College cost prediction and savings for 5, 3, and newborn

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wabash_sphinx
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College cost prediction and savings for 5, 3, and newborn

Post by wabash_sphinx » Tue Jul 16, 2019 6:13 am

I have a 5 and 3 year old with newborn coming.

I have started 529 for them all and live in a favorable state for that investment vehicle (Indiana).

The question is: how do you accurately predict the cost of college education? I don't want to overfund the 529 (I don't think, but might not be bad idea for grandkids etc) but I don't want to fall short.

I also realize this will be controversial but I would like to be able to cover post graduation education if desired by our children.

I have rough estimates as to what I need but are there good objective data sets to help predict most accurately?

TexMexIndex
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Re: College cost prediction and savings for 5, 3, and newborn

Post by TexMexIndex » Tue Jul 16, 2019 6:42 am

I just threw 5K into 529 plans for each kid when they were born and will check back when they hit their teen years. I have a 5, 7, and 9. My focus now is Retirement. By then I can focus on them and see what additional input is needed. I check about a year and a half ago and my 9 year old had around 12k built up then.

So many variable, kids desires, school expectations, scholarships, etc. I wont pay for my kids Grad school though, just undergrad full for the first year or two and tuition after that.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Jack FFR1846 » Tue Jul 16, 2019 6:53 am

There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
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lakpr
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Re: College cost prediction and savings for 5, 3, and newborn

Post by lakpr » Tue Jul 16, 2019 7:02 am

I expect 6% inflation yearly at least, and 8% inflation rate at worst, for college expenses. Take the current in state tuition at the flagship state university, and quadruple it (at an average 7%, the cost doubles every 10 years). That is the amount of money you will need when your child hits 18 years and goes to college.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by TomatoTomahto » Tue Jul 16, 2019 7:14 am

lakpr wrote:
Tue Jul 16, 2019 7:02 am
I expect 6% inflation yearly at least, and 8% inflation rate at worst, for college expenses. Take the current in state tuition at the flagship state university, and quadruple it (at an average 7%, the cost doubles every 10 years). That is the amount of money you will need when your child hits 18 years and goes to college.
It’s good to save a lot, but at some point, what’s unsustainable isn’t sustained.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Bacchus01 » Tue Jul 16, 2019 7:15 am

Jack FFR1846 wrote:
Tue Jul 16, 2019 6:53 am
There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
Everyone keeps predicting that online will revolutionize college, and yet it hasn’t. I got my MBA 20 years ago. Many of the classes were available online. I took one or two (hated it). Here we are 20 years later and while it’s more prevalent, it has certainly not revolutionized education. I’m not sure why that’s going to change in the future.

Bacchus01
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Bacchus01 » Tue Jul 16, 2019 7:17 am

My advice would be to take advantage of any state tax benefit and no more. Do that yearly and let it ride. If you have extra, take some classes on your own and remember you need a new laptop and system for class :)

pwrdwnsys
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Re: College cost prediction and savings for 5, 3, and newborn

Post by pwrdwnsys » Tue Jul 16, 2019 8:13 am

I also wish to avoid overfunding my son's 529. I have decided to fund the 529 to no more than my low-end cost estimate, and use I Bonds for the rest. Any I Bond money not needed for college can become part of my retirement FI allocation.

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F150HD
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Re: College cost prediction and savings for 5, 3, and newborn

Post by F150HD » Tue Jul 16, 2019 8:21 am

Bacchus01 wrote:
Tue Jul 16, 2019 7:15 am
Jack FFR1846 wrote:
Tue Jul 16, 2019 6:53 am
There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
Everyone keeps predicting that online will revolutionize college, and yet it hasn’t. I got my MBA 20 years ago. Many of the classes were available online. I took one or two (hated it). Here we are 20 years later and while it’s more prevalent, it has certainly not revolutionized education. I’m not sure why that’s going to change in the future.
+1 and if one isn't self-motivated, then video courses aren't for you, and some folks do not learn well via 'video' no matter how many times then can replay it. At that, for a true 'college experience', one needs to go and live onsite, cannot do that via video. Granted, some learning is great online, but not all. Some disciplines need on-site in-person for it to be meaningful.

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unclescrooge
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Re: College cost prediction and savings for 5, 3, and newborn

Post by unclescrooge » Tue Jul 16, 2019 8:25 am

F150HD wrote:
Tue Jul 16, 2019 8:21 am
Bacchus01 wrote:
Tue Jul 16, 2019 7:15 am
Jack FFR1846 wrote:
Tue Jul 16, 2019 6:53 am
There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
Everyone keeps predicting that online will revolutionize college, and yet it hasn’t. I got my MBA 20 years ago. Many of the classes were available online. I took one or two (hated it). Here we are 20 years later and while it’s more prevalent, it has certainly not revolutionized education. I’m not sure why that’s going to change in the future.
+1 and if one isn't self-motivated, then video courses aren't for you, and some folks do not learn well via 'video' no matter how many times then can replay it. At that, for a true 'college experience', one needs to go and live onsite, cannot do that via video. Granted, some learning is great online, but not all. Some disciplines need on-site in-person for it to be meaningful.
All good points. I lean towards Jack's theory, but counter arguments are good too.
Regardless of the outcome, undergrad tuition cannot rise 3% over inflation indefinitely.

