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College and University Discussion
Reply to "What is a "donut hole family"?"
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[quote=Anonymous][quote=Anonymous]Most donut hole scenarios is that you marry around 30 and your HHI is about $100-$130K. Mortgage, loans and daycare... no ability to save. With a 5% increase in salary over the next few years you get to ~$150K. Kids are 10 and maybe you can save $1000/month if you are lucky. After 8 years you have $80000 in college funds, divided by 2 kids, divided by 4 years, $10000/year to help pay college. You now make $200K, no way, no how you are getting aid, college costs $40K-$80K/year. You kid will only qualify for $5K, you can pay $10K out of earnings, $10K from saving and you are $15K - $55K/year in the hole... donut hole. A parent plus loan is a 4% fee just to get the loan, the interest rates are 7%. So you borrow against your retirement since that is cheaper, but not really because you are losing earnings. At 75 you can finally retire to make up for your kids college.[/quote] All harsh truths that people need to hear![/quote]
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