Advice re underfunded college savings & well funded retirement

[Anonymous]

Anonymous wrote:

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Anonymous wrote:This seems so simple. You pay what you saved. Your child can take out loans for gap. Don’t mess up your retirement to pay for their college. Medical bills will unlikely go down. Pay off their loans later if you are in the financial position to do so.

I don’t think you should discourage child from going to the college he wants.

The gap is $40,000 or more per year. The student cannot take out that much in loans without the parents taking the loans on themselves.

Then be it. My parents didn’t pay for my college. I had a mix of scholarships and loans.

This is such an UMC problem, stressing about paying full price of college.

DH and I both had loans. We both paid off our loans shortly after getting married. We somehow survived. We can easily pay for our three children’s college, grad school, weddings, down payments and vacations.

I had Ivy League education debt. I would not recommend it for some second tier private school.

No undergraduate degree, Ivy or otherwise, is worth over $100,000 in loans.

OP's kid has other options that involve no loans, or limited loans. "So be it" is not sound financial advice.

My $100k debt was worth it 20 years ago. Granted that included grad school. Undergrad was mostly scholarships.

I would argue the college you attend is vastly important. I met many amazing people in Boston, my spouse especially. I made six figures at my first job. DH now earns 7 figures.

Apples and zebras. Grad school is a different animal altogether. I took out loans for law school and it was worth it at that time, in that context, for the job that I got right after graduating.

Six figures for undergrad alone (and OP's kid would be looking at $160K or so, which is the gap between what she can pay and what an elite school costs) is insane no matter what.

The data make it clear that the college you attend is not "vastly important" unless you come from poverty.

The data also make it clear that significant student debt hampers your ability to get ahead in adulthood - to marry, have children, save for retirement, buy a house. That is a fact.

https://www.forbes.com/sites/dianahembree/2018/11/01/new-report-finds-student-debt-burden-has-disastrous-domino-effect-on-millions-of-americans/#2836da0112d1

Says the author who attends Green Mountain College.

We can agree to disagree. I personally think certain schools are worth the price - Stanford, MIT, Johns Hopkins, UChicago in addition to the Ivys. Is NYU worth it? Maybe. Boston College? Maybe. Maybe not.

My 40yo friend can’t pay off her loans from her crap private college. I’m sure she would say it isn’t worth the price.

Leaving aside your snarky remark about your personal opinion of her educational credentials, she is just the messenger. The piece is based on a study. It's not the only study on this topic; there are lots. It is a FACT that significant student debt is crippling and causes people fall behind, financially speaking.

https://www.meetsummer.org/share/Summer-Student-Debt-Crisis-Buried-in-Debt-Report-Nov-2018.pdf?_t=1541171524

Other sources for the same information:

https://www.cnbc.com/2019/01/16/student-loan-debt-is-keeping-young-people-from-buying-homes-fed-study-finds.html

https://www.ucl.ac.uk/ioe/news/2018/jun/student-loan-debt-has-negative-consequences-later-life-review-ioe-researchers-suggests

https://www.cnbc.com/2018/07/17/how-student-loans-are-making-some-people-abandon-their-dreams.html

https://www.marketwatch.com/story/what-student-debt-does-to-people-its-not-pretty-2018-11-14

I’m from NY where SUNY schools are decent but not like UVA level. Those friends who went public instead of Cornell, NYU, Tufts, Boston College, etc. had such a chip for many many years. I can’t think of anyone who didn’t go to Harvard or Yale to attend SUNY. I knew lots of kids who did not attend other very good universities like Amherst due to money.

I doubt OP wants her children to attend community college to save money in hopes to transfer as juniors.

I'm in NYC. I went to NYU and know lots of people who went to SUNY and then transferred to NYU (this was pretty common). I would imagine it's done today.

Why?

[Anonymous]

All of this is not even relevant and probably isn't real. OP is spending more on health care for spouse and child and retirement not including mortgage and other expenses than they earn post tax.

[Anonymous]

Anonymous wrote:All of this is not even relevant and probably isn't real. OP is spending more on health care for spouse and child and retirement not including mortgage and other expenses than they earn post tax.

. Where is this information. I only see one spouses income and not the amount in disability they are receiving for the disabled spouse. I only see costs of $70k, some of which are tax deductible and reduce their tax. I also do not see where the OP revealed what they are saving per year for retirement- only th retirement totals of what they have already saved.

[Anonymous]

OP, what if your kid had a part time job that paid:

$6250 for tuition each year of college

an additional 40% of the tuition paid of what is left over from the $6250 if you worked a little longer ( see below). 40% of the in state amount.

