Anonymous
Post 07/29/2022 20:52     Subject: Recommendations for Funding College
Anonymous wrote:Does anyone have any tips or recommendations for funding what will sure to be an expensive college experience for our kids?

We have two kids in high school, rising senior and rising sophomore. We’ve got $90K and $83K in 529 plans for them each, respectively. There is no chance we will qualify for need-based financial aid, even when both are in college at the same time. Several of the schools we’re contemplating are places like Cornell and Carnegie Mellon that no longer or simply don’t offer merit-based scholarships. So, we’re looking at $80K+ per year. 529 will cover about a fourth of the cost, but this is still $450K or so over 6 years. Kind of a lot to absorb as part of our monthly budget. What do most people do?

Outside, independent scholarships? Bonuses from work? Exercise stock options? Kids get student loans? Parents get loans? Refinance or second mortgage? Temporarily halt retirement contributions?


Are your kids rockstars or just regular DCUM smart? If the latter, then your state school, lower tier state schools that give you merit (Alabama, Kansas etc), or low tier privates that heavily discount. You choose which environment you want. This advice has been repeated nine thousand times on this forum.
Anonymous
Post 07/29/2022 20:40     Subject: Recommendations for Funding College
Anonymous wrote:OP are you insane or just stupid? You make $400k, have $2m+ in retirement accounts, and you're stumped about how to pay for college for your kids? You've been banking on the (mistaken) assumption that your kids would get merit scholarships to Ivy League and near peer schools?

I've got to say, as a two-nonprofit household that has forgone every luxury to be able to afford the best schools that our two kids might be able to get into, people like you just blow my mind.


LOTS of people didn't realize how expensive private colleges were, or had this idea that they were offering soft discounts (and many do, just not the Ivys). They probably thought college would be 40-50K not 80K.
Anonymous
Post 07/29/2022 20:27     Subject: Recommendations for Funding College
OP are you insane or just stupid? You make $400k, have $2m+ in retirement accounts, and you're stumped about how to pay for college for your kids? You've been banking on the (mistaken) assumption that your kids would get merit scholarships to Ivy League and near peer schools?

I've got to say, as a two-nonprofit household that has forgone every luxury to be able to afford the best schools that our two kids might be able to get into, people like you just blow my mind.
Anonymous
Post 07/29/2022 20:24     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:We’re you not making over $150,000 until very recently? If you didn’t want to save for college, then you either need to take parent plus loans or look at less expensive schools.


No, we’ve been making quite a bit more than this for some time. We have clearly underfunded our 529. Too late to fix it now and, honestly, we didn’t realize until just a year or two ago that many colleges don’t offer merit-only-based scholarships. There must also be a demonstrated financial need. DH grew up dirt poor and received a full scholarship to a T20 school and then a full ride after through to a Ph.D. I went to a cheap in-state school.

But…we ran multiple college financial aid net price calculators and even with our below-par 529 balances, we’re told our net price is whatever the college charges and that our affordability is more than double the actual $80K cost. So, sure seems like the colleges think we can easily afford to send our kids there. Just wondering what levers they’re expecting us to pull?


Ok, so your husband got a cheap education and got a good job as a result. Now he needs to pay full price for his kids to go to school.

I can’t believe you thought you’d be able to solve this problem with merit aid. Plus merit aid means your kid is going to a school that they are overqualified for. You make 400k a year. Prioritize education. No one else should be paying for your kids educations just because you didn’t plan well.
Anonymous
Post 07/29/2022 20:19     Subject: Recommendations for Funding College
Anonymous wrote:I would be humiliated to have my kid graduate with debt or not be able to attend the best school they got into at that income. Clearly you should be able to cash flow a lot. Also you could definitely take 100K out of your brokerage accounts. And keep in mind that ROTHs and Ibonds can be spent on college with no tax consequences.


