Saving for your kids' education

[The_Tick]

Probably need to consider what will happen if a child doesn't quality for an academic scholarship and if Uncle Sam comes back with an expected family contribution amout of $20K or above. Basically, Uncle Sam is saying that the family can afford to pay for the child's education but the family is unwilling to and there will be little to no financial aid.

Such was my case and it has caused problems in my family later in life. It's kind of crappy when a student (by himself) can't afford to go to BYU as a Freshman. My parent's attitude was "I paid my own way back in the day". But college was more affordable in previous generations and it's basically impossible today for a minimum wage earner to pay for college by himself.

That is what a JC is for.

If TK1 didn't get a scholarship the choices she would have had were:

1. Take out loans and work
2. Go to the local JC for 2 years and then give it a go.

Kids have choices.

[CardiacCoug]

I think that tuition figure is a little low. For the year tuition and fees at stanford is oging to be about 40k. Room and board not included, of course.

Sure, that was per quarter obviously.

So that's more than $5K per month when kids are only spending 27 hours per week doing academic activities. That seems like a scam.

[cougjunkie]

Sure, that was per quarter obviously.

So that's more than $5K per month when kids are only spending 27 hours per week doing academic activities. That seems like a scam.

Sounds like Most Cuffers making 5k+ per month while only working 27 hours per week or less.

[creekster]

Sure, that was per quarter obviously.

So that's more than $5K per month when kids are only spending 27 hours per week doing academic activities. That seems like a scam.

I see. well it was unclear becasue you gave dates for two quarters but tuition for one. Nice to knwo we all agree, however.

[Uncle Ted]

This education bubble maybe is about to pop...

Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

[...]

Thiel isn’t totally alone in the first part of his education bubble assertion. It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.

It will most likely be replaced with accredited on-line courses taught by cheap labor in some foreign place where they still only charge a penny for their thoughts.

[happyone]

We have not "saved" for our kid’s college per se, but we do help out financially. Our oldest went to Westminster on scholarships, financial aid/student loans and Mom and Dad - we contributed about $750/month. Our middle one started at Snow, they gave her a full academic scholarship and she worked on campus as a tutor in their writing lab and in the Theater Dept's costume lab. She wanted to go to Westminster, but most of the financial aid was student loans and decided she didn't want to take on that much student loan debt, so she starts at the U this fall. We will probably contribute about the same amount as we did for her older sister. She is hoping to go to Westminster for her masters. The youngest is a soph in HS so we are still in the holding pattern for her.

[BigFatMeanie]

Probably need to consider what will happen if a child doesn't quality for an academic scholarship and if Uncle Sam comes back with an expected family contribution amout of $20K or above. Basically, Uncle Sam is saying that the family can afford to pay for the child's education but the family is unwilling to and there will be little to no financial aid.

Such was my case and it has caused problems in my family later in life. It's kind of crappy when a student (by himself) can't afford to go to BYU as a Freshman. My parent's attitude was "I paid my own way back in the day". But college was more affordable in previous generations and it's basically impossible today for a minimum wage earner to pay for college by himself.

I do not agree that it's impossible today for a minimum wage earner to pay for college by himself. If he wants to go to Harvard, sure. But there are plenty of other schools, BYU included, where it's completely possible:

University of Utah - 12 credit hours - $2,851.12 for a freshman.
BYU - $2,210 for a semester - a freaking bargain!!

Community college will be even cheaper still.

Let's say the kid graduates in early June from high school and hasn't saved a penny. (*See the huge aside below) Let's say he works 40 hours a week at $7.50 an hour (heck, even Chick-fil-a pays more than that and who ever said that one couldn't work more than 40 hours/week or can't work two jobs while saving up?). Working June, July, August, that's $3600 gross revenue. Let's take 20% for taxes/FICA, 10% for tithing. That's $2520 just for tuition in the summer. Even if we took out 30% for taxes/FICA that's still $2160 for tution.

They can continue to work full time while going to school full time and easily pay for room/board. I can drive down to BYU right now and find thousands of kids that are doing it this way.

Also, even if the EFC is high and the family doesn't contribute a penny, the student can still borrow near the full cost of their tuition at unsubsidized rates.

