Can we afford to pay for our kid's college (at all)?

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ChinchillaWhiplash
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Can we afford to pay for our kid's college (at all)?

Post by ChinchillaWhiplash » Tue May 28, 2019 6:55 pm

48 and 51. 1st year being able to fully fund i401k with $56k, HSA $7k, BD Roth $6k. Built up small EF of $20k. Have spent the last 2 years getting rid of bad debt. Currently have mortgage of $3875 month at 4.5% fixed for another 28 years. Heloc that all extra cash has been thrown at w/$15k left variable currently 6.5% (non- deductable interest). And finally a student loan which we just refinanced with $58k left variable rate at 2.54%. That is all our debt. Income is variable each month but usually have around $2-3k after paying all bills, funding account, etc that has been used to kill the Heloc. As far as retirement funding goes, we have about 1/4 of what would be needed to retire and need to fund a taxable account with at least $50k year for a retirement in about 12-13 years. Just started getting serious about it at the beginning of 2018.

Now to the college funding issues. Have around $30k for oldest kid starting in the fall in a 529. Freshman year requires student to live in dorm in our state. Is one of the "cheaper" state colleges in our state. He is dead set on going here and I do not want to discourage him. He is a GT student that got horrible grades in HS and blew any chance of merit based scholarship. He is getting in because his SAT score was high. Average cost of in state tuition, books, fees, room and board are $25k year. Maximum subsidized/unsubsidized federal student loans are: Freshman $5500, Sophomore $6500, Jr/Sr $7500 a year. Kid has no savings of his own. He always spent every penny on stuff (OCD collector). I do not want him to carry all the load, but think it is in his best interest to take on some responsibility. Not sure we can afford to fill in the gaps. Do not want or plan to take out any private or parent PLUS loans. Hoping he can get a part time job to cover some of this and at least pay off any interest of student loans. Gap will be around $18k year. Hoping costs go down once he can share an apt with room mates or something.

Other issue is we have another child who will be out of HS in 5 yrs. She was diagnosed with learning disabilities, but is getting good grades and works hard. Hoping she will be scholarship elegible. Putting a little bit each month into her 529. We get a state tax break of 4.63%. Can we afford to put in any more? Don't want to neglect our own retirement by doing so, but also want kids to be able to get a good education without suffering too much debt. We left school with a lot of debt and it stinks.

Grt2bOutdoors
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Re: Can we afford to pay for our kid's college (at all)?

Post by Grt2bOutdoors » Tue May 28, 2019 7:18 pm

ChinchillaWhiplash wrote:
Tue May 28, 2019 6:55 pm
48 and 51. 1st year being able to fully fund i401k with $56k, HSA $7k, BD Roth $6k. Built up small EF of $20k. Have spent the last 2 years getting rid of bad debt. Currently have mortgage of $3875 month at 4.5% fixed for another 28 years. Heloc that all extra cash has been thrown at w/$15k left variable currently 6.5% (non- deductable interest). And finally a student loan which we just refinanced with $58k left variable rate at 2.54%. That is all our debt. Income is variable each month but usually have around $2-3k after paying all bills, funding account, etc that has been used to kill the Heloc. As far as retirement funding goes, we have about 1/4 of what would be needed to retire and need to fund a taxable account with at least $50k year for a retirement in about 12-13 years. Just started getting serious about it at the beginning of 2018.
Do you have to retire in 12-13 years? You have a significant amount of debt, but the good news is you have time to pay it off. The mortgage on your home in Colorado is huge, you must have a sizeable house. Any chance of downsizing come retirement?
If your child has $30K and the ability to borrow some monies, the difference will usually be in the form of ParentPlus loans ~ the kind you will be responsible for if the kid fails to pay as agreed. I don't see how else child 1 can pay for school. So it's not a matter of "if you can afford to pay for kid's college as much as it is, can you afford to retire in 12-13 years. I'm not seeing it, but maybe other posters can. I also would not bank on scholarships for child 2, it's possible but do you really want to depend on "hope"?
Last edited by Grt2bOutdoors on Tue May 28, 2019 7:22 pm, edited 1 time in total.
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veindoc
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Re: Can we afford to pay for our kid's college (at all)?

Post by veindoc » Tue May 28, 2019 7:20 pm

Simply said, no.
Did you just buy a new house? Or did you refinance? Trying to understand how you still have 28 years left on mortgage. Is that 2k left over after you have put in the requisite amount monthly to get to the $50k in taxable.

Child has to get a summer job maybe even two and work though school to pay for books and fees. Take max loan available and you pay for the rest with the 529 and cash flow.

If you are lucky and hit your goal and still have it on you to work a little more then perhaps you can help children with loan. At this point can’t do it.

smitcat
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Re: Can we afford to pay for our kid's college (at all)?

Post by smitcat » Tue May 28, 2019 7:24 pm

ChinchillaWhiplash wrote:
Tue May 28, 2019 6:55 pm
48 and 51. 1st year being able to fully fund i401k with $56k, HSA $7k, BD Roth $6k. Built up small EF of $20k. Have spent the last 2 years getting rid of bad debt. Currently have mortgage of $3875 month at 4.5% fixed for another 28 years. Heloc that all extra cash has been thrown at w/$15k left variable currently 6.5% (non- deductable interest). And finally a student loan which we just refinanced with $58k left variable rate at 2.54%. That is all our debt. Income is variable each month but usually have around $2-3k after paying all bills, funding account, etc that has been used to kill the Heloc. As far as retirement funding goes, we have about 1/4 of what would be needed to retire and need to fund a taxable account with at least $50k year for a retirement in about 12-13 years. Just started getting serious about it at the beginning of 2018.

Now to the college funding issues. Have around $30k for oldest kid starting in the fall in a 529. Freshman year requires student to live in dorm in our state. Is one of the "cheaper" state colleges in our state. He is dead set on going here and I do not want to discourage him. He is a GT student that got horrible grades in HS and blew any chance of merit based scholarship. He is getting in because his SAT score was high. Average cost of in state tuition, books, fees, room and board are $25k year. Maximum subsidized/unsubsidized federal student loans are: Freshman $5500, Sophomore $6500, Jr/Sr $7500 a year. Kid has no savings of his own. He always spent every penny on stuff (OCD collector). I do not want him to carry all the load, but think it is in his best interest to take on some responsibility. Not sure we can afford to fill in the gaps. Do not want or plan to take out any private or parent PLUS loans. Hoping he can get a part time job to cover some of this and at least pay off any interest of student loans. Gap will be around $18k year. Hoping costs go down once he can share an apt with room mates or something.

