Best strategy to pay college for 3 kids

[Anonymous]

Anonymous wrote:Poor decisions were made before you got to this point. Don't make another one by taking retirement money out. DC1 choice was a bad one. We have three kids, similar HHI (slightly higher), but wouldn't do even one private college. All went to instate flagship.

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DC1 is paying less than the instate she got a significant merit and the school was top 10 for her major. DC2 is instate but still expensive. The third one applied to top schools in her major 3 in state and other OOS which she secure merit so far from 2 to mach instate. We will see if she gets anything like DC1 but at least 40-50k for in state.

[Anonymous]

Anonymous wrote:How much will you need annually? Can the kids take out the loans and then pay them back once they graduate? Will the 150 be enough for the coming year?

The plan is the 150 will be enough for next year and they will be taking the loan but we need at least another 250k additional as DC3 will be cone in 2 years.

[Anonymous]

I’d have all 3 switch to/start at in state publics.

[Anonymous]

#1. Do not borrow from retirement. One important consideration is that if your husband borrowed from retirement and then got laid off (not an insignificant consideration in your 60s), you would have to pay back that loan immediately. That happened to my DH (before we married) but fortunately he was almost done with the repayment.

The kids should be taking out the maximum federal student loans. It's a modest amount each year and should not be a burden to repay. And important to consider that if you don't take out the loan one year it does not increase the amount you have available the next year. That is, 1st year can take out $5500, 2nd year $6500, 3rd yr and beyond $7500. If you don't take the $5500 in freshman year, you can still only take the $6500 the next year.

[Anonymous]

Anonymous wrote:These responses seem to ignore the fact that you have the rental. We also don't know how much you have in retirement.

We have kind of a similar situation, but #3 is still a HS freshman. My plan when she goes to college is -- if we need the cash-- to either sell or refinance the rental. (I prefer sell; DH prefers refinance.). We are in a slightly better situation, though, because we pay off the house about that same time, so our mortgage payments go to zero (though there are still escrow-type costs to cover). So in our case, I think we can cover a good deal of the tuition just from those cashflow savings.

Of the two main options, the refinance probably makes the most sense financially, depending on interest rates, because you can deduct the interest costs from taxes as a business expense. The trick for you is that right now, interest rates are really high so taking equity out is challenging. (But if you can wait 9 months, it will be better.)

In sum, I would run some numbers on the refinance option, including the increased business tax deduction. (The only reason to tap retirement is if you realistically think you have over-saved there over the years... and only you can assess that... and even then it's really hard to figure out...).

That is the option we look into refinancing but the interest rate we will loose need to look into is it better to pay high interest on equity loan that the whole mortgage. We can wait 9 months as we have the 529 may be interest rate will be low enough so that the rent will cover mortgagee.

[Anonymous]

Anonymous wrote:You need to stop spending.

We don't spend that much but we also have a lot of expenses (related to parent) that we can't itemize on the tax. We drive really old cars and hoping they won't break down the next 3 year.

[Anonymous]

Anonymous wrote:#1. Do not borrow from retirement. One important consideration is that if your husband borrowed from retirement and then got laid off (not an insignificant consideration in your 60s), you would have to pay back that loan immediately. That happened to my DH (before we married) but fortunately he was almost done with the repayment.

The kids should be taking out the maximum federal student loans. It's a modest amount each year and should not be a burden to repay. And important to consider that if you don't take out the loan one year it does not increase the amount you have available the next year. That is, 1st year can take out $5500, 2nd year $6500, 3rd yr and beyond $7500. If you don't take the $5500 in freshman year, you can still only take the $6500 the next year.

That is what he is saying instead of retirement equity loan is better at this age. You also brought up a good point about getting laid off. All 3 will be taking a loan and work during summer to help a little bit.

[Anonymous]

Sell the rental

[Anonymous]

My plan was to have 1 of the 3 not go to college.

[Anonymous]

Anonymous wrote:My plan was to have 1 of the 3 not go to college.

Now you are trolling us OP.

[Anonymous]

Anonymous wrote:ROTC scholarships! We have four kids and three are on full ride scholarships with monthly stipends. All are engineering majors and will be doing some tech or flying related job when they commission. They are getting wonderful College educations and serving their country. If your children are fit and smart, maybe consider the service route?

Just keep in mind that when they are serving, the military will decide where they serve. I remember a guy I went to college with found out his first duty station would be in South Korea, which he was not happy about.

If your kid gets a duty station far away, they won't be able to come "home" for everything (holidays, birthdays, etc.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:My plan was to have 1 of the 3 not go to college.

Now you are trolling us OP.

OP here didn't post that. We value education a lot and probably focused too much.

[Anonymous]

You can’t afford it.

[Anonymous]

Anonymous wrote:You can’t afford it.

True we can't afford but we can take a loan similar to buying a car or a house.

[Anonymous]

Anonymous wrote:#1. Do not borrow from retirement. One important consideration is that if your husband borrowed from retirement and then got laid off (not an insignificant consideration in your 60s), you would have to pay back that loan immediately. That happened to my DH (before we married) but fortunately he was almost done with the repayment.

The kids should be taking out the maximum federal student loans. It's a modest amount each year and should not be a burden to repay. And important to consider that if you don't take out the loan one year it does not increase the amount you have available the next year. That is, 1st year can take out $5500, 2nd year $6500, 3rd yr and beyond $7500. If you don't take the $5500 in freshman year, you can still only take the $6500 the next year.

Sounds like they are doing this, which is good. The posters who have suggested the kids take loans need to understand that this is the maximum, anything above has to be taken by the parents, not the kids. Agree that it makes sense to take money from the rental rather than retirement (or sell it).