Should We Ever Save for Children's College?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm
EnjoyIt wrote: Fri Oct 16, 2020 12:39 pm
Frank the Tank wrote: Fri Oct 16, 2020 10:57 am I'm 6 years away from my twins graduating from high school. I was fortunate to take a finance class in college in the late 1990s where the professor was an avowed proponent of index funds and Vanguard, so the Boglehead philosophy was engrained in my financial planning from day one of my career before I knew that the term "Boglehead" even existed. (Thinking back, I was so fortunate to take that class since I definitely was the type at that time that would have have wanted to actively trade.) So, I feel very comfortable with our retirement planning 20 years later, but college planning still keeps me up at night.

In running the financial calculators at various schools (ranging from our in-state public flagship to Ivy League/Ivy-level schools), we would be a full pay family everywhere based on our income today (which isn't that much more than the OP's HHI). Even at our in-state public flagship, which both my wife and I attended and we would be more than happy for our children to attend, the total cost of attendance would be around $35,000 each per year (so $70,000 total for twins) as of *today* (much less several years from now). Even at our income level, that would be quite difficult to simply cash flow out of our income. For a full pay private institution, that number would be more than double. We started contributing to 529 plans for our kids as soon as they were born based on what seemed to be a reasonable rate of tuition cost inflation at the time, but the rise of tuition costs during that period have been astronomical. I have a hard time believing that an upper middle class family that has actually had to write tuition checks within the past 10 years could think that cash flowing and/or having kids pay for it on their own is really a viable option.

Sitting here 6 years away from paying those tuition checks, it's the only part of our financial planning that I wish that we had been more aggressive in saving more. We're now having to catch up with larger contributions in order to compensate for the lost time. It's a basic Boglehead philosophy to utilize the power of compounding returns and time value of money in their investments, so I'm actually flabbergasted at some of the comments here to suggest to not apply this to college costs (which for many people will be an amount larger than the cost of their house without the favorable terms of a mortgage).

Also, I had a fair amount of student loan debt after attending law school (fortunately none after undergrad), so I understand the drag that paying off that debt has on someone's ability to invest early on in their career. If you want your kids to be Bogleheads, then you want them to invest as much as possible from the very beginning of their careers in their 20s. Having a lot of student loan debt during that period can be a large (or even insurmountable) road block on that front.

Ultimately, we want our kids to have options. To be very clear, that doesn't mean paying private university tuition for the sake of paying for private university tuition based on an emotional whim. In fact, I can't justify paying more than in-state tuition at our flagship for 99% of the circumstances and career options. So, our primary target is to have the costs of our in-state flagship saved in our 529 plans.

That being said, as someone that is a lawyer that works in finance and tech consulting, I know firsthand that there are certain industries where an elite school is effectively a gatekeeper. Investment banking and top tier management consulting are prime examples where you essentially have to "pay to play" for a reasonable chance at those fields. The "live at home and go to community college for 2 years" model would never work in that scenario and even our excellent in-state flagship (a top 50 school) would present a difficult road. If either of our kids wants a reasonable shot (e.g. going to a true feeder school instead of trying to compete for a handful of slots against 40,000 other students) to work in one of those industries, then that 1% exception may apply because the potential financial return from those industries is so high (as even just a short stint can provide the training background for even more elite exit opportunities). In that situation, our secondary target is to have enough in our taxable accounts to be able to give our kids that shot if they're fortunate enough to be in that position.

Ultimately, the challenge is that college planning is like trying to predict the price of a airline ticket 18 years from now. Every person is paying a different price and it could depend on a thousand different factors that are outside of your control. I can only go by the most likely scenario for our financial situation, which is that we're going to be a full pay family and we'll need to plan accordingly.
Thanks for sharing your story. My feeling is pretty straight forward. Save for retirement as much as possible. It means are available max out all tax preferred options. Save in taxable account. Money is retirement and taxable can easy be used to help pay for higher education. If savings are on track and doing well, then I would look at a 529.

Just because one isn’t putting money into a 529 does not mean one will not help their kids with college costs. Also, a child can always take out loans and the parents can help pay them off if means are available.

In your situation that may be a reasonable option if your kids get into an Ivy League school. Use up the cash you have saved and if they need more they take out a loan. You help them pay it off after they graduate. This is exactly our plan though we are well over 6 years away. We have a 529 that I hope will cover in state tuition. Cash that we currently spend on the kids at home can be diverted towards expenses in college. If we owe more, our kids can take out a loan and we will help them pay it off.
Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Normchad
Posts: 1294
Joined: Thu Mar 03, 2011 7:20 am

Re: Should We Ever Save for Children's College?

Post by Normchad »

prairieman wrote: Sat Oct 17, 2020 9:32 am I just wanted to put in a plug for the value of parent involvement into their kids’ education during their formative years. We actually paid money to our kids for grades and accomplishments and, in our case, I think it helped them to become goal oriented - which helped in many ways, including reducing the cost of college through merit-based scholarships. We probably didn’t save as much as we could have in 529 accounts, but did not need as much as we thought we would have, either.
Each received decent cost reductions and work arrangements and we were able to get them through college debt free. For 529 accounts, we made a big effort to save a lot at their births and then nothing more. That money more than tripled by the time they needed it, even though the housing crisis and dot com bubble impacted their values.
We also stressed graduating in four years (we would not help in a fifth year).
Excellent point. I think like investing, education compounds as well. The work you do earlier has the most time to compound and provide outsized returns.

Ours are grown and gone now. But we figured they got the equivalent of 20 minutes instruction per day at school. So we did roughly the same at home, and really turbocharged the education.
Last edited by Normchad on Sat Oct 17, 2020 9:43 am, edited 1 time in total.
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm
EnjoyIt wrote: Fri Oct 16, 2020 12:39 pm
Frank the Tank wrote: Fri Oct 16, 2020 10:57 am I'm 6 years away from my twins graduating from high school. I was fortunate to take a finance class in college in the late 1990s where the professor was an avowed proponent of index funds and Vanguard, so the Boglehead philosophy was engrained in my financial planning from day one of my career before I knew that the term "Boglehead" even existed. (Thinking back, I was so fortunate to take that class since I definitely was the type at that time that would have have wanted to actively trade.) So, I feel very comfortable with our retirement planning 20 years later, but college planning still keeps me up at night.

In running the financial calculators at various schools (ranging from our in-state public flagship to Ivy League/Ivy-level schools), we would be a full pay family everywhere based on our income today (which isn't that much more than the OP's HHI). Even at our in-state public flagship, which both my wife and I attended and we would be more than happy for our children to attend, the total cost of attendance would be around $35,000 each per year (so $70,000 total for twins) as of *today* (much less several years from now). Even at our income level, that would be quite difficult to simply cash flow out of our income. For a full pay private institution, that number would be more than double. We started contributing to 529 plans for our kids as soon as they were born based on what seemed to be a reasonable rate of tuition cost inflation at the time, but the rise of tuition costs during that period have been astronomical. I have a hard time believing that an upper middle class family that has actually had to write tuition checks within the past 10 years could think that cash flowing and/or having kids pay for it on their own is really a viable option.