Here is BYU's tuition chart through the years: http://yfacts.byu.edu/viewarticle.aspx?id=85

When I started at BYU in 1988, tuition was $860. That's $1564 in today's dollars. Tuition at BYU has increased more than inflation but not nearly enough to make the "college was more affordable back then" argument hold much water given the increase in available student loans the feds have pumped into the system.



* A huge aside: WTF? What kind of parent lets their teenager go all through high school without saving a penny and without making it clear to the kid that he will be responsible for his own tuition? Maybe if the family expected to pay but had a sudden financial setback this could happen but this certainly is the exception and not the rule. If a parent generally expects the kid to pay their own way then they've generally made it perfectly clear to the kid all through high school that he either needs to work hard on his grades in order to be scholarship worthy or needs to work hard at Chick-Fil-A in order to save money for tuition. Show me a kid that can't get a scholarship and that doesn't have the gumption to save a single penny on their own and I'll show you a kid that by definition isn't college material. That being said, let's go with this ridiculous scenario for the purposes of our example.

[Tick's wife]

I used to say this and still do to some effect, but MJ and I have decided to give the kids an opportunity to "work" around the house and yard to earn money, some of which will be put into their college fund (basically a savings account they can watch grow). We'll also put what we can into a 529 account without them knowing. I had two sisters that never went to college and my parents had the same plan as yours (kids pay their own way) so I want to avoid having my kids not attend college. It sounds like your kids have better heads on their shoulders.

We figure we'll let them know about the 529 plan at some point when they go to college or right before. Then if they get scholarships or have money left over after graduation they can have what's left. If they don't graduate then mom and dad get another European vacation.

They both have had savings account since birth but we didn't plan to save for college, just to save. We figured the Lord would provide when the time came and He did. Where there is a will, there is a way.

[Paperback Writer]

I do not agree that it's impossible today for a minimum wage earner to pay for college by himself. If he wants to go to Harvard, sure. But there are plenty of other schools, BYU included, where it's completely possible:

University of Utah - 12 credit hours - $2,851.12 for a freshman.
BYU - $2,210 for a semester - a freaking bargain!!

Community college will be even cheaper still.

Let's say the kid graduates in early June from high school and hasn't saved a penny. (*See the huge aside below) Let's say he works 40 hours a week at $7.50 an hour (heck, even Chick-fil-a pays more than that and who ever said that one couldn't work more than 40 hours/week or can't work two jobs while saving up?). Working June, July, August, that's $3600 gross revenue. Let's take 20% for taxes/FICA, 10% for tithing. That's $2520 just for tuition in the summer. Even if we took out 30% for taxes/FICA that's still $2160 for tution.

Which isn't enough to cover Fall semester tuition, let alone books, room and board. Tuition and books at BYU is roughly 5K and room and board is about 7K.

They can continue to work full time while going to school full time and easily pay for room/board. I can drive down to BYU right now and find thousands of kids that are doing it this way.

I attended BYU for 5 years and never met one student who worked full-time and went to school full-time. In fact, most of my roomates did not work even part-time as I did. And I had a lot of difficulty securing part-time work in Provo let alone full-time. Not that I could have handled full-time work with a demanding major. Or I guess I could have taken 6 years or more to graduate with a B.A./B.S.

Also, even if the EFC is high and the family doesn't contribute a penny, the student can still borrow near the full cost of their tuition at unsubsidized rates.

True. And perhaps that's the only option for some students.

Here is BYU's tuition chart through the years: http://yfacts.byu.edu/viewarticle.aspx?id=85

When I started at BYU in 1988, tuition was $860. That's $1564 in today's dollars. Tuition at BYU has increased more than inflation but not nearly enough to make the "college was more affordable back then" argument hold much water given the increase in available student loans the feds have pumped into the system.

When I went to school those Federal dollars were not in the system. The argument I was making is that BYU was more affordable in the 1950's then it was in the 1980's. Given the escalating costs of college education - even at BYU - I think that's a given. In short, minimum wage has not kept up with increases in tuition - even at BYU.

* A huge aside: WTF? What kind of parent lets their teenager go all through high school without saving a penny and without making it clear to the kid that he will be responsible for his own tuition? Maybe if the family expected to pay but had a sudden financial setback this could happen but this certainly is the exception and not the rule. If a parent generally expects the kid to pay their own way then they've generally made it perfectly clear to the kid all through high school that he either needs to work hard on his grades in order to be scholarship worthy or needs to work hard at Chick-Fil-A in order to save money for tuition. Show me a kid that can't get a scholarship and that doesn't have the gumption to save a single penny on their own and I'll show you a kid that by definition isn't college material. That being said, let's go with this ridiculous scenario for the purposes of our example.

