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@Truth Bombs: Thanks! It really delayed our ability to sort of "get our financial life off and running" and I don't want LO to have to be behind 10 years on things like saving and investing.
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@Truth Bombs: Sure you should save for it and put parameters on it. My point was I can see when trying to prioritize savings it makes to put money towards things that will more likely be useful than others. Not everyone has the luxury of fully funding both things at the same time. I agree with you about the 529 thing, and once our student loans are paid off we will be directing more money to a Roth IRA for our son to have that monetary flexibility. I don't think we are disagreeing, I just don't think people are lying to themselves about saving for college. I am extremely proud we will be paying off our huge law school loans soon while at the same time wishing we had the benefits of our friends who never had to pay for school at all. But I think it's more important when looking at my sons future that MY loans are paid off first and that HE doesn't have to be 34 and supporting his folks with a new baby at home like we are. And if we are short for his schooling and he has to get a job while he's in school or work as an RA or TA or whatever, it won't kill him. Would I love to pay off all our loans, save fully for retirement, college, rainy day, pay off my mortgage, and take care of my folks while teaching my kid financial responsibility without having them work or take out loans? Absolutely. But if I don't get there and he needs some loans and has to work and learns financial responsibility that way, fantastic.
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@lawbee11: we have the same goal.
One reason I want to WOH is so DH and I can save enough for retirement and college. His mom paid off his loans so we only have to pay mine back. It has helped us tremendously financially and I want LO to have the same start we did. I think we can teach her to be financially smart even though she will have her education paid for. I also have no problem pulling the funding if she isn't doing what she needs to do. Even if it isn't enough to pay for 100% of her education I hope it's enough to pay for most of it. She also has a very generous grandmother who is saving for her as well.
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@DillonLion: that's my reason. I don't want my kids to start there life burdened with debt.
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@gingerbebe: So true that not having to support your parents/inlaws is a gift in and of itself!
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If DH and I do become financially secure enough to feel like we can afford to set more aside for college than our child/ren receives as gifts, I think we would start doing what my parents did for me. They were prepared to spend enough to send each of their 4 kids to state schools. When I was interested in a private school, they said ok, apply. But when I was accepted I was warned that it wasn't a given and would depend on financial aid. I ended up with more than $50K in loans, but thankfully the rates were low enough then that I've been able to pay it off. And I wouldn't be where I am today if I'd chosen to go to a state school, so to me, it was worth it. But I don't feel at all slighted that my parents didn't pay 100%, nor do I think parents should feel obligated to if they aren't that financially secure.
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we would love to be able to fully fund our children's education like our parents did, but i'm not sure that's a reality. we will make sure that our retirement savings are on point and then contribute to our LOs education savings. we don't yet have a 529 for DD and i'm not sure what we'll do next year when we're in the position to contribute more significantly as our state has no tax benefits.
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@Truth Bombs: I know from experience that it really depends on the kid and the maturity level. My parents paid for my first 2 years of college and I basically partied and skipped classes those entire 2 years, I was very immature and didn't really comprehend what they had done for me. I ended up finishing but paying for the rest myself and I took it much more seriously.
We will save as much as we can for college, and figure out a plan together with our kids diwn the road- do they think they are ready for college? Do they have a major they are very interested in? Etc.
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We are still early in our careers and working our way up so we haven't been able to save much for college. In a few years we will be able to be more aggressive but we will already be behind.
I have changed my tune over the last year and now I am committed to paying for my kids college 100%. I hate hate hate being saddled by my student loan debt and would love for them to be debt free.
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We put some money into her 529 every month and will do so for T, too. But I'm going back to school soon enough, and I'll have 85K in my own student loans. I don't expect to nor plan to pay for all of our kid's tuitions 100%. We'll see where we are financially in 15 years, but right now it's hard to see the forest through the trees, when you're paying daycare costs out the wazoo.
For $100k+ in student loans...it'll be interesting to see what sort of fields have any remotely decent ROI on them
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We're saving a set amount for each of our kids. Even with increasing costs, the amount should cover 4 years of private school education + housing.
We're hoping they go to a state school and stay close to home though
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We will cover everything we can.
My FIL has generously funded education accounts for all his grandkids, so provided they go to school up here it's all already covered. Private school in the states will require a bit more. -
We'll help with what we can. But we will already be paying for private school for PK-12 for the kids. We live in an area where the public schools aren't the best.
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I plan to cover 4 years in a state school for both of my children. Right now we're saving a fairly small amount per month. When I go back to work in a few years I'll first pay off my school loans, then that money will go towards their college funds. We'll probably reevaluate how much we need to be contributing every few years.
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We plan to pay for undergrad 100%. My employer pays 50% of tuition so hopefully I will be working here still and that policy won't change. We save as much as we can in her 529 and other investments. I really try to prepare for the future as much as possible without stressing about it because nothing is guaranteed.
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@DillonLion: Yes - our loans definitely impacted our ability to take off on our own and start building and saving for ourselves too, which is a big reason I want to save as much as I reasonably can for LO. I can't complain really, because my education got my foot in a door which wouldn't have been opened without it - directly allowing me to earn more than I otherwise would.....but at the same time, would have been a different ballgame to not be paying $600/month for more than a decade...
Also, I worked to put myself through school. I had to work - no other choice. That fact directly limited my choice of majors because I couldn't major in anything that required a lot of internships, or only offered courses during the day or workweek. Just another thing to think about - I don't want LO's choices to be directly limited by the same factors.
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@Truth Bombs: Unless the FAFSA has changed since I last filled one out, parental assets are absolutely counted as part of a student's ability to pay for college.