Sitting here 6 years away from paying those tuition checks, it's the only part of our financial planning that I wish that we had been more aggressive in saving more. We're now having to catch up with larger contributions in order to compensate for the lost time. It's a basic Boglehead philosophy to utilize the power of compounding returns and time value of money in their investments, so I'm actually flabbergasted at some of the comments here to suggest to not apply this to college costs (which for many people will be an amount larger than the cost of their house without the favorable terms of a mortgage).

Also, I had a fair amount of student loan debt after attending law school (fortunately none after undergrad), so I understand the drag that paying off that debt has on someone's ability to invest early on in their career. If you want your kids to be Bogleheads, then you want them to invest as much as possible from the very beginning of their careers in their 20s. Having a lot of student loan debt during that period can be a large (or even insurmountable) road block on that front.

Ultimately, we want our kids to have options. To be very clear, that doesn't mean paying private university tuition for the sake of paying for private university tuition based on an emotional whim. In fact, I can't justify paying more than in-state tuition at our flagship for 99% of the circumstances and career options. So, our primary target is to have the costs of our in-state flagship saved in our 529 plans.

That being said, as someone that is a lawyer that works in finance and tech consulting, I know firsthand that there are certain industries where an elite school is effectively a gatekeeper. Investment banking and top tier management consulting are prime examples where you essentially have to "pay to play" for a reasonable chance at those fields. The "live at home and go to community college for 2 years" model would never work in that scenario and even our excellent in-state flagship (a top 50 school) would present a difficult road. If either of our kids wants a reasonable shot (e.g. going to a true feeder school instead of trying to compete for a handful of slots against 40,000 other students) to work in one of those industries, then that 1% exception may apply because the potential financial return from those industries is so high (as even just a short stint can provide the training background for even more elite exit opportunities). In that situation, our secondary target is to have enough in our taxable accounts to be able to give our kids that shot if they're fortunate enough to be in that position.

Ultimately, the challenge is that college planning is like trying to predict the price of a airline ticket 18 years from now. Every person is paying a different price and it could depend on a thousand different factors that are outside of your control. I can only go by the most likely scenario for our financial situation, which is that we're going to be a full pay family and we'll need to plan accordingly.
Thanks for sharing your story. My feeling is pretty straight forward. Save for retirement as much as possible. It means are available max out all tax preferred options. Save in taxable account. Money is retirement and taxable can easy be used to help pay for higher education. If savings are on track and doing well, then I would look at a 529.

Just because one isn’t putting money into a 529 does not mean one will not help their kids with college costs. Also, a child can always take out loans and the parents can help pay them off if means are available.

In your situation that may be a reasonable option if your kids get into an Ivy League school. Use up the cash you have saved and if they need more they take out a loan. You help them pay it off after they graduate. This is exactly our plan though we are well over 6 years away. We have a 529 that I hope will cover in state tuition. Cash that we currently spend on the kids at home can be diverted towards expenses in college. If we owe more, our kids can take out a loan and we will help them pay it off.
Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
Grt2bOutdoors
Posts: 23042
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Should We Ever Save for Children's College?

Post by Grt2bOutdoors »

EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm
EnjoyIt wrote: Fri Oct 16, 2020 12:39 pm

Thanks for sharing your story. My feeling is pretty straight forward. Save for retirement as much as possible. It means are available max out all tax preferred options. Save in taxable account. Money is retirement and taxable can easy be used to help pay for higher education. If savings are on track and doing well, then I would look at a 529.

Just because one isn’t putting money into a 529 does not mean one will not help their kids with college costs. Also, a child can always take out loans and the parents can help pay them off if means are available.

In your situation that may be a reasonable option if your kids get into an Ivy League school. Use up the cash you have saved and if they need more they take out a loan. You help them pay it off after they graduate. This is exactly our plan though we are well over 6 years away. We have a 529 that I hope will cover in state tuition. Cash that we currently spend on the kids at home can be diverted towards expenses in college. If we owe more, our kids can take out a loan and we will help them pay it off.
Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
You can IF the lender views you as credit worthy. If you are unemployed or lack assets, tell us why you think someone will lend you money directly to benefit another person than yourself? People make plans, then life gets in the way....
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
smitcat
Posts: 6476
Joined: Mon Nov 07, 2016 10:51 am

Re: Should We Ever Save for Children's College?

Post by smitcat »

EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm
EnjoyIt wrote: Fri Oct 16, 2020 12:39 pm

Thanks for sharing your story. My feeling is pretty straight forward. Save for retirement as much as possible. It means are available max out all tax preferred options. Save in taxable account. Money is retirement and taxable can easy be used to help pay for higher education. If savings are on track and doing well, then I would look at a 529.

Just because one isn’t putting money into a 529 does not mean one will not help their kids with college costs. Also, a child can always take out loans and the parents can help pay them off if means are available.

In your situation that may be a reasonable option if your kids get into an Ivy League school. Use up the cash you have saved and if they need more they take out a loan. You help them pay it off after they graduate. This is exactly our plan though we are well over 6 years away. We have a 529 that I hope will cover in state tuition. Cash that we currently spend on the kids at home can be diverted towards expenses in college. If we owe more, our kids can take out a loan and we will help them pay it off.
Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
Of course you can take out a loan for college - sometimes its even the best idea.There is no way to know what type of loans or other assitance will be available in the future. There is not even a good way to know if you will need some or all of the funds for college - future estimates are just that.
KlangFool
Posts: 17715
Joined: Sat Oct 11, 2008 12:35 pm

Re: Should We Ever Save for Children's College?

Post by KlangFool »

Grt2bOutdoors wrote: Sat Oct 17, 2020 10:35 am

You can IF the lender views you as credit worthy. If you are unemployed or lack assets, tell us why you think someone will lend you money directly to benefit another person than yourself? People make plans, then life gets in the way....

Grt2bOutdoors,


A) If the person is unemployed and lacks assets, the person should not co-sign the loan.


B) <<People make plans, then life gets in the way....>>


And, that is the exact reason why someone should save for retirement first before saving for a college education.


KlangFool
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm
EnjoyIt wrote: Fri Oct 16, 2020 12:39 pm

Thanks for sharing your story. My feeling is pretty straight forward. Save for retirement as much as possible. It means are available max out all tax preferred options. Save in taxable account. Money is retirement and taxable can easy be used to help pay for higher education. If savings are on track and doing well, then I would look at a 529.

Just because one isn’t putting money into a 529 does not mean one will not help their kids with college costs. Also, a child can always take out loans and the parents can help pay them off if means are available.

In your situation that may be a reasonable option if your kids get into an Ivy League school. Use up the cash you have saved and if they need more they take out a loan. You help them pay it off after they graduate. This is exactly our plan though we are well over 6 years away. We have a 529 that I hope will cover in state tuition. Cash that we currently spend on the kids at home can be diverted towards expenses in college. If we owe more, our kids can take out a loan and we will help them pay it off.
Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Grt2bOutdoors
Posts: 23042
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Should We Ever Save for Children's College?

Post by Grt2bOutdoors »

KlangFool wrote: Sat Oct 17, 2020 10:49 am
Grt2bOutdoors wrote: Sat Oct 17, 2020 10:35 am

You can IF the lender views you as credit worthy. If you are unemployed or lack assets, tell us why you think someone will lend you money directly to benefit another person than yourself? People make plans, then life gets in the way....

Grt2bOutdoors,


A) If the person is unemployed and lacks assets, the person should not co-sign the loan.


