Can we talk college savings?

[idnib]

.

[Lisbeth]

I think college is horribly overpriced and overrated, but my kids will likely still go. I believe strongly in lifelong learning but I think many colleges have become pretty poor at true education.

My parents have contributed large sums to the kids' accounts as gifts for various occasions. That honestly makes up the bulk of their college savings. We also contribute.

I do believe in sending the kids loan-free if possible, but it is getting impossible for most. Ridiculous!

[Alicia64]

I went to junior college for two years before transferring to a four year college. I ended up getting a masters degree. That more people don't use junior colleges surprises me.

 

My teachers at JC were excellent. It's been thirty years and I still remember many of them, their passion for their subject, and how they made me think. Also, when employers ask where I earned my degree I gave them the four year school. They didn't want to hear, "Well, first I started at JC, then I went to blank, then onto blank blank."

 

I would consider JC as a sensible plan.

 

Alley

[Miss Peregrine]

 

 

Whose responsibility is it?  

 

In most cases, there are four potential sources of funding, generally tapped in the following order - 

--The student, through savings, work during school and on breaks, internships/co-ops, and student loans to be paid off later.

--The parents, through savings, cash flow during the school years, and loans to be paid off later.

--The school, generally through merit aid, usually used to entice top students to attend the school.

--The neighbors (aka taxpayers) through federal student aid, subsidization of loans, and subsidization of work-study wages. 

 

It is the rare kid who can work their way through at today's prices without relying on help from the other sources.  

Schools assume that parents will contribute a certain amount based on their financial situation.  

Students who do not get this contribution from their parents do not get their financial aid package adjusted to take that into account, meaning that at best they will have to take out loans to cover it.

This is because the system is set up with the assumption that parents should contribute what they can before asking the neighbors to do so.

Merit aid can be substantial, but rarely covers so much that the parents aren't expected to contribute at all.  

 

Not contributing what you can to your kids' higher education puts your kid in the hole before they even start.  It makes it much, much harder for them to get a college degree.

Why would you do that?  

 

(I am not talking here about parents who are finacially unable to help, or about kids who have shown themselves to be an iffy investment due to behavoir or academic issues, or who want to major in underwater basketweaving or some other iffy career that is a lousy return on investment, or about kids who for one reason or another are better off on another path than college.  And obviously the financial aid system is not perfect and doesn't always take into account special cases.)

 

 

 

I don't think college is necessary. It can be helpful but the last few years have seen many college-graduates holding degrees and no job to show for it, degrees their parents mortgaged their house for. That's crazy. 

 

My kids don't qualify for financial aid. If they want to go to a four-year college, they can get scholarships, work, or take out loans(though I wouldn't advise it). They are adults and that is their choice. We are willing to help as much as possible with JC, but they're expected to apply for any and all scholarships possible. DD18 has her first year paid for at out local JC from scholarships. She works part-time and saves every dime for when she transfers.

 

 

 

[Jann in TX]

I am the college savings plan.  Our children will not qualify for financial aid.

 

I had to stop teaching full time when dd2 was born-- she was a premature and had/has lots of health problems.  DD1 is an aspie-- she was the reason we started homeschooling... 

 

When dd2 was a Jr in high school she was eligible for dual enrollment (8 hr max each semester only had to pay a $40 out of area fee for each class!). DD 1 was working nearly full time at a local grocery store and decided she wanted to go to college and she actually passed the placement test (I honestly did not think she would).  She started at the local CC (not really local-- about 45 minutes away) and commuted with her sister. I started to teach online math classes and was able to cover dd1's tuition/books.

 

DD1 worked for a 3 year associates degree (had a higher ranking in her field than a 4 year degree due to the professionals she studied under).  The CC claimed it was a 2 year degree-- but there was NO WAY that was humanly possible due to all of the lab hours required.

 

DD2 had planned to stay home and transfer to a nearby state university.. she totally bombed the ACT and SAT tests (anxiety disorder) so scholarships were out of the picture.  When she got accepted at a different state universiy (she had a 4.0 grade average from the highly ranked local CC with 28 credit hours and several sophmore level classes) we were in shock!  We ended up taking out a home equity loan (cheaper than students loans in our case).

 

We paid cash for all of DD1's expenses through her graduation (with honors!!). 

 

We have a home equity loan for DD2's tuition/fees and I pay for her housing/food/misc expenses with the money I make from my job.

 

One more semester-- left!  DD2 is set to graduate (also with honors!) in May.  We will help her through next August then she will be on her own.  She will have an English/Spanish major and will most likely teach for a year or two and save up for a masters in linguistics.  She really wants to be a writer-- but knows she needs a 'day job'...  after she is cut off I will start paying off the home equitly loan-- should take 2-3 years.

 

We have started an official college fund for DD3 (currently in 7th grade).  Hopefully this one will get some scholarships-- but just in case we are hoping to avoid student loans/home equity loans.  I hope to have 2 years of my salary to add to her account. 

 

I was able to work 20-30 hours per week and pay my way through college-- that is totally NOT an option any more.  DH and I do not want our children to start off their adult lives in debt.  We know of way too many recent college grads who have  student loan payments higher than our mortgage!  

[MeAndTheBoys]

Sadly, my family hasn't done any college savings for my kids. They are 10 and 6, and I would really like to begin doing something. I am a Dave Ramsey follower and I know he recommends ESA (Educational Savings Account). I am also somewhat familiar with 529 Plans. What have you used for college savings? If you use a 529 Plan, how did you choose which one to go with? Do you have a savings goal? Any tips or suggestions?

 

I opened a 529 for each of them when they were born and we piddle a little in there every month on an autodraft.  Maybe $100/month for the older 2, $50/month for the youngest, because he is 6 grades behind the next son, and we will have our house paid off by the time he starts college.  Also, I know that you can trickle down, so there might be some money left over from the older's accounts if they get some awesome scholarships or do work/study or something else.

