Education cost and kids

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smitty1515
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Education cost and kids

Post by smitty1515 »

What are BHs viewpoint on covering higher education costs?

I often have conversations with family and friends, most of whom are about our age (33/34), about the cost of college and preparing to save. We have 1 child (5 y.o.) and have started saving in a 529. We are doing pretty well (net worth ~300k with only mortgage debt) and have done it without windfalls, help, etc. Both of us were expected to pay for our education and if we were not able to cover it we had a loan.

I've noticed a status quo trend with young adults when they know their parents/family are covering the cost of education. I had a friend freshman year of college who was unable to get a Harley his dad guaranteed if he got a 3.0 GPA fall semester. I had another who flunked out after 2 years and took no initiative with applying himself in class. Obviously small sample size but I think it does have some credence. I have come to believe that covering part of the cost of education is important to prevent being overwhelmed with debt upon starting a career but feel that having some skin in the game is important.

What are Bogleheads thoughts on this? I'm guessing it's across the board but I'd be curious if you've read any books, had any life experience(s), or had any discussions that have shaped your viewpoints on the topic.

I'm amazed at some of the stories I read on this forum and I consider the financial prowess around here second to none. I appreciate any input or thoughts on the issue.
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Dee Stroir
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Re: Education cost and kids

Post by Dee Stroir »

I think it has more to do with the values you raise your kids with than with them knowing how much you're worth or aren't worth. If they understand the value of money and the sacrifices you have made to put them in the position to have their education paid for, then I don't think you have to worry about it. If they value hard work from an early age, they won't squander the opportunity.
malbecman
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Re: Education cost and kids

Post by malbecman »

We're prepared to pay the costs of our children's higher Ed. (Got one starting next fall) but I'd agree with the previous poster, it's a lot about who your kids are and what your family values. If they do start screwing around in college, then we will have a talk. But for now, we see them making good choices in their lives and it is ultimately their lives and choices that they must live.


Edited for typo
KlangFool
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Re: Education cost and kids

Post by KlangFool »

OP,

Feeding your family is more important than covering higher education cost.

Over last 10+ years, all my employers have annual or quarterly laid off. I was unemployed for more than 1 year a few times. I save nothing for my children education cost. I work in high tech industry. Age discrimination is widespread after 40 years old. Many of my peers in the 40s and 50s are long term under-employed or unemployed. There is no assurance that I would not be one of them. And, if that happened, I would be forced to retire early. We would need all our savings to feed the family. Thank goodness that I survived long enough. Hence, I am funding my 2 children's college education via my annual savings / cash flow.

At your age (30+), it was not certain that I could survive long enough to fund my children's college education. Hence, I saved nothing for the college education. The plan was if I survive long enough, I could "cash flow" the college education with my high annual saving rate and investment. The plan worked out.

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Grt2bOutdoors
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Re: Education cost and kids

Post by Grt2bOutdoors »

I chuckle when I hear the term "skin in the game". Let me ask you this - if you had the opportunity to come back today as a kid entering last year of high school, would you do it? You have any clue what sort of pressure kids face today without the thought of taking on debt? How has the job market been on a whole for kids coming out of higher education, and then we get the term "skin in the game" tossed out as if the kids don't have enough in it to begin with. My thought process, if you have the means, then why would you throw your kid in a pool with a ball and chain attached at the waist telling them to swim when you know the weight will hinder rather than help? There is enough out there in the world waiting with those sorts of stumbling blocks, why add one more to the pile?
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Jack FFR1846
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Re: Education cost and kids

Post by Jack FFR1846 »

I think you'll find no consensus here. I've seen everything from "I'm giving my kids directions to college, a boot out the door and the clothes on their back...they can pay it themselves" to paying full price for a high end college with no financial aid.

There are a lot of "send them to 2 years of community college and then finish a 4 year degree at an in state public college". Coming from a community college myself, when I started my 4 year degree, I found that one course (English) was accepted as transfer, so your mileage may vary.

I pay full boat for my son at an expensive private engineering school. My son knows that if he doesn't do well, he'll be in state college the following semester. He takes Stafford loans every year so he's got skin in the game.
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delamer
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Re: Education cost and kids

Post by delamer »

I am unconvinced about the "skin-in-the-game" idea if loans are involved. Most 18-year-olds don't understand the implications of debt and student loans. And there are no payments on the loans until graduation, I believe, so there is no immediate effect on the student while still in school.

That, however, is different than requiring a kid to contribute some savings or a reasonable number of work hours during the semester toward their education.