B) <<People make plans, then life gets in the way....>>


And, that is the exact reason why someone should save for retirement first before saving for a college education.


KlangFool
I don’t disagree with you. I was responding to the poster who assumes one can just get a loan to pay for their kids college without qualification and that is clearly not true. No lender will hand out cash without evidence that there is a reasonable chance of repayment.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

Grt2bOutdoors wrote: Sat Oct 17, 2020 10:35 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm

Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
You can IF the lender views you as credit worthy. If you are unemployed or lack assets, tell us why you think someone will lend you money directly to benefit another person than yourself? People make plans, then life gets in the way....
If one is not credit worthy for a loan then one doesn’t even have the assets to retire either and should be paying $0 for college. Kids will need to go to community college or state school or work or take out their own debt or whatever makes things work.

I don’t understand why we are going around in circles here? It is because life happens why a family should first save up for retirement and then start thing about paying for their kids higher education and not the other way around.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm

Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Well then you should not be paying for higher education either. I think this is pretty straight forward here and don’t understand why you are going around in circles.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
chipperd
Posts: 732
Joined: Sat Sep 24, 2011 5:58 am

Re: Should We Ever Save for Children's College?

Post by chipperd »

dogagility wrote: Sat Oct 17, 2020 8:35 am
chipperd wrote: Sat Oct 17, 2020 6:59 am
Frank the Tank wrote: Fri Oct 16, 2020 10:57 am I'm 6 years away from my twins graduating from high school. I was fortunate to take a finance class in college in the late 1990s where the professor was an avowed proponent of index funds and Vanguard, so the Boglehead philosophy was engrained in my financial planning from day one of my career before I knew that the term "Boglehead" even existed. (Thinking back, I was so fortunate to take that class since I definitely was the type at that time that would have have wanted to actively trade.) So, I feel very comfortable with our retirement planning 20 years later, but college planning still keeps me up at night.

In running the financial calculators at various schools (ranging from our in-state public flagship to Ivy League/Ivy-level schools), we would be a full pay family everywhere based on our income today (which isn't that much more than the OP's HHI). Even at our in-state public flagship, which both my wife and I attended and we would be more than happy for our children to attend, the total cost of attendance would be around $35,000 each per year (so $70,000 total for twins) as of *today* (much less several years from now). Even at our income level, that would be quite difficult to simply cash flow out of our income. For a full pay private institution, that number would be more than double. We started contributing to 529 plans for our kids as soon as they were born based on what seemed to be a reasonable rate of tuition cost inflation at the time, but the rise of tuition costs during that period have been astronomical. I have a hard time believing that an upper middle class family that has actually had to write tuition checks within the past 10 years could think that cash flowing and/or having kids pay for it on their own is really a viable option.

Sitting here 6 years away from paying those tuition checks, it's the only part of our financial planning that I wish that we had been more aggressive in saving more. We're now having to catch up with larger contributions in order to compensate for the lost time. It's a basic Boglehead philosophy to utilize the power of compounding returns and time value of money in their investments, so I'm actually flabbergasted at some of the comments here to suggest to not apply this to college costs (which for many people will be an amount larger than the cost of their house without the favorable terms of a mortgage).

Also, I had a fair amount of student loan debt after attending law school (fortunately none after undergrad), so I understand the drag that paying off that debt has on someone's ability to invest early on in their career. If you want your kids to be Bogleheads, then you want them to invest as much as possible from the very beginning of their careers in their 20s. Having a lot of student loan debt during that period can be a large (or even insurmountable) road block on that front.

Ultimately, we want our kids to have options. To be very clear, that doesn't mean paying private university tuition for the sake of paying for private university tuition based on an emotional whim. In fact, I can't justify paying more than in-state tuition at our flagship for 99% of the circumstances and career options. So, our primary target is to have the costs of our in-state flagship saved in our 529 plans.

That being said, as someone that is a lawyer that works in finance and tech consulting, I know firsthand that there are certain industries where an elite school is effectively a gatekeeper. Investment banking and top tier management consulting are prime examples where you essentially have to "pay to play" for a reasonable chance at those fields. The "live at home and go to community college for 2 years" model would never work in that scenario and even our excellent in-state flagship (a top 50 school) would present a difficult road. If either of our kids wants a reasonable shot (e.g. going to a true feeder school instead of trying to compete for a handful of slots against 40,000 other students) to work in one of those industries, then that 1% exception may apply because the potential financial return from those industries is so high (as even just a short stint can provide the training background for even more elite exit opportunities). In that situation, our secondary target is to have enough in our taxable accounts to be able to give our kids that shot if they're fortunate enough to be in that position.

Ultimately, the challenge is that college planning is like trying to predict the price of a airline ticket 18 years from now. Every person is paying a different price and it could depend on a thousand different factors that are outside of your control. I can only go by the most likely scenario for our financial situation, which is that we're going to be a full pay family and we'll need to plan accordingly.
Thanks for sharing those details.

Couple thoughts and a question Re: " Even at our in-state public flagship, which both my wife and I attended and we would be more than happy for our children to attend, the total cost of attendance would be around $35,000 each per year (so $70,000 total for twins)".

Current full price in state at UofIllinois on campus is $30,050. (I got this number by adding: room and board, tuition, books and fees).

The UofI website cites "other expenses" as an additional $2,500/year, but that typically is only included at some schools to help families include/not forget additional costs to be away from home, like travel costs home. This is very individual. I have never included that in a COA unless a student needs to fly/train/bus home. If that is a factor, again, it's so individual, that I ask a family to roughly calculate that themselves.

Every school that I've seen will discount your EFC by anywhere from $5,000-$9,000/year for having two in school at the same time. So wondering if that COA you cited includes the discount each of your twins would receive (each would get half that EFC discount) for having two kids in college simultaneously?

Curious and, as these numbers are used for planning, hoping this may offer a small bit of reassurance.
Colleges/universities are under no obligation to discount the cost of attendance to match a FAFSA-based EFC, and I would venture to say that most do not.

One of the most accurate methods to estimate your actual cost of attendance is to use the Net Price Calculator. (If you own a farm, business, or are divorced, the Net Price Calculator may not be as accurate.)
I agree with both statements.
I have yet to see a college or university not discount the COA when there is more than one student in school at the same time.
The NPC should account for that variable.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am
oldfort wrote: Fri Oct 16, 2020 12:58 pm

Kids can’t take out loans without a co-signer.
What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Then you are likely in the category that would have gotten financial aid in the first place...
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

nigel_ht wrote: Sat Oct 17, 2020 8:24 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am

What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Then you are likely in the category that would have gotten financial aid in the first place...
Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

EnjoyIt wrote: Sat Oct 17, 2020 12:39 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am
EnjoyIt wrote: Sat Oct 17, 2020 2:31 am

What’s your point? If we don’t have the money to cover our own expenses and pay cash for college, a loan needs to be taken out. I see nothing wrong with taking out a loan and then helping them pay it off a few years out of college.

