When deciding and discussing the college budget......

Paying for College
1

…do you include $ that you plan to contribute from your annual income? Or only $ that you already have saved (that can be pretty much guaranteed)?

That is my question. Now here’s a little bit about why I’m asking:

A large portion of our college budget would be coming from my earnings, but my job is a little “iffy” at the moment. I earn a very good hourly wage and feel that I would be able to find another job if something happens to this one, but don’t know if I will be able to find comparable pay. Including only our college savings in the budget would significantly reduce - if not eliminate - the schools on D’s list right now.

I have told my D that much of the college budget will be coming from my income and she knows my job situation. I know her personality and am afraid that if I give her a lowball #, she may decide to not even try for some schools. Basically, I do not want to discourage her from “going for it” but I don’t want her to be shocked if in the end we can’t afford it. I think I have done a good job of this without discussing actual #'s. Honestly, for every time I read “don’t look at the sticker price” I can find someone/something else that says “be realistic and honest about what you can afford”. We can’t afford sticker price on any school being considered so far, but we are committed to doing everything we can to help her pay for school. Maybe I just need to go to sleep, because I’m feeling confused and unsure about everything tonight!

2

There’s nothing wrong with insisting on a couple of “parent picks” to ensure that your DD will still apply to a couple of “reaches” that may not be affordable.

Besides, the fact is…the reach schools are often more generous anyway, so applying to them makes sense.

You have to be honest about the money. You also have to consider the impact of a job loss. Yes, some “full need” schools may give you more aid if you did end up with a lower paying job, but if your current job pays out a stipend or a bunch of unpaid vaca days, the school may say that your income is still too high.

I think a safe approach is to include the amount that you have saved, but also a “conservative” amount from what you can pay out of current income.

That said, respect your DD’s desire to protect her heart a bit. She may not want to apply to a whole bunch of reaches if having to later decline them means a bunch of grieving.

Your DD is a music major. Will she have to audition?

Always remember that even without a job loss, a household will have several unexpected expenses that can throw havoc into a tightly budgeted plan. No family can go four year without have a whole bunch of unexpected expenses…dental work, home repair, car repair, car replacement, major appliance replacement, sudden trip to see a sick relative, etc etc.

3

At some point you have to commit. I had my kids apply to a financial safety, the “if mom gets run over by a bus” school (I am a single parent). Told 'em if the bus kills me, insurance will cover college, BUT if I just can’t work, disability income probably wouldn’t cover the other schools. But May 1, you have to pull the trigger on a school, and I did let them pick higher priced schools.

I also have the logic that it is easier to transfer later to a school where you have been accepted once in case of a financial downturn (but not a preferable plan). And D2’s college gave us improved FA one year when my income was down.

4

<<< if your current job pays out a stipend >>

Ugh…should say: If your current job pays out a severance…"

@intparent is right. At some point you have to commmit.

5

Can you give her a conservative amount based on what you can contribute out of the pay level of a replacement job if your current job goes away?

6

All you can do is plan with the best information you have. I knew my job was ending but decided to let my kids go to college anyway. We’re going along until we can’t go along any more (if that happens, so far so good) and then we’ll make another plan. Both did pick colleges where they had aid (one a lot, one a little), schools that are reasonably priced to begin with. After first year at some colleges, you can reduce expenses by living off campus, by working as an RA, by working more in the summer.

There is an element of the unknown at any school for any student. Will the student get the scholarship in the following years if based on gpa? Will the student be able to find a job to pay some expenses? Will everyone stay healthy? There are just some plans that may have to change if circumstances change. Having to transfer is not the end of the world.

But your daughter picking a more affordable school also isn’t the end of the world. She might not want the pressure of having to figure out how to pay for the more expensive one, or the pressure of thinking the family is suffering financially because of her. My sister went to an expensive school her first year (many years ago), and the second year she transferred to the flagship. Much happier at the flagship because there were a lot of students like us, on the lower end of middle class and not able to afford tuition at a private school. At that time, instate tuition was just a few hundred dollars per semester.