NYGiantsFan
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Re: College cost prediction and savings for 5, 3, and newborn

Post by NYGiantsFan » Tue Jul 16, 2019 8:44 am

wabash_sphinx wrote:
Tue Jul 16, 2019 6:13 am
I have a 5 and 3 year old with newborn coming.

I have started 529 for them all and live in a favorable state for that investment vehicle (Indiana).

The question is: how do you accurately predict the cost of college education? I don't want to overfund the 529 (I don't think, but might not be bad idea for grandkids etc) but I don't want to fall short.

I also realize this will be controversial but I would like to be able to cover post graduation education if desired by our children.

I have rough estimates as to what I need but are there good objective data sets to help predict most accurately?
If you have capacity, I would recommend to take average between state and private college current cost and add rate of inflation for number of years before your child will be in the college. In the Facebook College Parents group (that I have been to), every single parent is complaining about rising tuition and other costs (health etc) year over year. For example health fee (not insurance) went up about by 19% this year in this particular university.

HopeToGolf
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Re: College cost prediction and savings for 5, 3, and newborn

Post by HopeToGolf » Tue Jul 16, 2019 8:47 am

Any models you use today are unlikely to accurately predict what you will pay. The system is broken, in need of repair, and/or will evolve. Unless you are very wealthy and fund at a rate that outpaces current tuition and room and board at private colleges and grad schools I think you can use current prices and assume modest inflation and returns as a basis and contribute to the fund using those assumptions (without worry of over contributing).

You said that you don’t want to run short, do you know if you plan to pay for private or public college AND grad school?

Why don’t you start with public school in your state and go from there. I guarantee that your head will explode when you calculate the costs for inflation adjusted undergrad and grad degrees starting 13 years from now. If you want to pay for private school, double that.

In our case, 10 years ago, the numbers were so scary (and now proving to be wrong), we played it more down the middle and saved some but focused on retirement and general savings. My goal was to fund the 529 to roughly pay for 4 years of public school and figure the rest out when we got there. With 4 years to go we may get to 3 years funded due to some combination of underestimating the cost increase, overestimating returns, and looseness with respect to contribution estimates. We will pull from savings or cash flow to fund the gap between cost (at public or private school) and what is in the fund. While we ran “short” the savings just went into a different vehicle. The tax savings in the 529 were not so great that we regret our plan.

With your ambition to pay for it all, unless you are very rich or the system breaks, you will not over contribute. The schools have figured out the market.

vrr106
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Re: College cost prediction and savings for 5, 3, and newborn

Post by vrr106 » Tue Jul 16, 2019 8:54 am

See the post below and search for others for similar themes:
viewtopic.php?f=2&t=271389&p=4353548#p4353548

I really don't think anyone can accurately predict the cost. If your kids end up getting into an elite Ivy, would you send them there or would you send them to your in-state flagship university? That's your decision to make. My formula is to aim for something between the in-state public and a decent private, figuring my kids are likely to also do some grad school so I won't be overshooting.

Also, you are early enough in the game - it's better to overfund now and figure out later whether you want to reduce how much you put in. That's when you really reap the tax benefits. Not sure which state you live in, but in my case the state tax savings are non-existent.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by stoptothink » Tue Jul 16, 2019 9:00 am

We just hit the state max deduction each year ($3920) and call it good. Considering the two local universities are currently <$7k/yr for tuition+fees+books, my 7 and 4yr olds are almost set already. The costs vary significantly, so you are going to get answers all over the map.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by dogagility » Tue Jul 16, 2019 9:01 am

wabash_sphinx wrote:
Tue Jul 16, 2019 6:13 am
I have a 5 and 3 year old with newborn coming.
I have started 529 for them all and live in a favorable state for that investment vehicle (Indiana).
The question is: how do you accurately predict the cost of college education? I don't want to overfund the 529 (I don't think, but might not be bad idea for grandkids etc) but I don't want to fall short.
I also realize this will be controversial but I would like to be able to cover post graduation education if desired by our children.
I have rough estimates as to what I need but are there good objective data sets to help predict most accurately?
Hi Wabash,
The best way to estimate college expenses is to run the Net Price Calculator for a few colleges. Every college has one of these on their website. I suggest you run a flagship university (e.g. IU), a private college (Butler and/or Wabash), an out of state university (e.g. Michigan State), and a non-flagship university (e.g. Indiana State). After you get these numbers, add 4-5%/year for inflation.

