How are you going to pay for college?

OK, I had NO idea! I read $20K in the paper yesterday, and I have been absolutely freaked out ever since.

I've been stashing a couple hundred away in a fund for the boys each month and putting it in CDs to get better interest. But we're only 8 years away from our oldest entering college, and we will have college bills for the next 8 years after that, with two in at once for 4 of those years.

By that time, it ought to be at least $25k a year, so in 8 years, we need to be well on our way to having accumulated $300,000!

DH said, "Well, our only saving grace is that our house will be paid off by then, and you will be able to work full time." But STILL! I can't imagine that will even make a dent.

My folks didn't have any money to give my brothers and I for college, and we all graduated. My oldest brother and I came out owing nothing. My first entire YEAR at a private college cost me $500!! (Scholarships were good back then!). I've been so naive about the costs!

I've thought about those college pre-pay plans, but there's no way we can make the minimum monthly payments for three kids on those. It's completely unrealistic. I'm feeling very depressed and defeated now.

 

the good thing is yes i would save up for them. they can also get college loans that they don't have to pay for until after their done with college so that does give you a little extra time to help pay it off. i jpined that gerber life insurance and they will have the option to cash it in at 21 or keep it up at the same low cost i got it at. if they cash it in they will get 50,000.
whatever i can pay i will and i figure by the time they are older the prices will be higher so if they get a student loan for college then it will but me some time topay the rest off. i don't plan on having my kids pay for their own college after they are done with it. but then again maybe they won't want to go to college either but i am still saving as they are going to. it's good to plan for their future but don't be upset if they have other ideas.

 

Well, college is not getting any cheaper. If Sean goes to a TN school, he will get $4000 per year from the Hope Scholarship (from the TN lottery)for as long as he maintains a B average. We are going to apply for any and all scholarships we can find for him to apply for and then there are always loans. Plus any money we have already put aside for him (which isn't huge but may pay for at least one year of college). If he doesn't go to a TN school, we will lose the $4000 per year, but he is really looking at some schools outside the state so we can't count on that money, I guess. Oh. And he will probably work. He is going to sit for the A+ exam ( I think that's what it's called) which has to do with computers and stuff. If he passes that and gets his certificate he will be able to work on the Geek Squad or a similar thing and earn some good money for little hours. One of his teacher's former students it making $40,000 a year while going to college. I'm not thinking Sean would make that much but he could at least earn enough to help cover his expenses while we cover tuition.

It's a headache. How do you think I feel? Sean is only a year a few months away from college!

 

Deep Breaths...

Even if you didn't have a dime saved up to help the boys out, there are ways to get college paid for. They may come out owing money, but its doable. The debt doesn't last forever, and its much better for them to have it heading into the work force than for you to have it heading into retirement.

My parents weren't able to save a dime towards putting their 3 kids through college. We all attended. 2 of us have graduated, the 3rd is about a year away but is taking time off to work. I graduated in '99 and owed about $40,000. Now we're 9 yrs later and I only have about $4,000 of that debt left. I'll probably finish paying for college by the end of the year :banana:

Here's how we did it:
*FAFSA (a form you fill out that details earnings, etc...pretty much your tax info)
*Loans & Grants
*Scholarships! (Check with your local HS and also things like VFWs, DAR, Lions Clubs, etc)
*and good old fashioned working to earn $$

(You might want to look into how the money you're saving to pay for college might need to be stored so it doesn't count against you when it comes to financial aid. Just a heads up!)

 

Good point. Amy, you can go online, I believe, and look at the FAFSA form now to see if any of that money will count against you at college time. I'm off to work but check out www.fafsa.ed.gov for more information!

 

A couple of options to think about are: 529 College Savings Plans.. they are pre-tax savings programs designed to help families save for college.. What we did was what in Texas is called the "Texas Tomorrow Plan" which is like a prepaid college tuition plan... He did it years ago and it froze the rates at what they were when he purchased the plan. Both girls college tuition is paid for in full as long as they attend school in Texas. They can use it out of Texas but there would be some addtional cost.. but we wouldn't lose anything. SD #1 is a junior and in the top 10% of her class which will assure her admission to any school in Texas... She's probably going to U of Texas.. "ALL" we will have to pay is room, board and books...
Here is a link to 529 info..
http://www.sec.gov/investor/pubs/intro529.htm

 

Here's an article and it contains a grid of the annual tuitions for in-state college tuition of the "Big Ten" schools. http://www.collegian.psu.edu/archive/2007/...highest_in.aspx

Penn State was the highest at $12,000/year and the average is about $6,000/year. So there are good schools out there that are still within reach without being in debt up to your eyeballs. On the other hand, most private and Ivy League universities are just off the chain, unbelievably expensive!

We started saving very aggressively and started a tap 529 plan since the boys were born. We are very fortunate to be able to save the max allowed within the plan per year ($12,000/child). Its a big hit to write that check each year! My DH's parents paid for his medical school (undergrad was basically free since he received alot of scholarship money) He wants to "pay it forward" for our boys. But that is not possible for everyone. Yet, where there's a will, there's a way! Between school loans, part-time jobs and possible scholarship money, you would hope that in state public universities will stay within reach for all those interested in persuing higher education. That's what I did and many others do...it works out.