7

What’s the logic in NOT discussing actual numbers? Make her part of the solution, not part of the problem.

I don’t think there’s a downside in making a spreadsheet which shows contribution each year from savings, current income, and loan payments. You’ve got the high end- which assumes everything goes well. You’ve got the middle- which is a less optimistic scenario. And then you’ve got the “no job or other financial catastrophe” which is the fallback position. Make sure your D has options which fit each of the three possibilities and then kick the can on a decision until you’ve got acceptances and financial aid offers in hand.

It is unrealistic to expect a kid to plan for the worst without the information in front of her. Once she sees the numbers she can work with you to make sure there are affordable options on the list even if your circumstances change.

8

To de-couple the cost from your income, look for schools the give generous merit aid.

9

Didn’t expect to wake up to so many great replies. Thanks everyone!

I guess I am doing most of what many of you are suggesting. The yearly budget I’m thinking of is one that includes the money from our college savings, a portion of our retirement funds that we could part with, an oop amount that we could afford with me working a nearly minimum wage job, and a student loan in the amount of $5,000.

Yes, she is considering a music major…specifically a commercial music major…which isn’t offered at a lot of schools. For almost all schools/programs, she will be auditioning. I don’t think a lot of people understand the additional uncertainty that comes with that, the fact that her choices are very limited to programs a school offers, and that a big piece of the puzzle is dependent on the merit money that goes along with that audition!

We are in the process of trying to change our monthly expenditures and “pretend” my income does not exist. The problem is that we pay a lot of money monthly for music lessons and expenses related to her performing. That money would “shift” to college expenses (since her lessons would be a part of her tuition) but it limits our ability to get to the point where we are actually saving all of my income.

I understand all too well the “unexpected expenses” aspect!! Honestly, that is what is happening now. We have had a solid 6 months of one major expense after another. Which is probably what is making me so nervous. I was very comfortable with our savings and emergency savings until I watched it rapidly drain away in such a short time period. So, building that back up prior to next Fall, is a priority.

I never really considered the transfer possibility if things go wrong. I guess I had always thought that there is little merit money available to transfers, so assumed transferring would most likely mean an increase in costs. That is why we are trying so hard to make sure the school she chooses is a really great all around “fit”.

…
“What’s the logic in NOT discussing actual numbers? Make her part of the solution, not part of the problem.”
…

The logic is simply based on her personality and the fact that the first time I mentioned the loans and amounts that would be available to her, all color drained from her face and she looked like she really may have fainted. She also reacted that way on a recent grocery shopping trip with me. She hadn’t been on a “full grocery” trip in a very long time and when the total came up she literally gasped (the cashier giggled) and asked with shock in her voice “Do you really spend that much every week?” To her, $500 sounds like an awful lot of money, let alone $5,000. Also, she is very considerate and wants to make sure that we (parents and her little sister) are not suffering at her expense.

So, my concern is that she will decide to make things easy on all of us and not apply to any four year schools, decide to go to community college working towards a degree that is not what she desires and likely drop out somewhere along the way. Giving her actual numbers also puts a lot more pressure on her for auditions. Basically, at this point, she knows that she will need some merit money from all schools and the higher the price tag, the more merit she will need. She just doesn’t know the actual dollar amounts.

…
"I don’t think there’s a downside in making a spreadsheet which shows contribution each year from savings, current income, and loan payments. You’ve got the high end- which assumes everything goes well. You’ve got the middle- which is a less optimistic scenario. And then you’ve got the “no job or other financial catastrophe” which is the fallback position. Make sure your D has options which fit each of the three possibilities and then kick the can on a decision until you’ve got acceptances and financial aid offers in hand.
…

I think I just might make this spreadsheet! Thanks!