 

I opened the 529s at the same place that I rolled my workplace 401K funds into after I stopped working--good investment company, and convenient to have them in one place.  They are 529 plans from a different state than we live in; our state doesn't give any kind of advantages for using our own state 529.

 

It's nice to see that the balances have really grown over the years even though we haven't contributed TOO much.  If we are able to keep contributing for the 6- and 7 years before DS 1 and 2 go to college, it MIGHT pay for 4 years at our in-town, very good university if they lived at home.  Or 4 years at a state school if they did work-study or got a scholarship.

 

My parents gave me a lump sum for college that probably would have paid tuition, room & board at a state school.  The agreement was that when it was gone, it was gone.  I chose to go to a private school with a small scholarship, and I always worked multiple jobs to pay my own room and board and books--I was able to make their contribution spread to cover tuition with scholarships.  I also took the max number of hours per sememster to finish in 3 1/2 years before I ran out of money :)

 

So I"m not terribly worried about it.  We are doing what we can to save without it being a financial burden on us.  We want to help.

 

But I also want it to be my boys' responsibility to use the money we contribute wisely and to figure out ways to make up the difference.

 

DH and i used workplace plans and aggressive savings to pay our ways through graduate school (after we married and before we had kids).

 

B

 

[TranquilMind]

No, we didn't save anything for the kids' college - various reasons.  Our kids also stayed home past the traditional ages of 18yo.  So when they finally decided to begin college, most were 23 - 24yo or older, thus classified as "Independent".  And because none of them have ever really held paying jobs, they had no income to report either.  So what all this means is that they were awarded full tuition at a large state school.  Dh and I pay for their apartment and living expenses.  They drive our old cars which we keep up.  And they all live together, so no nutjob roommate problems (except for their nutjob brothers and sisters, of course ;)).  They will also graduate with no debt. 

 

Also, none of them will be working paying jobs during college either because their aid would be reduced by any amount of money they earned so it's not really worth it.  But that gives them plenty of time to study and they take full advantage of it. 

 

It's not for everyone, but it's worked wonderfully for our kids.      

 

That really is a practical solution, but many kids don't want to wait until 23 or 24 years old.   Not that it isn't a good idea....

[idnib]

If you are interested, google "Monte Carlo College Simulator." If I remember correctly, I used the one at T Rowe Price to figure out how much to invest each month to ensure they each have enough for in-state tuition, books, and fees. Even waiting a couple years can greatly increase the amount needed monthly to meet the same goal. So whoever on the forum said to start saving as each child is born has it right. Even if it's only $20 per month each, open a 529 account and put it on autodraft.

 

I tried the T Rowe Price one you mentioned because although I've used other calculators in the past, I'd never tried a Monte Carlo one for college. (I have for retirement.)

 

I was shocked at how much more money it said I needed to put in each month compared to other calculators. Poking around I found it assumes a 4.90% return on the market. That's definitely quite conservative, and it's for the actual stock market, not some kind of return for an automatic mix of stocks and bonds as you get closer to matriculation. Of course as the time for matriculation gets closer, average market returns mean less. The difference between 7% and 4.9% over a year is not that significant. But if you're planning for a baby's future fund, I personally find this assumption too conservative over 18 years. It's nice to oversave, but not if one is sincerely struggling in the meantime.

[FaithManor]

I went to junior college for two years before transferring to a four year college. I ended up getting a masters degree. That more people don't use junior colleges surprises me.

 

My teachers at JC were excellent. It's been thirty years and I still remember many of them, their passion for their subject, and how they made me think. Also, when employers ask where I earned my degree I gave them the four year school. They didn't want to hear, "Well, first I started at JC, then I went to blank, then onto blank blank."

 

I would consider JC as a sensible plan.

 

Alley

It's a nice idea if you are in a state where junior college is tightly regulated. Our community colleges are not and as such, the education is very poor. Most universities will not accept the credits not even if the student earned an AA degree. It's money down a hole for the most part, sad to say. 60 credits at the local CC will net one, at most, 8 credits of electives at one of the lower ranked regional universities, nothing at private schools, and sometimes absolutely nothing at the state flagships like Michigan State and University of Michigan.

 

It's very hit or miss which CC's are decent and which one's are not worth a dime. They've also gone up in price. The per credit hour fee at the local, truly, spectacularly bad one 8 miles from here is only 1/3 per hour less than crappy regional U down the road. But, crappy regional U's credits are still worth something and their degree still means something to local employers while anything with crappy CC's name on it makes employers and other colleges recoil in horror.

 

It would be nice if our system were more tightly regulated, in terms of quality, like the California system. Then CC would be a big help to parents and students trying to make it through without a crushing student loan debt.

[Alicia64]

It's a nice idea if you are in a state where junior college is tightly regulated. Our community colleges are not and as such, the education is very poor. Most universities will not accept the credits not even if the student earned an AA degree. It's money down a hole for the most part, sad to say. 60 credits at the local CC will net one, at most, 8 credits of electives at one of the lower ranked regional universities, nothing at private schools, and sometimes absolutely nothing at the state flagships like Michigan State and University of Michigan.

 

It's very hit or miss which CC's are decent and which one's are not worth a dime. They've also gone up in price. The per credit hour fee at the local, truly, spectacularly bad one 8 miles from here is only 1/3 per hour less than crappy regional U down the road. But, crappy regional U's credits are still worth something and their degree still means something to local employers while anything with crappy CC's name on it makes employers and other colleges recoil in horror.

 

It would be nice if our system were more tightly regulated, in terms of quality, like the California system. Then CC would be a big help to parents and students trying to make it through without a crushing student loan debt.