I don't think parents should overextend themselves to pay for college and I don't think there is anything wrong with requiring your kid to go in-state public if other options are unaffordable.

But "No" to requiring your kids to take out loans when you have the means to pay.

And yes, we paid for two kids' undergrad educations and one grad degree (so far).

There have been other threads on this topic, and opinions are all over the place.
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EnjoyIt
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Re: Education cost and kids

Post by EnjoyIt »

I don't remember where I heard or saw this, but one option is to have your kids take out loans for the first semester and then based on grades pay the rest of their education. For example if they get a 3.5 or higher they get next semester paid for. 3.0-3.5 they have to take out loans. I kinda like the idea.
I definitely agree that if they aren't willing to apply themselves in school then there really is no need for me to pay for it. I would pay for the 1st semester loan anyways once they graduate if I am financially able to.
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Kenkat
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Re: Education cost and kids

Post by Kenkat »

My parents paid for my education at State U and so I want to be able to do the same for my kids. Son #1 is in his second year and doing well; son #2 is a good student in high school, with AP classes and classes for college credit, so I expect him to be successful as well. They know the deal is for State U or equivalent; I'm not covering out of state tuition or housing. They are pretty good kids overall and so they understand that this is important and they are expected to do the necessary work.

A college education is pretty important to future success in life (there are other paths of course), so I want to give them that advantage if I can. They are both tight as a drum when it comes to spending their money, so I don't think they need college debt to teach them good financial habits.
jackholloway
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Re: Education cost and kids

Post by jackholloway »

I have never seen anything to indicate that "skin in the game" makes much difference, and much to indicate that heavy loans limit your options. I do not believe in paupering yourself for your kids education, but I do think it a parents responsibility to do what they can. My parents paid full tuition at a very expensive college. If DD gets into somewhere as good, and I continue to be a high earner, I will do the same.

If Life Happens, then I will adapt. So will she.
Steve723
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Re: Education cost and kids

Post by Steve723 »

I agree that there is no one right answer, so I will simply share what we are planning on doing without passing judgment on other paths.

We did just what you did and opened a 529 for our kids soon after their birth. Now that they are in 8th and 9th grade, this is getting very real now! What we have agreed to do is fund 100% of their tuition and room & board for any in-state public school. If they decide they want to go private or out of state, they will have to contribute the difference. We believe that there are plenty of good options with the in state public schools and that ultimately career success has very little to do with where one got his or her Bachelor's degree.

As for the "skin in the game" issue, we aren't very concerned based on how they currently apply themselves in middle school. Both are studious kids and want to do well in school. That being said, we'll probably require a minimum GPA of 3.0 or something like that in order to continue getting help from us.
Nearly A Moose
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Re: Education cost and kids

Post by Nearly A Moose »

I'll pay as much as I comfortably can. I'd probably expect my kids to take federal loans, assuming the rates are reasonable. Some combination of giving them a bit of skin in the game and experience managing money and paying loans (mostly the latter, really). If they decided they just had to be arts majors, and I could afford it, I'd probably pay back those loans for them. My parents told me they'd pay for any college I got into. I passed on the super-expensive one and took a full ride at a school I really liked. Didn't really worry too much about the money (at the time told myself that maybe my dad would buy himself a cool car with it). He turned around and told me he'd pay a chunk of grad school with that money instead. Cool. I took the max federal loan each year for grad school, a scholarship, and the rest my dad covered. Looking back, I'm incredibly grateful I never had the pressure of wondering if I should go to a cheaper grad school, take a specific job, or pay down a $400,000 student loan. I certainly wouldn't say it made me apathetic about the whole schooling thing.

Also, if you're an UHNW individual (I am not, my parents are not), it seems like good estate planning.
Last edited by Nearly A Moose on Mon Sep 12, 2016 9:50 pm, edited 1 time in total.
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topofthebellcurve
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Re: Education cost and kids

Post by topofthebellcurve »

My wife and I both graduated in 2008.

Both of our families paid for our (quite expensive) undergrad at Williams College, and we graduated without debt. My wife had a more straightforward path -- she went on to a PhD, and then into the pharma industry. I had a much more adventurous start to my working life, first as a dance photographer, then working on a solar startup in China, then in philanthropy, and finally settling into commercial real estate and renewable energy development.