Other issue is we have another child who will be out of HS in 5 yrs. She was diagnosed with learning disabilities, but is getting good grades and works hard. Hoping she will be scholarship elegible. Putting a little bit each month into her 529. We get a state tax break of 4.63%. Can we afford to put in any more? Don't want to neglect our own retirement by doing so, but also want kids to be able to get a good education without suffering too much debt. We left school with a lot of debt and it stinks.
"Don't want to neglect our own retirement by doing so, but also want kids to be able to get a good education without suffering too much debt. We left school with a lot of debt and it stinks."

You laid out the numbers pretty clearly and likely know that these are not both going to happen the way you have configured them. The math does not allow for both to happen and I am not even sure you have all the costs in these figures.
The best reasonable advice would be to minimize college costs for one or both with all the typical strategies read here at this site such as - start at local jr college, ROTC, attend PT , secure a job that offers some tuition assistance etc..

SimonJester
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Re: Can we afford to pay for our kid's college (at all)?

Post by SimonJester » Tue May 28, 2019 8:02 pm

What about community college for the first year or two, then transfer to the 4 year school if possible...

Is the 4 year college near your residence? If so you should be able to get a waiver for living in dorms the first year.

If not is there a 4 year college he could commute to then perhaps transfer?
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livesoft
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Re: Can we afford to pay for our kid's college (at all)?

Post by livesoft » Tue May 28, 2019 8:09 pm

ChinchillaWhiplash wrote:
Tue May 28, 2019 6:55 pm
1st year being able to fully fund i401k with $56k, HSA $7k, BD Roth $6k.
Since you are investing $62K a year into retirement accounts, you can easily afford to pay for your kid's college expenses. Most people cannot put that kind of money away into retirement accounts. If you paid $25K of $62K for college, then you would still be putting more into retirement accounts than most families.

Yes, you can afford to pay for your kids' college educations without any problems whatsoever.
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Jack FFR1846
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Re: Can we afford to pay for our kid's college (at all)?

Post by Jack FFR1846 » Tue May 28, 2019 8:15 pm

What is your son going to major in? I would be especially sure that he's not majoring in time and space but in something he'll be employable at for sure.

Sorry, but $25k is sort of peanuts for college costs. Have him take out the Stafford loans and pick up the rest with cash flow and PLUS loans. Have him work summers.
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market timer
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Re: Can we afford to pay for our kid's college (at all)?

Post by market timer » Tue May 28, 2019 8:17 pm

I'd suggest something like this:

Annual cost of attendance: $25K
Funds from 529: $7.5K
From Federal loans (to son): $6.5K
From son's summer/PT work: $5K
From parents' cash flow (if GPA > 3.3): $6K

If his SAT scores are very high relative to the average at his college, provided he works hard, there is a good chance he will qualify for merit scholarships at his school. I'd nudge him in that direction by subsidizing college beyond the 529. With merit scholarships, perhaps he won't need to take on Federal loans after the first year or two. From a longer term perspective, his time would be much better spent trying to get the highest grade in every class and obtain scholarships (and eventually a decent job), rather than doing part-time work. However, a little part-time work during the school year is not such a bad thing, e.g., work/study position at the library or research assistant position with a professor.

Arthur Digby Sellers
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Re: Can we afford to pay for our kid's college (at all)?

Post by Arthur Digby Sellers » Tue May 28, 2019 8:20 pm

The way I’m reading your post is that you are currently saving nearly $70k per year in retirement accounts, and that you need to save $50k more per year in taxable in order to fully fund your retirement. Is that right? If so, that is a heavy lift on its own, even without college costs.

Your housing expenses are very, very high. I’m not sure you can afford all three major expenses you have—retirement, school, and house. Could you downsize your home and cut your housing expenses in half? If so, that savings alone would be enough to pay for college.

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bottlecap
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Re: Can we afford to pay for our kid's college (at all)?

Post by bottlecap » Tue May 28, 2019 8:31 pm

It's a little hard to grasp all of your financials in your post as described, but if I understand correctly, my answer would be "no way."

You've got to take care of yourself so you can retire, won't be a burden on your kids when you do retire, and can perhaps help them out in the future.

I wouldn't leverage your future to support the educational complex any further.

Good luck,

JT

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fortfun
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Re: Can we afford to pay for our kid's college (at all)?

Post by fortfun » Tue May 28, 2019 8:38 pm

A few suggestions:

1. Go the community college route for the first year or two. I think it should be completely free. Talk to your high school college and career counselor. There is some program in CO that covers that cost. (Front Range or Aims).
2. Live at home. He does not need to stay in dorms if he lives at home. My kids will likely live at home the first few years of college. That's okay. I'd rather have that than a ton of college debt.
3. Have you considered renting out your basement? We rent our basement out for 1k/month. We rent to only mature college students and only post at our university housing site. So far it has been an amazing cash stream for us.

Any chance that you or your spouse could get a job at the/a university and qualify for half price tuition? DW works at CSU and our kids will get half price tuition.

Best of luck to you!

BrooklynInvest
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Re: Can we afford to pay for our kid's college (at all)?

Post by BrooklynInvest » Tue May 28, 2019 8:39 pm

Community College for a year? I did a year out of sheer financial hardship. Saved a buncha money. Wasn't the best experience socially but nothing I could do about it. All worked out.

Kid takes some classes that transfer

An opportunity for him to get his grades up - or for you to learn that he's not motivated?

An extra year for both of you to boost college savings a bit

Best of luck,

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Watty
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Re: Can we afford to pay for our kid's college (at all)?

Post by Watty » Tue May 28, 2019 8:44 pm

Can we afford to pay for our kid's college (at all)?
You didn't post a lot of details about the rest of your situation so it would be hard to say much about how much you can afford.

One thing that struck me was that it sounds like your mortage is around $700,000 which may mean that your house is something like a million dollar house.