The kind of parents who help pay for older siblings' BYU and Ricks education but then one decides to quit teaching leaving no funds for the next child's education. The kind of parents who require their kids to buy their own clothes, school supplies, and car insurance (I needed to drive to get me to my 2 part-time jobs I worked to save for college-one of which was full-time during the summer). I just couldn't save enough and although I had enough savings to cover tuition, I didn't have enough for Room and Board so my parent's forbid me to attend BYU (their alma mater).

In my case, the "Lord didn't provide" and there was plenty of "will". So I lived at home, attended a Big 8 school, worked several jobs, and then transferred to BYU when I had enough savings...and never returned home. They found out I had graduated when I was no longer living in Utah. But at least I graduated, I have an older sibling who was cut off. He tried the work full-time go-to-school full time but didn't have high enough grades to get into his major (and he tried multiple). Consequently, he never graduated and it has come back to bit him big time professionally.

I've determined to do things very differently with my kids. I hope to be like my in-laws who were elated that their daughter decided to go back to school full-time to graduate after marriage. And paid for her tuition and books to do so.

[Uncle Ted]

Less saving for your kids' education and more for your retirement...

Parents’ Financial Support May Not Help College Grades

Parents saving for college costs, take heed: A new national study has found that the more college money parents provide — whether in absolute terms or as a share of total costs — the lower their children’s college grades.

Students from wealthy families are more likely than those from poor families to go to college, and those whose parents pay their way are more likely to graduate. But according to “More Is More or More Is Less? Parent Financial Investments During College,” a study by Laura Hamilton, a sociology professor at the University of California, Merced, greater parental contributions were linked with lower grades across all kinds of four-year institutions.

[...]

“Ultimately, it’s not bad to fund your children,” she said.

Help your kids get better grades in college by paying less of it.

[byu71]

Less saving for your kids' education and more for your retirement...

Parents’ Financial Support May Not Help College Grades



Help your kids get better grades in college by paying less of it.

Shocking. On my way into work last week I heard about some survey that has been taken every year with college students. Current college students think they are more "gifted" and get "good grades" that those surveyed in prior years. The actual facts are to the contrary.

I am still in favor of not allowing college students to vote unless they are also employed.

[mUUser]

Even taking the results of the study into account, I see no reason to not fully fund my kids' education. I think she nailed it in the last sentence.....“Ultimately, it’s not bad to fund your children,” she said. “My kids are little, but I plan to pay for them — after we talk about how much it costs, and what grades I expect them to achieve.”

[Paperback Writer]

Less saving for your kids' education and more for your retirement...

Parents’ Financial Support May Not Help College Grades



Help your kids get better grades in college by paying less of it.

It appears to be a parental fail:
Dr. Hamilton found that the students with the lowest grades were those whose parents paid for them without discussing the students’ responsibility for their education. Parents could minimize the negative effects, she said, by setting clear expectations about grades and progress toward graduation.
So parents are giving kids $$$ with little or no accountability. I tell my kids we are investing in their future by helping them significantly with college expenses. And that we usually don't make bad investments. When we do, we no longer invest in that entity.

The article hints at this but I think there are influential families that may skew the data. If a student knows his family has connections to acquire employment post-graduation, he or she may only do just enough to keep that door open. Such was the case in my study group. We had a very likeable guy who was content with Bs and it became clear we would have to carry him somewhat through our group projects and rigorous course schedule. Several times we thought about kicking him out of our study group but he was an amiable guy and would talk his way into staying in our group. He also gave us some needed balance because the rest of us were shark like competitive. We worried for him about his job prospects because his GPA was close to 3.0 while the rest of the group's was at least 3.5 and much higher for a couple. Many employers would not interview a student with a sub 3.5 GPA and we expressed our concern for him, for which he always thanked us, but didn't change his approach. Prior to graduation, he was the first of our group with a job offer and a very good one at that. Before we all left Provo, he divulged to me that he knew he would receive this job offer as long as he kept a B average and graduated. All it took was a phone call from his father.