College Savings

[MonkeyMama]

@Photo -I understand that part. BUT, you will get absolutely no financial aid if you have $0 assets and your income is higher than cutoff. Which is the reality in a high cost area - assets won't even come into the equation. (At least that is my very limited understanding. I have no professional frame of reference since subject never comes up, but have played a bit with online calculators to make sure I Wasn't crazy. It quickly became clear to me that combo of high wages and low cost colleges in region explained why financial aid was never discussed in my middle class circles, nor brought up by any tax clients - but to whine they were excluded solely for their high incomes).

As an aside, I personally don't think it's a bad thing that people with high incomes and/or savings don't qualify for aid. But I know I am general alone in these type feelings! I'll take fiscal responsibility any day (over government handouts).

[LivingAlmostLarge]

But I can't live without saving for retirement. It would be too irresponsible, and I've heard that from a couple of friends now with kids who are making about the same and saved diligently for college and no aid.

Photo how much are you paying out of tuition for kids 2 and 3 if they got merit based scholarships? What is their tuition and how much did they get versus what you pay? What did the first kid get? Do you expect child #4 to do the same? Did all three kids get the same or did the aid vary? And if it varied did you still pay for the kids 100%?

[Like2Plan]

But I can't live without saving for retirement.

LAL,
You are right, you have to save for your retirement first.

I think the most sucessful strategy is to save an amount you can comfortably afford in a systematic fashion and increase the amount as you are able.

Maybe you won't reach the entire amount needed for college, but every bit you save now is money you (or your child) does not have to borrow. Also, if you save in a 529 plan, the money is not as heavily weighted against you in the financial aid formula as opposed to other non-retirement assets outside the 529. Unless things change with the financial aid formulas, I doubt your child would qualify because over the next 18 years your income will continue to go up.

[LivingAlmostLarge]

Okay sounds good. I feel more comfortable knowing we're well secured in 15 years, but guilty at the same time because college maybe underfunded.

[moneybags]

There is some aid available for higher income families (over $100,000), but mostly at private schools with a lot of money (Harvard, Princeton, etc.). Many of these schools fund 100% of your education if family income is under $60,000. Schools will soon be required to have a financial aid calculator on their websites, so if you are curious, check one out. I know Princeton and Carleton College already have them. It asks for basic info from your tax return, house value/debt, family size, and savings/investments.

For those of you with kids in high school, my biggest tip is to buy a study guide book for the PSAT and make sure your child takes this test in their junior year. For those that do extremely well (top 15,000 in the country), there are great scholarship opportunities available from the National Merit Scholarship Program. For example, National Merit Finalists can attend University of Alabama for 4 years, free tuition, free room and board, a free Ipad, and a small stipend.

[another_chelle]

I currently only put away $100 per month per child. We have two kids we are hoping to pay for a majority of their college costs. Since both of our kids are daycare kids we are used to paying $20K a year in childcare and once the kids move onto elementary we will transfer at least half of the daycare savings over to the kids college accounts.

Also once the kids do go to college we should be in the position to pay for items such as books and supplies on an as needed basis. The goal is to have a paid for house by this time and we could redirect the mortgage savings to kids college needs.

The other half of the daycare savings will be moved to our retirement savings. We are saving about 13% for retirement at this time and we need to bump up to at least 15%. Our income varies but we are never under 150K/year.

My husband and I both paid for our own schooling and he came out with about 25K in student loans. With the price of college going up every year we don't want the kids to be saddled with crazy huge student loan debt. I see too many threads about people coming out of college with over 100K of student loan debt and that is no way to start a new life.

[LivingAlmostLarge]

Good to know about the school calculators. I know they pay 100% for kids whose families make less than $60k, but when will they adjust for where you live? Seems unfair because where I live $60k is barely making it for sure, versus $60k in a much lower COLA where it can easily be enough.

I don't know what the future holds but $100k of student loans, at least is it for graduate school? If just undergrad, I'd probably talk to my kid about CC instead and having $50k in debt for just 2 years.