Reply to If college is so expensive ... why don't more families get need-based aid?

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[quote=Anonymous]We have always had two working parents and had a household income on $350,000 when our kids started college. We are full pay. And not whining— it’s a nice income. Although a SFH house in Fairfax County in a decent school district (decent— not the best) is now $1 million. So, expenses add up fast here.

And I agree— you should start saving for college at birth. And if you and your spouse make $350,000 at birth and have no extra expenses or decrease in income for 18 years, you should have a 529 funded for Harvard. But usually, that’s not how life happens.

We had about $250k per kid in their 529s when they hit college. Enough for a Midwestern LAC with merit and WM, both with no loans.  WM kid will have about $50k left over for grad school.

Why not the $400k they would need to full pay? Because people looking at a $350k income seem to assume we had an $350,000 income and $0 in extra expenses from the day Kid 1 was born until we filed the FAFSA 18 years later. And that was not remotely true.

To start with, we had kids relatively young, and we didn’t always make $350,000.  It was closer to/ slightly below $200k the kids were born. Now subtract $1500-1800 a kid a month for childcare (at the time) for the first 5 years.

Just as we were getting ready to stop needing FT childcare for kid1, we bought into a decent school district just before (like 3 months before) the housing bubble burst, the recession happened-  and we went from having plenty of equity to being underwater on our mortgage. It took us 10 years to regain our housing value and get back to square 1.  At the same time, one parent lost their job.  And we couldn’t move for a job, because underwater on the mortgage. That parent found a new job relatively fast, but took a big pay cut.  Lots of people hit by the recession now have kids entering or in college.

A year later, the other parent had a huge health event and was out of work for 18 months, most of the time in treatment. And the rest of the time was was too sick/ occupied with treatment to reliably care for the kids and save that money.

Meanwhile, even when school started, the childcare expenses didn’t just go away. From K-6, we were paying for before and after care so that we could both work. Not cheap for two kids, even if it’s just SACC.  And summer care was just ungodly expensive.   Plus, care on all the random days school was closed for TWDs, 1/2 day Mondays (still a thing in FCPS at the time), snow days, rain days, cold days. And FCPS just hates to operate for a full uninterrupted week days.

So, our salaries were not at $350k for most of the years we saved. And many years, we saved very little because childcare was bleeding us dry— and high quality childcare was not a place we were willing to scrimp. And those were also the years where compounded interest could have worked its magic.

That’s reality for many two income families.  Add on for us the recession happened and we bought at a house at the worst possible time, that we we had a job loss and pay cut and had one parent who was very sick (but thankfully now has a clean bill of health), but was out of work for a significant period of time.

So when people say— just start saving when the baby is born, I agree on principle. But people (and Harvard) make a lot of assumptions about a family’s ability to save when their kid was 4 based on what the family finances look like when the kid is 18. And FAFSA doesn’t really capture childcare expenses, serious illness in the family, recession eating away $200,000 in equity overnight, job loss, etc— especially when those things happened. when a kid is in ES or younger. But those things prevent savings at a point when savings can be most valuable if you invest right because of compounded interest.

I’m glad we both worked, especially since one of us was unemployed for a period of time and one of us was too sick to work for a longer period of time. When we only had one adult who could work, I was grateful we had two adults with active careers that carried benefits. But realistically, my salary covered childcare for several years and that’s about it. We sucked it up to keep me in the workforce.  But financially, we might have been in a better position for college if I had just never worked at all, rather than working to pay for childcare, and then ultimately having that income counted against us on the FAFSA. [/quote]

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