The biggest unknown will be your kids GPA and test scores. Put in a few different ones to see the outcome. However, state universities won't give you big merit aid unless your kiddos are tippy top students. Butler and Wabash will give out "merit" aid like candy, but it's really just a marketing tool for such private colleges.

As an example, my two daughters (one in college and one just graduated) both went to flagship universities in the Midwest. Very good students but not tippy top. Out of pocket expenses ran about $25K/year for each one. That's about $200K overall. We have a smaller amount leftover in our 529s after paying this, which will be used to pay for grad school for my oldest daughter.

We are very happy to have been able to give our kids undergraduate degrees without them or us taking out student loans.

At the very least, I strongly suggest you invest $5000/year into the Indiana 529 system. This will give you a $1000 state income tax credit each year.

Cheers,
DA
Taking "risk" since 1995.

KlangFool
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Re: College cost prediction and savings for 5, 3, and newborn

Post by KlangFool » Tue Jul 16, 2019 9:04 am

OP,

I think you are asking the wrong question.

A) If you have to ask about the cost, you are not one of those persons that can afford to pay any price.

B) If you can afford to pay any price, there is no reason to ask this question.

If you only have a net worth 200K when your kid started college, will you pay 200K (100% of your net worth) toward college? If not, how much? What is the percentage?

For most of us, the amount that we are willing to pay for our kids' college is a percentage of our overall portfolio size. The kids could borrow for a college education. We cannot borrow for our retirement. It does not make sense to burden our kids with our retirement by spending all our retirement money on their college education.

I do not save for my kids' college education. I only pay for my kids' college education if my portfolio excluding the house is 1 million or more. My kids got lucky. So, I fully paid for my kids' college education.

KlangFool

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Re: College cost prediction and savings for 5, 3, and newborn

Post by vineviz » Tue Jul 16, 2019 9:14 am

wabash_sphinx wrote:
Tue Jul 16, 2019 6:13 am
I have rough estimates as to what I need but are there good objective data sets to help predict most accurately?
Historically, over the long-term the cost of college (tuition + room/board) has increased by about 1.2% more than the general rate inflation. This relationship isn't strictly constant, but it's been very consistent over the past 40 years.

Right now, the expected rate of inflation over the next 20 year is very low (1.8%) so I'd expect the rate of increase for college costs to be about 3%. Clearly there is a lot of uncertainty around that estimate, but for planning purposes its the most defensible estimate you could construct.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: College cost prediction and savings for 5, 3, and newborn

Post by KyleAAA » Tue Jul 16, 2019 9:36 am

My plan is to dump $30k into my son's 529 each of the first 2 years of his life, invest fairly aggressively, and let it ride. I will reevaluate when he is 13 to see if I should contribute more. No state income tax so no point in spreading out contributions for a deduction. I figure with decent gains, this should get me there. I will be retired by the time he goes to college.

winterfan
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Re: College cost prediction and savings for 5, 3, and newborn

Post by winterfan » Tue Jul 16, 2019 9:50 am

Bacchus01 wrote:
Tue Jul 16, 2019 7:15 am
Everyone keeps predicting that online will revolutionize college, and yet it hasn’t. I got my MBA 20 years ago. Many of the classes were available online. I took one or two (hated it). Here we are 20 years later and while it’s more prevalent, it has certainly not revolutionized education. I’m not sure why that’s going to change in the future.
I agree. I'm still waiting for this too and I haven't seen it yet. We put in 10K or so when our DD was born and then added about $100/mo after that. Right now she has a little over half of the all-inclusive cost of our state school. I think that will be fine in eight years. I wouldn't add anymore, but our state offers a tax credit, so I take advantage of that.
Last edited by winterfan on Tue Jul 16, 2019 9:59 am, edited 1 time in total.

indyfish
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Re: College cost prediction and savings for 5, 3, and newborn

Post by indyfish » Tue Jul 16, 2019 9:59 am

I live in Indiana, also. For those that don't know - Indiana has a 20% state tax credit up to $5000 invested in the state 529 a year (meaning up to $1000 state tax credit). For my 2 year old daughter - I invest $5000 in the 529 - and my mother (who lives in Indiana) also invests $5000 a 529. My dad lives in Iowa and invests in their 529 as well up to when there are state tax benefits (about $3300) a year.

I don't know how much tuition will go up over the years. As you may know, Purdue has frozen in-state tuition for the last few years (but hot majors like engineering pay extra in fees).

My wife works at one of the public state universities (not IU-Bloomington or Purdue), and they are starting to tighten their belts because they are concerned about getting enough students to enroll. While there is a frenzy for applications to top colleges (as I am sure we have all read articles about), those not in the top 200 colleges struggle to get enough students to enroll. Colleges outside the top 200 will have to keep their costs down or they will struggle and/or not survive. Demographic trends are not helpful for those colleges - as birth rates are getting lower and lower.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by MrBeaver » Tue Jul 16, 2019 10:15 am

wabash_sphinx wrote:
Tue Jul 16, 2019 6:13 am
The question is: how do you accurately predict the cost of college education? I don't want to overfund the 529 (I don't think, but might not be bad idea for grandkids etc) but I don't want to fall short.
Answer: You can't.