Right now you seem to have these goals.

1) Paying for at least part of your sons college.
2) Owning an expensive house that will not be paid off until you are 76 and 79
3) Retiring by the time you are 61 and 64
4) Paying off your student loans and a home equity loan.
5) Paying for at least part of your daughters college.

I would question how realistic any of the goals are. Even without the college costs you might want to consider moving to a less expensive house to help prepare for retirement but there may be more going on with your finances that you did not mention.
ChinchillaWhiplash wrote:
Tue May 28, 2019 6:55 pm
Have around $30k for oldest kid starting in the fall in a 529.
It sounds like he will be heading off to college in about ten weeks.

It is pretty late to be figuring out the college funding now and unless you have preparing your son that you may not be paying most of the costs for his freshman year then it would be problematic to pay for much less than he has been lead to expect.

One of the things you really need to do it to talk with your kids about how much of the college expenses that you will be willing and able to pay and any conditions attached to it, like good grades. Some people find it really hard to talk about money with kids but you really need to have these discussions at least in general terms. That way they can be better prepared for any gaps that they will need to figure out how to pay for.
Last edited by Watty on Tue May 28, 2019 8:45 pm, edited 1 time in total.

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Nate79
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Re: Can we afford to pay for our kid's college (at all)?

Post by Nate79 » Tue May 28, 2019 8:45 pm

Something needs to give. You have a huge debt load including a very expensive house that you may need to carry the mortgage into retirement or sell, underfunded retirement, and 2 kids for college. None of this bbn is very positive.

Bfwolf
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Re: Can we afford to pay for our kid's college (at all)?

Post by Bfwolf » Tue May 28, 2019 8:53 pm

Another angle on this:

You describe a gifted student who doesn't put in the work and so gets terrible grades and seems to have a poor concept of the value of money. Should you finance this child at $25K a year to go to college where there's a good chance he will flunk out? This feels like the perfect opportunity to gently suggest to your child that he spend a year in community college proving he can get the grades, after which you'll gladly help finance his college at a 4 year school, though he will clearly still need to work and take out loans to help pay for it.

Tdubs
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Re: Can we afford to pay for our kid's college (at all)?

Post by Tdubs » Tue May 28, 2019 9:07 pm

Two years of CC is probably about $10k and usually guarantees a spot in the 4-year state system with an AA or AS in hand. Your kid may not like it, but the $30k will cover almost three years.

Sam1
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Re: Can we afford to pay for our kid's college (at all)?

Post by Sam1 » Tue May 28, 2019 9:09 pm

You need to move and get a 15 yr mortgage. Or refinance

I can’t imagine that mortgage on your income in Colorado. It’s not necessary to take in so much debt/income.

Sam1
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Re: Can we afford to pay for our kid's college (at all)?

Post by Sam1 » Tue May 28, 2019 9:12 pm

I’m interested in learning from your mistakes. Not trying to be a jerk but how do you end up your age with so little in retirement, a new 30 year mortgage, and very little in 529s? Were you always spending most of what you made and never realized you’d eventually have to face reality? Or did you face some sort of financial hardship? My kids are under the age of 3 and I feel like a loser the months I can’t invest the estimated $1,200 a month needed for college in X number of years.

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TxAg
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Re: Can we afford to pay for our kid's college (at all)?

Post by TxAg » Tue May 28, 2019 9:13 pm

What's the deal with the house? $3875/month for 28 more years is steep!

delamer
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Re: Can we afford to pay for our kid's college (at all)?

Post by delamer » Tue May 28, 2019 9:14 pm

Sounds like you need $200,000 to cover both kids’ college costs.

They can each borrow $27,000 on their own — not an undue burden.

So that leaves $146,000 uncovered.

If each kid earns $5,000/year with summer & school year jobs, you are down to $106,000.

You’ve already saved $30,000, so now you are left with funding $76,000.

As one parent to another, if you can manage a $3875/month mortgage then you can manage to save $76,000 over the next 9 years for college.

Even if that means you both retire a bit later than preferred.

Three cautions:

1. Don’t let you son start at a 4 year school if you have any doubt about funding 4 years there. That is simply unfair to him.
2. Don’t spend all your resources on getting you son through school so that nothing is left in the coffers for his sister. That is simply unfair to her.
3. Tell your kids the plan now — that they’ll have student loans and that they’ll have to put $5,000/year cash toward their educations. That’s fair to both of them.

Good luck.

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Re: Can we afford to pay for our kid's college (at all)?

Post by venkman » Tue May 28, 2019 9:22 pm

Bfwolf wrote:
Tue May 28, 2019 8:53 pm
You describe a gifted student who doesn't put in the work and so gets terrible grades and seems to have a poor concept of the value of money. Should you finance this child at $25K a year to go to college where there's a good chance he will flunk out? This feels like the perfect opportunity to gently suggest to your child that he spend a year in community college proving he can get the grades, after which you'll gladly help finance his college at a 4 year school, though he will clearly still need to work and take out loans to help pay for it.
I had the same thought. Does this kid want to go to college because he wants an education, or because he doesn't really want to do anything right now, and he thinks college is the option that will allow him to put in the least amount of effort?

I was a smart but low-effort student in high school; and in hindsight, I would've appreciated college a lot more if I had taken a year off and had to work full-time.

MrBobcat
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Re: Can we afford to pay for our kid's college (at all)?

Post by MrBobcat » Tue May 28, 2019 9:24 pm

Depends upon where paying for your kid's college falls in your priority list. Given your current retirement goals, debt, and the information you've given I'm not seeing it.

HereToLearn
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Re: Can we afford to pay for our kid's college (at all)?

Post by HereToLearn » Tue May 28, 2019 9:32 pm

market timer wrote:
Tue May 28, 2019 8:17 pm
I'd suggest something like this:

Annual cost of attendance: $25K
Funds from 529: $7.5K
From Federal loans (to son): $6.5K
From son's summer/PT work: $5K
From parents' cash flow (if GPA > 3.3): $6K

If his SAT scores are very high relative to the average at his college, provided he works hard, there is a good chance he will qualify for merit scholarships at his school. I'd nudge him in that direction by subsidizing college beyond the 529. With merit scholarships, perhaps he won't need to take on Federal loans after the first year or two. From a longer term perspective, his time would be much better spent trying to get the highest grade in every class and obtain scholarships (and eventually a decent job), rather than doing part-time work. However, a little part-time work during the school year is not such a bad thing, e.g., work/study position at the library or research assistant position with a professor.
I don't know how much merit money will be offered once he is an enrolled student at his college. Most merit is used to attract students when applying as HS seniors.