This is income limitation ( very low) for these
Anonymous
Post 07/29/2022 19:35     Subject: Recommendations for Funding College
I would be humiliated to have my kid graduate with debt or not be able to attend the best school they got into at that income. Clearly you should be able to cash flow a lot. Also you could definitely take 100K out of your brokerage accounts. And keep in mind that ROTHs and Ibonds can be spent on college with no tax consequences.
Anonymous
Post 07/29/2022 17:00     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:How much do you have saved in 401k/IRAs? I didn't see that listed. If you already have a lot, you could cut contributions (but don't give up an employer match). You can probably also afford to cash flow a lot of the cost of college if you cut back on current expenses. $400k/year is quite a bit to work with.


DH and I both work full-time and have about $2.2M in 401K/IRA and $70K in an HSA. DH also has a pension from a previous job that will kick in at age 62 (maybe?) that is worth about $3200/month but not COLA. We’re mid-40s, so I think we could cut 401k contributions for a few years, as we have at lot being compounded already. This could free up maybe about $40K gross…don’t want to cut all and lose employer 401k match, though.


Yeah -- stop finding retirement for a while, and/or also just cut back on spending a lot.


In reality, they should be able to just cut back on spending alot with that income!! Can easily cash flow $30-40K/year with that income. Heck most people could cash flow the entire $80K/year with that income.

Not a good idea to cut retirement savings, especially since you seem to have a general spending issue. But the tis also a choice.
Anonymous
Post 07/29/2022 16:29     Subject: Recommendations for Funding College
Anonymous wrote:We must spend too much on travel and other discretionary items, so perhaps there is a lot that can be cut in these areas to cover some of the cash flow.


I'm a teacher earning $90,000 and my husband's disability pulls in another $30K. So HHI $120,000

We are cash flowing $12,000 towards our son's college.

Of course our mortgage payments are lower than yours (I'm assuming!!) but if I can find $1,200/month, you HAVE to be able to find at least 3x that on your income.
Anonymous
Post 07/29/2022 16:26     Subject: Re:Recommendations for Funding College
The truth is, $80,000 a year for college is outrageously expensive. You were thinking it'd be more like $40,000, is my guess.

You didn't aggressively save for college but you do have money and you CAN afford the expense, but it just feels overpriced.

But, your telling your kids that they cannot go to these expensive colleges because you didn't save enough for it and also you don't think it is worth the cost, is going to feel really crummy, especially when (it feels like) all their peers are able to go. No one wants to admit that to their kid.

LOTS of well off kids turn up their noses at state school and yet lots of them end up going because their parents just don't think $80K a year is worth it.

Anonymous
Post 07/29/2022 16:13     Subject: Re:Recommendations for Funding College
You can cashflow it if your kids happen to win the jackpot of getting into CMU/Cornell. But admissions has gotten a LOT tougher if you haven't gone through it yet. Our kid had 99% test scores and top grades in rigorous courses (4.45 WGPA) and a national award in his area of interest and he didn't get into any of his "dream" schools (which were of similar caliber to CMU and Cornell). The good part of this is that he DID get into our excellent state schools (UVA and W&M) with some merit aid. He was also awarded lots of aid to very solid private schools that weren't his "dream school." So in a sense, if your kid is actually competitive for CMU/Cornell, there is a very good chance they won't get in, but will get into other schools with merit aid. Just be sure to look at which schools offer merit aid because not all do.
Anonymous
Post 07/29/2022 16:07     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We’re you not making over $150,000 until very recently? If you didn’t want to save for college, then you either need to take parent plus loans or look at less expensive schools.


No, we’ve been making quite a bit more than this for some time. We have clearly underfunded our 529. Too late to fix it now and, honestly, we didn’t realize until just a year or two ago that many colleges don’t offer merit-only-based scholarships. There must also be a demonstrated financial need. DH grew up dirt poor and received a full scholarship to a T20 school and then a full ride after through to a Ph.D. I went to a cheap in-state school.

But…we ran multiple college financial aid net price calculators and even with our below-par 529 balances, we’re told our net price is whatever the college charges and that our affordability is more than double the actual $80K cost. So, sure seems like the colleges think we can easily afford to send our kids there. Just wondering what levers they’re expecting us to pull?


