Anonymous wrote:DW and I disagree somewhat on the priority of saving for college. I think it's last priority after retirement savings and making sure we have a decent emergency cushion.

HHI is about $280/yr. 3 year old and 6 year old in public school. $650K mortgage. About $600K in 401ks, $60K in liquid/emergency funds. Only other debt is about $20K in student loans that are very low rate (2%) that will be done in a few more years.

The debate is: should we be aspiring to cover all of those future college costs? Where we've settled for the time being is 50% of out of state tuition for both kids - which equates to $750/month right now. Planning to increase that by about 2-3% a year going forward. We can't predict now what kind of scholarships or grants kids may be eligible for, and innumerable college calculators have given us pretty different answers, so 50% seemed an OK compromise.

What is everyone trying to get done? 100% coverage for college for their kids? Private university rates with inflation? Out of state public tuition?

I agree 100% with you OP. Your kids are not going to help fund your retirement, nor should they.

Always put your oxygen mask on first, before assisting anyone else!

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Anonymous wrote:My DH wants to cover 100%, I think 33% from us, 33% from the kid, 34% from scholarships is reasonable. Honestly loans aren't the worst thing that can happen to a kid and I think knowing going in that they have to pay for part of it will make them think longer and harder about public vs private, what major they want to pick and what their first job out of college will pay, the works.

I've told him that even if we hit the Powerball I'd stick to this plan, and then just pay off their loans as a graduation present. I really think having a kid be personally invested in their college education on the financial side makes them take it more seriously.

Maybe so in old days when cost was under control. With COA of 25k (instate public) to 70k (private) per year, there's no way kids can contribute in a meaningful way. Don't rely on that approach. It's a really outdated thinking.

I don't know. I think if kids are contributing (through loans) about $5-10k per year, it's meaningful for them without crushing their future with burdensome loan costs. Our plan is to fully cover in-state public. But if kids wanna go to private, I think they're gonna have to finance something like $7.5k per year. They should understand that it costs a lot more to go private.

They cannot take out student loans for $7,500 per year Until they were junior and senior years. The federal limit is $5500 the first year and $6500 the following year.

For anything beyond those amounts, you would need to take out a parent PLUS loan.

Neat. That doesn't really affect my post or my plans though. As I said, if my kids go private, they're gonna have to finance something like $7.5k per year. So, maybe they'll do $5500 in their own student loans, and cover the other $2k in some other way.

That's a reasonable amount but what is your assumption on how much your kids' private will cost?

I think $220k in 2018, which might be something like $350-450k in 2035.

I explained this up-thread, but I'm planning to have our 529 cover 100% of public in-state, maybe $120k in today's dollars or $200-300k in 2035. If the kid chooses to go private, we will have a shortfall of something like $100k in 2018 dollars (maybe $150k in 2035 dollars). That shortfall will be something we'll cover through a combination of (1) cash flow, (2) other non-529 savings, and (3) my kid's own funding (student loan or otherwise).

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Anonymous wrote:My DH wants to cover 100%, I think 33% from us, 33% from the kid, 34% from scholarships is reasonable. Honestly loans aren't the worst thing that can happen to a kid and I think knowing going in that they have to pay for part of it will make them think longer and harder about public vs private, what major they want to pick and what their first job out of college will pay, the works.

I've told him that even if we hit the Powerball I'd stick to this plan, and then just pay off their loans as a graduation present. I really think having a kid be personally invested in their college education on the financial side makes them take it more seriously.

Maybe so in old days when cost was under control. With COA of 25k (instate public) to 70k (private) per year, there's no way kids can contribute in a meaningful way. Don't rely on that approach. It's a really outdated thinking.

I don't know. I think if kids are contributing (through loans) about $5-10k per year, it's meaningful for them without crushing their future with burdensome loan costs. Our plan is to fully cover in-state public. But if kids wanna go to private, I think they're gonna have to finance something like $7.5k per year. They should understand that it costs a lot more to go private.

They cannot take out student loans for $7,500 per year Until they were junior and senior years. The federal limit is $5500 the first year and $6500 the following year.

For anything beyond those amounts, you would need to take out a parent PLUS loan.

Neat. That doesn't really affect my post or my plans though. As I said, if my kids go private, they're gonna have to finance something like $7.5k per year. So, maybe they'll do $5500 in their own student loans, and cover the other $2k in some other way.

That's a reasonable amount but what is your assumption on how much your kids' private will cost?

Anonymous wrote:The vast vast majority of private colleges are no better than their public counterparts. There are some exceptions to this but not many. We are funding 100% of an instate 4 year program. Also planning to fund 50% of grad school if we deem it practical. (Not paying for MA in East Asian art history for example.)

I'd tend to agree with this unless you're talking about a top ~25 university or top ~10 in the specific field of study. In those cases, the brand recognition of your school (either broadly or in your field) can be a huge accelerator for your career.

Hoping to have $100k for each of our three kids. It'll have to be enough.

4 years full pay for a private or 4 years full pay for a public + grad school

We will guide the kids to think carefully about the financial consequences of their educational choices.

The vast vast majority of private colleges are no better than their public counterparts. There are some exceptions to this but not many. We are funding 100% of an instate 4 year program. Also planning to fund 50% of grad school if we deem it practical. (Not paying for MA in East Asian art history for example.)

