OT - How Are You Paying for Your (kids') College?
Mates,
We are a year out from having the first one go off to college.
She is busy researching schools and we were talking tuition and room and board last night. Uhm. Yeah. Things have changed in that regard since when I went to school on a magnitude of about 10X. When I stopped playing hockey, painting houses all summer was enough to pay for my last two years of tuition and board. Not so these days!
It is hoped that we would avoid debt of any kind for the kids's school, and so the question is:
How are you/do you plan on paying your kids' college costs?
Thank you, and hopefully many good ideas are shared.
XM
August 11th, 2016 at 12:49 PM ^
sell Meth in Barry County, they love that shit over there.
August 11th, 2016 at 12:51 PM ^
I'm not.
August 11th, 2016 at 1:32 PM ^
Same, thanks to (intentional) sterility!
August 11th, 2016 at 11:04 PM ^
This. I got snipped before babies.
August 11th, 2016 at 12:52 PM ^
but there are some risks...
August 11th, 2016 at 1:37 PM ^
August 11th, 2016 at 2:58 PM ^
August 11th, 2016 at 3:42 PM ^
August 11th, 2016 at 5:07 PM ^
I base this on what I've seen in Breaking Bad through the end of season 4.
August 11th, 2016 at 12:52 PM ^
Tl;dr I'm screwed
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August 11th, 2016 at 12:57 PM ^
Feel the same way. 8 years and 10 years out on my two and I fear the thought. We have a 529 for them, but by that time I might as well become an indentured servent at their school of choice.
In all honesty, I had a wonderful undergrad experience at Michigan, but is it even close to what I went through in the 90s?
August 11th, 2016 at 1:07 PM ^
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August 11th, 2016 at 1:13 PM ^
We met with our financial advisor when our daughter was born (3.5 yrs ago). Calculated in-state tuition at UM to be around 265k. Stanford on the other hand - a whopping 526k. I could only respond with "shit".
August 11th, 2016 at 7:43 PM ^
What are you basing those numbers on? Right now in-state tuition at UofM would be about $70k total; there's no way that room and board/cost of living is nearly $200k. Similarly with Stanford, it's expensive, but it's nowhere near that expensive...
August 11th, 2016 at 11:07 PM ^
Yea, those numbers seem high.
August 11th, 2016 at 4:38 PM ^
You pay large sums of money so you can hopefully one day make a decent wage as an employee somewhere, ugh.
Take the money you saved for them and give it to them at age 23 so they can have a head start in life with a nest egg to fall back on if things ever get too tough. Spend ages 18-22 investigating and researching with them starting an online business or making money online. This way they can go thru life working remotely while experiencing life to the fullest along with having the huge upside that all of their hard work may pay off in a big way one day down the road.
OR
They can go to school and build up 200k+ in debt to become an employee for somebody that is getting rich off their hard work and who also has all the power to get rid of them for any reason. All of this while being stuck in the same small area of the world the whole time waiting for their 2-3 weeks of vacation each year, no thanks.
August 11th, 2016 at 11:08 PM ^
Even with the cost of college as high as it is, it is still one of the best investments a kid can ever make. Doubly so if they pick a career path that someone will actually pay them for.
Best bang for your buck is engineering. Of course it's also one of the hardest undergrad majors.
August 11th, 2016 at 12:53 PM ^
By not having any.
August 11th, 2016 at 1:53 PM ^
Bingo. The no kids approach comes in handy when you're still no where near paying off your own education from a decade ago.
August 11th, 2016 at 12:54 PM ^
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August 11th, 2016 at 12:57 PM ^
We're 2 years out and are nervous as all hell. We've squirreled away significant chunks of $$$ in 529 accounts for our children, but that will come nowhere near covering the cost of out-of-state UM tuition (yes, my oldest child is extremely interested in UM - my fault for watching UM sports so much. Also, half my wardrobe is Michigan gear).
I'm also terrified of the FAFSA mocking us for saving so much in 529 accounts, meaning we will not qualify for any financial aid. As the OP stated, summer jobs won't pay for the tuition bills unlike a few decades ago. I need to learn more about the FAFSA in the coming years so we can brace ourselves for financial impact.