There is a huge uncertainty in all three of these:
  • General Sticker-price cost of university education
  • Assistance you gain from merit or need-based aid
  • Which school your children will attend
One thing often forgotten in these discussions is that you can pay for college from other sources. Roth money must be reported as untaxed income so can reduce any need-based aid you are receiving. But HSA withdrawals for previous qualified expenses are both untaxed and not reported as income, so that could be a cash flow source that does not affect need-based aid.

It's a complex thing with a lot of uncertainty. Maximize your normal tax benefits (401k/IRA/HSA/etc. contributions) and your 529 benefits that give you a state tax benefit. Only after that should you contribute to a 529/ESA.

We have no state 529 tax benefit, and have chosen to fund 529s to roughly half the price of an in-state school, assuming costs rise only at inflation. If that is underfunded, we will make up the difference with taxable or HSA qualified withdrawals. If it looks to be overfunded by middle/high school, there is plenty of time to draw it down from other education related expenses (computers, internet service, etc.). The somewhat broader list of qualified withdrawals for an ESA is why we fill that before a 529, but the qualified expense list was broadened in the 2017 tax bill, so I think there is much less of a difference now.

If I were you, I'd probably just contribute at a rate to get your state tax credit, and then reassess every few years.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Grt2bOutdoors » Tue Jul 16, 2019 11:28 am

I gave up predicting college costs about 2 years ago, the inflation rates in college costs far exceeds that of CPI-U, I find it to be on par with healthcare inflation which is nuts. Eventually though, there is going to be a reckoning and I hope it comes before my kid enters school in about 8 years. The local state university school are affordable if you attend as a commuter, then all-in is about $50-60K for 4 years. The state flagship requires room and board and that pushes the all-in to about $120-$125K for 4 years. Then we have out-of-state schools (not Top 10) without scholarship running about $180K all-in for 4 years. Then we also have the Top 10 which run anywhere from $65k per year and up, let's call it $300K all-in, if not more.

College costs prediction - if I have the money, if a need for any sort of loan is less than 1 years of annual income and if the scores are there. Otherwise, child will attend the school that we can afford. I'm not taking on debt for a 4 year party where the dorm room is more like a 24 hour resort (even the lower cost schools hold parties, but I think you get the idea).
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Van Down By Da River
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Van Down By Da River » Tue Jul 16, 2019 11:51 am

I also have a 3 and a 5 year old and I ran a few of the calculators recently (savingforcollege.com I think?), and here is what I calculated:

Current Cost:
In State Public Average ~ 15,000
Out of State Public Average ~ 30,000

Projected Cost in 15 Years
In State Public ~ 30,000
Out of State Public ~ 60,000

So, about 120,000 for in state, and 240,000 for out of state, per kid

I am shooting for having 120,000 per kid so we can pay for an in state school public school in cash, and worst case, the boys are geniuses and get accepted to an expensive school, hopefully they get scholarships or we can figure a way to plug the hole (student loans, parent loans, home equity loans, taxable account, eating ramen noodles for 6 years, etc.)

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Re: College cost prediction and savings for 5, 3, and newborn

Post by siriusblack » Tue Jul 16, 2019 11:59 am

My advice (and what we've done) is to use 529's for some of your college costs, and cash-flow a portion also (or take from other savings vehicles)-- this hedges bets because lots of things could happen between now and then. We use the 529 for the equivalent of in-state university tuition/fees/etc. (my target for each of my kids, in today's dollars, is about 50k in the 529, and I assume that will increase at 6% annually). I'm planning to cash flow room & board and other expenses. This gives us lots of flexibility, while also ensuring baseline is covered. If the kids want to go to private school, they are responsible for the difference.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by NJ_Bogler » Tue Jul 16, 2019 12:16 pm

Are you fully funding other tax advantaged accounts first? Think that's important before going the 529 route (although there is an argument to be made that you can still dump $ into the 529 up to the max state deduction without maxing retirement accounts ... depends on your priorities).

For my kids, I found projecting the cost of college out for 18 years was impossible (and terrifying). I thankfully had a windfall and dumped around $70k in per kid and will let it ride for 15+ years. Will assess in about 10-12 years whether to contribute more. If I don't have the funds to contribute more, so be it ... kids on their own and they've gotten a good start.

Overfunding doesn't worry me -- I just came to terms with the risks and accepted them. Employers put a greater premium on grad degrees, so whatever is left (if anything) can go to that. And while the penalty is fairly steep, it's not the end of the world if you want the $ and don't want to give it to another beneficiary. Since I only super funded recently, I even consider the 529 to be a "catastrophic emergency" fund. I have a normal EF, but if all goes to hell (i.e. two job losses, major illness/disability), I won't feel bad raiding the 529s and they haven't grown much yet anyway so the penalty will be negligible. Of course the math would change if the stock market tanks too.