 

Well, I encourage everyone to check their individual state. I've lived in four states -- two in the South, two in the West -- that allow JC student to transfer to four year schools. I don't think it's unusual. My units transferred w/ no problem at all.

 

The entire model behind the JC system is to allow "regular people" to go to school and transfer into a four year system. If MI isn't making this work -- it's a systemic scam (and maybe that is the case).

 

I agree with you re: the AA. When I went to JC, I just took the classes that allowed me to transfer to a four year. I wondered why friends were getting an AA.

 

Alley

[justasque]

I don't think college is necessary. It can be helpful but the last few years have seen many college-graduates holding degrees and no job to show for it, degrees their parents mortgaged their house for. That's crazy. 

 

My kids don't qualify for financial aid. If they want to go to a four-year college, they can get scholarships, work, or take out loans(though I wouldn't advise it). They are adults and that is their choice. We are willing to help as much as possible with JC, but they're expected to apply for any and all scholarships possible. DD18 has her first year paid for at out local JC from scholarships. She works part-time and saves every dime for when she transfers.

 

 

 

I agree that, if not carefully considered, parents can mortgage their home for a degree that doesn't have a good return on investment, leaving the new graduate jobless and both student and parents in serious debt.  

 

BUT - there's a difference between, say, a degree in dance vs. a degree in computer science.  A student of former is likely to end up waiting tables while, if they're lucky, picking up a part-time job teaching dance.  A student of the latter may pay for the last two years of school with co-op jobs and graduate with a couple of full-time job options offering a six-figure salary.  These are extremes, of course, but the point is that the idea that just because some majors are not worth the investment (from a financial perspective), doesn't mean that's the case for all of them.  The reasonably-bright kids I know who have chosen career-oriented majors, particularly in STEM fields, are doing well post-graduation, with good jobs (and in many cases, spouses/partners they met at school who also have good jobs).

 

AND - there's also a difference between state school prices and private school prices, which can be twice as much as those of the state schools.  (In some cases private schools offer enough merit aid to bring the price down to be the equivalent of a state school, so it's wise not to rule them out too soon in the college search.)

 

So taking out a loan for a slacker kid to study philosophy of underwater basketweaving at a third-rate private college costing $60K/year with no financial aid would be a move that could result in both student and parents in dire financial straits.  

 

But helping a decent student attend a quality school to study in a field that is likely to result in gainful employment at a middle-class wage is an investment that will pay off for the whole family in the long run, even if in the short run there are some moderate loans to be paid off by the student and perhaps the parents.  

 

Miss Peregrine, I hope that you will help your kids to apply for both merit and need-based aid by filling out the FAFSA (and other financial aid forms) and by helping them navigate the financial aid process.  You don't know how much a school will cost by just looking at the sticker price, and even if they don't qualify for need-based grants, many schools make tuition much more affordable for good students through merit aid (scholarships) and eligibility for co-op jobs.  Also, in some cases there is considerably more aid available to freshman students (which continues for all four years) than for transfer students, making a four-year college a better financial choice for good students than a 2+2 approach, so make sure you've considered this rather than just looking at sticker prices.  

 

College is a huge investment, and it's wise to do a TON of research before helping a young adult choose the path that's right for them.  You are right to ask questions and not just follow the "college is for everyone, parents should pay whatever it takes" herd mentality.   But for kids who are reasonably intelligent and motivated, and who are interested in a field where a degree is required for entry-level employment, parental financial investment in their college education can have a significant payoff, for generations to come.

[Miss Peregrine]

Justasque, we did the FAFSA and she qualified for nothing, because of our income. Which is not the same as saying we can afford it. We have other priorities, 4 other children and we live in a high COL area with insane housing costs.

 

I don't disagree with "helping" but I don't agree that a child is owed a college education. I don't agree with a previous poster that there is "no way" a kid can work 20-30 hours and put themselves through college. My dd took 18 units this semester and worked those hours. It's not impossible. I see others in our area doing just that. Maybe it takes a little longer, maybe it's really tough. But if it's worth it to them they can do it.

[MomtoCandJ]

We will help the girls with what we can. Our parents didn't help us at all unless it was financial aid in my case since I grew up poor. Dh doesn't have a degree and most likely won't. I'm working on college round 3 and 2nd degree (round 1 was a bust). My 1st degree as a pharmacy tech (diploma program) isn't really worth anything since a lot of people just do on the job training. I'm now going for RN which is needs a degree and are needed in my area.

[Laura Corin]

 

BUT - there's a difference between, say, a degree in dance vs. a degree in computer science.  A student of former is likely to end up waiting tables while, if they're lucky, picking up a part-time job teaching dance.  A student of the latter may pay for the last two years of school with co-op jobs and graduate with a couple of full-time job options offering a six-figure salary.  These are extremes, of course, but the point is that the idea that just because some majors are not worth the investment (from a financial perspective), doesn't mean that's the case for all of them.  The reasonably-bright kids I know who have chosen career-oriented majors, particularly in STEM fields, are doing well post-graduation, with good jobs (and in many cases, spouses/partners they met at school who also have good jobs).

 

 

I hear this sentiment expressed a lot - I was just wondering how much the name of the university matters in the US, compared to the major.  In the UK, a degree in classics (for example) from Cambridge would lead to jobs, just because of the assumption that it took dedication to get into the university, and the intellectual training provided there allows one to turn one's hand to many roles.  A degree in classics from a less selective university would not be so worthwhile in career terms.

 

Is that the same in the US?

 

L

[maize]

I hear this sentiment expressed a lot - I was just wondering how much the name of the university matters in the US, compared to the major. In the UK, a degree in classics (for example) from Cambridge would lead to jobs, just because of the assumption that it took dedication to get into the university, and the intellectual training provided there allows one to turn one's hand to many roles. A degree in classics from a less selective university would not be so worthwhile in career terms.

 

Is that the same in the US?