Hypothetical example: A family ends up having $100k saved but their child gets into a school that costs $200k. They currently spend $10k a year on the child and about $5k of it goes away by them moving out and going to school. They divert the extra $5k a year towards the education. This family also was saving $5k a year for college which will also be diverted towards tuition. That should cover $140k and a $60k loan will be taken out. Since this family was diverting $10k a year towards the loan, this family can have it paid of in about 6 years.
If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Well then you should not be paying for higher education either. I think this is pretty straight forward here and don’t understand why you are going around in circles.
People get too wrapped up in the micro-details. For someone like the OP in the $160k HHI bracket with two kids, the most important decision is set to clear limits on what colleges the kids can attend: ex. we won't pay/cosign for more than the COA at the in-state flagship. After setting clear limits on college spending, then worry about the less important tax optimization issues like an early IRA withdrawal vs 529.
stoptothink
Posts: 8314
Joined: Fri Dec 31, 2010 9:53 am

Re: Should We Ever Save for Children's College?

Post by stoptothink »

oldfort wrote: Sat Oct 17, 2020 10:37 pm
nigel_ht wrote: Sat Oct 17, 2020 8:24 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am

If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Then you are likely in the category that would have gotten financial aid in the first place...
Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
trueblueky
Posts: 1847
Joined: Tue May 27, 2014 3:50 pm

Re: Should We Ever Save for Children's College?

Post by trueblueky »

You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
I don't see Berea College nor College of the Ozarks on the prepscholar.com list. Neither charges tuition. Both have strong work study programs.

Added: I see Army, Navy and Air Force academies, but not the Coast Guard Academy nor the Merchant Marine Academy.
stoptothink
Posts: 8314
Joined: Fri Dec 31, 2010 9:53 am

Re: Should We Ever Save for Children's College?

Post by stoptothink »

trueblueky wrote: Sun Oct 18, 2020 8:28 am
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
I don't see Berea College nor College of the Ozarks on the prepscholar.com list. Neither charges tuition. Both have strong work study programs.
I can't verify the accuracy of the list (I'm sure a few more were missed), but with ~5,300 institutions in this country offering 4yr degrees, it's pretty easy to see that the vast majority aren't going to offer 100% need-based aid or otherwise figure out how to fund attendance for you. The ones that do generally have very low rates of admission. That's the point I (and oldfort) was making.
mnsportsgeek
Posts: 309
Joined: Mon Jan 19, 2015 1:39 pm

Re: Should We Ever Save for Children's College?

Post by mnsportsgeek »

I personally don't agree with the advice to max out all tax-advantaged retirement savings before contributing to college savings.
You can live a very comfortable life in retirement without maxing out 2 401Ks, 2 Roth IRAs, and an HSA.

We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am I personally don't agree with the advice to max out all tax-advantaged retirement savings before contributing to college savings.
You can live a very comfortable life in retirement without maxing out 2 401Ks, 2 Roth IRAs, and an HSA.

We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
Because ours and your future is uncertain, I would rather presume retirement accounts and then if all goes well, maybe when kids are older start looking into adding towards 529. My reasoning is that anything can happen and I would want to make sure we are secure if we lose our jobs, get sick, or whatever may happen. No harm done if we divert some retirement savings towards a 529 later. It just means that life is going as planned.

I am a very strong proponent of saving as much as possible early on in a career to get some front losing on retirement savings. My first year in a real job I saved 60% of take home pay. This number went down over the years as we allowed lifestyle creep. But those first few years of savings have compounded significantly where we are now in a position to help pay for higher education for the kids.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
stoptothink
Posts: 8314
Joined: Fri Dec 31, 2010 9:53 am

Re: Should We Ever Save for Children's College?

Post by stoptothink »

mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
What about for someone, who unlike yourself and your wife, did not graduate with little or no debt and therefore was not able to build retirement accounts early? There's a lot of "my parents paid for my education, so it is my responsibility to pay for my kids..." on this board, but I think it is important to recognize that (as has been discussed earlier), most college students are not having their education fully-funded by their parents (and most parents, by the time their kids are college-aged, have little in the way of retirement savings). You (and I, and most on this board) can do both, but for most parents it is a more difficult decision.
User avatar
abuss368
Posts: 21583
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Should We Ever Save for Children's College?

Post by abuss368 »

Many years ago we stated saving and investing for college with the state administered program. Once the balance grew, we eventually looked into Vanguard’s plan and moved our accounts. Vanguard’s plan, administered through the state of Nevada, offer very low cost options. We simply selected an all in one target fund and this has worked well.

Interesting, we received messages from Vanguard that the plan is being cleaned up and better organized effective November 1st. The age based funds appear to be better organized. There was earlier confusion based on risk tolerance - aggressive, moderate, conservative. In addition, the costs of many funds are being lowered again. Many thanks Vanguard.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
teen persuasion
Posts: 1266
Joined: Sun Oct 25, 2015 1:43 pm

Re: Should We Ever Save for Children's College?

Post by teen persuasion »

mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am I personally don't agree with the advice to max out all tax-advantaged retirement savings before contributing to college savings.
You can live a very comfortable life in retirement without maxing out 2 401Ks, 2 Roth IRAs, and an HSA.

We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
My view is that you are taking the phrase "max your retirement accounts" too literally. There are various ways to interpret this short rule of thumb.

One way to view "max" is to fill to the maximum allowed by law. Another is to fill to the maximum you need to reach your retirement goals. Both interpretations are moving targets, because individuals have varied access to retirement account space (no employer plan, SIMPLE IRA, 401k, after tax contributions allowed vs not, 2 workers vs SAHP, etc) and have different ideas on size of retirement savings needed (especially if eligible for a pension or 2 plus SS).

A different viewpoint is that retirement accounts are really just tax advantaged accounts that can be used for things beyond retirement (like college expenses). The 529 plan is another form of tax advantaged account, specifically for college expenses only. So the challenge here is to decide which tax advantaged plans are most useful. This is likely to be a hierarchy, with pros and cons for each, and contribution limits making stacking of multiple types the reality. More flexible types are higher on the stack, less flexible are lower on the list. As you fill each level, you must move down a desirability level to proceed to fill the next level, until you reach your desired max saved.

So if you've decided that 20% of income is sufficient to save for your retirement goal, and that has not exceeded the limits of top levels of accounts nominally designated 'retirement' accounts, you still have more room in those accounts. You chose to leave those levels unfilled and drop down to a more specialized /less flexible level to fill for a different purpose (college expenses). The question is whether that is the best account/level to use for that purpose. The devil's in the details. If you are in a state with an income tax AND your state offers a good tax credit for 529 contributions, that's a pro towards using 529s. If you expect to possibly be eligible for some financial aid, 529 and taxable assets will decrease aid (vs having the same amount stashed in 'retirement' accounts), so a pro towards using retirement accounts instead. But if your income-to-retirement accounts-space ratio means you exhaust all tax advantaged space and must also save in taxable to reach desired retirement assets, then using 529 accounts is again a pro (expands your tax advantaged space, unlikely to be eligible for any financial aid).

There's also the option to fund different goals sequentially instead of in parallel. Front load retirement savings (more than 20% in early years), then pause retirement savings in the college years to fund college expenses from cash flow, and switch back to retirement after college expenses are done. This has the advantage of giving retirement accounts priority early on, so that they get the most benefit from long compounding, and if life hands you a curveball you have a good base in the more generalized accounts, and none/little in the less flexible specialized college accounts that could be detrimental in a low income curveball situation.
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

teen persuasion wrote: Sun Oct 18, 2020 10:21 am
mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am I personally don't agree with the advice to max out all tax-advantaged retirement savings before contributing to college savings.
You can live a very comfortable life in retirement without maxing out 2 401Ks, 2 Roth IRAs, and an HSA.

