Paying for and saving for college - how do UMC people do it?

[Anonymous]

We did not save for kids college, prioritized our investments. We was not eligible for any financial aid with the gross income around $250,000. Both kids got full merit scholarships. There are a lot of free college options, I don't see any need to pay high $$$ for college when there are plenty free options. One kids was admitted to three Ivy league schools, chose to go to the school with full ride instead.

[Anonymous]

Anonymous wrote:What is wrong with borrowing against home equity for college expenses? Student loans have higher variable rate and can’t be discharged in bankruptcy? Sure it’s better to not borrow at all but if you need cash flow, why is home equity not the best option?

I think PP meant to go to cheaper options instead of borrowing

[Anonymous]

Anonymous wrote:

Anonymous wrote:You haven’t said much about what you are paying for housing and cars but on 320k salaries with no day care or tuition costs I’d expect you could max 401k and put $1-2k a month into 529s. Maybe do backdoor Roths (which can be used for either) too.

This is what we have always done (once we got through the crush of daycare). HHI started at $250k when kids were little and is now close to $400k.

We put $1,250 per month per kid in a 529. Currently have about $200k per kid saved with 4ish more years till college.

To come back to the idea of prioritizing retirement vs. college savings. I wrote the above. My spouse and I are the same age as you and have basically the same income and we have $1.2M in retirement. So it really doesn't have to be one vs. the other if you are prioritizing saving vs. spending.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We earn about what you did and fully funded the kids college. We had no student loans ourselves. We keep cars forever. We under bought our house. The kids have not been to Europe. That said in state options are great for most kids so focusing on the tuition level is fine too!

How did you do it though, did you save someplace, pay out of pocket and so forth? I'm looking for "how-to." We've really been pouring all savings into our retirement.

Then the answer is readily apparent, OP. You had different savings priorities. It's really that simple. I'm not sure what befuddles you about this.

I'm sure that same financial advisor who told you to prioritize retirement also told you that in doing so, and buying the suburban house, you will not have enough to fully fund college for both kids. None of this should be a surprise.

[Anonymous]

You have a spending issue. We make half you do. We paid $400k for our house and paid in extra to get it paid off. We started saving since birth. We have only taken a few vacations, wait till the cars die before replacing and pay cash, mainly shop clearance, aldis, etc. it’s about life choices.

[Anonymous]

Anonymous wrote:We did not save for kids college, prioritized our investments. We was not eligible for any financial aid with the gross income around $250,000. Both kids got full merit scholarships. There are a lot of free college options, I don't see any need to pay high $$$ for college when there are plenty free options. One kids was admitted to three Ivy league schools, chose to go to the school with full ride instead.

Really gross that you took money from another student who needed it as you were too selfish to save.

[Anonymous]

Anonymous wrote:

Anonymous wrote:At your income level you are way behind on college and retirement savings. We are late 40s and make about $170,000 combined. We don't have "college" savings, but have put money into 401Ks and Roths. We are at $1.3 million in retirement savings and have been able to cashflow private school and now UMD college park. Since we are heading into a recession, your 529 accounts aren't going to grow as much. Be in a position to cashflow and borrow once your kids get into college. You are in the donut hole friend. You are not getting financial aid.

They are NOT a donut hole. Someone making $320K should have been able to save for both retirement and college and be well positioned at this point. Donut hole is someone making ~$125K in a HCOL area who would have struggled to save fully for college and retirement and own a home, etc. At $320K it's more about their choices that have put them in this position. You can choose the lifestyle or choose retirement/college funds or balance all three things

Donut hole is a fake excuse. They easily could have saved. They choose a nicer lifestyle and now want to complain.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We did not save for kids college, prioritized our investments. We was not eligible for any financial aid with the gross income around $250,000. Both kids got full merit scholarships. There are a lot of free college options, I don't see any need to pay high $$$ for college when there are plenty free options. One kids was admitted to three Ivy league schools, chose to go to the school with full ride instead.