I don't know if the OP's COA figure includes textbooks, transportation, and spending money. If so, the son may need to divert a chunk of his earnings to pay for those expenses.

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ChinchillaWhiplash
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Re: Can we afford to pay for our kid's college (at all)?

Post by ChinchillaWhiplash » Tue May 28, 2019 9:34 pm

Right now not putting $s in taxable. Want to have the Heloc paid off by end of the year. Mortgage is a refi. Hope to maybe downsize once kids are out of house. Would be good to get out from under our dream house, but would have to move to nearby town with worse schools. Job situation is real good with high pay for field and area. Nearest state college is 2 hours away, so living at home is not an option. He was going to take a gap year and work to save money, but is now excited to go to college. He did not even think he could get in with his low gpa. Nearest community college is over 1 hour away. We suggested this before he got accepted. Thinking is best to pay off the Heloc asap, set an amount for taxable, and direct extra to 529. Probably can make it work with the federal student loans. I refuse to get into more debt with the parent Plus or private loans. The interest rates are pretty high and we sure as heck don't need to take on more debt. Work can be prolonged for a few extra years. Maybe just part time. Once the Heloc is paid, that should free up cash flow for taxable and 529. Will probably be able to cut back on some spending to free up more $s. Hoping he will excel in the college environment and qualify for merit based scholarships as well. Definitly will be putting $s aside for daughter's 529 as it has some time to grow. She is more driven and wants a job at 13. She also has money saved in a bank account. It's like a night a day difference between the 2 siblings.

Small Savanna
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Re: Can we afford to pay for our kid's college (at all)?

Post by Small Savanna » Tue May 28, 2019 9:38 pm

$30K in a 529 is a good start. If you can chip in $5 to $10K per year, your son should be able to cover the rest with loans and part time employment. You have to decide if it is a priority; helping your kids through college might mean delaying retirement by 2 years.

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Mlm
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Re: Can we afford to pay for our kid's college (at all)?

Post by Mlm » Tue May 28, 2019 9:41 pm

You have posted about a lot of vacation travel in the past two months. Maybe you could look at saving those expenses first.

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HereToLearn
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Re: Can we afford to pay for our kid's college (at all)?

Post by HereToLearn » Tue May 28, 2019 9:44 pm

ChinchillaWhiplash wrote:
Tue May 28, 2019 9:34 pm
Right now not putting $s in taxable. Want to have the Heloc paid off by end of the year. Mortgage is a refi. Hope to maybe downsize once kids are out of house. Would be good to get out from under our dream house, but would have to move to nearby town with worse schools. Job situation is real good with high pay for field and area. Nearest state college is 2 hours away, so living at home is not an option. He was going to take a gap year and work to save money, but is now excited to go to college. He did not even think he could get in with his low gpa. Nearest community college is over 1 hour away. We suggested this before he got accepted. Thinking is best to pay off the Heloc asap, set an amount for taxable, and direct extra to 529. Probably can make it work with the federal student loans. I refuse to get into more debt with the parent Plus or private loans. The interest rates are pretty high and we sure as heck don't need to take on more debt. Work can be prolonged for a few extra years. Maybe just part time. Once the Heloc is paid, that should free up cash flow for taxable and 529. Will probably be able to cut back on some spending to free up more $s. Hoping he will excel in the college environment and qualify for merit based scholarships as well. Definitly will be putting $s aside for daughter's 529 as it has some time to grow. She is more driven and wants a job at 13. She also has money saved in a bank account. It's like a night a day difference between the 2 siblings.
Do you know that his college offers merit awards to current students based on grades earned while in college? I am not familiar with this, but each college has its own policies.

cshell2
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Re: Can we afford to pay for our kid's college (at all)?

Post by cshell2 » Tue May 28, 2019 9:55 pm

Mlm wrote:
Tue May 28, 2019 9:41 pm
You have posted about a lot of vacation travel in the past two months. Maybe you could look at saving those expenses first.

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:shock:

Good lord. So, the money for college is there, it's just not a priority.

stoptothink
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Re: Can we afford to pay for our kid's college (at all)?

Post by stoptothink » Tue May 28, 2019 9:57 pm

cshell2 wrote:
Tue May 28, 2019 9:55 pm
Mlm wrote:
Tue May 28, 2019 9:41 pm
You have posted about a lot of vacation travel in the past two months. Maybe you could look at saving those expenses first.

viewtopic.php?f=11&t=280943&p=4540683#p4540683 5/12
viewtopic.php?f=11&t=278899&p=4495690#p4495690 4/15
viewtopic.php?f=11&t=275669&p=4434461#p4434461 3/13
:shock:

Good lord. So, the money for college is there, it's just not a priority.
This is an odd thread. OP can absolutely afford it, and then some, just doesn't seem like it is a priority (and there is nothing wrong with that).

OnTrack2020
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Re: Can we afford to pay for our kid's college (at all)?

Post by OnTrack2020 » Tue May 28, 2019 10:03 pm

$30k in 529 divided by 4 years = $7500 per year


$12,500 per semester. It does matter somewhat how you organize this. The student loan of $5,500, the $3,000 from a summer job, and parents the remaining $4,000 for the first semester. The second semester, use the $7,500 from 529, $2,500 from parents and an additional $2,500 from parents until you receive your education tax credit. (We typically held that money back to go towards the next academic year.)