Retirement first is a sensible goal but what does it mean in concrete terms. What would you consider adequate in order to shift funds to college savings? People earn different incomes so that may not help illuminate the correct decision making process but perhaps sharing what your retirement goal is in terms of multiples of gross income might be informative

So for example, we are on track to have 10 times our gross Household income saved by age 65 assuming an inflation adjusted rate of return of 5%. Given that I feel comfortable putting around 6% of our gross income towards college savings
We also have 8 months of emergency savings

Anonymous wrote:OP here. Thanks for responses, everyone. Interesting to see that the amount of uncertainty in this makes it hard for most to really feel confident about their planning (so we're not alone).

My philosophy has been that if we can get a good amount of it covered, that there are other avenues available to make up shortfalls (private loans, paying out of pocket, etc). I saw my sister get into her #1 private liberal arts college and then not get the financial aid she needed. It was pretty devastating for her as well as my middle class parents. She went to her #2 school, and has a very successful career now. I opted for the ROTC path and got a full ride and felt pretty good about not putting myself or my parents into any kind of debt - but I don't want to make my kids do that unless it's something they decide on their own. I wound up taking some small loans for grad school, which I'm still paying - but they're not much of a burden.

OP, I posted above, but you're not alone. Unless you're wealthy and can easily afford to pay everything, these are hard decisions. My parents paid for my out of state, private undergrad (which I absolutely loved), but I learned much later they did it to their own financial detriment. So now, in his 70s, my dad has almost no savings and is living in income-controlled housing, because he told me I could go anywhere for undergrad, rather than involving me in the decision. Much as I loved my college experience, I don't know that it was worth the enormous stress of worrying about him at this point in our lives (with a HHI similar to yours, but three kids to save for). My mom thankfully inherited a good bit from her parents and will be fine (they're divorced), but when they are old enough, we will explain to our kids that while we will help pay for their college, we put our retirement first for specific reasons.

So, yeah. It's not easy. We're also not willing to work jobs that would pay us a ton but require long hours. We're lucky to have the HHI and things we do have, of course.

OP here. Thanks for responses, everyone. Interesting to see that the amount of uncertainty in this makes it hard for most to really feel confident about their planning (so we're not alone).

My philosophy has been that if we can get a good amount of it covered, that there are other avenues available to make up shortfalls (private loans, paying out of pocket, etc). I saw my sister get into her #1 private liberal arts college and then not get the financial aid she needed. It was pretty devastating for her as well as my middle class parents. She went to her #2 school, and has a very successful career now. I opted for the ROTC path and got a full ride and felt pretty good about not putting myself or my parents into any kind of debt - but I don't want to make my kids do that unless it's something they decide on their own. I wound up taking some small loans for grad school, which I'm still paying - but they're not much of a burden.

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Anonymous wrote:My DH wants to cover 100%, I think 33% from us, 33% from the kid, 34% from scholarships is reasonable. Honestly loans aren't the worst thing that can happen to a kid and I think knowing going in that they have to pay for part of it will make them think longer and harder about public vs private, what major they want to pick and what their first job out of college will pay, the works.

I've told him that even if we hit the Powerball I'd stick to this plan, and then just pay off their loans as a graduation present. I really think having a kid be personally invested in their college education on the financial side makes them take it more seriously.

Maybe so in old days when cost was under control. With COA of 25k (instate public) to 70k (private) per year, there's no way kids can contribute in a meaningful way. Don't rely on that approach. It's a really outdated thinking.

I don't know. I think if kids are contributing (through loans) about $5-10k per year, it's meaningful for them without crushing their future with burdensome loan costs. Our plan is to fully cover in-state public. But if kids wanna go to private, I think they're gonna have to finance something like $7.5k per year. They should understand that it costs a lot more to go private.

They cannot take out student loans for $7,500 per year Until they were junior and senior years. The federal limit is $5500 the first year and $6500 the following year.

For anything beyond those amounts, you would need to take out a parent PLUS loan.

Neat. That doesn't really affect my post or my plans though. As I said, if my kids go private, they're gonna have to finance something like $7.5k per year. So, maybe they'll do $5500 in their own student loans, and cover the other $2k in some other way.

We are prioritizing retirement over college, for sure. My parents did the opposite and I really wish they hadn't. I'd love to get to the point of having enough for in-state tuition for all three, and then talk with them when the time comes about the various options.

We have 1, HHI of $250. We should have around $200k for DD for college. We are saving more heavily for retirement, but everyone should be covered.

We only have 1, so our situation may not work for everyone.

We fund the 529s at the full amounts allowed every year. We have about $96K for our 10 year old. So, we should be able to fund in-state (and maybe out of state making up the difference and, hopefully, some sort of aid).

I funded college and grad school and the debt was crippling. My DH went to a military academy so that helped offset my debts. It is paid off but really put us in a hole starting out. I want DC to have an easier time starting out and to be able to choose a career best suited for her rather than one that will simply pay bills (which is what I did and I hate my career path).

As for skin in the game, this did not make me work harder. I was already a hard worker. But, it did cause some (resentment is not the right word, but certainly jealousy) at my friends who graduated college with not a penny in debt, got to live in nice apartments, had a functional car, etc. while I scraped by barely even able to afford food, no health care, etc. I'm not sure I learned anything from that other than how to survive.

Priority has always been retirement, emergency funds and life insurance.

We have fully paid 5 years instate tuition for two children. Also put aside 200K for each child for graduate studies. We have not saved for expenses but we are assuming it will be around 20K per child per year, we will cross that bridge when we have to.