<p>Question. Is there a rule of thumb of a percent of parents’ income that should go towards tuition that most schools use?</p>
<p>The reason I ask is I will have 2 in college in a year. We pay full COA at Ds school. Not sure yet where son will go, but we could be looking at over 110K/year in COA for two kids. We may need to look for a much cheaper option for our son.</p>
<p>Husband and I live very frugally. We paid off our house, drive ancient 20+ year old cars, etc. I have a job that pays well, husband has a business that is struggling. Is there a limit to the % income that is expected? We do pay a lot in taxes but have few expenses. We are borrowing against our home equity now to pay for some of Ds COA that we can’t manage from our budget or savings. We do have some retirement savings that are not in 401K. I fear that they look at that as college savings but it really is retirement and emergency fund for the business.</p>
<p>Who knows. Terrible answer but realistic. I feel your pain, I just completed the first of 2 in school same year and I have a 2 year hiatus before it occurs again. And our EFC is still higher than the COA and we’re pretty solidly middle class but frugal and investors. Unfortunately they do consider income that isn’t solely in 401Ks and IRAs even if for you it is a well crafted investment strategy and they do expect a goodly chunk out of income. If I had done anything different I would simply have maxed out my 401Ks instead of diversifying. Generally you don’t get 2 for 1 on the kids in college either. You can try some of the institutional calculators to get an idea of what 2 in school does. </p>
<p>I have a broken dishwasher that I’m not going to replace for a while. When the college kids are home they can wash by hand like their high school brother. Sort of punctuates what we’re doing for them with regard to college costs. Passive aggressive yes. Effective…totally.</p>
<p>There really isn’t a standard answer to your question. There are just too many variables to consider. College costs are typically covered with past earnings (savings), current earnings (income) and future earnings (loans). </p>
<p>Some families have more available current income than others to use for college costs. Some families have more savings, less debt, smaller housing costs, smaller family sizes, no other financial obligations.</p>
<p>Some families have higher debt, higher housing costs, several children, other family members (e.g. parents) who they help financially.</p>
<p>Each family needs to make their own determination of how much they feel comfortable expending out of current earnings for college costs.</p>
<p>Is there a limit to the % income that is expected?</p>
<p>Not really. Some schools don’t meet need, so they don’t care if you’d have to give every cent to afford to send your kids to college.</p>
<p>On the other hand, if you have equity and assets, those will get considered as well at schools that meet need. My sister pays full freight for 2 kids at pricey privates - the total amount is a big part of their income, but that’s because they have a lot of assets (home equity and savings/investments)</p>
<p>What schools are you considering for your son? Where does your D go? Will your son mind being told that he has to go to a cheaper school so that you can continue to send your D to a pricey school? I can imagine that some kids won’t really like to be told that.</p>
<p>That said, does your son have high enough stats that he could get great merit scholarships?</p>
<p>We do have some retirement savings that are not in 401K.</p>
<p>that will cause an increase in expected “family contribution”.</p>
<p>I know I may get flamed for posting this, but it seems sort of unfair that you allowed your D to choose a school without regard to cost, but after realizing how expensive it is, you don’t allow your S the same choice (this is assuming there have been no massive decreases in income, layoffs, medical expenses, etc). Ideally, it would have been good to think about their overlapping attendance and the potential financial implications before your D made her college choice, so that one kid wouldn’t end up with restrictions due to the (seemingly) restriction-free choices of the other one. JMHO.</p>
<p>I don’t think you should be flamed for saying that. I think what you’ve wrote makes sense. That’s why I asked if the son would be upset, because I think many younger sibs might be.</p>
<p>Yes, parents do need to look at the big picture before allowing #1 child to enroll at a pricey school if that might mean that #2 or #3 will be told that he can’t as well. </p>
<p>Some families who have found themselves in such a predicament have had to tell #1 that he/she can’t continue at the pricey school and must go somewhere that will cost half of whatever the family can afford to pay each year.</p>
<p>I suppose the college mis-match would be easier to stumble into if kid 1 was a high achiever and kid 2 a very late bloomer…but I agree with others that there is no substitute for planning ahead on this. I know families where the kids chose the public/private combo (and incidentally, the public school sibling has earned a much higher income than the private school sibling since graduation with similar undergrad degrees) but the parents equalized their spending on other things - like weddings.</p>
<p>Wheather the daughter’s choice is really a problem for the son in OP’s case really depends on the kids and their priorities. Perhaps son will be happy at Big State U. and would like some dollars for a downpayment on a house later (thus spreading out the cost difference).</p>
<p>We told each kid we would pay the EFC.
Now the first kid the EFC was lower, because her sibling was at home + child deduction.
With 2nd not only EFC is higher, but college costs have risen & summer jobs don’t pay as well.
But we are still paying EFC plus a little extra.</p>
<p>run the calculator on collegeboard and it will give you a rough idea of how your EFC is calculated for private schools. With two in college, it will be cut in half. For example, if your EFC is $60k today, you are full pay with one in college. With the exact same numbers and two in college, that $60k is split over two kids, each with $30k. Thus, you would have $25k need for each kid (assuming both attended private schools).</p>
<p>Of course, every college calculates need differently, and most do not meet full need, but at least you will have an idea if you are expected to be full pay x2.</p>
<p>The percentage of income expected will also vary by income level. People with lower incomes spend a higher percentage on necessities like food, heat, rent, etc. Higher income families spend a lower percentage on necessities and can direct the excess into investments, retirement accounts, “emergency” savings, and so forth. Consequently, higher income families will probably be expected to pay a higher percentage of their income. Having a business can complicate the situation, too, because although the business requires substantial investment and a savings cushion, it is also an asset.</p>
<p>I think the general answer to your question is “higher than you want it to be.” ;)</p>
<p>If you can live on nothing, 100% can go towards college. I know a family with a kid at Harvard and Yale who is paying more than 100% of their income for their kids to go there. They own rental properties as their livelihood and pension, and the schools won’t give them financial aid because of that. They sold their house and have moved in with relatives where they will live until their kids are finished. It’s that important to them.</p>
<p>I’m paying a nominal 50% of my gross income for my 2 sons’ college expenses. I say nominal because the funds are mostly coming from savings (UTMA and 529 accounts) that were funded long ago. I’m also not including DH’s gross income because he’s their stepfather and not paying college expenses directly. Overall about 40% of college payments are paid from current income and 60% from savings.</p>
<p>S2’s college is FAFSA-only. They have never required verification of S1’s enrollment. They told me that grants would remain roughly the same over 4 years, even in year 4 when S1 graduates. So far in the past 2 years they’ve met over 100% of need through generous merit aid and a small grant.</p>
<p>S1’s college is FAFSA-only as well but his COA is less than his EFC, so I don’t even file for him.</p>
<p>It’s water under the bridge, but just curious why you don’t have your retirement income in 401k or SEP–there are such good plans for self-employed/business owners and it provides a tax advantage to boot.</p>
<p>Don’t have any answers, but maybe a savvy financial planner could take a look at your assets, retirement needs, etc and help you arrive at a workable number. It might help to have a more concrete ceiling in mind so you don’t get into trouble.</p>