Year #1 - $7,500 from 529
$5,500 Student loan
$3,000 from a student job during the summer
$2,500 Education tax credit (not received until Spring 2020)
$6,500 from parents (start saving $550 month now)

Year #2 - $7,500 from 529
$6,500 Student Loan
$3,500 from a student job during the summer
$2,500 Education tax credit (save it for college)
$5,000 from parents (keep putting $420 aside every month)

Year #3 - $7,500 from 529
$7,500 Student Loan
$4,000 from a student job during summer
$2,500 Education tax credit (save for college)
$3,500 from parents (save $300 a month)

Year #4 - $7,500 from 529
$7,500 Student Loan
$4,500 from a student job during summer
$2,500 Education tax credit (save for college)
$3,000 from parents (save $250 a month)

A few things to consider. Do you or your husband receive any bonuses? If so, I would use some of that money in place of students loans. Any money we received from federal and state tax returns, in addition to the education tax credit, has gone toward education,. We started saving the money we were short in January of any given year for the Fall/Spring academic semester coming up. So, in our case, where we might be short $3,500 for the Fall semester, we would start saving $500 per month and by the beginning of August when tuition was to be due shortly, we had saved 7 months. Then we just kept saving that same amount from August through December. Any money your child earns during the Fall/Spring college terms will probably need to be used for living expenses.

It can be done, but your child will be the one signing these loans, so he should be fully aware of what he is signing and the interest that is accruing. If you have $2k-$3k left over at the end of each month, you probably will easily be able to come up with some additional while still working on your debt.

One thing I didn't consider was that the cost of tuition, at least in our case, has risen around 4.5% per year. I didn't even give it a thought.

quantAndHold
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Re: Can we afford to pay for our kid's college (at all)?

Post by quantAndHold » Tue May 28, 2019 10:14 pm

  • Expensive mortgage
  • Retirement at 63 and 60
  • 2x college
You can afford two of those things. Just not all three at the same time.

I would plan on retiring later.

Regattamom
Posts: 197
Joined: Sat Jan 06, 2018 3:40 pm

Re: Can we afford to pay for our kid's college (at all)?

Post by Regattamom » Tue May 28, 2019 10:16 pm

Lots of good advice from the BH community.

What I hope for your son (and your daughter) is that you have made him aware of your lack of college savings before now. It seems from your posts that you live in a nice neighborhood, "dream house" with good schools and you travel for leisure. There may be an expectation on his part that college is his destiny with such a rosy picture of your finances from the outside looking in. If you haven't had a talk with him about what you are able/willing to pay, I hope it happens soon. The gap year to earn money might be a good idea after all.

delamer
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Re: Can we afford to pay for our kid's college (at all)?

Post by delamer » Tue May 28, 2019 10:19 pm

cshell2 wrote:
Tue May 28, 2019 9:55 pm
Mlm wrote:
Tue May 28, 2019 9:41 pm
You have posted about a lot of vacation travel in the past two months. Maybe you could look at saving those expenses first.

viewtopic.php?f=11&t=280943&p=4540683#p4540683 5/12
viewtopic.php?f=11&t=278899&p=4495690#p4495690 4/15
viewtopic.php?f=11&t=275669&p=4434461#p4434461 3/13
:shock:

Good lord. So, the money for college is there, it's just not a priority.
Ages around 50 with 28-year mortgage, outstanding HELOC, $58K in existing student loans, and multiple international trips in one year.

And worried about paying for 2 kids’ college educations.

You do need to think about your priorities.

HereToLearn
Posts: 464
Joined: Sat Mar 17, 2018 5:53 pm

Re: Can we afford to pay for our kid's college (at all)?

Post by HereToLearn » Tue May 28, 2019 10:33 pm

OnTrack2020 wrote:
Tue May 28, 2019 10:03 pm
$30k in 529 divided by 4 years = $7500 per year


$12,500 per semester. It does matter somewhat how you organize this. The student loan of $5,500, the $3,000 from a summer job, and parents the remaining $4,000 for the first semester. The second semester, use the $7,500 from 529, $2,500 from parents and an additional $2,500 from parents until you receive your education tax credit. (We typically held that money back to go towards the next academic year.)

Year #1 - $7,500 from 529
$5,500 Student loan
$3,000 from a student job during the summer
$2,500 Education tax credit (not received until Spring 2020)
$6,500 from parents (start saving $550 month now)

Year #2 - $7,500 from 529
$6,500 Student Loan
$3,500 from a student job during the summer
$2,500 Education tax credit (save it for college)
$5,000 from parents (keep putting $420 aside every month)

Year #3 - $7,500 from 529
$7,500 Student Loan
$4,000 from a student job during summer
$2,500 Education tax credit (save for college)
$3,500 from parents (save $300 a month)

Year #4 - $7,500 from 529
$7,500 Student Loan
$4,500 from a student job during summer
$2,500 Education tax credit (save for college)
$3,000 from parents (save $250 a month)

A few things to consider. Do you or your husband receive any bonuses? If so, I would use some of that money in place of students loans. Any money we received from federal and state tax returns, in addition to the education tax credit, has gone toward education,. We started saving the money we were short in January of any given year for the Fall/Spring academic semester coming up. So, in our case, where we might be short $3,500 for the Fall semester, we would start saving $500 per month and by the beginning of August when tuition was to be due shortly, we had saved 7 months. Then we just kept saving that same amount from August through December. Any money your child earns during the Fall/Spring college terms will probably need to be used for living expenses.

It can be done, but your child will be the one signing these loans, so he should be fully aware of what he is signing and the interest that is accruing. If you have $2k-$3k left over at the end of each month, you probably will easily be able to come up with some additional while still working on your debt.

One thing I didn't consider was that the cost of tuition, at least in our case, has risen around 4.5% per year. I didn't even give it a thought.
I wonder if the AOTC is a sure thing. Could MAGI exceed $160K (fully phased out at $180K). The mortgage, HELOC & student loan repayments and vacation spending make me wonder about MAGI.

Dottie57
Posts: 6589
Joined: Thu May 19, 2016 5:43 pm

Re: Can we afford to pay for our kid's college (at all)?

Post by Dottie57 » Tue May 28, 2019 10:36 pm

delamer wrote:
Tue May 28, 2019 10:19 pm
cshell2 wrote:
Tue May 28, 2019 9:55 pm
Mlm wrote:
Tue May 28, 2019 9:41 pm
You have posted about a lot of vacation travel in the past two months. Maybe you could look at saving those expenses first.

viewtopic.php?f=11&t=280943&p=4540683#p4540683 5/12
viewtopic.php?f=11&t=278899&p=4495690#p4495690 4/15
viewtopic.php?f=11&t=275669&p=4434461#p4434461 3/13
:shock:

Good lord. So, the money for college is there, it's just not a priority.
Ages around 50 with 28-year mortgage, outstanding HELOC, $58K in existing student loans, and multiple international trips in one year.