I was able to take a tremendous amount of risk in my early years post-graduation, and they seem to have paid off (just crossed $1M in savings). If I had the burden of school debt, which could have easily been $50-100K+, I would have likely been forced to find a job straightaway (if one could be found in 2008/2009). Perhaps that would have been a good thing, but I had only the vaguest idea of who I was or what I wanted to be doing on graduation, and I treasure those exploratory years -- years that would have been impossible (or at least, much harder) with substantial debt. One of my major financial goals is to be able to give the same experience to my children -- a great education, and a clean slate.

Just my 20 million cents.
daveydoo
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Re: Education cost and kids

Post by daveydoo »

smitty1515 wrote: What are Bogleheads thoughts on this? I'm guessing it's across the board but I'd be curious if you've read any books, had any life experience(s), or had any discussions that have shaped your viewpoints on the topic.
I've replied to a few of these recently so I'll save my breath (BH are all over the map on this, and anecdotes are seldom instructive). I'll just say that it completely depends upon the kid, and you'll know which camp you're in (or should be in) when they're older. If they're driven and motivated, and are appreciative of your support, you'll want to help them. If not, you'll be much less inclined to "invest" in their education because it will actually be speculation -- not investment. My perspective has evolved as I've watched my kids grow up and work hard. And I'm grateful for the leg up that my folks gave me -- even if it was a fraction of what education costs today.
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hmw
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Re: Education cost and kids

Post by hmw »

My parents paid for my education. My in-laws paid for my wife's education. We plan to pay for our son's education.
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jabberwockOG
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Re: Education cost and kids

Post by jabberwockOG »

I went to an extremely inexpensive state school (total cost for 4 years tuition including books = $2512, yea really not a typo) and lived with multiple roommates, survived by eating peanut butter and tuna fish, funded almost entirely on summer and PT job money along with a yearly grant (BEOG $1800/year). Worked my butt off, graduated near the top of my class, and loved the experience, and would not trade it for anything.

As parents we worked very hard for many years to save substantial amounts required to help fund our kids higher education costs. The deal I made was that as long as they earned a 3.0 GPA or above each semester, I would provide the additional funds required (maximum 8 semesters) for tuition/living expenses/books/etc above scholarships/grants and over what they earned working summers and some light PT jobs. The concept was to instill the reality that they had to demonstrate a similar level of self discipline and work ethic on their education as their parents had to earn and save the money used to fund their education. One child spent one summer overseas taking a class and working a non paying internship. That was a optional choice for them so they took a loan specifically to cover the costs (over scholarship they received for that summer).

Writing a blank check for a young person's education with no conditions is a bad plan and throws away an extremely valuable learning and maturing opportunity - real life is always conditional - discipline and hard work usually pays off.

We know a couple who will likely have to work well past 65 yo because they very graciously spent $500k+ on education costs for kids who went to expensive schools and had a great time getting what I refer to as "barista ready" degrees with matching C level GPAs.
Last edited by jabberwockOG on Mon Sep 12, 2016 11:11 pm, edited 1 time in total.
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ClevrChico
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Re: Education cost and kids

Post by ClevrChico »

My goal is to pay half with a 529 plan. Ideally scholarships/working will pay 25%. And they can get loans for 25%.

It's only a plan at this point, and so much can change. If they choose a frugal community college to start, I'll pay more. We have two kids, so it's possible one kid could get a full ride, and another nothing, and we'll shift the 529 money around.

I cringe at the thought of having kids slack off for four years and accomplish little with no skin in the game. I also don't want them to start adult life in huge debt. I'm trying to be balanced as someone that worked their way through college.

White Coat Investor has an excellent article here:

http://whitecoatinvestor.com/how-my-chi ... r-college/
Minnesota97
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Re: Education cost and kids

Post by Minnesota97 »

Our plan right now(and we have plenty of time as we have a 3rd and 1st grader) is to save enough to cover all costs (off to a good start) but we will set the expectation with each that they are expected to contribute $2500 or so per year. We would put that $2500/year in a savings account they don't know about and after graduation we give them their contribution back, and much to their surprise they have $10,000 to start real life - apartment first month rent, furniture, help start professional wardrobe, etc
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Watty
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Re: Education cost and kids

Post by Watty »

We paid for our son to go to a state university. His grades were not great and he really struggled with some of the advanced math classes he needed to get his computer science degree.

He did manage to graduate and is doing very well with his career now.

By definition in any graduating class a quarter of the students will be in the bottom quarter of their class. Adding more financial pressure on them could easily mean that some of them would do worse and fail to graduate.

I suspect that if my son did not have our financial support then he would have given up or not even tried to get a college degree.

As others have said you don't want to give up your financial security to pay for college but if you have the means then it really makes sense to at least pay for an in-state university.

