4- 5 years of med school

[Anonymous]

Anonymous wrote:

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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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

Then you attend state u or any school that gives great merit and that you can afford. Or your kid lives at home does cc then onto state u. There are many ways to do college affordable. It just might not be 90k per year private schools. And that's a choice you made not to find a way to save. But the other 95% of universities can be affordable

He does live at home and attends CC and it still isn’t affordable. Not at all. The only way to make it affordable would have him graduating in appr. 10-12 yrs.

[Anonymous]

Anonymous wrote:

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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

Having a lower income and not being able to save is different from someone making 150-600K or mor eand screaming poverty.

I'm at 150K with a rising junior but I made less than 50K when she was born. It's great that you have enough savings on hand, but lumping 150K in with 600K is positive foolish.

[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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

It’s funny then that financial experts use the term to describe people who can't pay despite having planned, yet don't qualify for FA. Huh.

Someone making $200k could have adequately saved for $40-50k per year. That's 95% of colleges. If you want the 90k ones you can choose to adjust your lifestyle and save more (hint it's likely not worth that and it's not needed but that is a choice)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

Then you attend state u or any school that gives great merit and that you can afford. Or your kid lives at home does cc then onto state u. There are many ways to do college affordable. It just might not be 90k per year private schools. And that's a choice you made not to find a way to save. But the other 95% of universities can be affordable

He does live at home and attends CC and it still isn’t affordable. Not at all. The only way to make it affordable would have him graduating in appr. 10-12 yrs.

Our CC are about $6k per year. My kid earns $10-12 k working just summers and Xmas break. Not sure how that is not affordable. More could be earned working or during the school year quite easily. Then the 4 year is $25-30k for the final 2 years. It's doable for most kids and it's minimal loans

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

The donut hole is a myth created by parents who did not plan well. College isn’t exactly a surprise. You have two decades to save.

It’s the same for retirement.

Not everyone has money leftover each month to save. I really didn’t make ends meet for years and when I did, I didn’t have money leftover to save.

Then you attend state u or any school that gives great merit and that you can afford. Or your kid lives at home does cc then onto state u. There are many ways to do college affordable. It just might not be 90k per year private schools. And that's a choice you made not to find a way to save. But the other 95% of universities can be affordable

He does live at home and attends CC and it still isn’t affordable. Not at all. The only way to make it affordable would have him graduating in appr. 10-12 yrs.

Our CC are about $6k per year. My kid earns $10-12 k working just summers and Xmas break. Not sure how that is not affordable. More could be earned working or during the school year quite easily. Then the 4 year is $25-30k for the final 2 years. It's doable for most kids and it's minimal loans

A lot Americans still look down on community colleges.