And worried about paying for 2 kids’ college educations.

You do need to think about your priorities.
Veddy interrresting

HornedToad
Posts: 973
Joined: Wed May 21, 2008 12:36 am

Re: Can we afford to pay for our kid's college (at all)?

Post by HornedToad » Tue May 28, 2019 11:25 pm

You can easily afford it. It's just whether you choose to is the question. $120k year into retirement savings for 12 years is the same as 100k into retirement savings for 14 years and probably better.

So the question is whether working 18-24 months longer so kids can go to college is a priority to you.

Personally I think it should be and would be cruel to remove it at last moment when you can make it work or also cut costs over the next ten years.

It's not like ~1.5M in retirement plus social security is roughing it if you do choose to early retire.

Regattamom
Posts: 197
Joined: Sat Jan 06, 2018 3:40 pm

Re: Can we afford to pay for our kid's college (at all)?

Post by Regattamom » Tue May 28, 2019 11:35 pm

For some reason, this post has really affected me.

I totally understand that many people can't afford or don't want to pay for their kids college. And I believe that parents must make sure their retirement is on track before shelling out big bucks for their kid's college. And I recognize that many adults come to an understanding of financial responsibility late in life.

With all of that said: From what I can tell from reading past posts, OP, you make over $300k (maybe $350k?) annually as a physician. (Please correct me if I am wrong.) I get that you have made past financial mistakes. But you make A LOT of money.

If you can't afford to pay for a state school, who can?

If you want to pay for their college, it seems to me that you can find an extra $20,000 per year in your budget.

Bfwolf
Posts: 1938
Joined: Thu Oct 14, 2010 11:19 am

Re: Can we afford to pay for our kid's college (at all)?

Post by Bfwolf » Tue May 28, 2019 11:54 pm

ChinchillaWhiplash wrote:
Tue May 28, 2019 9:34 pm
Right now not putting $s in taxable. Want to have the Heloc paid off by end of the year. Mortgage is a refi. Hope to maybe downsize once kids are out of house. Would be good to get out from under our dream house, but would have to move to nearby town with worse schools. Job situation is real good with high pay for field and area. Nearest state college is 2 hours away, so living at home is not an option. He was going to take a gap year and work to save money, but is now excited to go to college. He did not even think he could get in with his low gpa. Nearest community college is over 1 hour away. We suggested this before he got accepted. Thinking is best to pay off the Heloc asap, set an amount for taxable, and direct extra to 529. Probably can make it work with the federal student loans. I refuse to get into more debt with the parent Plus or private loans. The interest rates are pretty high and we sure as heck don't need to take on more debt. Work can be prolonged for a few extra years. Maybe just part time. Once the Heloc is paid, that should free up cash flow for taxable and 529. Will probably be able to cut back on some spending to free up more $s. Hoping he will excel in the college environment and qualify for merit based scholarships as well. Definitly will be putting $s aside for daughter's 529 as it has some time to grow. She is more driven and wants a job at 13. She also has money saved in a bank account. It's like a night a day difference between the 2 siblings.
Let me ask you this, and I'm not saying it to be confrontational but just to really help get to the heart of the matter. What makes you think your smart but unmotivated son is going to get his act together in college? He sounds like he doesn't have the maturity right now to go to college and succeed. So how much of your approach here is just wishful thinking? Is he excited to go off to college now vs work because it's another year where he doesn't have to take on any real responsibilities? If he was really excited about college, how come he never put the work in during high school to make college more of a reality, to the point where the prevailing thought was he would not get into ANY 4 year schools in state?

I've never met your son and you've lived with him your whole life. So obviously you're in a far better situation to understand what's going on here than I am. But it sure sounds like this is headed for failure, and that despite his acceptance to this school, he should take a gap year and work. Work will hopefully teach him some self-discipline, which he seems to lack.

Does any of this make sense or am I talking crazy?

veindoc
Posts: 592
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Re: Can we afford to pay for our kid's college (at all)?

Post by veindoc » Wed May 29, 2019 7:32 am

Regattamom wrote:
Tue May 28, 2019 11:35 pm
For some reason, this post has really affected me.

I totally understand that many people can't afford or don't want to pay for their kids college. And I believe that parents must make sure their retirement is on track before shelling out big bucks for their kid's college. And I recognize that many adults come to an understanding of financial responsibility late in life.

With all of that said: From what I can tell from reading past posts, OP, you make over $300k (maybe $350k?) annually as a physician. (Please correct me if I am wrong.) I get that you have made past financial mistakes. But you make A LOT of money.

If you can't afford to pay for a state school, who can?

If you want to pay for their college, it seems to me that you can find an extra $20,000 per year in your budget.
I agree. And based on the previous post about sons trip to Uzbekistan and other countries, what kind of message are you sending? Is travel more important than school?

And you say your son spends all his money on stuff? OCD collector. Who do you think taught him it’s ok to spend all your money on stuff? His parents.

If you cut expenses and work a little longer, you can make this happen for your son taking on no debt. But only if it is important to you.

Also about the HELOC, if you truly make $300,000 a year, you can pay that off in 3-4 paychecks. Then take the money you were using to pay that off to fund the college. The 58k student loan should be done in a year to 18 months which frees up cash flow for the next few years in college. If you only have $2k/month left with that income you have a serious spending problem.
Last edited by veindoc on Wed May 29, 2019 9:11 am, edited 1 time in total.

scottinmet
Posts: 112
Joined: Fri Dec 25, 2015 11:27 am

Re: Can we afford to pay for our kid's college (at all)?

Post by scottinmet » Wed May 29, 2019 7:35 am

I would have no problem cash flowing my son's college as much as he needed (with son assuming student loans so he has a financial stake in it as well). The end goal is to have him become an independent and self sufficient adult. It will help both you and your son in the long term more than the additional money you can put into your retirement accounts.