10

I think given your D’s academic interests, getting her on board now is critical. She may have a couple of years of working survival jobs and doing commercial music gigs on the side; she may spend her summers working in low paying internships (or no paying) instead of office work which would allow her to save; she may have unexpected costs to “launch” (like moving to a city where she never expected to live) to chase a great opportunity.

I think getting her aligned with reality needs to happen now. I know a couple of kids pursing careers in the arts- both on the performing side as well as the business side. The ones who seem really, really happy with their choices are the ones who had their eyes wide open since high school. The ones who seem miserable (or who dropped out, or have otherwise left their career paths) are the ones who assumed that mom and dad’s bounty would continue indefinitely (never true), that they’d get famous real quick (sometimes true but usually not) or that they could actually live on a 15 hour a week minimum wage job while working gigs on the side in LA or NY or Nashville (absolutely never true unless there’s a trust fund involved).

Get her oriented towards reality as soon as you can. If she decides she wants to attend community college and get a certificate in radiology tech or dental hygiene- you’ve got time now for her to learn more about those paths and see if that’s what she wants. But given the rigors of the audition admissions scene- she needs a back-up plan regardless, right???

11

http://www.pointpark.edu/Academics/Schools/Business/UndergraduateProgram/SportArtsandEntertainmentManagement

commercial side of music, do you mean something like this? ^^^^

12

blossom has brought up some really good points. Happykid is a theatre tech/design person. She is making almost enough money to live on in her second year out of college, but we cover the car insurance, medical insurance, and her cell phone. Several of her acting major friends have already left the profession for financial reasons - most recently one was asking for recommendations for good online programs to study accounting because of the pressing need for a skill that would lead to a better-paid day job.

13

@blossom I’m sure your thoughts are well intended, so I will just say that my daughter is fully aligned in reality as related to her career prospects with the degree she is seeking. Her HS schedule is always packed (no lunch or study hall, core classes are all honors or AP), works a part time job (in a music related field), and gigs on the side. She has many real world skills that most of her peers do not have and we have yet to meet with an admissions counselor or department head that is not impressed with her resume. As I said earlier, she is very conservative where money is concerned. She has spent her 1st three years of high school trying to find “something more practical” to study. I have no doubt she knows exactly what she is getting into if she ultimately chooses to take “the music route” in college.

@mommdc Most of the programs she is looking at include some of the business / management / marketing / accounting / economic / legal classes similar to the program you linked, but some also include things like sound engineering / recording technology and all of the programs would need to have some actual music classes - theory and performance - to make her list. The schools on her list include programs that could earn her a BS, BA, BBA or BM degree. All the programs are a little different. She is also hoping to work in a minor in Spanish if possible.

@happymomof1 While my D has never been interested in theatre, it has always been obvious to me that those kids work very hard and have grueling schedules even at the HS level. I’m sure the work ethic they have learned will help them succeed in life. I’m glad things are working out for your D. It is not easy to self support immediately post college in many fields. I hope she is still enjoying it! My D’s current job could pay enough (if full time) to self support if she were to go back to it after college. I always look at that as the “worst case scenario” and it’s really not bad at all. She quite enjoys it and I will be just so happy for her if she ends up being able to do what she loves and pay the bills!

14

OP- your D sounds wonderful.

Given how hard-working she is, how much initiative she shows, and how dedicated she is to her craft, I’m wondering why you even posted that if she finds out how much college costs and how much of a strain on your budget it might be that she’d just throw in the towel and head to CC. (not that there is ANYTHING wrong with community college).

So she’s either “all in”, fully aware of the realities of the career path she’s chosen- which suggests 100% commitment, not needing a plan B in case her auditions don’t get her into the program she wants… or she’s ambivalent (which was my takeaway from your first post). Kids who are fully dedicated to a career in the arts- whether the business side or the performing side- are low risk for throwing in the towel when finances become an issue.