 

We also have 529 College Savings Plans for the boys that my grandmother started when they were born. For birthdays and xmas our parents donate to them, and we also add as much as we can every year. My husband is at UCLA right now getting his PhD, and it's hard to pay for his tuition and save, but so far we've done alright. And when my husband is done, we'll be able to divert that money as well straight to the boy's 529s.

 

My dad has given them some savings bonds that they can use for college. Other than that they will have to either get scholarships or financail aid or loans.

It KILLS me that I know from now, that I will not be able to pay my children's college tuition.
My parents paid mine and I wish I could do the same. However we spent $200,000 just conceiving these two babies, so unfortunately, their college money was spent before they took their first breath.

 

I have steered clear of 529s because isn't it true you can lose money depending on the market? Our first attempt at saving for college was a mutual fund for Jackson. We put in $4,000 and after several years we ended up with $2,500 and were paying fees to boot! I'll never do anything like that again.

And I haven't done the pre-paid plans because we can't make the required monthly payments to keep accounts open for three kids.

I'm pleased to hear that other state schools aren't as ridiculous as Illinois schools. I pray that my boys will get scholarships (that's what got me through). I just really don't want them to graduate with heavy debt. DH had some school loans, but they were not difficult to pay off with both of us working.

Thanks for all your suggestions!

 

I asked dh about the 529 plans as he is a financial advisor. I read him the posts and his answer is that a 529 can loose money or gain money based on the market, but you can choose your level of risk.

Amy - I told him what you wrote about losing so much in a mutual fund, and his response was -- must have been a tech fund in 2000 because that's the only type of fund that has experienced that much loss.

Any other questions, I can have him pop on and answer.

 

Our methods are a little different than what I have read on here. They all have their own savings accounts & bonds, but I am guessing that won't cover much when the time comes. What We did was buy the boys each a few shares of stocks in the company I work for. I know most people would say that is too risky, but we feel it is very secure. By the time they go to college they should be worth quit a bit. My husband graduated without any debt & we want the same for our boys.

 

If you're not going the 529 route, make sure to keep savings in your own name as opposed to your kids' names.

 

Many private colleges also offer scholarships based upon Academic performance to some of the students they accept. Both of my daughters were offered substantial scholarships from nearly every college to which they applied. I am talking about scholarships of $40,000- $$64,000 (divided evenly over 4 years)! If your children maintain excellent grades throughout high school, many schools will automatically consider them for scholarships like this. These funds, in addition to any scholarships your children win on their own (check out college scholarships site and even better college scholarship site for ideas) can really help. Your children can apply for literally dozens of scholarships and put quite a dent in those tuitions!

 

QUOTE(BGTwins97 @ Apr 3 2008, 07:44 PM) [snapback]703707[/snapback]
If you're not going the 529 route, make sure to keep savings in your own name as opposed to your kids' names.


Why is it better to keep it under your own name?

We are going the 529 route but my DH and I have disagreements over how much to put in. He really wants to save enough to pay for their entire college education. He graduated with a huge student loan, and he says he doesn't want his kids to have that. I feel like we should put in less and rely on other resources like scholarships. I would rather save up to buy a house because we've been married for 7 years now and we are still renting.

 

QUOTE(BRMommy @ Apr 25 2008, 10:54 AM) [snapback]738828[/snapback]
Why is it better to keep it under your own name?


Two reasons:

1) When figuring (need-based) financial aid, colleges take roughly 5% of parental savings per year (not including retirement savings), but 35% of savings in the child's name. If, arbitrarily, your child has $40,000 in their name, after four years they will have about $7150 remaining. If the same $40,000 is in their parents' name, they will have about $32,600 remaining. That amount can then be gifted (will take two years under current gifting rules) to the child, and used to pay down college loans.

2) Control of the money: though most people like to think that their children wouldn't ever do anything stupid, stuff DOES happen. Money saved in a child's name -- even in a UGMA/UTMA -- becomes controlled by the child when the child reaches either 18 or 21 (varies by state). There is no legal way around this. Junior may decide he'd rather have a Jaguar than a college education, and there is absolutely nothing that parents can do about it once he hits 18/21. If the money is kept in the parents' names, they retain control. Obviously I'm not talking about money that Junior makes working as a teenager, but rather the money that the parents are saving for Junior, and perhaps money gifted at birth or by people specifically for educational savings.

And don't forget to save for your own retirement.

 

QUOTE(BGTwins97 @ Apr 25 2008, 08:08 PM) [snapback]739799[/snapback]
Two reasons:

1) When figuring (need-based) financial aid, colleges take roughly 5% of parental savings per year (not including retirement savings), but 35% of savings in the child's name. If, arbitrarily, your child has $40,000 in their name, after four years they will have about $7150 remaining. If the same $40,000 is in their parents' name, they will have about $32,600 remaining. That amount can then be gifted (will take two years under current gifting rules) to the child, and used to pay down college loans.

2) Control of the money: though most people like to think that their children wouldn't ever do anything stupid, stuff DOES happen. Money saved in a child's name -- even in a UGMA/UTMA -- becomes controlled by the child when the child reaches either 18 or 21 (varies by state). There is no legal way around this. Junior may decide he'd rather have a Jaguar than a college education, and there is absolutely nothing that parents can do about it once he hits 18/21. If the money is kept in the parents' names, they retain control. Obviously I'm not talking about money that Junior makes working as a teenager, but rather the money that the parents are saving for Junior, and perhaps money gifted at birth or by people specifically for educational savings.

And don't forget to save for your own retirement.


I had no idea. Thanks for the info!