 

L

I would expect that a degree from Harvard or Stanford would open doors regardless of the major, the difference is the cost of the degree for someone who doesn't qualify for a lot of financial aid. A bachelor's degree in classics even from Harvard will not net you the kind of job that will pay off massive student loans.

[maize]

I know a couple of people who graduated from Stanford with music degrees; they both loved their undergraduate experience, but would never have recouped the cost had they not had major financial aid such that Stanford cost them no more than a state school would have done.

[Laura Corin]

I would expect that a degree from Harvard or Stanford would open doors regardless of the major, the difference is the cost of the degree for someone who doesn't qualify for a lot of financial aid. A bachelor's degree in classics even from Harvard will not net you the kind of job that will pay off massive student loans.

 

Will it not get you into general training courses with major corporations?  This is one example (management consulting - major corporation) which doesn't care at all what subject was studied.  I suspect that this training heads towards a major salary.

 

L

[maize]

Will it not get you into general training courses with major corporations? This is one example (management consulting - major corporation) which doesn't care at all what subject was studied. I suspect that this training heads towards a major salary.

 

L

I don't know, most positions of that sort that I am aware of would want someone with a business major. Humanities majors here almost always go on to graduate school, especially those coming out of elite universities.

[Jane in NC]

Laura,

 

When I was an undergrad back in the dark ages, corporations did hire those with humanities degrees for training programs like you mention. In part this was the case because the computer science, information technology, statistics, operations management, etc. sorts of degrees were nonexistent.  In more recent years, entry level positions in investment banking (particularly those involved with derivatives and other esoteric instruments) are often offered to people with degrees from the Ivies in abstract science or math.  I know a young man with a master's degree is Cosmology who opted out of the PhD path to make money (a lot of it) in investment banking.

 

While it is true that those with STEM degrees are probably going to make more money out of the starting gate, I see opportunities for many degrees including humanities.  Part of the issue though is that jobs may not be available in a student's home town or college town.  My son is making a good starting wage in Cultural Resource Management (archaeology) and, with his hotel and meals covered, he has saved a bundle. But this is not a job that allows him to choose his location.  He is sent to projects wherever they may be.  I sometimes wonder if the size of this country limits job opportunities.  Some people are unable or unwilling to move distances for employment.

 

Business degrees have become a dime a dozen it seems.  My husband serves as a corporate advisor for information tech majors/minors at a nearby university.  This application of computer science and business is one way students demonstrate a bit more flexibility.

 

Students can certainly not foretell the future which makes the degree game tricky for some. I encouraged my son to follow his passions but not all parents share my level of confidence. 

 

 

[Melinda in VT]

Will it not get you into general training courses with major corporations? This is one example (management consulting - major corporation) which doesn't care at all what subject was studied. I suspect that this training heads towards a major salary.

 

L

I don't think training programs like that are common in the U.S. As far as I know, the Very Major corporation I work for doesn't have training programs. We do hire a lot of people straight out of college, but at least in the areas I know about, we hire people with specific degrees ( technical communication, software development, or design). Someone with a classics degree would have to have a lot of experience on the side and a great cover letter explaining how he was qualified to even make it to the interview stage.

 

Things are probably different for those from well-connected families, but a degree from an Ivy without the family connections would be unlikely to make a difference.

 

I'm curious to see what other people say.

[Nan in Mass]

We went the pay-off-the-mortgage route.  We also saved for college, as did both sets of grandparents.  In the end, each child's savings amounted to about half of ONE year at an expensive college, or 3/4 of a year at a less expensive college.  We let all three take out significant loans, since they were studying for careers which should allow them to be able to pay off those loans.  The plan is for them to continue living with us after graduation while they pay off the loans.  Oldest is doing this, paying off about a third of his loan each year this way.  So far, so good.  Oldest and youngest had/have scholarships which pay for about a third of each year (middle one had less scholarships and made it up with savings, since his college was less expensive).  For youngest, it breaks down about like this each year: 1/3 scholarships, 1/6 savings, 1/6 loans, 1/3 we straight pay on a monthly plan instead of mortgage (or any other debt).  That 1/6 savings sounds pitiful, but it is really important because it fills the gap left after what we can pay each year and the university financial aid package (loans and scholarships) and allows our son to go to his first choice private university rather than to our state university.  And THAT is important because I think my son's chances of graduating from his private uni are far better than they would be from our state uni.  I don't think it would be completely unreasonable to say that those savings, pitiful as they seem, are making the difference between a college degree and no college degree.  It also provided a fallback plan.  The savings would have paid for an associate's degree from the community college.  So, keep saving, everyone, even if it seems hopeless.  The paying-off-the-mortgage plan is a good one, in our experience, but if you can possibly save a bit over top of that, especially when your children are tiny, it is well worth it.  If nothing else, it might pay for a certificate program at your community college which would allow your child to work for awhile and save up money for a 4-year degree.  And consider out-of-the-box ways of dealing with any loans your child does have, like continuing to live at home.

 

Nan

[madteaparty]

We are still paying our own student loans. For college, we are counting on being able to pay as those bills come due, since even if our income stays stagnant, we (well, DH) should be in the prime years of his career when DS goes off to college (DH would be in his early 40s), and our own student loans would have been paid off by then. We already do not qualify for any sort of financial aid. I can also try to go back to work then.

I do put a little bit in a 529 while I still work. So far, I have about half an hour of college saved ;)

[madteaparty]

I hear this sentiment expressed a lot - I was just wondering how much the name of the university matters in the US, compared to the major.  In the UK, a degree in classics (for example) from Cambridge would lead to jobs, just because of the assumption that it took dedication to get into the university, and the intellectual training provided there allows one to turn one's hand to many roles.  A degree in classics from a less selective university would not be so worthwhile in career terms.

 

Is that the same in the US?