$721 per month tax free during school months all up $6400 per year

Another $140 per month net for worked hours (16) on a set weekend once per month

A $20,000 bonus paid partially at year 2 and balance at year 5

And approx 14K of wages paid for what amounts to training to learn to do the job performed one weekend per month, ( this part of the commit can be as short as 4 months but choosing a time slot closer to 8 months nets the 40% off tuition mentioned above.
The training to do the job could be for work in computers, cyber, medical other useful fields complimentary to career goals.

A security clearance also is included.

All up this is close to 110K- 120K in college money and wages spread out over 6 years, pretty nice pay for part time work wouldn't you say? And by part time I mean 16 hours a month, after job training is complete ( job training varies but no more than 8 months)

This is the current offer from The Virginia Air Guard and some of the $$ I included above is from the GI Bill and the Post 9/11 GI Bill which could be attained with a 90 day temp duty assignment. All up its 6 years of 1 weekend a month after the initial training.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So you have about 16 months before your first starts school and five years before the second? Stop all retirement saving now and pad that 529 while you can. You may actually get some aid considering your spouse's high medical needs. Then do a cash out refinance or home equity loan to cover the gap.

OP is 58. This is terrible, terrible advice.

+1 OP should absolutely not stop saving for retirement. With a disabled spouse and sky high medical bills (that will not go down) they need MORE for retirement.

OP, I understand you say you can afford ~25k per year. But with your situation, you need to be considering community college only for the first two years and a state school for the last two. If your child can gather the scholarships/aid to attend a different school at the same cost as CC/State school then great.

You need to have a serious conversation with your children about what you can afford. And they need to be more aware of what is going on in your family. It seems they don’t have a clue about how ill/costly the treatments are for the disabled spouse.

Actually, they might have a clue and be afraid to bring up the subject. Talking about it with your kids would probably alleviate a lot of stress all around and add needed clarity, Please have this talk, OP.

Doubtful. The OP stated “Kid does not understand reality; will reach out to school college counselor.” How would the kid not understand reality of finances and have a clue at the same time?

[Anonymous]

Anonymous wrote:You need to tell your kid you cannot afford the reach schools. Hard stop. Your budget for college is $30k. Your kid should now this. He/she needs to work within that budget or figure out how to pay the delta themselves. [/quote]


This is the first thing any good, public or private, college counselor will tell you. Do not dangle schools you cannot afford in front of your child's eyes - it's not fair to you or the child.

[Anonymous]

Anonymous wrote:

Anonymous wrote:All of this is not even relevant and probably isn't real. OP is spending more on health care for spouse and child and retirement not including mortgage and other expenses than they earn post tax.

. Where is this information. I only see one spouses income and not the amount in disability they are receiving for the disabled spouse. I only see costs of $70k, some of which are tax deductible and reduce their tax. I also do not see where the OP revealed what they are saving per year for retirement- only th retirement totals of what they have already saved.

Read the post carefully, it says that and they have a remaining mortgage.

[Anonymous]

My assumption is the family had a major medical situation for one of the income earner when the oldest child was in Middle School.

The plan prior to this was to continue on the path where they had 2 incomes - one that could easily cover college costs wherever they decided to go. The plan was thrown off track and now there needs to be a new plan.

These things happen - and life assumptions need to change. Talk to a financial advisor - and talk to your children. You are raising them to be adults - this is an adult conversation they need to be a part of.

[Anonymous]

Anonymous wrote:OP, what if your kid had a part time job that paid:

$6250 for tuition each year of college

an additional 40% of the tuition paid of what is left over from the $6250 if you worked a little longer ( see below). 40% of the in state amount.

$721 per month tax free during school months all up $6400 per year

Another $140 per month net for worked hours (16) on a set weekend once per month

A $20,000 bonus paid partially at year 2 and balance at year 5

And approx 14K of wages paid for what amounts to training to learn to do the job performed one weekend per month, ( this part of the commit can be as short as 4 months but choosing a time slot closer to 8 months nets the 40% off tuition mentioned above.
The training to do the job could be for work in computers, cyber, medical other useful fields complimentary to career goals.

A security clearance also is included.

All up this is close to 110K- 120K in college money and wages spread out over 6 years, pretty nice pay for part time work wouldn't you say? And by part time I mean 16 hours a month, after job training is complete ( job training varies but no more than 8 months)

This is the current offer from The Virginia Air Guard and some of the $$ I included above is from the GI Bill and the Post 9/11 GI Bill which could be attained with a 90 day temp duty assignment. All up its 6 years of 1 weekend a month after the initial training.