In short: pick a best guess # and forget it about for the next decade while it hopefully grows.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Sam1 » Tue Jul 16, 2019 12:20 pm

This thread makes me feel better. I wouldn’t be able to disclose our savings goals as it seems everyone I know plans to save way more.

I believe our calculation is $1,200 per kid from birth until college so they can attend a private. This means investing around $260k per child.

Instead we plan to front load with the goal of investing $100k per kid by the time they are each three years old. We want to watch the accounts and see if we then need to continue savings.

The reason we aren’t doing more is that I want want to limit my future life and other important things for my family (housing, vacations, childcare) to save for something that may not happen. Spouse and I both stand to inherit money and that could easily go towards college savings. Not counting on a penny, but still don’t want to limit vacations as a family to save for college and then get $1 million down the road.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Sam1 » Tue Jul 16, 2019 12:22 pm

NJ_Bogler wrote:
Tue Jul 16, 2019 12:16 pm
Are you fully funding other tax advantaged accounts first? Think that's important before going the 529 route (although there is an argument to be made that you can still dump $ into the 529 up to the max state deduction without maxing retirement accounts ... depends on your priorities).

For my kids, I found projecting the cost of college out for 18 years was impossible (and terrifying). I thankfully had a windfall and dumped around $70k in per kid and will let it ride for 15+ years. Will assess in about 10-12 years whether to contribute more. If I don't have the funds to contribute more, so be it ... kids on their own and they've gotten a good start.

Overfunding doesn't worry me -- I just came to terms with the risks and accepted them. Employers put a greater premium on grad degrees, so whatever is left (if anything) can go to that. And while the penalty is fairly steep, it's not the end of the world if you want the $ and don't want to give it to another beneficiary. Since I only super funded recently, I even consider the 529 to be a "catastrophic emergency" fund. I have a normal EF, but if all goes to hell (i.e. two job losses, major illness/disability), I won't feel bad raiding the 529s and they haven't grown much yet anyway so the penalty will be negligible. Of course the math would change if the stock market tanks too.

In short: pick a best guess # and forget it about for the next decade while it hopefully grows.
Have you used the college calculators? Here’s the thing - they will tell you the $70k front loaded isn’t even close to enough. It will probably tell you that it will pay for 50% of a public over for years.

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Watty
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Watty » Tue Jul 16, 2019 12:34 pm

MrBeaver wrote:
Tue Jul 16, 2019 10:15 am
There is a huge uncertainty in all three of these:

General Sticker-price cost of university education
Assistance you gain from merit or need-based aid
Which school your children will attend
Also;

If all your kids will even go to college.
If they will go for a year or two then drop out.

People sometimes try to ignore these possibilities and plan for the best case but there is a very real chance that not all your kids will actually spend four years in college.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by TomatoTomahto » Tue Jul 16, 2019 1:42 pm

Watty wrote:
Tue Jul 16, 2019 12:34 pm
MrBeaver wrote:
Tue Jul 16, 2019 10:15 am
There is a huge uncertainty in all three of these:

General Sticker-price cost of university education
Assistance you gain from merit or need-based aid
Which school your children will attend
Also;

If all your kids will even go to college.
If they will go for a year or two then drop out.

People sometimes try to ignore these possibilities and plan for the best case but there is a very real chance that not all your kids will actually spend four years in college.
And, also the chance that it will be 5 or 6 years. :oops:

Ask me how I know :D
Okay, I get it; I won't be political or controversial. The Earth is flat.

Yankuba
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Yankuba » Tue Jul 16, 2019 2:06 pm

I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.

lakpr
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Re: College cost prediction and savings for 5, 3, and newborn

Post by lakpr » Tue Jul 16, 2019 2:17 pm

Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
$0 for tuition IF you stay on campus; on campus room and board is $25k per semester
OR
$20k tuition fee per semester if you stay off campus

You mean we will see such games in the future?

Sam1
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Sam1 » Tue Jul 16, 2019 2:44 pm

Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?

Yankuba
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Yankuba » Tue Jul 16, 2019 2:58 pm

lakpr wrote:
Tue Jul 16, 2019 2:17 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
$0 for tuition IF you stay on campus; on campus room and board is $25k per semester
OR
$20k tuition fee per semester if you stay off campus

You mean we will see such games in the future?
I can see that. Free tuition but the price tags for room, board and fees will be astronomical.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by stoptothink » Tue Jul 16, 2019 2:59 pm

Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
The average cost of public universities (tuition + fees) in the U.S. is <10k/yr for in-state https://www.collegedata.com/en/pay-your ... education/ . Our two local universities are <$7k/yr for tuition/fees/books (Utah). The costs vary significantly across the country. If you don't live in an area with reasonably cost-effective options, well, that sucks. If cost is a really serious concern, there are options (they may not be ideal).