August 11th, 2016 at 12:56 PM ^
I figure saving $500 a month per kid from birth gets me close enough.
August 11th, 2016 at 1:00 PM ^
I just did the math on that and it equals $108000 dollars. That's probably not enough going forward though.
August 11th, 2016 at 1:03 PM ^
It's actually $219,673 with a conservative 5% return through age 21. You have to invest it.
August 11th, 2016 at 1:06 PM ^
August 11th, 2016 at 1:16 PM ^
If you assume 7% growth (which depending on who you ask is or is not a good assumption) then it is north of 200k
August 11th, 2016 at 1:26 PM ^
He should also be increasing that $500/month at a rate equal expected net income growth.
August 11th, 2016 at 2:34 PM ^
August 11th, 2016 at 12:56 PM ^
By bringing the Warthog out of retirement
August 11th, 2016 at 12:56 PM ^
Around $115 of debt for my oldest that just graduated - about $12K in refunds on taxes
But she has a full time job and between her and us we'll make sure she is able to become completely self supportive without killer her debt wise
The youngest is hitting OCC for an associates degree first - we'll see after that - she is only now becoming serious about school - not gonna drop major bucks on her til she proves herself
August 11th, 2016 at 12:58 PM ^
$115. Or $115K?! If the former, you did well. If the latter, ouch.
August 11th, 2016 at 1:04 PM ^
Careful with that full time job! Once your gross earnings go over a certain limit (~$75,000 /yr I think) you loose that tax refund on accrued student loan debt interest. I don't actually recommend taking less money just to keep the refund, since the long term benefits should outweigh the short term loss of having to work harder with less, but damn it's a sucks when TurboTax lets you know that your ineligible for that tax break!
August 11th, 2016 at 1:24 PM ^
It really sucked to pay $8,000 in interest in one year with no deductions coming from it.
August 11th, 2016 at 2:16 PM ^
if filing jointly
wife stays home
we are good (barely)
August 11th, 2016 at 3:58 PM ^
I got me one of those sugar mommas but I still work. Figure pay the piper now and retire early.
August 11th, 2016 at 12:56 PM ^
Sorry to hear about the upcoming expense. Especially when you start to think about the cost-benefit of a college degree (obviously, depends on field of study, cost, job prospects, etc.).
My wife is a professor. Her university will pay for tuition at that school or at about 35 others. Those schools will be encouraged, but not required. If XM or Mrs. XM (hell, even the kid) can pick up a full-time gig at a local university, you might be able to get a tuition benefit.
I am also saving for my kids' college in 529 plans. That doesn't help you out, XM, but any mgoparents with young kids, you should. Growth is tax free, provided it is used for education.
August 11th, 2016 at 12:57 PM ^
August 11th, 2016 at 1:27 PM ^
face tattoos....?
August 11th, 2016 at 3:00 PM ^
August 11th, 2016 at 12:57 PM ^
August 11th, 2016 at 12:59 PM ^
isn't allowed to go to college until we beat OSU and MSU.
August 11th, 2016 at 1:25 PM ^
best one yet
August 11th, 2016 at 12:59 PM ^
August 11th, 2016 at 1:05 PM ^
2 kids and this is exactly what we are doing. 1/3 in 529, 1/3 in zero coupon bonds, and 1/3 in index funds. That way if both our kids end up going to jail, we aren't stuck with all that money in a 529. Suffer now for freedom later, indeed!
August 11th, 2016 at 1:13 PM ^
Education is free in jail, no? So let's look at the half-glass-full angle here.
Also, you can still access 529 funds if you don't end up using them. You'll have to forfeit taxes, etc., but it's not the money is lost in a black hole. This is the part where I utter the disclaimer to consult your tax attorney or financial advisor or the internet for further details.
August 11th, 2016 at 1:19 PM ^
Free jail education - sounds pretty damn good!
Yeah, the whole 10% penalty in addition to income tax steered us towards several different options for planning purposes (in addition to the traditional 529). Plus, I like the idea that it is my money (particularly in the event that my daughter continues to piss me off every morning until she is 18).
August 11th, 2016 at 1:29 PM ^
That's what I would do if my wife and I weren't currently spending a 2nd mortgage's-worth on our own loans each month.