One thing we did do was to require that he pick a major that has a good job placement rate for people graduating with the major. We didn't require that it be a high paying major but it needed to be something that would lead to a job. I only halfway joked with him that when I dropped him off at college for the first time that I would drop him at the college placement center and not a dorm.
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SmileyFace
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Re: Education cost and kids

Post by SmileyFace »

We are paying for both of our child's college costs. Since they have been raised to put 100% effort into school throughout their lives we aren't experiencing any of the problems that you allude to (e.g. both are fully engaged and doing well). Maybe we are just lucky but I give kudos to how they were raised to be responsible.
I received loans to go to college but they were subsidized loans. Since my children have no capability to get subsidized loans I don't want to straddle them with debt just to force them to have skin in the game. They are responsible young adults regardless of how their education is funded.
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Re: Education cost and kids

Post by Jack FFR1846 »

Skin in the game

So here's why I allow my son to have the Stafford loans for himself where I could easily just pay that extra $5-$7k per year. Back when I was in college, paying my own way, I ALWAYS had on my mind that if I didn't pass a course, not only would I have to re-take the course.....I'd have to pay to take it again. Although I was an average student in high school and community college, once I was paying real money, I became an A student. After my freshman year, I had proven myself enough to get into what I considered the best undergraduate engineering college in the country (feel free to argue about that....to me it was the best). I finished there and graduated with distinction (their version of suma cum laude). I do hear plenty of stories from my son of students who obviously come from money (they buy a Nissan GT-R mid semester to get to the grocery store) and end the year with a 0.2 gpa.

Besides his own motivations, my son knows that he'll be paying back Stafford loans and that if his academic progress is not up to my standards, he'll be transferring to a less expensive state school.
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stoptothink
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Re: Education cost and kids

Post by stoptothink »

You'll find a million threads on this topic, and they tend to get heated. Like the OP, both my wife and I had zero help from parents, in fact I was helping out my mother financially through most of my nearly 8yrs of graduate school. I am very proud that I completed my PhD in '12, with zero debt and having never received a penny of family assistance or even having filled out a FAFSA. My wife is just returning to finish her undergrad, after having not been in school in a decade; she'll do so while continuing to work full-time and with two kids, and we'll be paying 100% out of pocket. As you can probably tell, we are very much in the "skin in the game" crowd.

We were provided the opportunity to figure it out on our own and for both of us it was a huge learning experience, I would like to provide that same experience for my children (who are currently 4 and 16-months). That means we will very much encourage them to live at home and commute to one of two major universities or the local CC (all which are within 10 miles of my home) to start, or otherwise be very cognizant of the cost of their education. We have have discussed it at length and the current idea is to allow them to take out loans (if needed) and then we'll help them pay them off when they graduate. Even though we have the means, 529s are not even a consideration; at least for the time being.

You'll probably get a lot of posts which compare our plans to child abuse; it worked for us. To each their own.
vtjon
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Re: Education cost and kids

Post by vtjon »

I propose that we send the kid with a sack of $100 bills to pay the first year of tuition so they can really see how much it is. :moneybag
soboggled
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Re: Education cost and kids

Post by soboggled »

Sound like you are taking a sensible approach. Many parents today are on guilt-trips that they have to immediately provide their kids with the best and most of everything. A 529 only makes sense if you get a state tax deduction. In any case, take care of your retirement needs first - the best gift you can give them is not being reliant on them in old age. Then if you have enough left over you can help them financially, if not now, maybe later.
delamer
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Re: Education cost and kids

Post by delamer »

Watty wrote:We paid for our son to go to a state university. His grades were not great and he really struggled with some of the advanced math classes he needed to get his computer science degree.

He did manage to graduate and is doing very well with his career now.

By definition in any graduating class a quarter of the students will be in the bottom quarter of their class. Adding more financial pressure on them could easily mean that some of them would do worse and fail to graduate.

I suspect that if my son did not have our financial support then he would have given up or not even tried to get a college degree.

As others have said you don't want to give up your financial security to pay for college but if you have the means then it really makes sense to at least pay for an in-state university.