My wife attends local U. She has two more semesters to finish her BS, total cost: ~$25k.

Yankuba
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Yankuba » Tue Jul 16, 2019 3:00 pm

Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
I live in NY

I just checked and SUNY Binghamton is $7k per year in tuition, $3k in fees and $16k for housing and meals. SUNY Geneseo is $8,600 in tuition.

rj342
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Re: College cost prediction and savings for 5, 3, and newborn

Post by rj342 » Tue Jul 16, 2019 3:04 pm

Jack FFR1846 wrote:
Tue Jul 16, 2019 6:53 am
There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
Yes, something has got to give in the current model and that technology is probably the impetus, if student loan bubble doesn't force it. So I think a mistake to project too far out under current rules.
IMO 'free college' won't do it, not without the required accompanying tight restrictions on college placement and major selection that the European countries which do it have (that proponents here in US don't want to talk about.

rj342
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Re: College cost prediction and savings for 5, 3, and newborn

Post by rj342 » Tue Jul 16, 2019 3:09 pm

Watty wrote:
Tue Jul 16, 2019 12:34 pm
MrBeaver wrote:
Tue Jul 16, 2019 10:15 am
There is a huge uncertainty in all three of these:

General Sticker-price cost of university education
Assistance you gain from merit or need-based aid
Which school your children will attend
Also;

If all your kids will even go to college.
If they will go for a year or two then drop out.

People sometimes try to ignore these possibilities and plan for the best case but there is a very real chance that not all your kids will actually spend four years in college.
Or they spend 8! :oops:

When I taught as a university instructor in the mid-2000s, there was one older student who would show up each semester enrolled in a class then drop a few weeks in, almost every time. I remarked on this to someone in admin, and they looked him up -- he had been going off and on since the 1970s! Without ever finishing a BS. Apparently he had figured some way to milk veterans benefits somewhow (Vietnam vet).

stoptothink
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Re: College cost prediction and savings for 5, 3, and newborn

Post by stoptothink » Tue Jul 16, 2019 3:11 pm

rj342 wrote:
Tue Jul 16, 2019 3:09 pm
Watty wrote:
Tue Jul 16, 2019 12:34 pm
MrBeaver wrote:
Tue Jul 16, 2019 10:15 am
There is a huge uncertainty in all three of these:

General Sticker-price cost of university education
Assistance you gain from merit or need-based aid
Which school your children will attend
Also;

If all your kids will even go to college.
If they will go for a year or two then drop out.

People sometimes try to ignore these possibilities and plan for the best case but there is a very real chance that not all your kids will actually spend four years in college.
Or they spend 8! :oops:

When I taught as a university instructor in the mid-2000s, there was one older student who would show up each semester enrolled in a class then drop a few weeks in, almost every time. I remarked on this to someone in admin, and they looked him up -- he had been going off and on since the 1970s! Without ever finishing a BS. Apparently he had figured some way to milk veterans benefits somewhow (Vietnam vet).
It took my SIL 9yrs to get her BS in Nursing, and I believe the GI Bill paid for every singly penny.

rj342
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Re: College cost prediction and savings for 5, 3, and newborn

Post by rj342 » Tue Jul 16, 2019 3:17 pm

stoptothink wrote:
Tue Jul 16, 2019 3:11 pm
It took my SIL 9yrs to get her BS in Nursing, and I believe the GI Bill paid for every singly penny.
Guy I'm talking about had been in, at least token effort to get the $$, more than 20 out of those 30 or so years. No significant progress.

NJ_Bogler
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Re: College cost prediction and savings for 5, 3, and newborn

Post by NJ_Bogler » Tue Jul 16, 2019 4:10 pm

Sam1 wrote:
Tue Jul 16, 2019 12:22 pm
NJ_Bogler wrote:
Tue Jul 16, 2019 12:16 pm
Are you fully funding other tax advantaged accounts first? Think that's important before going the 529 route (although there is an argument to be made that you can still dump $ into the 529 up to the max state deduction without maxing retirement accounts ... depends on your priorities).

For my kids, I found projecting the cost of college out for 18 years was impossible (and terrifying). I thankfully had a windfall and dumped around $70k in per kid and will let it ride for 15+ years. Will assess in about 10-12 years whether to contribute more. If I don't have the funds to contribute more, so be it ... kids on their own and they've gotten a good start.

Overfunding doesn't worry me -- I just came to terms with the risks and accepted them. Employers put a greater premium on grad degrees, so whatever is left (if anything) can go to that. And while the penalty is fairly steep, it's not the end of the world if you want the $ and don't want to give it to another beneficiary. Since I only super funded recently, I even consider the 529 to be a "catastrophic emergency" fund. I have a normal EF, but if all goes to hell (i.e. two job losses, major illness/disability), I won't feel bad raiding the 529s and they haven't grown much yet anyway so the penalty will be negligible. Of course the math would change if the stock market tanks too.

