It’s a generalized formula that has nothing to do with any one person’s specific reality. There is no one-size-fits-all formula for paying for college. But, saving some in advance, paying some out of current earnings and paying for some with loans is not a bad place to start. For many families it can be one of the largest expenses they will have to deal with, and spreading the expense over a much longer period of time might be the only reasonable way to make it work.
I have a lot of empathy for any family that prioritizes education and discovers that their best efforts are still going to be a limiting factor.
But college affordability is a complicated subject, and many people like to jump to the easiest conclusion- “pay the professors less”. Well, they’d be shocked how little some professors make. “Have fewer non-teaching staff”. Well, that’s great except that if it’s YOUR kid with a deadly peanut allergy, you don’t want to fire the nutritionist who supervises the cooking staff at the cafeteria, and if it’s YOUR kid who uses a wheelchair or a walker you don’t want to fire the disabilities coordinator and if it’s YOUR kid who had a bout with severe depression you don’t want to cut back on the counseling staff. So easy solution- just get rid of the high priced professional staff. Well- since every time a college kid drinks too much and falls off a roof or slips on a step the family sues- who are you getting rid of? The head of risk management, chief legal counsel or the director of substance abuse programs?
Who here wants to send their kid to a college where every single dorm isn’t outfitted with the latest in technology? Do you know what it costs to retrofit a building constructed in the 19th century to meet that demand? Parents here complain that their kids dorm doesn’t have air conditioning- even though in some parts of the country, A/C season for a college kid means two weeks in September and four days in May.
People want what they want. Then they get furious that it costs so much to deliver what they want.
I am empathetic, but there are no quick fixes here. Sadly.
It sounds like you are not an adjunct. Adjuncts sometimes get paid differently than full time faculty.
If you are working in a state where public employees don’t contribute to SS, that’s a whole different story.
I should add that my adjunct kid also has a well funded Roth. He does the best he can.
“I remember sitting down when the kids were born and reading on the 529 plan info materials that we should plan for 1/3 of the cost to come from savings (the 529), 1/3 to come from grants/aid, and 1/3 to come from cashflow and student earnings”
What I remember right before our first kid was born (2002) is that college costs were going up so fast that you should expect to be paying 150K for public universities and 250K plus for privates. My wife and I immediately set-up a 529 plan with the expectation that we were the ones that would be footing the bill, almost exclusively (i.e we did not expect grant/merit or any other aid). I think those college cost projections were pretty accurate (if not a little low especially for some privates).
What you must also keep in mind is that the line to pay for college starts at your house. there are over 4000 colleges in the U.S. at price points ranging from free (Berea and other work colleges) to over 70K a year. You get to have that conversation regarding what you will or will not pay/borrow or cosign for college.
Where do you think that the money for financial aid comes from? The endowment is funded through the generosity of others (parents, grandparents, alumni, corporations, etc) so that they can help make college affordable for those who really have no means to pay. Do you really think that others should pay for your child to attend school based on financial need while you bank a half million $$. If I had $100k in the bank, and the college is asking me to pay $5.6k to the college, I would run that check to the college and say thank you very much for letting me keep my $95, 400. The biggest driver of financial aid is income. If you make $100k/year, then yes you are going to pay more than someone who makes $32k/year. I am not saying that you have to or that you should spend every available $ to send your kids to college. If you want to be miserly about it, then that is a total different issue
To be able to pay for essentially any school your child wants to attend, is a blessing. A 0 EFC kid is most likely going to college commuting from home because the only thing they are guaranteed is a $6000 Pell grant and a $5500 loan freshman year. Many states do not even provide state aid for their taxpayer base.
And by the way, your friend who is making bank, driving a range rover and has saved no money for college, unless his/her kid is getting considerable merit money, their kid is most likely going to school locally and living in their room at home.
Read the CDS, which now includes information on Pell grant students and students who receive subsidized loans, and you will being poor is really not that great in the college process
“I’m talking about contributions to 401Ks during the financial aid base year and the years the kids are in college. For a person with two kids, once you factor in prior prior years, that’s about a decade of prime earning years that their 401K contributions will be counted as income. Again, I’m not for a second saying that someone who can’t afford any savings is better off. I would never, never say that. I work with homeless and extremely poor students every single day. But I don’t see it as overall good financial policy to discourage middle class and upper middle class people from saving for retirement in order to fund college educations. It just shoves the social burden on the next generation. We should incentivize saving for retirement, not the opposite.”