One thing we did do was to require that he pick a major that has a good job placement rate for people graduating with the major. We didn't require that it be a high paying major but it needed to be something that would lead to a job. I only halfway joked with him that when I dropped him off at college for the first time that I would drop him at the college placement center and not a dorm.
Very thoughtful post, Watty. We need to support -- financially and emotionally -- our kids to the best of our ability. And that means recognizing what they need as individuals. Withdrawing support for one child whose grades aren't great may spur them to improve; for another child, it may cause them to give up. Know what is best for your child (not what worked for you or your older brother or that child's sibling) and act accordingly.
Last edited by delamer on Tue Sep 13, 2016 11:48 am, edited 1 time in total.
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ubermax
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Re: Education cost and kids

Post by ubermax »

We have two children and both went to the same State school - for each we paid for 3 years and they paid for 1 via Stafford loans - the 3:1 split was arbitrary but we felt it was a good idea , for us, to have them share in the cost to some extent - it worked out fine .
Steven439
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Re: Education cost and kids

Post by Steven439 »

My parents paid 100% for my college (expensive private college) and even my masters. Heck, they even paid for roughly half of my wife's medical school. Yet we turned out fine. We're in our late 30s now, 2 kids. We earn in the mid 6 figures and have a 7 figure net worth. We both work in what I would describe as our "dream jobs." We plan to fully fund our kids' educations as well.

I have to wonder if there is any actual data on this, as opposed to anecdotes. Otherwise we can argue all day long on message boards but never get anywhere.
stoptothink
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Re: Education cost and kids

Post by stoptothink »

Steven439 wrote:
I have to wonder if there is any actual data on this, as opposed to anecdotes. Otherwise we can argue all day long on message boards but never get anywhere.
I'll answer that for you: no. I also don't see anybody arguing...but that's how this thread usually ends up.
travelnut11
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Re: Education cost and kids

Post by travelnut11 »

We are still debating this (we have time...my children are currently aged 17 months and in utero) but we plan to have some hybrid system where we pay some (most?) but our children will be expected to work and contribute in some manner. I had a full tuition scholarship to Flagship U but was responsible for books, housing, food, etc. I think this was a good split and I was able to graduate in 1999 with no debt and a small savings account to get me started in life. My husband was in the military, attended university 2.5 years and dropped out. He just finished up his B.A. last year at age 38 (which we paid out of pocket since his GI bill benefits had expired).

Funding will likely be from various sources. My mother unexpectedly passed away last year and left two small IRAs totaling about $40K that I'm earmarking for my children's education. She was a teacher and I think she would love knowing that her savings was helping to pay for their college. I opened up a 529 in my state for my daughter as we'll get a tax break. I'm adding cash gifts to that as we get them and also the RMDs on the IRAs to fund the account. We'll likely add more funds as well in the future mostly likely after we get our daycare costs down in 3.5 years. We will also plan to cash flow some from regular income when the time comes. Like all of our plans this is subject to change depending on a lot of factors.
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Michread
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Re: Education cost and kids

Post by Michread »

Grt2bOutdoors wrote:I chuckle when I hear the term "skin in the game". Let me ask you this - if you had the opportunity to come back today as a kid entering last year of high school, would you do it? You have any clue what sort of pressure kids face today without the thought of taking on debt? How has the job market been on a whole for kids coming out of higher education, and then we get the term "skin in the game" tossed out as if the kids don't have enough in it to begin with. My thought process, if you have the means, then why would you throw your kid in a pool with a ball and chain attached at the waist telling them to swim when you know the weight will hinder rather than help? There is enough out there in the world waiting with those sorts of stumbling blocks, why add one more to the pile?
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Broken Man 1999
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Re: Education cost and kids

Post by Broken Man 1999 »

For our children, we purchased Florida Prepaid Tuition Plans for each. My thoughts at the time (before my promotion into management) was at least a major portion was fixed in price for them. Though, as we learned some additional costs were experienced due to "fees".

All of our children completed their programs and graduated, two earning master's degrees, of which we paid for one. The other was paid via scholarship. They all had jobs during college, and all graduated with zero student debt.

Fast forward nearly 30 years: We have purchased plans for four years at the most expensive public university in Florida for each of our four grandchildren. If they choose to go to a university or college with lower tuition, they would receive the difference.

In addition to the state universities and colleges, the tuition can be used at private universities and colleges and public universities and colleges in those states that have reciprocal agreements with Florida. So, lots of options available.

As well, we are funding a 529 plan for each of the grandchildren. No idea how much they could grow to as they are still receiving modest amounts.

My father distributed a portion of our inheritance when he was still living, and that helped our family immensely. We were able to assist the children in college beyond just tuition, helped our daughters have beautiful weddings, and helped wife and I save and invest for our retirement.

As a child of the depression, his education was cut short and he lacked one semester from graduating from high school. He purchased raw land and planted citrus trees while working full time at his day job. After he retired from his day job, he turned full attention to the citrus groves, keeping them until he retired completely and sold them.