We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
My view is that you are taking the phrase "max your retirement accounts" too literally. There are various ways to interpret this short rule of thumb.

One way to view "max" is to fill to the maximum allowed by law. Another is to fill to the maximum you need to reach your retirement goals. Both interpretations are moving targets, because individuals have varied access to retirement account space (no employer plan, SIMPLE IRA, 401k, after tax contributions allowed vs not, 2 workers vs SAHP, etc) and have different ideas on size of retirement savings needed (especially if eligible for a pension or 2 plus SS).

A different viewpoint is that retirement accounts are really just tax advantaged accounts that can be used for things beyond retirement (like college expenses). The 529 plan is another form of tax advantaged account, specifically for college expenses only. So the challenge here is to decide which tax advantaged plans are most useful. This is likely to be a hierarchy, with pros and cons for each, and contribution limits making stacking of multiple types the reality. More flexible types are higher on the stack, less flexible are lower on the list. As you fill each level, you must move down a desirability level to proceed to fill the next level, until you reach your desired max saved.

So if you've decided that 20% of income is sufficient to save for your retirement goal, and that has not exceeded the limits of top levels of accounts nominally designated 'retirement' accounts, you still have more room in those accounts. You chose to leave those levels unfilled and drop down to a more specialized /less flexible level to fill for a different purpose (college expenses). The question is whether that is the best account/level to use for that purpose. The devil's in the details. If you are in a state with an income tax AND your state offers a good tax credit for 529 contributions, that's a pro towards using 529s. If you expect to possibly be eligible for some financial aid, 529 and taxable assets will decrease aid (vs having the same amount stashed in 'retirement' accounts), so a pro towards using retirement accounts instead. But if your income-to-retirement accounts-space ratio means you exhaust all tax advantaged space and must also save in taxable to reach desired retirement assets, then using 529 accounts is again a pro (expands your tax advantaged space, unlikely to be eligible for any financial aid).

There's also the option to fund different goals sequentially instead of in parallel. Front load retirement savings (more than 20% in early years), then pause retirement savings in the college years to fund college expenses from cash flow, and switch back to retirement after college expenses are done. This has the advantage of giving retirement accounts priority early on, so that they get the most benefit from long compounding, and if life hands you a curveball you have a good base in the more generalized accounts, and none/little in the less flexible specialized college accounts that could be detrimental in a low income curveball situation.
I think this is a very good synopsis.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

oldfort wrote: Sat Oct 17, 2020 10:50 pm
EnjoyIt wrote: Sat Oct 17, 2020 12:39 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am
oldfort wrote: Sat Oct 17, 2020 9:34 am

If you co-sign on the loan, the lender can go after you for repayment. If you can’t afford to pay for college in your hypo, look at places cheaper than $200k.
Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Well then you should not be paying for higher education either. I think this is pretty straight forward here and don’t understand why you are going around in circles.
People get too wrapped up in the micro-details. For someone like the OP in the $160k HHI bracket with two kids, the most important decision is set to clear limits on what colleges the kids can attend: ex. we won't pay/cosign for more than the COA at the in-state flagship. After setting clear limits on college spending, then worry about the less important tax optimization issues like an early IRA withdrawal vs 529.
Median HHI is $69K. If you can’t manage to save for retirement AND 2 college degrees off $160K income that’s on you for not being able to prioritize for your kids future...
Last edited by nigel_ht on Sun Oct 18, 2020 8:11 pm, edited 1 time in total.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

stoptothink wrote: Sun Oct 18, 2020 9:11 am
mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
What about for someone, who unlike yourself and your wife, did not graduate with little or no debt and therefore was not able to build retirement accounts early? There's a lot of "my parents paid for my education, so it is my responsibility to pay for my kids..." on this board, but I think it is important to recognize that (as has been discussed earlier), most college students are not having their education fully-funded by their parents (and most parents, by the time their kids are college-aged, have little in the way of retirement savings). You (and I, and most on this board) can do both, but for most parents it is a more difficult decision.
Given than the median retirement savings for folks in their 40s is $63K and the average 529 has only $24K in it so most folks aren’t doing either one...given that I would say that what most on this board is doing is the far more relevant baseline than what most folks in general do.

If you’re savings 20% gross for retirement then yeah...save for college too with no regrets and forget about the “what about” scenarios.

Yes your life can be deeply challenged by fate but in how many of those scenarios will the contents of a college fund really change the outcome for folks on BH?
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

stoptothink wrote: Sun Oct 18, 2020 8:09 am
oldfort wrote: Sat Oct 17, 2020 10:37 pm
nigel_ht wrote: Sat Oct 17, 2020 8:24 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am
EnjoyIt wrote: Sat Oct 17, 2020 9:43 am

Why can’t I take out a loan for my kids education? Is there some taboo against it? If I’m saving $x every year for school then I can use $x to help pay down the debt after they graduate and help pay that debt.
What if you can't afford to pay back the loan?
Then you are likely in the category that would have gotten financial aid in the first place...
Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
If they can’t get in HYPMS (or cal tech and a handful of others) and then generally the alternative university that costs $$$$$ is overpriced for what it delivers and has a lower ROI than state schools.

The institutions that can show a positive ROI for $$$$$ are most likely on the list with good financial aid.

If they can’t show a positive ROI, then it’s a luxury decision. If you can afford it, great. If you can’t...well it’s a luxury and the BH way is to LBYM...

To me college is a financial/business decision...the ROI for many institution + major combinations are stellar. It’s going to be one of the better retirement investments you can make if you want to justify it that way...

But some combos have a negative or low ROI...and the answer there is no.

As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

nigel_ht wrote: Sun Oct 18, 2020 8:23 pm
stoptothink wrote: Sun Oct 18, 2020 8:09 am
oldfort wrote: Sat Oct 17, 2020 10:37 pm
nigel_ht wrote: Sat Oct 17, 2020 8:24 pm
oldfort wrote: Sat Oct 17, 2020 11:02 am

What if you can't afford to pay back the loan?
Then you are likely in the category that would have gotten financial aid in the first place...
Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
If they can’t get in HYPMS (or cal tech and a handful of others) and then generally the alternative university that costs $$$$$ is overpriced for what it delivers and has a lower ROI than state schools.
In the real world, not bogleheads fantasy land, the percent of students who get admitted to HYPMS is such a vanishingly small percentage of high school students, it's not worth discussing. Proceed with the assumption your kid will not get admitted to HYPMS, unless you're a rich donor and one of the previously mentioned schools has a building named after you.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

oldfort wrote: Sun Oct 18, 2020 9:00 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm
stoptothink wrote: Sun Oct 18, 2020 8:09 am
oldfort wrote: Sat Oct 17, 2020 10:37 pm
nigel_ht wrote: Sat Oct 17, 2020 8:24 pm

Then you are likely in the category that would have gotten financial aid in the first place...
Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
If they can’t get in HYPMS (or cal tech and a handful of others) and then generally the alternative university that costs $$$$$ is overpriced for what it delivers and has a lower ROI than state schools.
In the real world, not bogleheads fantasy land, the percent of students who get admitted to HYPMS is such a vanishingly small percentage of high school students, it's not worth discussing. Proceed with the assumption your kid will not get admitted to HYPMS, unless you're a rich donor and one of the previously mentioned schools has a building named after you.
So what? If your kids get in, you pay.