In short: pick a best guess # and forget it about for the next decade while it hopefully grows.
Have you used the college calculators? Here’s the thing - they will tell you the $70k front loaded isn’t even close to enough. It will probably tell you that it will pay for 50% of a public over for years.
One calculator I used said a 4-year in-state in 2036 will cost $162k. $70,000 earning 5% annually will equal about that over same time period.

But what if there's a revolution in college that causes the bubble the burst? What if costs increase even faster than inflation? What if 5% is overly optimistic? What if my kid gets a scholarship? Joins the military? Drops out of college?

Who the heck knows. I picked a # I felt good about. If it's not enough at the end of the day, I got some tax free growth and will cash flow or loan the rest of it. And if it's too much I'll take the penalty. I chose what felt like a good middle ground but YMMV.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by Grt2bOutdoors » Tue Jul 16, 2019 4:17 pm

Yankuba wrote:
Tue Jul 16, 2019 3:00 pm
Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
I don't believe anyone mentioned the possibility that free tuition at state schools becomes a real thing sometime in the not too distant future. I believe it is more likely than college costs continuing to increase 6% a year.

So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
I live in NY

I just checked and SUNY Binghamton is $7k per year in tuition, $3k in fees and $16k for housing and meals. SUNY Geneseo is $8,600 in tuition.
Wow, it was like $7K total back when I was in school, and I'm not that old. Amazing that R&B is more than tuition and fees. I wonder if they upgraded the dorm since I last saw it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Sam1
Posts: 452
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Sam1 » Tue Jul 16, 2019 4:26 pm

stoptothink wrote:
Tue Jul 16, 2019 2:59 pm
Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
The average cost of public universities (tuition + fees) in the U.S. is <10k/yr for in-state https://www.collegedata.com/en/pay-your ... education/ . Our two local universities are <$7k/yr for tuition/fees/books (Utah). The costs vary significantly across the country. If you don't live in an area with reasonably cost-effective options, well, that sucks. If cost is a really serious concern, there are options (they may not be ideal).

My wife attends local U. She has two more semesters to finish her BS, total cost: ~$25k.
Wow! That’s great. The cheapest decent publics (so a major state university) in our area are at least $50k out of state. We don’t have any in state options.

Makes me feel better about the 100k we are putting away

Sam1
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Re: College cost prediction and savings for 5, 3, and newborn

Post by Sam1 » Tue Jul 16, 2019 4:31 pm

stoptothink wrote:
Tue Jul 16, 2019 2:59 pm
Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
The average cost of public universities (tuition + fees) in the U.S. is <10k/yr for in-state https://www.collegedata.com/en/pay-your ... education/ . Our two local universities are <$7k/yr for tuition/fees/books (Utah). The costs vary significantly across the country. If you don't live in an area with reasonably cost-effective options, well, that sucks. If cost is a really serious concern, there are options (they may not be ideal).

My wife attends local U. She has two more semesters to finish her BS, total cost: ~$25k.
We are considering relocating our senior year of our first child’s HS for in state tuition. By relocating I mean buying a vacation home in a neighboring state and making it our primary residence. Even in today’s dollars the difference in out of state and in state costs are around $160k per child for four years. For two kids that’s $320k we can put in a vacation home and I consider we should get most, if not all, of that money back when we sell the property.

That’s how expensive even publics are near where we live. That it’s a better option to buy an actual house in cash and live there.

flarf
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Re: College cost prediction and savings for 5, 3, and newborn

Post by flarf » Tue Jul 16, 2019 4:39 pm

I'm not concerned about over-funding a 529 plan as a parent. If my kids don't spend it, then hopefully their kids do, after decades of growth.

The college business is so massive and layered with vested interests that it's really hard to believe it'll transform into something super-affordable. Sure, we may see some tweaks around the edges, but the the private school end of the spectrum is certainly well entrenched and room & board everywhere will continue to grow regardless of tuition charges.

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Re: College cost prediction and savings for 5, 3, and newborn

Post by jbranx » Tue Jul 16, 2019 4:50 pm

{Topic is now in Personal Finance}.

cshell2
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Re: College cost prediction and savings for 5, 3, and newborn

Post by cshell2 » Tue Jul 16, 2019 5:14 pm

Sam1 wrote:
Tue Jul 16, 2019 4:26 pm
stoptothink wrote:
Tue Jul 16, 2019 2:59 pm
Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
The average cost of public universities (tuition + fees) in the U.S. is <10k/yr for in-state https://www.collegedata.com/en/pay-your ... education/ . Our two local universities are <$7k/yr for tuition/fees/books (Utah). The costs vary significantly across the country. If you don't live in an area with reasonably cost-effective options, well, that sucks. If cost is a really serious concern, there are options (they may not be ideal).

My wife attends local U. She has two more semesters to finish her BS, total cost: ~$25k.
Wow! That’s great. The cheapest decent publics (so a major state university) in our area are at least $50k out of state. We don’t have any in state options.