Your BASE is $400k. You make an additional $40k in RSUs and ISOs a year, and can earn another $60k in bonus on top of that. So the real question is where is all of your money going? How is it possible you only have $150k in non-retirement accounts? Why do you think you need some hidden lever to pay for your kids? I'd be fascinated to see your budget, though I doubt you'd offer it up. $500k/year, one house, mortgage of $530k, and somehow you have no idea where to find money for college. It's like a parody of DCUM cluelessness.


OP here. The ISOs and RSUs are pretty recent and associated with a new job, so we don’t know how these will pan out and very little has been accumulated so far. We dump a lot into retirement and building home equity, but only recently started contributing to taxable brokerage accounts. We must spend too much on travel and other discretionary items, so perhaps there is a lot that can be cut in these areas to cover some of the cash flow.
Anonymous
Post 07/29/2022 16:01     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:How much do you have saved in 401k/IRAs? I didn't see that listed. If you already have a lot, you could cut contributions (but don't give up an employer match). You can probably also afford to cash flow a lot of the cost of college if you cut back on current expenses. $400k/year is quite a bit to work with.


DH and I both work full-time and have about $2.2M in 401K/IRA and $70K in an HSA. DH also has a pension from a previous job that will kick in at age 62 (maybe?) that is worth about $3200/month but not COLA. We’re mid-40s, so I think we could cut 401k contributions for a few years, as we have at lot being compounded already. This could free up maybe about $40K gross…don’t want to cut all and lose employer 401k match, though.


Yeah -- stop finding retirement for a while, and/or also just cut back on spending a lot.
Anonymous
Post 07/29/2022 15:51     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:We’re you not making over $150,000 until very recently? If you didn’t want to save for college, then you either need to take parent plus loans or look at less expensive schools.


No, we’ve been making quite a bit more than this for some time. We have clearly underfunded our 529. Too late to fix it now and, honestly, we didn’t realize until just a year or two ago that many colleges don’t offer merit-only-based scholarships. There must also be a demonstrated financial need. DH grew up dirt poor and received a full scholarship to a T20 school and then a full ride after through to a Ph.D. I went to a cheap in-state school.

But…we ran multiple college financial aid net price calculators and even with our below-par 529 balances, we’re told our net price is whatever the college charges and that our affordability is more than double the actual $80K cost. So, sure seems like the colleges think we can easily afford to send our kids there. Just wondering what levers they’re expecting us to pull?


Your BASE is $400k. You make an additional $40k in RSUs and ISOs a year, and can earn another $60k in bonus on top of that. So the real question is where is all of your money going? How is it possible you only have $150k in non-retirement accounts? Why do you think you need some hidden lever to pay for your kids? I'd be fascinated to see your budget, though I doubt you'd offer it up. $500k/year, one house, mortgage of $530k, and somehow you have no idea where to find money for college. It's like a parody of DCUM cluelessness.
Anonymous
Post 07/29/2022 15:51     Subject: Recommendations for Funding College
Anonymous wrote:
Anonymous wrote:How much do you have saved in 401k/IRAs? I didn't see that listed. If you already have a lot, you could cut contributions (but don't give up an employer match). You can probably also afford to cash flow a lot of the cost of college if you cut back on current expenses. $400k/year is quite a bit to work with.


DH and I both work full-time and have about $2.2M in 401K/IRA and $70K in an HSA. DH also has a pension from a previous job that will kick in at age 62 (maybe?) that is worth about $3200/month but not COLA. We’re mid-40s, so I think we could cut 401k contributions for a few years, as we have at lot being compounded already. This could free up maybe about $40K gross…don’t want to cut all and lose employer 401k match, though.


You can definitely afford to cash flow college. You're in great shape on retirement, so cut back contributions but don't lose the match. With this added information, your situation looks much better for cash flowing college. Consider a postnup agreement with your DH that requires him to continue helping to pay his pro rata share of college tuition if you get divorced while kids are still in college.
Anonymous
Post 07/29/2022 15:47     Subject: Re:Recommendations for Funding College
FWIW, we have a lower income, higher 529 balances, and won't pay for $80k schools. DS is at a VA state U. DD (a senior) will apply to state schools and privates that have some potential to come down to $40k-ish