But you should have a conversation with him now that the flow of cash for college stops if he doesn't maintain his grades. He is responsible for his grades, you will be responsible for helping him financially through his college years.

smitcat
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Re: Can we afford to pay for our kid's college (at all)?

Post by smitcat » Wed May 29, 2019 7:51 am

ChinchillaWhiplash wrote:
Tue May 28, 2019 9:34 pm
Right now not putting $s in taxable. Want to have the Heloc paid off by end of the year. Mortgage is a refi. Hope to maybe downsize once kids are out of house. Would be good to get out from under our dream house, but would have to move to nearby town with worse schools. Job situation is real good with high pay for field and area. Nearest state college is 2 hours away, so living at home is not an option. He was going to take a gap year and work to save money, but is now excited to go to college. He did not even think he could get in with his low gpa. Nearest community college is over 1 hour away. We suggested this before he got accepted. Thinking is best to pay off the Heloc asap, set an amount for taxable, and direct extra to 529. Probably can make it work with the federal student loans. I refuse to get into more debt with the parent Plus or private loans. The interest rates are pretty high and we sure as heck don't need to take on more debt. Work can be prolonged for a few extra years. Maybe just part time. Once the Heloc is paid, that should free up cash flow for taxable and 529. Will probably be able to cut back on some spending to free up more $s. Hoping he will excel in the college environment and qualify for merit based scholarships as well. Definitly will be putting $s aside for daughter's 529 as it has some time to grow. She is more driven and wants a job at 13. She also has money saved in a bank account. It's like a night a day difference between the 2 siblings.
With this additional information a few other ideas....
He is going this fall , correct? He is accepted and knows where he is going correct? Have a face to face meeting with an admissions counselor, its already late in the game so now is the time
Ask the admissions counselor now for help with these questions:
- What is the real total estimated costs with books, fees, food, activities, transportation, etc
- Is it possible for you son to do an overnight and sit in on some classes and activities
- What financial help is available with scholarships and grants (if any)
- What financial help is available in the way of loans
- What kinds of work study might be available (library, athletics, cafeteria, admissions, etc)
- Is there an RA program and what does it take to get into that
- any other ideas on how to soften this bill with and without 'favorable' loans

HomeStretch
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Re: Can we afford to pay for our kid's college (at all)?

Post by HomeStretch » Wed May 29, 2019 8:00 am

scottinmet wrote:
Wed May 29, 2019 7:35 am
I would have no problem cash flowing my son's college as much as he needed (with son assuming student loans so he has a financial stake in it as well). The end goal is to have him become an independent and self sufficient adult. It will help both you and your son in the long term more than the additional money you can put into your retirement accounts.

But you should have a conversation with him now that the flow of cash for college stops if he doesn't maintain his grades. He is responsible for his grades, you will be responsible for helping him financially through his college years.
+1

At this late stage, I wouldn’t force a change of colleges or a gap year on son. Talk with him about your expectations for grades and his expected contribution. He may fail but, more importantly, he may not. Give him a chance to try.

Tighten the belt and help him graduate with low enough debt that he’s not paying it off when he reaches your age so he doesn’t have to go through the same “can I afford college and retirement” situation with his kids.

smitcat
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Re: Can we afford to pay for our kid's college (at all)?

Post by smitcat » Wed May 29, 2019 8:31 am

ChinchillaWhiplash wrote:
Tue May 28, 2019 6:55 pm
48 and 51. 1st year being able to fully fund i401k with $56k, HSA $7k, BD Roth $6k. Built up small EF of $20k. Have spent the last 2 years getting rid of bad debt. Currently have mortgage of $3875 month at 4.5% fixed for another 28 years. Heloc that all extra cash has been thrown at w/$15k left variable currently 6.5% (non- deductable interest). And finally a student loan which we just refinanced with $58k left variable rate at 2.54%. That is all our debt. Income is variable each month but usually have around $2-3k after paying all bills, funding account, etc that has been used to kill the Heloc. As far as retirement funding goes, we have about 1/4 of what would be needed to retire and need to fund a taxable account with at least $50k year for a retirement in about 12-13 years. Just started getting serious about it at the beginning of 2018.

Now to the college funding issues. Have around $30k for oldest kid starting in the fall in a 529. Freshman year requires student to live in dorm in our state. Is one of the "cheaper" state colleges in our state. He is dead set on going here and I do not want to discourage him. He is a GT student that got horrible grades in HS and blew any chance of merit based scholarship. He is getting in because his SAT score was high. Average cost of in state tuition, books, fees, room and board are $25k year. Maximum subsidized/unsubsidized federal student loans are: Freshman $5500, Sophomore $6500, Jr/Sr $7500 a year. Kid has no savings of his own. He always spent every penny on stuff (OCD collector). I do not want him to carry all the load, but think it is in his best interest to take on some responsibility. Not sure we can afford to fill in the gaps. Do not want or plan to take out any private or parent PLUS loans. Hoping he can get a part time job to cover some of this and at least pay off any interest of student loans. Gap will be around $18k year. Hoping costs go down once he can share an apt with room mates or something.

Other issue is we have another child who will be out of HS in 5 yrs. She was diagnosed with learning disabilities, but is getting good grades and works hard. Hoping she will be scholarship elegible. Putting a little bit each month into her 529. We get a state tax break of 4.63%. Can we afford to put in any more? Don't want to neglect our own retirement by doing so, but also want kids to be able to get a good education without suffering too much debt. We left school with a lot of debt and it stinks.

Just rereading this now ….
"As far as retirement funding goes, we have about 1/4 of what would be needed to retire and need to fund a taxable account with at least $50k year for a retirement in about 12-13 years. Just started getting serious about it at the beginning of 2018."

What can you and your wife count on for pensions and/or Social Security at retirement age?

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ChinchillaWhiplash
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Re: Can we afford to pay for our kid's college (at all)?