 

L

 

I think only when the economy is super-hot. I recall political science majors from excellent schools being recruited into investment banking jobs back in the day. This was years ago and I am not that old ;) When my DH took his MBA, it was in the midst of the financial crisis, so to get a job via a recruitment program you literally had to be at one of maybe 5 schools. (he got a job eventually, and he was fine, but not through the schemes you mention). It's a bit of a boom and bust, like a lot of things in this country!

[Scarlett]

It's a nice idea if you are in a state where junior college is tightly regulated. Our community colleges are not and as such, the education is very poor. Most universities will not accept the credits not even if the student earned an AA degree. It's money down a hole for the most part, sad to say. 60 credits at the local CC will net one, at most, 8 credits of electives at one of the lower ranked regional universities, nothing at private schools, and sometimes absolutely nothing at the state flagships like Michigan State and University of Michigan.

 

It's very hit or miss which CC's are decent and which one's are not worth a dime. They've also gone up in price. The per credit hour fee at the local, truly, spectacularly bad one 8 miles from here is only 1/3 per hour less than crappy regional U down the road. But, crappy regional U's credits are still worth something and their degree still means something to local employers while anything with crappy CC's name on it makes employers and other colleges recoil in horror.

 

It would be nice if our system were more tightly regulated, in terms of quality, like the California system. Then CC would be a big help to parents and students trying to make it through without a crushing student loan debt.

How does one go about figuring out if their state has the crappy CCs?

[lllll]

..

[Seasider]

I am actually staring to think that "college savings" ends up hurting us when it comes time to complete the FAFSA. :P

[DawnM]

ANY savings can hurt you when you fill out the FAFSA, but we will not be spending our savings just to try to get more college money.

 

 

I am actually staring to think that "college savings" ends up hurting us when it comes time to complete the FAFSA. :p

 

[Seasider]

ANY savings can hurt you when you fill out the FAFSA, but we will not be spending our savings just to try to get more college money.

 

Oh, I wouldn't suggest that anyone not save!

 

I am just bemoaning the fact that assets not intended as college funds (ie, retirement accounts, home ownership, that sort of thing, many not liquid) seem to be assumed (by the govt) to be monies that could/should be applied to paying for college. It's discouraging to look fairly good on paper yet in reality not be able to afford college for our kids. It makes a difference in whether or not a kid qualifies for subsidized or nonsubsidized student loans, and the limits of loan amounts. It seems we get punished for trying to be financially responsible - just my lament to the nonsensical nature of the college funding beast.

[LucyStoner]

How does one go about figuring out if their state has the crappy CCs?

Check with the admissions office at the state universities to see what, if any, of your local CC credits transfer.

 

Our state has quality community colleges and college level non-tech program classes generally transfer. An AA or AS degree will take care of the first two years of university here provided the student has taken their cc classes with their major in mind.

 

A number of the local community colleges here now partner with state universities to offer BA, BS and even some Masters degrees, on site. They have also deleted the word community from the name of a couple of them- for example Bellevue Community College is now simple Bellevue College. One of the CPA programs I am looking at is a state university with a satellite campus on a community college campus.

[QueenCat]

Oh, I wouldn't suggest that anyone not save!

 

I am just bemoaning the fact that assets not intended as college funds (ie, retirement accounts, home ownership, that sort of thing, many not liquid) seem to be assumed (by the govt) to be monies that could/should be applied to paying for college. It's discouraging to look fairly good on paper yet in reality not be able to afford college for our kids. It makes a difference in whether or not a kid qualifies for subsidized or nonsubsidized student loans, and the limits of loan amounts. It seems we get punished for trying to be financially responsible - just my lament to the nonsensical nature of the college funding beast.

 

FAFSA does not consider retirement savings in bonafide retirement accounts such as 401ks. Some colleges do though.

[Jane in NC]

Oh, I wouldn't suggest that anyone not save!

 

I am just bemoaning the fact that assets not intended as college funds (ie, retirement accounts, home ownership, that sort of thing, many not liquid) seem to be assumed (by the govt) to be monies that could/should be applied to paying for college. It's discouraging to look fairly good on paper yet in reality not be able to afford college for our kids. It makes a difference in whether or not a kid qualifies for subsidized or nonsubsidized student loans, and the limits of loan amounts. It seems we get punished for trying to be financially responsible - just my lament to the nonsensical nature of the college funding beast.

 

Some small business owners/farmers can be hurt by the FAFSA; less so by the CSS Profile, the (invasive) financial form used by elite colleges. 

 

In discussions like this I do think it is worth noting that FAFSA does not consider the value of your primary home; it will consider the value of your non-liquid vacation home. Also, since FAFSA does not examine retirement accounts, consider Roth IRAs as a good savings tool.  Your contributions to Roths can be withdrawn without penalty (not true for the interest or dividends earned). 

 

Whether or not parents have saved, FAFSA assumes they have.  That is the bottom line.

 

 

[Tess in the Burbs]

We have had some financial situations in our married life that have led to us not being able to do much for our children's college education.  We do not feel bad about it.  I worked and paid my way through school.  My dad paid my rent one year, mom bought me books one semester.  It was all my parents offered me(they had divorced a few years earlier and our savings got 'gone').  But I paid my tuition.  Dh was similar...he got loans to pay for college knowing his job after college would be good paying to pay back the loans.  So we aren't inclined to hand over a fully paid education.  Our experiences taught us to appreciate the opportunity.  That being said...I know it's more expensive now, and I do intend to help financially, but it will depend when the time comes if I am working and such. 

 

However, my sister prefers to give the kids $ for gifts, and long ago she set up a savings plan for each child.  However, she had access to it, and emptied it out in desperation one year.  So I set up a savings plan through my bank that is a 529 savings plan.  It is not invested into mutual funds.  It is a savings plan that can only be used for educational purposes.  Each kid has one.  And my sister puts in $100 a year.  I know, it's not much.  But it is something.  And I have thrown some money to it when I think about it.  No one can use the money.  And it is earning something small....it is already much larger than it was. 