I still believe there is nothing wrong with sitting down with a HS kid to run the numbers (actual numbers). But why are you worried if she’s fully committed to her path? Kids take Gap years to work and save money when they can’t swing the aid package they got without a bigger cushion; kids trade-off “better program or better aid package” all the time, and I have no doubt your D would do the same if push came to shove.

Hoping your job situation stabilizes and that this is just an academic exercise…

15

I advise people to lay out a financial framework for their kid, explaining the upper limits of the money you can spend but adding the caveat, “When all your offers are in, we’ll sit down as a family and make a decision together.” Because you’re right … almost no one pays the “sticker price” on a college, but until the final offer is in you don’t really know how much it’ll cost. You don’t want to rule out a college with incomplete information, but you can’t/shouldn’t commit to any school with the numbers sight unseen.

Good luck! Your dd sounds like a gem, and you seem to have your heart/head in the right place.

16

As to my original question, I think you’ve all helped me quite a bit. I know my D does not think that the “sky is the limit” as far as our budget goes. She understands that where she attends will greatly depend on the offers received. We aren’t going to worry about hard numbers until the offers come in. I will have 3 budgets worked out (optimistic, realistic, and worst case scenario) for when we know what the real costs are going to be. All the “what ifs” in this process are really wearing on the both of us and there are so many other things we need to be focusing on right now. She is ok with waiting until the costs are actual numbers. It’s just too much guessing otherwise.

@blossom I am constantly telling my kids to be careful with texts and whatnot because they are so easily misunderstood. So the following is just for clarification, not to be argumentative.

My take on “being fully aware of the career path she has chosen”:

To me, it means that she understands that she doesn’t really need a degree in music to pursue a career in music. She understands that the life of a musician often consists of multiple jobs, a lot of hard work and low pay. She understands that having some skills that can land you other jobs is important. She understands that there are a lot of very talented people out there that don’t get very far. She isn’t only interested in being a performer, she is equally interested in other music related careers.

So, my concern was not her throwing in the towel on her musical aspirations, but giving up on pursuing the degree she has the most interest in because she thinks it may be too expensive or impractical when in reality it may not be either of those things. She has given up most of her social life throughout high school to earn the grades and test scores she has. I think she deserves a shot at studying what she enjoys in college. She is intentionally looking at programs that will also give her knowledge and skills in business, marketing, management, economics, accounting, etc. and she will also be fluent in Spanish. I think she will be very employable with these skills in or out of the music industry. This doesn’t make her less committed to her music, it very well may be what makes it possible to continue pursuing music for as long as she wants to - because it can often be a long winding road.

You’ve mentioned a plan B a couple of times.

Plan B (kind of) - Not all of the programs she plans on applying to require an audition. Most do, but not all.

Plan C - There are plenty of colleges that are on rolling admissions and she is a relatively high stats kid. She could get in somewhere last minute if nothing else works out.

Plan D - A gap year or a year at community college have never been completely out of the question.

Thanks for the well wishes on my job!

17

Be careful if you’re thinking of taking money from retirement accounts for college. When you take money from a retirement account, that amount gets added to your income for the year that you take it (for FAFSA and Profile purposes). So that can give you a much bigger EFC, and less aid, the next year. Many folks on here have fallen into that trap. Not sure if it applies to Roth IRAs, but definitely is a problem for withdrawals from regular IRAs and 401(k) accounts.

18

You could have your child take out subsidized loans since they don’t accrue interest while in school and then pay them back with retirement funds if you want to when they graduate.

Of course only if sibling doesn’t start college by then.

19

@mommdc

You can’t just have your child “take out subsidized loans”. The college needs to award these to your child. And not everyone qualifies for subsidized loans.

But everyone CAN take out unsubsidized loans!

20

Yes of course the student would have to qualify for them. Sorry I did not make that clear. But in case they were not planning for the student to accept any federal student loans and pay out of retirement funds instead, I thought this might be a good idea.