OP back. Thanks to all who have contributed helpful, actionable suggestions. PP, our eldest was looking at the Air Force academy and already has some related experience, but DC stopped pursuing it because the recruiters told him he could not be on stimulant medication for ADHD and commit to fly in the Air Force. Do you know if this same rule would apply to the Air Guard? Thank you for any insight you can provide.

To others wondering about the numbers not adding up, we have been tapping into our savings and also refinanced to take out $$$$$ to deal with medical and unemployment issues and rebuild our six-month emergency fund. Thanks for your attention to this. Disabled spouse was working and making a lot of $$$$$$ until about ten years ago.

[Anonymous]

Anonymous wrote:You need to tell your kid you cannot afford the reach schools. Hard stop. Your budget for college is $30k. Your kid should now this. He/she needs to work within that budget or figure out how to pay the delta themselves.

I can't bring myself to read the next three pages. This is all the advice you need. There is absolutely NO WAY that those private schools are worth it. None.

Don't do this to yourselves. You and your kids, if they ever get some financial aptitude, will regret it.

[Anonymous]

Anonymous wrote:My assumption is the family had a major medical situation for one of the income earner when the oldest child was in Middle School.

The plan prior to this was to continue on the path where they had 2 incomes - one that could easily cover college costs wherever they decided to go. The plan was thrown off track and now there needs to be a new plan.

These things happen - and life assumptions need to change. Talk to a financial advisor - and talk to your children. You are raising them to be adults - this is an adult conversation they need to be a part of.

OP again. PP is correct. Thank you. The kids have had a lot of anxiety around the health issues and realisation that there will be no return to a six figure income. It is a delicate subject, don’t want to worry them too much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, what if your kid had a part time job that paid:

$6250 for tuition each year of college

an additional 40% of the tuition paid of what is left over from the $6250 if you worked a little longer ( see below). 40% of the in state amount.

$721 per month tax free during school months all up $6400 per year

Another $140 per month net for worked hours (16) on a set weekend once per month

A $20,000 bonus paid partially at year 2 and balance at year 5

And approx 14K of wages paid for what amounts to training to learn to do the job performed one weekend per month, ( this part of the commit can be as short as 4 months but choosing a time slot closer to 8 months nets the 40% off tuition mentioned above.
The training to do the job could be for work in computers, cyber, medical other useful fields complimentary to career goals.

A security clearance also is included.

All up this is close to 110K- 120K in college money and wages spread out over 6 years, pretty nice pay for part time work wouldn't you say? And by part time I mean 16 hours a month, after job training is complete ( job training varies but no more than 8 months)

This is the current offer from The Virginia Air Guard and some of the $$ I included above is from the GI Bill and the Post 9/11 GI Bill which could be attained with a 90 day temp duty assignment. All up its 6 years of 1 weekend a month after the initial training.

OP back. Thanks to all who have contributed helpful, actionable suggestions. PP, our eldest was looking at the Air Force academy and already has some related experience, but DC stopped pursuing it because the recruiters told him he could not be on stimulant medication for ADHD and commit to fly in the Air Force. Do you know if this same rule would apply to the Air Guard? Thank you for any insight you can provide.

To others wondering about the numbers not adding up, we have been tapping into our savings and also refinanced to take out $$$$$ to deal with medical and unemployment issues and rebuild our six-month emergency fund. Thanks for your attention to this. Disabled spouse was working and making a lot of $$$$$$ until about ten years ago.

Then it is absolutely community college or the military and then college.

He cannot take his medication and pursue a career as a pilot, even commercially. “For medical certification consideration, you will need to have discontinued all psychoactive medications for at least the preceding 90 days. A neuropsychological evaluation consisting of at least an initial battery of testing will be required, but additional testing may be needed if there are deficiencies in the initial battery.”
https://www.aopa.org/go-fly/medical-resources/health-conditions/mental-health/add-and-adhd

[Anonymous]

Anonymous wrote:

Anonymous wrote:My assumption is the family had a major medical situation for one of the income earner when the oldest child was in Middle School.

The plan prior to this was to continue on the path where they had 2 incomes - one that could easily cover college costs wherever they decided to go. The plan was thrown off track and now there needs to be a new plan.

These things happen - and life assumptions need to change. Talk to a financial advisor - and talk to your children. You are raising them to be adults - this is an adult conversation they need to be a part of.