We are simply paying it forward some, an activity I hope our children and grandchildren will embrace. Hopefully our children are taking advantage of some burden being lifted from them, and are stashing away savings for retirement; if not; at least the grandchildren will still have an easier path to college.

Sadly, my father passed before we had any grandchildren of our own. I believe he would be very happy to see where some of his wealth ended up, as he was a huge fan of education.

Broken Man 1999
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Re: Education cost and kids

Post by 6miths »

I would agree with sentiments that it hard for current parents of teens to understand how much has changed for the current crop of college bound kids and new grads. Similar to the comparison of those who benefited from the post-WW2 boom and their children who struggled with the inflationary decade from the mid-70s. To me it seems that to let one's children take loans from a bank to fund their education is a rather anti-Boglehead approach, especially given what seems to me to be unrealistic and punitive interest rates on education loans in the US. If one has the means to comfortably fund one's children's educations then I would recommend it. Whether that takes the form of grants or loans can be determined but I agree that the teaching of appreciation of this kind of gesture is long passed by the time a child is ready for college and if the trait is not already instilled then one can't expect it to suddenly appear.
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corwin
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Re: Education cost and kids

Post by corwin »

I had to take out loans and work through school. My wife's tuition was paid but she worked for spending money. Due to a windfall we will pay for our daughter's tuition. We have the money set aside in a bond ladder. We told her she could keep half of any unused funds when she gets her degree. If she does community college and then a state school she could have a nice nest egg to start her career.
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Re: Education cost and kids

Post by stoptothink »

6miths wrote:I would agree with sentiments that it hard for current parents of teens to understand how much has changed for the current crop of college bound kids and new grads. Similar to the comparison of those who benefited from the post-WW2 boom and their children who struggled with the inflationary decade from the mid-70s. To me it seems that to let one's children take loans from a bank to fund their education is a rather anti-Boglehead approach, especially given what seems to me to be unrealistic and punitive interest rates on education loans in the US. If one has the means to comfortably fund one's children's educations then I would recommend it. Whether that takes the form of grants or loans can be determined but I agree that the teaching of appreciation of this kind of gesture is long passed by the time a child is ready for college and if the trait is not already instilled then one can't expect it to suddenly appear.
Not everybody in this thread is in that demographic. I seem to be the only person in this thread on the "skin in the game" team (well, a hybrid as we likely will pay off their loans upon graduation) and I completed my education in '12 and my wife is currently in school. I certainly understand what it is like today to pay for university education. I also understand what it takes to go to school and work simultaneously as I did it for ~11yrs and my wife is doing it now. Who knows, our plans may change when the time comes?
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smitty1515
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Re: Education cost and kids

Post by smitty1515 »

Thank you everyone for the candid responses.

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Taz
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Re: Education cost and kids

Post by Taz »

Even though my parents were unable to pay anything for my college, I managed to use a scholarship, work, & loans. I'm still a believer in not spoiling our kids (no car, pay for your phones & data, etc) but I saw how much debt affected my parents & vowed not to make the same mistakes. I firmly believe that starting off with debt is a killer. It's like starting on the 2 yard line rather than the 20. Yes, you can still score but it takes more effort, restricts your options, and an early setback results in points for the opposing team.

Our philosophy was/is that we would pay 4 yrs of tuition, books, room & board at a state university. We modified that to say that we would pay for a 5th year to do a combined BS/MS (to my dismay, I learned that grad-level courses cost 3x as much and start during junior/senior year).Private school or out-of-state required them to obtain scholarships/work & that we would use their UTMA for the difference from a state university. Also, we stressed that just because they might get a full-ride somewhere didn't mean that they should settle for lower quality school/program just to save us money. One was a NM finalist who several offers but decided to go the state U route -- which gave him nothing. Spending money beyond a basic stipend is their responsibility as is any study abroad.
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Re: Education cost and kids

Post by ddurrett896 »

Grt2bOutdoors wrote:then why would you throw your kid in a pool with a ball and chain attached at the waist telling them to swim
Because if they know a ball will be chained to them, they will try their hardest to make it as light as possible (better grades in hopes of scholarships, grants, doing well in sports)

I've seen way to many people go to out of state schools that cost twice as much as similar caliber in state schools that offered the same degree. Yes the may like the school and want to get away, but having skin in the game brings their focus on what is important and what's needed, not just wanted.
Last edited by ddurrett896 on Sun Sep 18, 2016 4:49 pm, edited 1 time in total.
FireProof
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Re: Education cost and kids

Post by FireProof »