Makes me feel better about the 100k we are putting away
A state with no colleges?

Our state schools range from 7-14K tuition. The flagship is 14K. Tuition is definitely not rising in this area at 6%/year. The 10 year cumulative percent change is 28%.

There is always the option of going to another state farther away that is cheap. At least one of our state schools doesn't even charge a separate rate for out of state tuition and a lot of them only increase by a few thousand. Push good stats and there are a lot more options. My son has University of Alabama - Huntsville on his list (we're in MN) because they give all students with at least a 3.5 GPA and 30 ACT 100% free tuition.

cbr shadow
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Re: College cost prediction and savings for 5, 3, and newborn

Post by cbr shadow » Tue Jul 16, 2019 6:27 pm

Bacchus01 wrote:
Tue Jul 16, 2019 7:15 am
Jack FFR1846 wrote:
Tue Jul 16, 2019 6:53 am
There very well could be a revolution in education coming. DS is currently taking a couple summer courses at his expensive private college and because the schedules make his classes overlap, he's taking one as an online course. This has become a near standard at his college, where students can watch the lecture anytime, go back and see it again or show up in class when the schedule allows. Out of 25 students in one of his classes, only 3 show up in person.

Going forward, these lectures could become a canned course. Use TA's to grade and provide help to students (both of his current courses have professors listed but are taught by PhD students). The cost to the college becomes very cheap.

So there is the ability right now for colleges to offer courses for very cheap. Will they do so? Likely not until they're forced to by their peers doing so and pricing them out of the market for new students. I do think this is coming and that college costs are going to go off a ledge and become much lower than it is today.
Everyone keeps predicting that online will revolutionize college, and yet it hasn’t. I got my MBA 20 years ago. Many of the classes were available online. I took one or two (hated it). Here we are 20 years later and while it’s more prevalent, it has certainly not revolutionized education. I’m not sure why that’s going to change in the future.
Online classes are very different today than they were 20 years ago. High Resolution video, high quality sound, multiple cameras and smart cameras that follow the teacher, plus the ability to bookmark the "sections" ahead of time, all add to how the online class feels. I've had poor quality/sound on an online class and hated it, but a well-run online class can be BETTER than being there in person since you have the ability to go back and review things that you missed, or speed things up if the pace is too slow. I had a friend who took her online classes at 1.5x speed

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ram
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Re: College cost prediction and savings for 5, 3, and newborn

Post by ram » Tue Jul 16, 2019 6:34 pm

Health care expenses in US ( (top line in graph) have stabilized at about 16% of GDP the last few years after many years of relentless increase.
https://www.google.com/search?nfpr=1&tb ... CLFpEiM1yM:
Perhaps the same will happen with college cost in the next few years.
Ram

BlueCable
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Re: College cost prediction and savings for 5, 3, and newborn

Post by BlueCable » Tue Jul 16, 2019 6:42 pm

17 years out, I'm not trying to predict college costs. I contribute the maximum state deduction amount of about $7k per year.

When we get closer, costs should be more predictable and we'll adjust as necessary. Leftovers stay for grandchildren.

stoptothink
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Re: College cost prediction and savings for 5, 3, and newborn

Post by stoptothink » Tue Jul 16, 2019 6:47 pm

Sam1 wrote:
Tue Jul 16, 2019 4:31 pm
stoptothink wrote:
Tue Jul 16, 2019 2:59 pm
Sam1 wrote:
Tue Jul 16, 2019 2:44 pm
Yankuba wrote:
Tue Jul 16, 2019 2:06 pm
So we would only need to pay for room, board, books, fees, etc. In my state the top public schools charge about $10k per year for tuition and $14k for everything else.
Which state is this!!?
The average cost of public universities (tuition + fees) in the U.S. is <10k/yr for in-state https://www.collegedata.com/en/pay-your ... education/ . Our two local universities are <$7k/yr for tuition/fees/books (Utah). The costs vary significantly across the country. If you don't live in an area with reasonably cost-effective options, well, that sucks. If cost is a really serious concern, there are options (they may not be ideal).

My wife attends local U. She has two more semesters to finish her BS, total cost: ~$25k.
We are considering relocating our senior year of our first child’s HS for in state tuition. By relocating I mean buying a vacation home in a neighboring state and making it our primary residence. Even in today’s dollars the difference in out of state and in state costs are around $160k per child for four years. For two kids that’s $320k we can put in a vacation home and I consider we should get most, if not all, of that money back when we sell the property.

That’s how expensive even publics are near where we live. That it’s a better option to buy an actual house in cash and live there.
Buying a vacation home that you may not want and definitely don't need? You know, your child can move there (anywhere) and likely get residency in a year. Work and/or go to CC for a year, then get into public U at in-state costs. I know countless people around here who did exactly that. I'm not too worried about sending junior to a different state right after high school, then again I was completely one my own at public U at 16.

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