 

For us, we are financially behind in saving for retirement.  Our focus goes there.  And when college comes, they can live at home for free.  Which would mean they only need tuition/book money.  If I am working by then...I will gladly put money aside for them.  

 

I think their experiences will be different than mine, and that is not a bad thing.  Waiting until they know what they want and are willing to work hard/pay for most of it will lead them down a better path for their future than just having it all paid for.  I have one kid that will benefit being home a little longer to mature before heading off to real life.  

 

If you really want to start something look at the big picture.  Make sure your retirement plans are first.  Then do something, even if really small for your kids.  Not having it handed to you can be a good thing. 

[Renthead Mommy]

I don't know what to tell you about starting late.  We started his 529 when he was born and throw a few hundred a month into his account. Hopefully he will be able to use the GI Bill, but we don't ever count on things like that.  Same with retirement, we save and plan for it as if we don't have anything else to count on, because there is always the chance it may not be there then, and if it is, so much the better. 

 

Best thing you can do is start now and keep at it. And teach your kids to start early for both their retirement and college saving, and don't run up a lot of credit card and other debt while in college where so many people end up wiht a lot of cc bills, and nothing to really show for it.

[AngieW in Texas]

We have never been able to save much for our kids. We have had a lot of medical expenses over the years and still don't fully know what's going on with our 16yo. 

 

However, all of my kids have taken advantage of dual credit at the local cc. We are fortunate to have a very strong cc. All of their credits can transfer over to the state universities because of matriculation agreements.

 

My oldest will be able to graduate in a total of 7 semesters (could  have been less, but she didn't do things in the optimal way). She got a full tuition scholarship that paid her tuition for the first 5 semesters, but she lost it in May last year. She has been home this year to stabilize and is doing much better. She will be returning to school for her last two semesters in August. These last two semesters will be full cost.

 

My middle will be able to get her BS in a total of 6 semesters, but she needs an MS for speech pathology, so she will have 5 more semesters after that for a total of 11 semesters. She will have scholarship eligibility for the first 8 semesters and that pays for her tuition and $1000/semester stipend to cover part of her meal plan. The last three semesters will be full cost and that will be hard, especially since the youngest will also be in college at that point.

 

My youngest is unlikely to get a scholarship. She works very very hard, but she is dyslexic and dysgraphic, so her test scores are not the greatest even though she received an A in both of the cc classes she has taken so far. She has only taken one class each semester so far because we have to be careful not to overload her. She is also going through vision therapy, physical therapy, speech therapy (for vocal cord dysfunction) and also massage therapy as part of the physical therapy to reduce her chronic pain. She was diagnosed with hypermobile joint syndrome three years ago by a rheumatologist and the PT and OT that doctor prescribed helped her tremendously, but I think she may have Ehlers-Danlos (hypermobility type). We will probably have to foot the entire bill for her college education. She wants to get into international commercial real estate and wants an international/global business BS degree for that.

 

Fortunately, we refinanced the house and I have gone back to full-time work this year so we have been able to keep up with expenses. In the past two years, we had 5 ER visits (two of which led to hospital admits), a one-week hospital stay, a two-day hospital stay, two outpatient surgeries, physical therapy, vision therapy (not covered by insurance), and speech therapy.

 

 

[Sneezyone]

We started saving for education before our kids were born but used some of it to fund our own graduate educations. We regrouped when DS was 1 and DD was 4 and now save $375/mo in a prepaid-tuition 529 that will cover 2 years of tuition/fees at a state school for each of them. We also gave each one 2yrs of DHs GI Bill. We will probably save more since the tuition plan will be paid off in 5 yrs. The remainder of our savings will be in a separate Coverdell acct. for private high school or a market based 529. We've never waivered from saving, always doing as much (or as little) as we could afford, and usually as a percentage of DHs pay. We have plans to pay off our house (right now it's a rental property and we break even) so that cash flow will be avail. if we need it. I keep trying to get DH to meet with a fin. counselor to make sure we're on the right track but I feel pretty good about where we are. The only thing that scares me is the thought of DD going to my alma mater which is big $$$$$. If she does, I'm pushing little man to attend the Naval Academy!!

[katilac]

Justasque, we did the FAFSA and she qualified for nothing, because of our income.  

 

Just to clarify, this only means that she does not qualify for federal aid. It does not at all mean that she doesn't qualify for institutional aid, from the college itself. 

 

For example, we do not qualify for federal aid, but one (private) school estimates that we will qualify for $10,000 to $12,000 yearly in institutional aid. 

[KungFuPanda]

My state has a website. You plug in your major, your target state school and your local CC. It tells you which courses the university will accept from your CC. If your CC doesn't have a course you need, but one in a neighboring county does, you can get in-state tuition for that course.

[Tsuga]

Just to clarify, this only means that she does not qualify for federal aid. It does not at all mean that she doesn't qualify for institutional aid, from the college itself. 

 

For example, we do not qualify for federal aid, but one (private) school estimates that we will qualify for $10,000 to $12,000 yearly in institutional aid. 

 

Yes, yes, yes.

 

You need to go to the college and look up all aid options. Talk to financial aid and ask if there are any scholarships she can apply for after first quarter based on her academic record at the school.

 

I qualified for a bit of Pell federally going back to school with two kids; my state gave me a full tuition waiver.

[babs]

We are just coming up on the college tidal wave now. My ds is a senior and looking at college for next year. We TANKED in '08 - my DH is in real estate. We got on board with Dave Ramsey and paid off all debt except the home mortgage and our rental's mortgage (we are looking to sell the rental this year.) DH makes a lot of $$ which puts us out of the need based scholarships. I will come back to this point below. When I say he makes good $$, I don't mean that paying for college is easy. This background will help you understand our approach. Keep in mind as you read that there is need based scholarship money and merit based scholarship money.