My parents paid for me, but I am cost-conscious regardless of who's paying, and chose an option that was $13,000 in total, rather than a private school for $120,000. If I had kids who were happy to pay with house money for a private school, I would definitely not pay everything. If they really have to go to Brown or Williams, they'd better feel some of the cost factors in the decision.
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Re: Education cost and kids

Post by Leemiller »

I plan on paying for undergraduate degrees and probably graduate school as well. No loans. I'm surprised so many people advocate getting loans for undergraduate degrees. When I graduated with one I had a terrible time getting a job and ended up in retail...eventually to law school. I was on my own with a mix of scholarships and loans and in my experience it only made me more fearful to take risks, left me feeling financially insecure, and living in a rather marginal neighborhood. My loans were even on the "low" end for law school. I have many friends who entire careers are based on their loan amounts, people delay having kids becuase of them, it's depressing.

I also think an 18 year old who has never paid utilities, rent, groceries, and taxes is in no position to be able to decide on what it really means to take on student loans. To me the loans felt even less real than credit card charges. I do plan on having my kids work and contribute to buying their first car, but otherwise no loans. Given our HHI, unless it dramatically changes, they will only be in a position to get scholarships. I'd rather send them to community college for two years, then to state school then get them on the debt cycle that so many Americans are stuck on.
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Re: Education cost and kids

Post by Leemiller »

I'd also add that it seems like many of the high income people I know had their entire educations financed. The higher the incomes, anecdotally, the more parental financial support.
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Re: Education cost and kids

Post by TomatoTomahto »

Leemiller wrote:I'd also add that it seems like many of the high income people I know had their entire educations financed. The higher the incomes, anecdotally, the more parental financial support.
I have 4 children. One of them is a non-traditional student, so I'll leave him out of this, but my anecdata on this topic:

Middle son, at Yale (pricey), a Junior majoring in CS and Math. Theoretically has no skin in the game, but he made $25k this summer, and $7k last year. His internship this summer had students from many schools and very different financial backgrounds; he was one of the few sophomores, most were juniors, and a few were graduate students. He observed that the kids with college debt were more likely to accept offers from the summer employer. These were very generous offers, but the kids felt that they had few options. He got a job offer for after college, depending on department the salaries range from insane to ungodly, and an invitation to come back for another internship. With this safety net in his back pocket, he is seriously considering getting a PhD from one of the highly ranked graduate schools, if he can get accepted. He understands full well how being debt-free gives him options that he might not have otherwise.

Oldest, we paid for private college (pricey), she paid for her own Masters and PhD, although I offered to pay. Well-launched with a good job.

Youngest, just started as a freshman at Skidmore (pricey). He has a standing offer to work during the summer as a vet tech; the pay is moderate but with cats, having skin in the game can be taken literally.

My parents paid for my college. My wife's parents paid for hers. Since we can pay without any financial pain, we would not consider anything other than paying for college. We expect that our kids will make good use of their time in college, and (knock wood) nobody has disappointed themselves or us.
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Dandy
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Re: Education cost and kids

Post by Dandy »

For most, at least in the recent past college and maybe even grad school had become close to a necessity. Soaring costs and a difficult labor market may have changed that a bit. Lots of kids are graduating with a college degree or higher and are having a difficult time getting a good, high paying job. And are often saddled with debt the size of what might have recently been the size of a mortgage obligation.

I was fortunate that both my children graduated college with no debt for them or us. The same goes for grad school. They have decent jobs but not great paying jobs - but at least no college debt. It is hard enough for one child to pay the mortgage and raise 2 children even with both parents working. I think parents who can afford to should pay or help pay for college if that is the best choice for their child as long as it doesn't wreck their retirement savings.

Here is what I think should be considered:
1. Does you child have special skills or is truly gifted. (Really - we all love our kids and think they are great but be a hard marker on this). One child
was gifted in the arts and the other had no special gifts. For a truly gifted child you might want to fund a special college that fits that gift even if it was very expensive. Fortunately, both went to state schools since there was a state school that specialized in the arts and was close to a major city for exposure.

2. There is a lot of peer pressure on you children and you to send your children to the "best" schools - even private high schools. You need to ignore the pressure and focus on matching the education expenses to you children's needs and your ability to pay. Don't put your retirement or their early family years at financial risk. The regional high school, junior college and state colleges should all be in play. College life is more enjoyable when you live on campus but that isn't always a necessity - but nice if it can be afforded.

