So we're on track for retirement and being financially independent. However I know my DH and I have taken care of ourselves at the expense of our children. We aren't going to be eating cat food and we are going to provide them with a good life and education k-12. We are going to give them a nice place to live, healthy food, and an education.
But what about college? That's the elephant in the room. I love reading CreditCardFree's posts about college. It is costing $17k/semester for her daughter to go to a state school. That means it is $136k without scholarships to go to the state school. OMG. And I understand it's out of state tuition but she explained the scholarship brings it in line with in state tuition which still isn't cheap!
But they are paying $7100 this semester because of a $10k scholarship and with the scholarship it works out to $75k for 4 years. Another reader Joe said he paid out of pocket after scholarships $9k for the semester which works out to $72k for 4 years. Jolie says they are paying $13k for the year or semester I can't tell. Either way it works out to $52k for 4 years or $104k for 4 years. Ms Frugalista said it cost $40k and probably $47k in total for each of her two kids now.
So I'm going to estimate right now in 2015 $70k is not an outrageous amount to be paying for college for 4 years. That works out to be around $17k/year. Assuming a very conservative 3% inflation rate I'll need $100k in 12 years. Granted I have an extra 4 years to pay this over and I have 15 years for my younger kid.
$100k for each kid as a ballpark number seems like a reasonable amount. I have 16 years for one and 19 years for the other because I will likely borrow and pay back based on grades. I want my kids to have skin in the game.
But we've only save $14k for DK1 and $9k for DK2 at a rate of $2k/year. According to a calculator if we save $2k/year for 16 years and get a rate of 6% return we will have $88k for DK1. So we may make it depending on the market. However if we save $300/month for 16 years at 6% we can have $130k. For our younger DK2 we have $9k and if we save $2k/year we'll have after 19 more years $96k @ 6% rate of return. However if we save $300/month for 19 years @ 5% we'll have $152k.
Can we find $300/month more for college? I think we can. After we buy a house and determine our living expense I'll show DH our potential college savings deficit and determine if we think $100k is enough for each child.
I've always said I'd like to provide 4 years at the state school and anything above we can't guarantee. Of course if they go somewhere really cheap I'd also love to give them the balance for graduate school!
College savings
October 30th, 2015 at 05:11 pm
October 30th, 2015 at 06:07 pm 1446228474
I have a friend sending her daughter to a state school in MN. Her daughter will graduate from a high school in Texas. The non resident tuition for the entire year at that school is $6400. Without scholarships. The room and board for the semester is $4050. One year, non resident is $16500.
I think the tuition isn't terrible...it's the housing costs that are the worst!
October 30th, 2015 at 06:11 pm 1446228681
I agree with CCF-it's housing costs that are the worst. If your kids could live at home (if you can stand it!) that also takes a significant portion of the cost down.
October 30th, 2015 at 06:59 pm 1446231587
jokeabee's suggestion about a community college was what I was going to recommend as well. Most colleges and universities will work with you if you explain you want a four year degree, but need to do the first two at a community college -- they tell you what will transfer so no credits are lost.
October 31st, 2015 at 01:29 am 1446254990
October 31st, 2015 at 03:17 am 1446261475
jokeabee I know about community colleges but I feel like dorming is part of the college experience and one that helps a lot. I'll post about that later.
Rob how much is illinois?
FrugalTexan definitely we'll have them apply to everything.
October 31st, 2015 at 06:04 am 1446271447
For boys, it's often helpful to have them in the workforce for a short term to allow maturity to catch up to age. Finally, while there are benefits to the dorm experience, it needn't be 4 -5 years if there is a state school in your city. Our younger son did 2 years of fully transferable college before moving on to a 4 year program. He nearly stopped my heart by deciding to take a 'gap' year and fund travels by working in third world countries. [best thing ever to appreciate being Canadian]
Finally, we cannot imagine what post secondary education will be in the next two decades. There will likely be such an incredible backlash from millenniums who find student loans of $ 130K @ 7% for 20 years to be unacceptable that there will be change. There is too much advantage in Nordic countries for example.
October 31st, 2015 at 06:13 pm 1446315213
November 1st, 2015 at 07:52 pm 1446407547
MyEnglishCastle, Do most kids pay the majority of tuition at your school? Is it public or private? What do you think it costs for four years?