 

So, here is what we have done: We have required our oldest to complete 2 years of college towards his AA (our state has guaranteed transfer and most of those classes will transfer to most colleges outside of our state as well). This was our first "college" payment plan - this is a lot cheaper than paying for any college as community college is much cheaper and he is still living with us anyway. We also PUSHED (no, we demanded) good grades (he has a 4.3 - in part due to the weighted GPA from college courses) which has given him additional merit based money. It has added benefits, like colleges LOVE seeing a high school student who has so much college done - WITH all A's except one college algebra wherein he got a B. That got him more merit based $$ b/c having completed half of his degree makes him more likely to graduate (they are looking for students who will graduate - this makes them look better and that is good business!)

 

For our income bracket, it is worth it for us to save for college (because we are out of the need based scholarships b/c we make too much $$). So, we have saved 2 years worth of what it costs in-state with some discount for merit based scholarship money. It is on him if he cannot graduate in 2 years - he should be able to as the drudgery of gen ed classes are out of the way while still in high school (and they counted twice for high school and college credit in our state!)

 

IF he wants the money we have saved in our 529 plan, he has to agree in writing to the following conditions (breach of contract and he forfeits it to the younger siblings)

1. he will not take out student loans (we will run a credit report each semester to ensure he does not sign on for this debt)

2. he will work to take care of the difference (work study, internships or other job - students who work usually do better with grades)

3. he will choose a major that actually will result in a higher salary out of college (e.g. we will not pay for "women's studies" or house painting...the first does not usually result in real jobs and the second can be done WITHOUT college and earns the same salary.) He has already chosen marketing and finance;  in taking the college classes towards this AA, he has discovered he really does like this major - another benefit of doing college while still in HS.

4. he will not drink underage

5. he will take 12-16 credits/semester and complete in 2 years or less.

 

I have HEARD that saving in a 529 plan can actually result in making it look like the parents can contribute more than another family with the same exact situation (# of children and # of children in college at the same time and income). They look at EVERYTHING on that FAFSA. Look at a FAFSA  online to see how they will look at you. In that situation, you may want to forego saving for college (I have heard the need based $$ ends somewhere between $110 and $180 - for the household - verify this as I have not.) They consider assets like rentals, 529 plans and other savings (we have 6 months of reserves as my husband is self employed and Dave Ramsey recommends it) when determining what you can contribute. So, if you have no 529, then there is a greater "need" that they may meet with scholarships. Some recommend putting the 529 in the grandparent's names, but that is risky. If they are ill or incapacitated, then the govt will look at their assets, including the 529 for purposes of Medicare/nursing home contribution. Or if they die, it can become part of the estate...really hard to predict those possibilities as parents age. We are already out of the need based just on our income alone, so the need based analysis and whether we have assets is irrelevant - thus we are saving in the 529 as it is better for us to have the money available since we will have to fund any difference anyway. We are going for the merit based though so...

 

The ACT/SAT tests are ALL IMPORTANT!!! You need to look at preparing your kids NOW - now matter their age. They need short passages for reading comp - not entire books only (homeschoolers are fond of reading lots of books, but you also need to practice A LOT with short passages as found on these tests.) Math is key - especially algebra, geometry and trig. Timing finishing these just before the test is smart. We also use Saxon 3rd ed. b/c it combines alg and geometry in one book. The ACT science is really reading comp with charts and graphs. Start looking at these tests (buy the practice books on Amazon with the REAL tests) and see what you will need to teach your kids to prepare them. These tests are weighted EQUALLY if not more along side the 4 years of grades that are reflected in the GPA (I think this is stupid, but such is the system now.) I have heard these tests will be changing to reflect common core...so keep up on them. Start educating yourself on these tests - they have been around for nearly 100 years (first used in 1926 I think) and are not going away anytime soon. Big business too. I wish I had stressed vocab like in Shurley grammar (uses word pairs of synonyms and antonyms in vocab, which is hugely helpful in reading comp and in vocab/eng passages as seen on these tests.) I still stressed (and still do) a classical approach along side test prep. If college is not on your radar, then you should not worry about all of this...probably should not be reading this post either! ;)

 

Remember, it is all BIG BUSINESS. They want students who will stay and pay for four years - attracting the best helps with this. They attract the best with high stats for GPA and SAT/ACT. Then they want alumni to contribute = BIG BUSINESS!!! So, you have to give them what they are looking for ultimately. Service hours and activities are really for the scholarships, especially outside scholarships...but that is another post and I am out of time. These are of secondary importance, grades and test scores are king in this endeavor. If you have service hours and activities but your grades and test scores are low, forget merit based money for most kids. 

 

One of the smart things I did early on was to look at what we wanted in the end (4 year college) and worked backwards. So, if you want to see your kids to to an ivy league 4 year, what do they require? (4 years of english, math, science, language...GPA? ACT?) It is all online. Then you can see how to pace/schedule school so you can hit those marks in high school. If you are not going to be ready for Alg 1 in 9th grade, how will you complete 4 years of math in hs that are algebra 1 and above (can still be done, but I am just giving examples.) It has always been helpful to work backwards...in all areas for my kids (morality, manners, etc...) Also helped to talk to them about where they will end up in giving them vision. My 8 yo dd already thinks about vocabulary for her ACT test! 

 

That is what I have learned so far, FWIW! Anyone is welcome to correct or improve this post...always looking for new/better info. 

 

I have a lot more to say about the benefits of college while in HS. 