One problem here is that the FAFSA doesn’t really accord with the reality of retirement provision today. An employer paid defined benefit pension doesn’t count at all on the FAFSA since you are not making those contributions. And if you are self-employed you can often set up the pension provision in a way that isn’t reported as income either (e.g. SEP-IRA contributions from your own C corporation). Unfortunately it’s the employees who only have the option of funding a 401K with their own contributions that lose out in the calculated EFC.
That’s true IF your employer has a loan program and IF you are working for the same employer or have rolled your prior 401k to a new employer. If not, you have to take a withdrawal.
Next to no colleges have remained price stable in 18 years. Or the 3.5 since a kid started hs. Not all schools offer good FA, if any. Our flagship offered $800, on a not that large income.
Most families do need to look for the right deal for their picture. Presumably, someone who saved unprotected assets of 200k "for college " was expecting to pay that 200k for college. But remember, the assessment is 5.6%. Maybe there’s some addl confusion about the difference between the FAFSA EFC and what a college expects, using it’s own formula?
But then, whether a college even has funds to meet your “need” depends on their assets and policies. CA, eg, offers no FA to out of state kids.
At most colleges, a 150k income would result in full pay. Before looking at assets. That includes the Joneses across the street, who earn 150 but spent all their extra $, never saved. They’d be full pay, too. No special break for them.
Count me in as one of the people who thinks the OP’s rant is a bit wrong.
Yes, college costs are higher at many schools for those who have high assets and/or high incomes.
No, the formulas are not set up such that one is expected to drain down all of one’s assets/pay all of one’s income to pay for college.
It certainly can feel that way, of course—but you have to also consider that aside from those at the way bottom of the income/assets scale, college costs actually take a lower proportion of people’s income and assets the further up the income/assets scale you go. There are a number of reasons for this, but we don’t often realize that it’s a fact. Human beings to be blind to that which doesn’t affect us, and so assume that the EFC or whatever numbers that get spit back at us are uniquely high for ourselves specifically, when they’re not—they’re unrealistically high for everyone except the ultra-wealthy who can full-pay anywhere without blinking.
I lost track of who said it, but upthread someone said the only constant in these sorts of discussion is that everybody seems to feel like they have it uniquely hard. But they don’t. It’s a broken system for pretty much anybody.
And remember that for those at the way bottom of the income scale, they only “hit the lottery” if their kid has the stats and preparation to get into one of the subset of schools who can afford to fully fund the college tuition and room and board. Otherwise, that “wonderful” EFC=0 leaves them miles away from affording any college other than commuting to the local CC.
“Otherwise, that “wonderful” EFC=0 leaves them miles away from affording any college other than commuting to the local CC.”
If that.
And in my experience… it’s the most privileged of the poor kids that win the big scholarships or make it into the elite universities WITH the huge financial aid. In my scholarship cohorts, maybe you had a 0 EFC, but you went to a private high school on scholarship. Or maybe your parents were highly educated and just very down on their luck because of medical or mental illness.
Almost never have I met a student who really “won the lottery” and truly was disadvantaged in all the ways people assume.
Those 0 EFC kids? The vast, vast, vast majority of them are getting incredibly screwed, and hard.
Has the OP been back?
Ok…so your child is dead set on 3 ivies, and ivies don’t give merit.
As you already know, the chances of your Val daughter getting into one of those ivies is slim, so be sure to have back ups. I understand where your Daughter is coming from…she works hard for her grades, she’s been a tippy top student her whole life, she feels that she “deserves” to go to an elite college, and probably thinks that she shouldn’t have to go to some college where some of her “less-outstanding” classmates might go.
Secondly, are you prepared to be full or near full pay at one of those schools for both of your kids? That would possibly mean paying $500k for both to go thru undergrad. Is it worth that? If you can’t/won’t spend that much on both of your kids’ educations, then tell them NOW how much you’ll spend per year.
Thirdly, you haven’t mentioned what your child’s career goal is. What is it? Will grad/med/law school be needed?
Aside from maybe Wall Street elite careers, there really aren’t any other career paths that care about where you went to undergrad. Where you get your terminal education is what can matter. Does your daughter understand that?