If they don’t then you pick the reasonably priced in state school.

If you want to splurge on a pricey school that’s not HYPMS but costs the same...awesome if you can afford it.

I don’t know a single rich donor to HYPMS but I do know a lot of kids who go. My cousin was one of them (Princeton).

I also know kids from our JROTC that went West Point and Annapolis.

It’s rare but it’s not “fantasy”. It may be aspirational but no more rare than retiring with multiple millions while working a normal 9 to 5 career.
Last edited by nigel_ht on Sun Oct 18, 2020 10:26 pm, edited 1 time in total.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

oldfort wrote: Sun Oct 18, 2020 9:43 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.

You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.

If my kids get into HYPMS I’ll find a way to pay.

If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.

Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
User avatar
TomatoTomahto
Posts: 11124
Joined: Mon Apr 11, 2011 1:48 pm

Re: Should We Ever Save for Children's College?

Post by TomatoTomahto »

nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
oldfort wrote: Sun Oct 18, 2020 9:43 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Okay, I get it; I won't be political or controversial. The Earth is flat.
stoptothink
Posts: 8314
Joined: Fri Dec 31, 2010 9:53 am

Re: Should We Ever Save for Children's College?

Post by stoptothink »

TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
oldfort wrote: Sun Oct 18, 2020 9:43 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
KlangFool
Posts: 17715
Joined: Sat Oct 11, 2008 12:35 pm

Re: Should We Ever Save for Children's College?

Post by KlangFool »

nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
oldfort wrote: Sun Oct 18, 2020 9:43 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.

You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.

If my kids get into HYPMS I’ll find a way to pay.


If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.

Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE
nigel_ht,

To each its own.

I come from a multigeneration business family. There are many self-made millionaires in my family. Some never graduated high school.


And, there are many family members that are FIRE.


The only silver bullet for us is our 30+% gross saving rate. We are FRUGAL. We do not overpay for anything. That includes a college education.


Yes, I have a biased view of formal education.

KlangFool
AnEngineer
Posts: 103
Joined: Sat Jun 27, 2020 4:05 pm

Re: Should We Ever Save for Children's College?

Post by AnEngineer »

EnjoyIt wrote: Sun Oct 18, 2020 12:34 pm
teen persuasion wrote: Sun Oct 18, 2020 10:21 am
mnsportsgeek wrote: Sun Oct 18, 2020 8:48 am I personally don't agree with the advice to max out all tax-advantaged retirement savings before contributing to college savings.
You can live a very comfortable life in retirement without maxing out 2 401Ks, 2 Roth IRAs, and an HSA.

We save 20% of our gross income towards retirement, and I don't have any reservations with putting several hundred dollars a month into a 529 for our 11 month old. I was fortunate to graduate college with just a little student debt (wife had none), and we would never have been able to build the retirement accounts we have without the savings we were able to start immediately after college graduation.

I see incredible value in prioritizing a college fund for your children. If you can save 20% for retirement and still have some extra funds, don't feel bad for breaking the "bogleheads advice" and putting some money towards college savings even if all your retirement accounts aren't maxed.
My view is that you are taking the phrase "max your retirement accounts" too literally. There are various ways to interpret this short rule of thumb.

One way to view "max" is to fill to the maximum allowed by law. Another is to fill to the maximum you need to reach your retirement goals. Both interpretations are moving targets, because individuals have varied access to retirement account space (no employer plan, SIMPLE IRA, 401k, after tax contributions allowed vs not, 2 workers vs SAHP, etc) and have different ideas on size of retirement savings needed (especially if eligible for a pension or 2 plus SS).

A different viewpoint is that retirement accounts are really just tax advantaged accounts that can be used for things beyond retirement (like college expenses). The 529 plan is another form of tax advantaged account, specifically for college expenses only. So the challenge here is to decide which tax advantaged plans are most useful. This is likely to be a hierarchy, with pros and cons for each, and contribution limits making stacking of multiple types the reality. More flexible types are higher on the stack, less flexible are lower on the list. As you fill each level, you must move down a desirability level to proceed to fill the next level, until you reach your desired max saved.

So if you've decided that 20% of income is sufficient to save for your retirement goal, and that has not exceeded the limits of top levels of accounts nominally designated 'retirement' accounts, you still have more room in those accounts. You chose to leave those levels unfilled and drop down to a more specialized /less flexible level to fill for a different purpose (college expenses). The question is whether that is the best account/level to use for that purpose. The devil's in the details. If you are in a state with an income tax AND your state offers a good tax credit for 529 contributions, that's a pro towards using 529s. If you expect to possibly be eligible for some financial aid, 529 and taxable assets will decrease aid (vs having the same amount stashed in 'retirement' accounts), so a pro towards using retirement accounts instead. But if your income-to-retirement accounts-space ratio means you exhaust all tax advantaged space and must also save in taxable to reach desired retirement assets, then using 529 accounts is again a pro (expands your tax advantaged space, unlikely to be eligible for any financial aid).

There's also the option to fund different goals sequentially instead of in parallel. Front load retirement savings (more than 20% in early years), then pause retirement savings in the college years to fund college expenses from cash flow, and switch back to retirement after college expenses are done. This has the advantage of giving retirement accounts priority early on, so that they get the most benefit from long compounding, and if life hands you a curveball you have a good base in the more generalized accounts, and none/little in the less flexible specialized college accounts that could be detrimental in a low income curveball situation.
I think this is a very good synopsis.
Agreed, (though the tax implications of the sequential option may not be favorable: tax deferred accounts best target your highest bracket).

Too much of this thread assumes money in a retirement account must be for retirement and money saved for college must be in a 529.
smitcat
Posts: 6476
Joined: Mon Nov 07, 2016 10:51 am

Re: Should We Ever Save for Children's College?

Post by smitcat »

stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
oldfort wrote: Sun Oct 18, 2020 9:43 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm As I said in a prior message, the relevant baseline is the median on bogleheads and not the general population or we’d be living pay check to pay check with minimal savings of any kind.
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
User avatar
wander
Posts: 3257
Joined: Sat Oct 04, 2008 9:10 am

Re: Should We Ever Save for Children's College?

Post by wander »

I agree with KlangFool. My parents did not have high school diplomas, but they raised 2 doctors and a bunch of engineers.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

nigel_ht wrote: Sun Oct 18, 2020 10:14 pm
oldfort wrote: Sun Oct 18, 2020 9:00 pm
nigel_ht wrote: Sun Oct 18, 2020 8:23 pm
stoptothink wrote: Sun Oct 18, 2020 8:09 am
oldfort wrote: Sat Oct 17, 2020 10:37 pm

Not likely. In the real world, not bogleheads land, most students don't attend colleges which meet full need. Within the limited subset of colleges which meet full need, as determined by the college, the family's EFC may not match the family's ability to pay.
You forgot this is Bogleheads, we just assume everybody's kids are going to HYPMS. There are a grand total of 22 schools in the entire country that offer 100% need-based aid, another 15 that guarantee to meet cost with a combination of aid+loans, and about 40 that guarantee to meet cost with loans (including my undergrad alma mater) https://blog.prepscholar.com/colleges-t ... ancial-aid . I know it's a :shock: , but the HUGE majority of students attend and graduate from universities not on any of those lists.
If they can’t get in HYPMS (or cal tech and a handful of others) and then generally the alternative university that costs $$$$$ is overpriced for what it delivers and has a lower ROI than state schools.
In the real world, not bogleheads fantasy land, the percent of students who get admitted to HYPMS is such a vanishingly small percentage of high school students, it's not worth discussing. Proceed with the assumption your kid will not get admitted to HYPMS, unless you're a rich donor and one of the previously mentioned schools has a building named after you.
So what? If your kids get in, you pay.