OP again. PP is correct. Thank you. The kids have had a lot of anxiety around the health issues and realisation that there will be no return to a six figure income. It is a delicate subject, don’t want to worry them too much.

NP here. I am sorry for your health situation; that has to be stressful on top of difficult physically. However, please broach this with your eldest- he is old enough to be able to hear that you don’t have an unlimited college budget. You can reassure him that your finances are fine, you won’t lose your house or anything but the reality of your college savings is what it is. Please don’t avoid the topic with him- be direct and honest so that he is prepared now. He can still apply to his dream school but he will need to get strong aid or outside scholarships. And he will also need to be prepared for the reality that he may have to go to another school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So you have about 16 months before your first starts school and five years before the second? Stop all retirement saving now and pad that 529 while you can. You may actually get some aid considering your spouse's high medical needs. Then do a cash out refinance or home equity loan to cover the gap.

OP is 58. This is terrible, terrible advice.

+1 OP should absolutely not stop saving for retirement. With a disabled spouse and sky high medical bills (that will not go down) they need MORE for retirement.

OP, I understand you say you can afford ~25k per year. But with your situation, you need to be considering community college only for the first two years and a state school for the last two. If your child can gather the scholarships/aid to attend a different school at the same cost as CC/State school then great.

You need to have a serious conversation with your children about what you can afford. And they need to be more aware of what is going on in your family. It seems they don’t have a clue about how ill/costly the treatments are for the disabled spouse.

Actually, they might have a clue and be afraid to bring up the subject. Talking about it with your kids would probably alleviate a lot of stress all around and add needed clarity, Please have this talk, OP.

Doubtful. The OP stated “Kid does not understand reality; will reach out to school college counselor.” How would the kid not understand reality of finances and have a clue at the same time?

OP again. Kid thinks that banks will loan to him the delta between what we can contribute and the cost. Haven’t many others on this board experienced times when their teenage boy lost touch with reality? Unfortunately he got the message from school counselor that merit awards would be unattainable. Perhaps counselor assumed he was going after merit at reach schools. There are schools that are lower ranked but where he could have a shot at their Honors College or merit aid. This could equal in-state tuition, which would be doable. All of kids friends are aiming for top 30 schools, he is having difficulty accepting he can’t count on attending same type of school due to finances, esp given this is a change from several years back.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, what if your kid had a part time job that paid:

$6250 for tuition each year of college

an additional 40% of the tuition paid of what is left over from the $6250 if you worked a little longer ( see below). 40% of the in state amount.

$721 per month tax free during school months all up $6400 per year

Another $140 per month net for worked hours (16) on a set weekend once per month

A $20,000 bonus paid partially at year 2 and balance at year 5

And approx 14K of wages paid for what amounts to training to learn to do the job performed one weekend per month, ( this part of the commit can be as short as 4 months but choosing a time slot closer to 8 months nets the 40% off tuition mentioned above.
The training to do the job could be for work in computers, cyber, medical other useful fields complimentary to career goals.

A security clearance also is included.

All up this is close to 110K- 120K in college money and wages spread out over 6 years, pretty nice pay for part time work wouldn't you say? And by part time I mean 16 hours a month, after job training is complete ( job training varies but no more than 8 months)

This is the current offer from The Virginia Air Guard and some of the $$ I included above is from the GI Bill and the Post 9/11 GI Bill which could be attained with a 90 day temp duty assignment. All up its 6 years of 1 weekend a month after the initial training.

OP back. Thanks to all who have contributed helpful, actionable suggestions. PP, our eldest was looking at the Air Force academy and already has some related experience, but DC stopped pursuing it because the recruiters told him he could not be on stimulant medication for ADHD and commit to fly in the Air Force. Do you know if this same rule would apply to the Air Guard? Thank you for any insight you can provide.

To others wondering about the numbers not adding up, we have been tapping into our savings and also refinanced to take out $$$$$ to deal with medical and unemployment issues and rebuild our six-month emergency fund. Thanks for your attention to this. Disabled spouse was working and making a lot of $$$$$$ until about ten years ago.

In less you have an in, its near impossible to get into an academy. He can still go and do many other jobs. The number of actual pilots vs. those in the air force.

Don't focus on spouse not working. If she cannot work you still have a healthy income but you need to substantially reduce your expenses. You can very comfortably live off that income with your remaining mortgage. Kids need to get financial aid, grants or go to a state school. We have raised ours to know this is what we can pay for in less you can get help but no loans and its not really an option. Stop taking out $$ except to treat the medical issues. Your kids have to be realistic that they are not going to an $50-80K school. Its simple.