Costs are too high but it’s not the buildings or salaries. It’s the excess administrators. Buildings are usually donated or sponsored by a corporation and salaries can be paid by tuition. Some University Presidents of State schools make obscene amounts of money which add up to many, many kids being in debt for 10-20 years so some dean/President can make big bucks like a corporate CEO while working at a non-profit. No one in academia should make more than $300K or whatever the President makes. Running a University is a prestige job with lots of perks so sky high CEO salary isn’t warranted.
This becomes a problem when proper expectations are not established at home. You can’t control college aid from nay institution (other than automatic objective based merit - score x, get y). You can control what you’re willing and able to pay (could be very different numbers). If that number is less than elite private full pay, make sure your kids know that.
Worst thing you can do is lead them to believe they can attend X if they get admitted only to find out you can’t afford it. That’s pretty cruel. Now if they fully understand the only way you can afford X is with aid (either need or merit) and you don’t get any, fine. Maybe they’re hunting for scholarships.
I would think most folks who were able to establish a decent college savings account are willing to use it to pay for college. Would it be great if I didn’t have to use those funds? Sure. Do I begrudge the school that we don’t get aid? Nope. Saved it to spend on college. Spending it on college. Kid is super happy and getting a great education from a great place. What else matters?
No the OP hasn’t been back to this thread…but on another thread, he is saying his kid will apply SCEA to Harvard…so I guess he has figured out a way to pay the bills.
I hope he understands just how fiercely competitive and how much rounded academics and ECs matter. Then the self presentation in the app…every bit if it. This is not just stats and rank.
Oft repeated advice: have matches and safeties.
The OP was logged in this morning. Maybe just reading and processing.
Wow. I had 70 plus CC emails and was wondering what did I start?
Yes, yes to so many questions asked.
Yes, she knows our financial situation. All of it. Our assets, income, and plans for her and her brother.
We have promised a set amount each year for her and her brother and we are saving to that goal.
I went the hard route in life. I got into Notre Dame, my dream school, my senior year of high school and had no way to attend. My parents never even considered contributing or helping in any way.
I joined the military, put my life on the line in the first Gulf war, sat eye to eye with live nuclear missiles at the ready. I know sacrifice in many terms.
Got out. Started over. Went to a Comm College in Nashville and eventually earned myself a full ride to Vandy. I was the prototypical $0 EFC kid. I worked hard for years and earned 3 degrees all honors and now continue to serve the American people in a very sensitive defense capacity.
The road was bumpy, twisted and had many wrong turns but I found my way.
The Notre Dame situation stayed with me many years and my wife and I decided that our children would have the power of choice I never had.
I did not post here for a while after my OP because many responses were petty, childish and unbecoming of a response from me.
My only point is that I believe that the amount you pay for college should not change if you save up to pay for it. Many of you disagree but do not offer any evidence that this phenomenon exists in any other aspect of life.
Maybe we live in a debt riddled nation. I don’t know. For asset sensitive schools I believe we should be able to save up for tuition without a penalty.
Thank you all for a spirited discussion. My family will continue to save and use CC to glean all we can from the info available here to get our children in the best schools they can get invited.
And yes, our daughter is fully aware that Harvard is very difficult, but it’s no mystery how to get in. It’s all right there in black and white and it’s not a crapshoot. If the candidates properly prepare a well rounded set of ECs with passion and bring out there true selves in their essays then they have a great chance. I believe that CC has it all here for mentoring. And of course the stats have to be stellar as well.
@LookAtMyShoes Thank you for your service! Your daughter will have better choices than you did. I totally get where you are coming from. For every penny saved, you have to put some % into the pot ( while others didn’t bother to save and won’t have to contribute the same amount). The system isn’t clear and some take advantage of that fact.
Best of luck to your daughter.
I’m not sure I understand, OP. If you save for a Mercedes, they don’t change the list price (let’s ignore any negotiation, etc.) For college, the cost stays fixed at whatever they set, call it 70k. That doesn’t change. But if you ask for a discount on college costs, it does depend on your circumstances. It’s when you ask for that discount, that they examine your financial particulars. “How much aid do we give the LaMS family?” “Well, let’s look at their need, what they have, and how they spend it now.”
It starts with income and you may be over the cutoff (I don’t think you’ve said what you earn.) Then a look at assets. A family with 200k in unprotected assets has that money. In the parlance (like it or not; and most of us don’t,) these are ‘assets available to put toward college costs.’ They assess those at 5.6%. Not all of it is tagged for the family contribution. Not a penalty. A small portion.
Unfortunately, (and I mean this matter-of-fact,) this is a case where none of us can have our cake and eat it, too.