If they don’t then you pick the reasonably priced in state school.

If you want to splurge on a pricey school that’s not HYPMS but costs the same...awesome if you can afford it.

I don’t know a single rich donor to HYPMS but I do know a lot of kids who go. My cousin was one of them (Princeton).

I also know kids from our JROTC that went West Point and Annapolis.

It’s rare but it’s not “fantasy”. It may be aspirational but no more rare than retiring with multiple millions while working a normal 9 to 5 career.
3.7 million kids graduate from high school each year and roughly 2/3 of them go onto to college or 2.45 million. About 7340 kids enroll in HYPMS each year, according to CDS data for first time freshman, or ~0.3%. Those odds are about the same as a high school football or baseball senior, making it into the NFL or MLB, respectively.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
oldfort wrote: Sun Oct 18, 2020 9:43 pm
Since all threads in the personal investments section are to enable the OP to make a decision, the relevant baseline is the financial situation of the OP, not the general population or the bogleheads median. Although I would say you have a skewed view of the bogleheads median, even among a group of relatively wealthy families, most kids aren't getting into HYPMS.
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
User avatar
TomatoTomahto
Posts: 11124
Joined: Mon Apr 11, 2011 1:48 pm

Re: Should We Ever Save for Children's College?

Post by TomatoTomahto »

oldfort wrote: Mon Oct 19, 2020 11:23 am According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
The article is behind a paywall, so I can’t read it.

Of the Yale grads I know (let’s say 10 of them), 0 have incomes below that line, at age 24, other than those who are in grad school.

The numbers might be skewed by the not insignificant number of kids who have options to work at lower pay. My son, for example, had a high school English teacher who graduated from Harvard. Why? Because he could afford to do what he wanted to do.
Okay, I get it; I won't be political or controversial. The Earth is flat.
oldfort
Posts: 1737
Joined: Mon Mar 02, 2020 8:45 pm

Re: Should We Ever Save for Children's College?

Post by oldfort »

TomatoTomahto wrote: Mon Oct 19, 2020 11:33 am
oldfort wrote: Mon Oct 19, 2020 11:23 am According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
The article is behind a paywall, so I can’t read it.

Of the Yale grads I know (let’s say 10 of them), 0 have incomes below that line, at age 24, other than those who are in grad school.

The numbers might be skewed by the not insignificant number of kids who have options to work at lower pay. My son, for example, had a high school English teacher who graduated from Harvard. Why? Because he could afford to do what he wanted to do.
Which just proves how misleading it can be to rely on anecdotes or personal experiences rather than data.
smitcat
Posts: 6476
Joined: Mon Nov 07, 2016 10:51 am

Re: Should We Ever Save for Children's College?

Post by smitcat »

oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university

A quote from the other link is cut and pasted below - the charts are really clear and useful if you read the article.
"The top 10 percent of Ivy League grads are earning $200,000 or more ten years after starting school. The top earners of other schools, on the other hand, are making just a hair under $70,000."
smitcat
Posts: 6476
Joined: Mon Nov 07, 2016 10:51 am

Re: Should We Ever Save for Children's College?

Post by smitcat »

oldfort wrote: Mon Oct 19, 2020 11:35 am
TomatoTomahto wrote: Mon Oct 19, 2020 11:33 am
oldfort wrote: Mon Oct 19, 2020 11:23 am According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
The article is behind a paywall, so I can’t read it.

Of the Yale grads I know (let’s say 10 of them), 0 have incomes below that line, at age 24, other than those who are in grad school.

The numbers might be skewed by the not insignificant number of kids who have options to work at lower pay. My son, for example, had a high school English teacher who graduated from Harvard. Why? Because he could afford to do what he wanted to do.
Which just proves how misleading it can be to rely on anecdotes or personal experiences rather than data.
Which is why I posted a link to an article not behind a pay wall and presents the data very clearly.
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
nigel_ht wrote: Sun Oct 18, 2020 10:23 pm
Nope. I have the skewed view of a demographic that values education to the extent that the cost is secondary.
You keep wanting to skip the ROI discussion which is the most relevant. Education is a silver bullet.
If my kids get into HYPMS I’ll find a way to pay.
If they don’t...then I pick UVA if they can get in there. If my state school option sucked then we’d have to look for alternatives but we picked where we live based in part on educational opportunities.
Besides, if you can save 20% gross for retirement you’re golden unless you want to FIRE.
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
Is $76k a year income worth paying $75k/yr for 4 years of education? Absolutely not.
But the potential to make substantially more is also there.

Interesting math here: What if I saved $75k a year for 4 years or $300k and instead lump summed it into a taxable account in my kids names. What would that be if they did not touch it for 40 years and got an average inflation adjusted 5% return on that investment? Answer is $2.1 million.

What if we used an actual historical return of a 75/25 portfolio, inflation adjusted the average is 2.6 million with a peak of 7.4 million and a low of about $1 million. Maybe the best return on investments isn't a high priced college education but investing the cash instead. Then again, we are not solely looking on education cash benefit but also the experience and the growth a college education provides a young individual.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

smitcat wrote: Mon Oct 19, 2020 11:38 am
oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university

A quote from the other link is cut and pasted below - the charts are really clear and useful if you read the article.
"The top 10 percent of Ivy League grads are earning $200,000 or more ten years after starting school. The top earners of other schools, on the other hand, are making just a hair under $70,000."
I think the data is a bit misleading. The kids with enough aptitude to get into Ivy league and can afford it are already above average and will be making higher incomes compared to the average kid in a community college. This alone skews the data. A doctor out of Yale will make the exact same income as a doctor out of a state school. A business grad from Yale is more likely to get higher end promotions and make more money than a business grad from a no name school. Context matters a lot here. I suspect that Ivy is great for certain professions and will open lots of opportunities. Other professions it is a waste of money. Again, context matters.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

wander wrote: Mon Oct 19, 2020 11:08 am I agree with KlangFool. My parents did not have high school diplomas, but they raised 2 doctors and a bunch of engineers.
I would say they valued education highly...you don’t get 2 doctors and a bunch of engineers because you think higher ed isn’t useful...
stoptothink
Posts: 8314
Joined: Fri Dec 31, 2010 9:53 am

Re: Should We Ever Save for Children's College?