Really gross that you took money from another student who needed it as you were too selfish to save.

They got merit scholarships, you dolt. Not need-based scholarships.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:At your income level you are way behind on college and retirement savings. We are late 40s and make about $170,000 combined. We don't have "college" savings, but have put money into 401Ks and Roths. We are at $1.3 million in retirement savings and have been able to cashflow private school and now UMD college park. Since we are heading into a recession, your 529 accounts aren't going to grow as much. Be in a position to cashflow and borrow once your kids get into college. You are in the donut hole friend. You are not getting financial aid.

You sound kind of like a jerk, actually. "Way behind"? How do you know how long that income has been what it is and what other expenses exist?

And: Why did your kids go to private school when you make such a modest salary?

They likely live in PG, where housing is cheap and there are cheaper private options that are kinda needed to be college ready

That makes sense.

[Anonymous]

Anonymous wrote:You have a spending issue. We make half you do. We paid $400k for our house and paid in extra to get it paid off. We started saving since birth. We have only taken a few vacations, wait till the cars die before replacing and pay cash, mainly shop clearance, aldis, etc. it’s about life choices.

where did you find a 400k house? And when?!

[Anonymous]

Family money in 529s here. Enough for pull pay for private for 3 kids. We are very lucky.

[Anonymous]

Ok, you’re asking how other people do it. This is my “how I’m doing it” at a fraction of your income: I did not bother with a 529 because that seemed like a luxury on a single fed salary. Instead, pre-kid, I started putting whatever I could save after funding my retirement account, into I bonds and investment accounts that would not necessarily be limited to education. Granted, I had some small seed money from parents and grandparents in those accounts, but mostly it was extra savings that I started way before I even thought about kids. By the time kid was in high school, there was enough money for state school. At that point, I adjusted my spending and cash flow and, for the last couple of year pre college, set aside enough cash in a savings account for an additional year of state school, as a cushion. In the end, my kid did not go to state school, but got enough merit aid at a private to make it only slightly more than state school. The first two years I was able to cash flow, even on my single fed salary, with some contribution from the father ( about one third; he pleads poverty even though his combined HH income is higher than mine). I didn’t have to start dipping into the investment account until junior year. At this rate, I’m not going to have to use up all the money saved, so it worked out fine not putting it in a 529.

So basically, keep putting money in the 529s, but if I can cash flow a good chunk of college, you should be able to cash flow quite a bit, if you adjust your spending during those years. Going where they get some merit aid or state schools would also help.

[Anonymous]

Our HHI has nearly always hovered around 90K a year, OP, but we bought individual stocks when we were young that have since matured into a double digit million portfolio. This is both our retirement AND college tuition, because we have very little in our retirement accounts (foreigners who came late to work in this country).

Everyone's path to college tuition will be different, but the common theme is awareness from birth of your kids that you need to strategize to pay for college. Our oldest is a senior, and his favorite school is 85K a year. We can afford it, thank goodness.

[Anonymous]

Anonymous wrote:You have a spending issue. We make half you do. We paid $400k for our house and paid in extra to get it paid off. We started saving since birth. We have only taken a few vacations, wait till the cars die before replacing and pay cash, mainly shop clearance, aldis, etc. it’s about life choices.

How the F do you have a $400k house and not have to pay private school tuition??

[Anonymous]

Anonymous wrote:Our HHI has nearly always hovered around 90K a year, OP, but we bought individual stocks when we were young that have since matured into a double digit million portfolio. This is both our retirement AND college tuition, because we have very little in our retirement accounts (foreigners who came late to work in this country).

Everyone's path to college tuition will be different, but the common theme is awareness from birth of your kids that you need to strategize to pay for college. Our oldest is a senior, and his favorite school is 85K a year. We can afford it, thank goodness.

OMFG. Don’t advocate for stock speculation as a path to wealth. It’s great you bought Apple before the iMac, but they could easily have been the next Atari.