 

[QueenCat]

IF he wants the money we have saved in our 529 plan, he has to agree in writing to the following conditions (breach of contract and he forfeits it to the younger siblings)

1. he will not take out student loans (we will run a credit report each semester to ensure he does not sign on for this debt)

2. he will work to take care of the difference (work study, internships or other job - students who work usually do better with grades)

3. he will choose a major that actually will result in a higher salary out of college (e.g. we will not pay for "women's studies" or house painting...the first does not usually result in real jobs and the second can be done WITHOUT college and earns the same salary.) He has already chosen marketing and finance;  in taking the college classes towards this AA, he has discovered he really does like this major - another benefit of doing college while still in HS.

4. he will not drink underage

5. he will take 12-16 credits/semester and complete in 2 years or less.

 

.

 

Although I can't personally see going with a written contract, I can understand choosing to do so. However, with #3, I know MANY college students who cannot, despite diligent efforts, get part time jobs while they are in school. During the summer, some can, but many can't because many service providers no longer want/need short term employees. During the school  year, they want workers whose schedules don't change due to class and school commitments. At least that's how it is where we live. There are some jobs on campus, including work study, but not enough for everyone who wants one. What then? You cancel your help because the child couldn't get enough work hours to make up the difference? Really not meant to be snarky but more to be food for thought.

[JFSinIL]

We did not save - all our money went towards therapy and medical bills for our one son with autism (etc.).  The first kid to go to college got top merit awards and took out student loans. We had enough income to be able to also pay about $15 thousand each of his first three years at the LAC.  Then hubby lost his job, and ds qualified for Pell grants and other grants that covered all but $300 (yes, that is three HUNDRED) for his final year.   The next kid, not as interested in college, has been working full-time for over a year now, and attending the local cc part-time.  The last to start college has been accepted and been given merit awards at a few schools, and thanks to loss of income here :-(  we do qualify for Pell grants, etc.  But she probably will do her first two years at the local cc, since it saves money, and she has a good part-time job with our local parks district she can keep if she stays close to home.  We do not have the spare money to send her off to a four-year school at the present time.

 

I started at the local CC, then a semester at a state school, then finished at a LAC, then UCLA and finally got full merit award covering tuition for NU.  Nothing wrong with starting out at the local community college!

 

Like to add, for DS at the LAC, the merit awards, etc. made our cost as parents LESS then it would have been at the local state school, which does not offer the same amount of merit-based scholarships and grants.  So do not rule out those non-public colleges and universities and assume public schools will be cheaper!

 

Oh, and if you have had extenuating circumstances (like our need to fund therapy for a kid with autism) that has prevented you from saving money towards college, or meeting the EFC that the FAFSA thinks you can afford, ask for a special circumstances from from the financial aid office of every school that has accepted your student.  That may gain more money from the school, if they really want your student.

[babs]

Although I can't personally see going with a written contract, I can understand choosing to do so. However, with #3, I know MANY college students who cannot, despite diligent efforts, get part time jobs while they are in school. During the summer, some can, but many can't because many service providers no longer want/need short term employees. During the school  year, they want workers whose schedules don't change due to class and school commitments. At least that's how it is where we live. There are some jobs on campus, including work study, but not enough for everyone who wants one. What then? You cancel your help because the child couldn't get enough work hours to make up the difference? Really not meant to be snarky but more to be food for thought.

The written contract is a powerful reminder. We did this for driving and it seems to be working (written expectations.) Many of his friends (otherwise good kids with HIGH grades) have had tickets and wrecks. Our driving school taught how powerful a written contract can be in deterring bad driving, especially for young men. Likewise, this contract for college money really spells out our expectations. I think it is harder for anyone to "break" their written word. The drinking will be hard to police, but it will certainly be a deal breaker if there is discipline from his school (or the law) on that account. It is a step towards owning his future to have a contract with us - we are not obligated to pay for any college, so he needs to step it up (sign on the dotted line ;) ) for this added luxury!

[QueenCat]

The written contract is a powerful reminder. We did this for driving and it seems to be working (written expectations.) Many of his friends (otherwise good kids with HIGH grades) have had tickets and wrecks. Our driving school taught how powerful a written contract can be in deterring bad driving, especially for young men. Likewise, this contract for college money really spells out our expectations. I think it is harder for anyone to "break" their written word. The drinking will be hard to police, but it will certainly be a deal breaker if there is discipline from his school (or the law) on that account. It is a step towards owning his future to have a contract with us - we are not obligated to pay for any college, so he needs to step it up (sign on the dotted line ;) ) for this added luxury!

 

I should say I meant number two, not number three on your list but I think you figured that out....... I do get your point, I just see how the job market is here for high school and college students. There are so many older adults that now do these types of jobs as their regular job, at least around here, that the service industry here hires very few teenagers for these positions. The types of positions that used to be primarily filled by teens and college students, such as fast food, restaurants, retail. I'm not saying that there aren't any but I know plenty who have truly pounded the payment to get something part time during the school year or full time during the summer, and simply couldn't. Some were able to pick up lawn mowing, pet sitting and such but even with those, there is only so much work to go around.

[babs]

The job market here is a bit better...but I think we could renegotiate if he provided evidence that he applied. I think it is important to set the standard and then modify later as needed. Good point though! Thanks...always looking for the holes in my plans ;)

 

[Laura Corin]

 

IF he wants the money we have saved in our 529 plan, he has to agree in writing to the following conditions (breach of contract and he forfeits it to the younger siblings)

 

 

I'm not saying that this is the wrong thing to do, but just to give a different perspective:

 

We have told Calvin that the 529 money is his to use, but if he messes up his opportunities, then there is no more money from us*.  His behaviour is his own to manage.

 

It's a different, more long-term, way of handing responsibility to him.  For us, it is time to treat him as an adult (whilst being very available to give advice) with his own money to manage.  So far - he's being really tight with his money....

 

*ETA: The 'no more money' rule is flexible to deal with disaster - illness, unemployment, etc.

 

L