3. Not everyone should be pushed to go to college. I know of several examples of children of friends and relatives that did not choose college and are extremely happy and productive - one is an electrician, another installs and services communication equipment and the other sells medical equipment. One thing in common was that they hated school even if they did all right. Once they went to a school that was focused on their interest they excelled. They were also not the type of person that would be happy to sit at a desk inside all day for 30 years.
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Re: Education cost and kids

Post by A-Commoner »

We have only 1 child who is now a HS senior. When she was born, we opened a 529 account for her and aggressively funded it regularly over 17 years. It now has a value of $300k. We also allocated another $250k in taxable accounts for grad school or med school if she goes that route. While this is a nice sum to have and likely more than sufficient to fully fund 4 years of private university and 4 years of med school, I'm having mixed feelings about spending that kind of money now that the day of reckoning is almost here. $550 k left alone to compound in a trust fund while the daughter attends a cheap community college would turn into $1 million when she is only in her early 30s. Would she not be better off than someone who graduates from, say, Northwestern with a net worth of 0?
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Re: Education cost and kids

Post by Tycoon »

A-Commoner wrote: I'm having mixed feelings about spending that kind of money now that the day of reckoning is almost here. $550 k left alone to compound in a trust fund while the daughter attends a cheap community college would turn into $1 million in when she is only in her early 30s. Would she not be better off than someone who graduated from, say, Northwestern with a net worth of 0?
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market timer
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Re: Education cost and kids

Post by market timer »

I'd probably pay for a top 5 school or in-state tuition at a flagship public school. If my kids want to do something else, maybe I'll give them $100K in today's dollars and they can cover the rest. It's a long way away, hard to say.
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Re: Education cost and kids

Post by Taz »

A-Commoner wrote: Would she not be better off than someone who graduates from, say, Northwestern with a net worth of 0?
Having graduated from Northwestern in the mid 80s (partially NROTC funded -- and a whole lot cheaper than today) I'd tend to agree. Unless her purpose of attending was to develop specific connections in politics (or drama) in which case she'd still have a few hundred thousand left.
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Re: Education cost and kids

Post by tibbitts »

Jack FFR1846 wrote: There are a lot of "send them to 2 years of community college and then finish a 4 year degree at an in state public college". Coming from a community college myself, when I started my 4 year degree, I found that one course (English) was accepted as transfer, so your mileage may vary.
But that was entirely due to lack of planning on your part. There are always opportunities to lock in credit transfer guarantees, although obviously perhaps not at the 4yr institution of your choice.
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Re: Education cost and kids

Post by delamer »

tibbitts wrote:
Jack FFR1846 wrote: There are a lot of "send them to 2 years of community college and then finish a 4 year degree at an in state public college". Coming from a community college myself, when I started my 4 year degree, I found that one course (English) was accepted as transfer, so your mileage may vary.
But that was entirely due to lack of planning on your part. There are always opportunities to lock in credit transfer guarantees, although obviously perhaps not at the 4yr institution of your choice.
Current students in my state can easily determine which community college courses will transfer to local 4-year colleges (both public and private), and what the course equivalents are for different schools.

However, that is relatively new. It used to be much harder to figure out transfer credits and there were frequently wasted credits for those going from community to 4-year schools.
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Re: Education cost and kids

Post by TigerNest »

My wife and I are your age, with our first child on the way. Our parents paid for our undergraduate educations. We intend to pay it forward and do the same for our kids.

We both paid for our graduate schools ourselves (MBA and Law School). We'll probably expect our children to pay for their own if they choose that path.
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Re: Education cost and kids

Post by TomatoTomahto »

A-Commoner wrote:We have only 1 child who is now a HS senior. When she was born, we opened a 529 account for her and aggressively funded it regularly over 17 years. It now has a value of $300k. We also allocated another $250k in taxable accounts for grad school or med school if she goes that route. While this is a nice sum to have and likely more than sufficient to fully fund 4 years of private university and 4 years of med school, I'm having mixed feelings about spending that kind of money now that the day of reckoning is almost here. $550 k left alone to compound in a trust fund while the daughter attends a cheap community college would turn into $1 million when she is only in her early 30s. Would she not be better off than someone who graduates from, say, Northwestern with a net worth of 0?
I guess it depends on what your child is like. At one time, you were considering Med school or graduate school. Now you're thinking community college. That's a big difference (AFAIK, you can't go to Med school or grad school after a cheap community college).

I'm having a hard time characterizing your daughter. Someone who is a likely prospect for Med or graduate school can probably get a significant scholarship at schools much higher on the pecking order than a community college.

She's a senior. Where is she applying and what are her thoughts on this?
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