Post by ChinchillaWhiplash » Wed May 29, 2019 8:58 am

We made terrible real estate decisions since 2003 (2 mortgages and 2 Heloc) and had tons of medical debt. We also had car debt and credit card debt. Over $120k in student loan debt. Worked in HCOLA and had low paying jobs for the field. Income has increased to a very good rate for the field in the last few years. Finally got ride of CC, 2nd house, car payment and putting full amount towards retirement. Have not been able to do that until 2019. We are way behind. Should get around $3000 month in SS and no pensions. We are going on one vacation to Portugal this summer. Our 1st over seas trip. Used CC travel rewards to put a large dent in the cost. That will be the way we go on any vacation from now on. Have aging parents back east (90+) and try to visit them once a year. Gets expensive for family of 4. Our airfair from nearest airport is around $400-500 per person to go anywhere. Nearest hubs are 6 hours one way drive, but flights are much cheaper. Anyway that is why we are behind. Finally figured out that we were in a downward spiral with debt 2 years ago. As far as kid goes, he is excited about going to college. I think it will open up his mind. He plans on being an astrophysicist. I think he can handle the work load as he took several college credits in HS.

KlangFool
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Re: Can we afford to pay for our kid's college (at all)?

Post by KlangFool » Wed May 29, 2019 9:05 am

ChinchillaWhiplash wrote:
Wed May 29, 2019 8:58 am

He plans on being an astrophysicist. I think he can handle the work load as he took several college credits in HS.
ChinchillaWhiplash,

How would that plan work? He would need a Ph.D. And, he may or may not be able to find a well-paying job. Who is going to pay for that?

<<I think he can handle the work load as he took several college credits in HS.>>

That means absolutely nothing. A person that really love a particular subject would have spent a lot of times on that subject outside of normal course/school works.

As per your post, your kid is smart enough. The problem is with his motivation. Is he willing to spend his free time with no payback in a certain area?

KlangFool

MichCPA
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Re: Can we afford to pay for our kid's college (at all)?

Post by MichCPA » Wed May 29, 2019 9:13 am

Prioritize saving for retirement and paying down debt. You goal with college funding should be avoiding private loans. The 4.5% federal rate is not a killer and you can always pay for loans after they graduate if you are in a position to do so!

They can get a loan for college, but you can't get one for retirement.

KlangFool
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Re: Can we afford to pay for our kid's college (at all)?

Post by KlangFool » Wed May 29, 2019 9:17 am

OP,

The answer is very simple. You have 30K to pay the first kid's college education. You should tell him that. And, that is the end of the discussion. He needs to find some other means to pay for the rest.

The only other question is whether you will co-sign for the student loan. My straightforward answer to you is no. Unless and until your son can convince you that he has a solid career plan to pay off the student loan, you will be on-hook for that. And, you cannot afford that.

KlangFool

rj342
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Re: Can we afford to pay for our kid's college (at all)?

Post by rj342 » Wed May 29, 2019 9:34 am

MichCPA wrote:
Wed May 29, 2019 9:13 am
Prioritize saving for retirement and paying down debt. You goal with college funding should be avoiding private loans. The 4.5% federal rate is not a killer and you can always pay for loans after they graduate if you are in a position to do so!

They can get a loan for college, but you can't get one for retirement.
I assume you mean help pay THEIR loans, in their name, if you can -- and fine if you can't.

Child #1 is not obviously college material. "High" SAT in this context may mean actuually high, like 90+ percentile, or just higher than bad grades would suggest.

Its worth the community college experiment -- and IMO 1 year should be enough to tell the tale.
If first year goes well AND he gets a clue about a useful major, then I vote go ahead and switch to the 4yr, to start getting used to the harder classes sooner, ad get plugged in with peers in his major for support.
I taught at a 4yr state school (CS instructor, 6 years) and the 2 yr college transfers in that field at least, usually did not work out well -- they didn't align their 2yr courses well for smooth step into our curriculum meaning more semesters at 4yr need to catch up, and had some shock with change in rigor.

OTOH it may just be something that takes some life experience first.

smitcat
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Re: Can we afford to pay for our kid's college (at all)?

Post by smitcat » Wed May 29, 2019 9:39 am

ChinchillaWhiplash wrote:
Wed May 29, 2019 8:58 am
We made terrible real estate decisions since 2003 (2 mortgages and 2 Heloc) and had tons of medical debt. We also had car debt and credit card debt. Over $120k in student loan debt. Worked in HCOLA and had low paying jobs for the field. Income has increased to a very good rate for the field in the last few years. Finally got ride of CC, 2nd house, car payment and putting full amount towards retirement. Have not been able to do that until 2019. We are way behind. Should get around $3000 month in SS and no pensions. We are going on one vacation to Portugal this summer. Our 1st over seas trip. Used CC travel rewards to put a large dent in the cost. That will be the way we go on any vacation from now on. Have aging parents back east (90+) and try to visit them once a year. Gets expensive for family of 4. Our airfair from nearest airport is around $400-500 per person to go anywhere. Nearest hubs are 6 hours one way drive, but flights are much cheaper. Anyway that is why we are behind. Finally figured out that we were in a downward spiral with debt 2 years ago. As far as kid goes, he is excited about going to college. I think it will open up his mind. He plans on being an astrophysicist. I think he can handle the work load as he took several college credits in HS.
What can you and your wife count on for pensions and/or Social Security at retirement age?

Trying to solve for your current goals (retire, college) simultaneously and reading you other post your home is the largest issue.
Your needs/wants are to increase current retirement portfolio from about $600K to at least $1.5 million while paying for college within the next 12 years.
$350K approx. total yearly income
$16K mo. - fixed costs
$7.5K mo. - fixed costs attributable to the home (PITI, Heloc, Taxes, utilities, etc)

$90K per year goes to the home.
Your best path would appear to be to look for alternate housing that may cost $40-$50K less a year now rather than thinking about waiting the 12 years to do so. With the home costs reduced there is a lot of room to solve for both your own school loans and the payments for college while at the same time increasing retirement savings.
It is unclear what Social Security you may get and it is unclear if the $1.5 million is your true target as you also mention 2.5 million.

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hisdudeness
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Re: Can we afford to pay for our kid's college (at all)?

Post by hisdudeness » Wed May 29, 2019 9:40 am

The original post disgusts me. I've probably never made over $40k in a year, I'm a single father, and both of my kids will have at least most of their college paid for through 529s, summer jobs, and whatever I have to add. Realistically, they may have to finish up by taking student loans.
But then again, I ain't ever seen Uzbekistan.
It's called Priorities.

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