Post by stoptothink »

EnjoyIt wrote: Mon Oct 19, 2020 11:46 am
smitcat wrote: Mon Oct 19, 2020 11:38 am
oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am

Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university

A quote from the other link is cut and pasted below - the charts are really clear and useful if you read the article.
"The top 10 percent of Ivy League grads are earning $200,000 or more ten years after starting school. The top earners of other schools, on the other hand, are making just a hair under $70,000."
I think the data is a bit misleading. The kids with enough aptitude to get into Ivy league and can afford it are already above average and will be making higher incomes compared to the average kid in a community college. This alone skews the data. A doctor out of Yale will make the exact same income as a doctor out of a state school. A business grad from Yale is more likely to get higher end promotions and make more money than a business grad from a no name school. Context matters a lot here. I suspect that Ivy is great for certain professions and will open lots of opportunities. Other professions it is a waste of money. Again, context matters.
This has been debated ad nauseam, on this board and elsewhere. The data is far from conclusive and there are a million different factors. The point being: it depends. Generalizations like "silver bullet, ROI is off the charts..." are pointless.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

EnjoyIt wrote: Mon Oct 19, 2020 11:46 am
smitcat wrote: Mon Oct 19, 2020 11:38 am
oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am

Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university

A quote from the other link is cut and pasted below - the charts are really clear and useful if you read the article.
"The top 10 percent of Ivy League grads are earning $200,000 or more ten years after starting school. The top earners of other schools, on the other hand, are making just a hair under $70,000."
I think the data is a bit misleading. The kids with enough aptitude to get into Ivy league and can afford it are already above average and will be making higher incomes compared to the average kid in a community college. This alone skews the data. A doctor out of Yale will make the exact same income as a doctor out of a state school.
Yah, no. Top residencies are real competitive...they all pay low but finishing your residency at Hopkins is more remunerative than finishing your residency at U of Maryland across town. And UMD has a very solid rep.
nigel_ht
Posts: 1188
Joined: Tue Jan 01, 2019 10:14 am

Re: Should We Ever Save for Children's College?

Post by nigel_ht »

EnjoyIt wrote: Mon Oct 19, 2020 11:42 am
oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am
stoptothink wrote: Mon Oct 19, 2020 10:37 am
TomatoTomahto wrote: Mon Oct 19, 2020 10:02 am
I don't have stats on this, but it is my impression that BHs have a higher percentage of acceptances to HYPMS and similar schools than the national average. I don't entirely ascribe this to the intelligence level, but also the hard work that often results in an acceptance.

My kids went to a private school that was academically selective. It also had a very generous need based scholarship program, which made for a diverse student body. 20% attended HYPMS and other similar schools (Caltech, other Ivies, etc) (more might have been admitted, but I only know where they matriculated). As a parent at that school for 9 years, I had a pretty good idea who worked hard and who didn't. The kids were mostly very intelligent, and the exceptions to that were widely known. Of those kids, only one was accepted to an Ivy who probably was accepted because of his family's money (I wasn't in the AO meeting, obviously, but he didn't seem like a serious student). My kids went to schools that were a fit for them (the hardworking one to Yale, the other one to a selective but not HYPMS caliber school).

For the most part, HYPMS get their acceptances right. When my son attended, he did find a cohort of "kids with their names on buildings" who I do not think brought up the academic level at the school, but they didn't drag the classes down either. For the most part, other students ignored them or pitied them -- they for sure did not aspire to be like them.

Here's an anecdote I've told before, but I think is instructive. In high school, my hard-working student hung out with kids who were among the HYPMS-bound crowd; my other son didn't. At Yale, most of my son's friends were getting a combined Master's/Bachelor's in their 4 years, to the point that I thought that's what was "normal" for college. It wasn't until graduation that I realized (based on the robes) that the combined degree students made up 2% or so of the undergraduates; birds of a feather DO flock together. It's also the case that these kids weren't hanging out together because they were all CS students, or Physics, or whatever; their majors were spread across the spectrum, but they liked to hang with kids who took school very seriously.

There are hard-working and very intelligent students who do not get accepted to HYPMS, but I think it is misleading to look at the 3% acceptance stats.

Re silver bullet, absolutely! ROI is off the charts.
Let's not make generalizations. ROI appears to be off the charts for your son, but the data does not necessarily paint that picture (in general). Of the HYPMS grads in my life, almost to the one you could say differently (but my anecdote is no more relevant than yours). Would I find a way if my kid was admitted? Probably.
FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university
Is $76k a year income worth paying $75k/yr for 4 years of education? Absolutely not.
But the potential to make substantially more is also there.

Interesting math here: What if I saved $75k a year for 4 years or $300k and instead lump summed it into a taxable account in my kids names. What would that be if they did not touch it for 40 years and got an average inflation adjusted 5% return on that investment? Answer is $2.1 million.

What if we used an actual historical return of a 75/25 portfolio, inflation adjusted the average is 2.6 million with a peak of 7.4 million and a low of about $1 million. Maybe the best return on investments isn't a high priced college education but investing the cash instead. Then again, we are not solely looking on education cash benefit but also the experience and the growth a college education provides a young individual.
Um...are you going to feed them for 40 years?
User avatar
wander
Posts: 3257
Joined: Sat Oct 04, 2008 9:10 am

Re: Should We Ever Save for Children's College?

Post by wander »

nigel_ht wrote: Mon Oct 19, 2020 11:52 am
wander wrote: Mon Oct 19, 2020 11:08 am I agree with KlangFool. My parents did not have high school diplomas, but they raised 2 doctors and a bunch of engineers.
I would say they valued education highly...you don’t get 2 doctors and a bunch of engineers because you think higher ed isn’t useful...
I think you misunderstand. What I mean is expensive education does not make people smarter. Smart people can find there way to live good lives.
EnjoyIt
Posts: 4693
Joined: Sun Dec 29, 2013 8:06 pm

Re: Should We Ever Save for Children's College?

Post by EnjoyIt »

stoptothink wrote: Mon Oct 19, 2020 11:55 am
EnjoyIt wrote: Mon Oct 19, 2020 11:46 am
smitcat wrote: Mon Oct 19, 2020 11:38 am
oldfort wrote: Mon Oct 19, 2020 11:23 am
smitcat wrote: Mon Oct 19, 2020 10:58 am

FWIW - average salaries appear to be much higher according to this article....
https://www.washingtonpost.com/news/won ... e-schools/
According to this, the median income of a Yale graduates at 34 is $76k with higher income for men and lower income for women. Is this above the average state school? definitely. Is earning $76k at 34 an off the charts income? Not really

https://www.nytimes.com/interactive/pro ... university

A quote from the other link is cut and pasted below - the charts are really clear and useful if you read the article.
"The top 10 percent of Ivy League grads are earning $200,000 or more ten years after starting school. The top earners of other schools, on the other hand, are making just a hair under $70,000."
I think the data is a bit misleading. The kids with enough aptitude to get into Ivy league and can afford it are already above average and will be making higher incomes compared to the average kid in a community college. This alone skews the data. A doctor out of Yale will make the exact same income as a doctor out of a state school. A business grad from Yale is more likely to get higher end promotions and make more money than a business grad from a no name school. Context matters a lot here. I suspect that Ivy is great for certain professions and will open lots of opportunities. Other professions it is a waste of money. Again, context matters.
This has been debated ad nauseam, on this board and elsewhere. The data is far from conclusive and there are a million different factors. The point being: it depends. Generalizations like "silver bullet, ROI is off the charts..." are pointless.
Agreed. It is all in the details. I can tell you this much. I hope my kids are smart and driven. If one of them does happen to get into an Ivy league school and is opting for a degree outside of basket weaving, we will pay for it. It may not be the best financial decision or the best ROI, but it can be. I love my kids, want the best for them, and am willing to take the chance.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
Post Reply