Reply to 2025 & 2026 donut hole families

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]What is a donut hole family?  High income nut no savings?[/quote]

Too rich to get aid. But not rich enough to easily pay $90k a year, especially with multiple kids. Usually live in high cost of living areas.[/quote]

And also made the choice not to save but instead increase their lifestyle as their income increased.  Because even in a "hCOLA" if you have been making $250K for the last 5 years, you could have chosen to save $20-30K/year, and likely for more than 5 years
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This doesn’t get you anywhere close to affording private colleges at full cost for one kid, let alone two or more.

And of course you’ll say, “just go in-state public!!” Which, sure, but that’s kind of the point of the donut hole. It’s not that you can’t afford *any* college, just that you are priced out of some of them while others above and below are not.[/quote]

Actually it does.  We could "afford it" now as we paid off our house and we live way under our means as we haven't changed our lifestyle as our income goes up.  Would it be smart, no.  Does my child want to go to a school thats $90K, no, but some are $60K.  If you made lifestyle choices that are different, then don't complain of what you cannot afford when you choose a differnet path.  While you vacationed, we saved.  While you go out to $100-300 meals, we go to $60-80 meals.[/quote]

No, it doesn’t. A kid starting school at good private colleges next year is looking at a total COA of close to $400k over the next four years. Five years of saving $25-30k does not get you there at all. You would need at least 10 years at that amount and with a real return of 7%. And that would just cover one kid.
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So when you choose to have a kid, that should be a consideration you make.  We didn't start until we were 30, we paid off our own loans, bought a home and had an emergency fund.  We didn't really take vacations until we were 35+.  Most vacations were drive somewhere for 4-5 days and stay in a cheap hotel/rental.  We made it a priority to save for our future and for our kids college from the time they were born.  When you start early, you don't need to save as much, as you have time for it to grow (tax free in a 529)  So while we increased our income over time, we never increased our lifestyle, and we didn't have kids until we could afford them (save for our retirement and some for college).

But you are complaining that you cannot afford the Top 25-30 schools that are priced at $90K and won't get any "financial aid".  That is like me complaining nobody is giving me a $100K BMW at a discount.  THat's not how life works.  If I value cars and want to drive that, I act like an adult, save for the BMW and adjust my budget accordingly to meet the needs of "what I value most".  Or if I'm like 99% of people, I realize it's a dream and that I can get everywhere I need to go safely in a $40K Honda/Toyota and save my $$.  [/quote]

I’m not complaining about anything. Just pointing out that the other PP’s math doesn’t math. No matter how many Motel 6s you stay at.

It’s funny, all of these comments about lifestyle choices. It’s also a lifestyle choice to make better educational and professional decisions so you don’t have to live like a pauper to afford college. But some of you who are obsessed with lifestyle choices never seem to mention that one.

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umm...because many of us did live "a lower lifestyle choice" until we were financially sound and could easily increase "our lifestyle".  
Bought our first home as one we could afford on only 1 of our incomes (we made similar amounts at that age).  We bought in a decent school district and nice home, but we stopped at a 2Ksq ft home despite the realtor and everyone else told us we could afford a 3K sq ft one that cost another $150K. Why would we need that with just 2 of us and no plans for kids for another 3-5 years, so 8-10 years away from "needing to use even the ES".  We funneled our "buying a less home" into savings and paying down that mortgage.  My spouse drove a basic car for 10 years, because they rarely drove (worked remotely and traveled a lot via plane for work).  Sure a fancier car would have been nice, but we saved and didnt' waste money.  But when we bought the next car, we were able to pay cash and no longer had to worry about interest rates, and have never had a car loan since then.  
So it's a mindset of, building a strong financial base and not spending spending spending.  We lived decently, much better than we had as kids (both grew up poor).  But that meant by time we had kids and they were old enough to care about vacations, we could start "spending a bit more" and not worrying about it.

So life is about choices, but you can easily find a great university to attend that won't cost you more than $40-45K/year.  That is the smart choice for 98%+ of people.  It is relatively affordable.  Kid takes $5.5K/year of fed loans (for a max of $27K), kid can work summers/breaks and PT for 8-10 hours/week during school and bring in another $8-10K.  That leaves $25-30K for the parents.  That's $100K total.  Approach it from that, and it's not that difficult to manage.  
And if you want to pay less, just drop down 1 tier and you can find plenty of good schools that will reward your smart kid with more merit.  Both of my kids could have attended schools for under $20K---the smarter one had 2 privates in the T40-50 that were only $40K all in and the "not as high stat but still smart kid had 3 schools in the 80-100 range all in for $40-44K.  There are plenty of options.  You get to pick what is most financially feasible for your family.

And just like I don't purchase luxury cars or fly first class, when choosing a college, I recognize I might not be able to afford some of the very top ones, just like everything else in life.  And I move on with what is a good choice for me and thank my lucky stars for how much privilege I actually have
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