As far as loans making a student more vested, I don't think it's a general truth, but I do think it matters for some kids. My entry level job years were spent with kids who came from parent paid college educations and most of them barely made it out of college, having spent most of it partying. I missed out on a lot of things by taking out loans and working through college - study abroad, making friends, etc. - but knowing that I was paying for my education did make me work harder and appreciate it more. I hope to find a happy medium for my kid that allows her to take advantage of opportunities I passed up but also instills a work ethic and value of a dollar in her. I definitely don't tell myself this as a justification for not saving for her. I'm not saving for her because I think having financially secure parents in their retirement is more important than saving for college. The loan-work ethic tie in was simply my experience, not a teachable moment I'm necessarily going for.
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@gingerbebe: You said it so much better than I was
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@Mrs. Carrot: oh yes, they are definitely counted. Just not as heavily as student assets. So whether you are putting money into a 529 for the child or a regular brokerage account for yourself, they count equally against the child. So I'm just saying that's not a reason to skip a 529 (I guess unless you're straight up spending the money instead of saving it in any form).
ETA: Assets in qualified retirement accounts don't count against you either.
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We will do our best but the reality is that we will not be able to cover the full cost of college unless LO has some financial aid and/or contributes. Our goal is for her to work in the summers and put 1/2 in savings. We will also have her save at least 1/2 of financial gifts.
Edit to add: I don't necessarily subscribe to the school of thought that she has to "earn" it to appreciate her education. And I would much rather her really earn it by working summers in high school and college and contributing that way than going into debt. BUT - if she has to take out some loans, I will be fine with that. We want to help her as much as we can but I don't at all feel that we are obligated to pay for a 4 year college education in full.
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@Mrs. Carrot: Yes to this!
We are saving for the kids' colleges, but know we won't be able to pay for them 100%. Our main financial concern for the future is our own retirement, so that's our priority, and saving for college comes after. The kids can get scholarships and loans just like we did.
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@avivoca: I'm right there with you.
We are focused on ourselves right now. DH doesn't make tons and I don't work, so building up our own retirement and savings is top priority. Even doing that is difficult.
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@gingerbebe: wow - my DH is also a veteran - I had never heard about this - is it new?
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For us, retirement always comes first. Given that, we've met with an advisor and based on estimated costs, we will contribute $400/month per child (twins on the way and I doubt we're done!) in a variety of investments in case it's not used for college tuition in the end.
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@Mamaof2: I'm so sorry, this is a state specific plan (CA) and I should have been clearer - he is a veteran with a service connected disability. And the benefit extends as long as your kids income doesn't exceed a certain amount each year but my friends who have used the benefit say most kids don't exceed it while in school. Also you only have access to the benefit until you are 27 as a dependent of a veteran but is extended until 30 if they themselves are a veteran. But it really depends on your state! We are in CA! Did your DH get a disability rating when he left?
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@gingerbebe: Ah I see - yes he did get a disability rating, 40% I think? But we are in PA
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I feel like it's impossible to even guess at what a college education is going to cost when my son is ready to attend, which makes it a challenge to determine what to save.
Let's say I choose to save what it would cost to send my son to the school I attended.
In 1997, the education cost $100,000. In 2015, it costs $250,000. Do I project that the cost will be $625,000 by the time my son graduates in give or take 18 years? Do I think the college degree is even worth that much? I have a hard time with the rising cost of college, especially at private universities.
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@looch: We use 6% as the inflation amount for education planning.... but I don't think (I hope!) it's not actually sustainable at that level.
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We're saving, but we won't be able to cover the cost. If LO stays in state, she'll get free tuition at a public University for about two years if she goes in state due to DH's vet status. We'll help where we can and will continue to save for her to ease the burden, but she's going to have get loans, scholarships and work (just like I did).
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My husband and I have talked about this and we haven't exactly settled on a plan. Basically, we both prefer the approach that our parents took. For him that was parents paying for undergrad 100%. For me that was parents significantly helping with undergrad but still working and still having some loans. We both agree that grad school is on the kids. We also agree that kids should, at least, work to earn spending money. Definitely summers and perhaps part-time during the school year.
I do, somewhat, agree that it's good for kids to have some "skin in the game" when making decisions about what college to attend and majors to pick and how seriously to take their time at school. But I think it's all very different based on the personality of the individual kid, so I don't think it's something you can necessarily set a policy for when they're little or not even born yet.
I will say that I prioritize retirement over saving for college because I think having to take care of parents, financially, is more of a burden than student loans. Personally, I also think that investing in mind-broadening experiences like international travel throughout my kid's life is more important than paying for college at 100%. It just all comes down to a matter of priorities. I don't want my kids to be severely limited by student loans, but I think that some loans are okay.
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We are saving for both kids within 529s and other investments to fund their undergrad degrees, we will also fund what we can for grad programs that they seriously want or need to pursue in their career choices.
Dh had his college paid for by his parents and took an extra year to finish but also went onto pay for his own graduate degree, and finished in a year and is almost debt free from it even though it's only been a few years since he graduated.
I paid for nearly all of my college w some help with what my parents could pay for, worked my way through paying bills for car, rent, etc. and I was still irresponsible about it my first year in college even though I finished on time. I also have debt from a law degree I chose not to finish for a better career move since I was already invested years into the career path I initially chose.
All that to say, I think appreciation for education is definitely not based on who paid for it and definitely is a case by case situation dependent on the person and their experiences and choices in college or later in grad school life.
Dh and I firmly agree though that higher education is important to both of us and we definitely weigh this factor heavily on the number of kids we will have and plan to save equally for all of our kids to have the same college education opportunities (as far as our help). This is of course after our own retirement funding, not in place of it.
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