Save for College or Take Family Vacations

  1. You have chosen to ignore posts from kargiver. Show kargiver's posts

    Re: Save for College or Take Family Vacations

    RT, your husband was wise to insist on saving for retirement; protect that with all your might.

    Saving for college is almost impossible these days.  An undergrad education can easily cost $50,000 per year.  And, if you have saved too much and make too much income, you won't qualify for financial aid.  So, if you've saved $100,000 earmarked for one's college tuition and make $100,000 between you (for instance), I'm betting you'd be sunk in the financial aid department, and you'd still be scr_wed because you'd only have 1/2 of what you need for one kid given they're going to a pretty expensive school.

    But, if you have nothing earmarked for college and there's only 4 years to go, I'd say UMASS is her/their best option and a very good one at that.  I wish I'd gone there (I have a math degree from BU) and if I could do it over again, I'd have done that instead of graduating with $25,000 in debt even after getting a decent scholarship.  If your daughters go to a state school, qualify for financial aid, and take a course load that allows them to work part time during the year and full time for the summers, you can probably manage better than if you go whole hog trying to save now.

    My advice is to go that route for their college, keep your retirement funds in place no matter what, and go on reasonably priced (not trips to Fiji) vacations. 

     
  2. You have chosen to ignore posts from ALF72. Show ALF72's posts

    Re: Save for College or Take Family Vacations

    Why can't you do both?  Save for college/retirment and take day trips.  The important thing to do is to spend time w/ the kids - you can do that anywhere.  Boston and New England are vacation destinations for many people.  There are tons of things to do nearby.  Go to museums [most libraries have free or drastically discounted prices], go hiking, visit Walden Pond, go to the beach, sit in your own backyard and chat, etc. 
    Saving for college is admirable.  If you can help your kids at all, spending your money on that rather than on a fancy vacation will benefit them more in the long run, IMO.  Have fun w/ them close to home and bank the funds you would have spent on airfare.  GL and HTH. 
     
  3. You have chosen to ignore posts from Lostgrouse. Show Lostgrouse's posts

    Re: Save for College or Take Family Vacations

    You've received some good advice here.  You have to consider that financial aid is a tricky situation and someone on a middle class income who has been saving all along might actually end up worse off than someone in your situation.  Is it fair?  No, but that seems to be the way it works.  

    You can always go on fancy vacations after the kids graduate college.  It is just important to spend time with them now and you can just do that with road trips or day trips.  I don't think that you want to have zero savings for college either though, so I think that a split would be good.  The other thing is, have you considered trying to get a job at a college?  If you can swing that now, you may be able to secure either reduced or free tuition for your kids in the future.  

    Also, don't discount community colleges.  They are on the upswing now that college is getting so prohibitively expensive.  Your kids can go there for the first two years for less than the cost of 1/2 a year at most schools and then transfer.  When they transfer they still will graduate from that name brand school, but at a little more than 1/2 the total cost.  There are also great scholarships available if  they do well in the CC setting.

    Good luck!  
     
  4. You have chosen to ignore posts from lemonmelon. Show lemonmelon's posts

    Re: Save for College or Take Family Vacations

    kar, you seem to know about stuff. Is there a way to have money accrue interest without it being counted as part of your assets when colleges review you for potential financial aid? I know that people used to put money into whole life insurance policies, but I keep hearing that's not a good idea. I don't know why.

    This thread makes me anxious. We applied for term life last week and the dude said that we should plan for at least 200K for college for our daughter. 200K! That's almost a whole house! I always assumed that I'd be so broke my whole life, any kids I had would get tons of financial aid, like I did.

    In terms of student loans, I personally wouldn't worry about it. I'm sure that's bad advice, but if you get loans through the federal government they're low interest and you can make low payments to start and stretch them out forever. I'll probably always be paying student loans. It's like a scar or a bad tattoo -- you just don't think about it after a while.
     
  5. You have chosen to ignore posts from kargiver. Show kargiver's posts

    Re: Save for College or Take Family Vacations

    Oh, yeah, community college is no joke.  In fact, I knew someone who went to Bunker Hill for the first 2 years, like Lostgrouse suggested, and I was stunned to find that their professors were BETTER than most of my fancy pants, high priced BU ones.  I was happy for my friend, but pissed I was spending TONS more and getting less.
     
  6. You have chosen to ignore posts from kargiver. Show kargiver's posts

    Re: Save for College or Take Family Vacations

    lemon, we must have been posting at the same time.  :)

    Unfortunately, my knowledge thins out fast beyond what I've posted so far, but to try to answer your question the best I can, there's a college saving account worth looking into the details of and asking a financial planner about, the 529 account (U. Plan).
     
  7. You have chosen to ignore posts from rysmom. Show rysmom's posts

    Re: Save for College or Take Family Vacations

    Kara - I took some classes at Mass Bay.  One of the professors also taught at BU.  We did the exact same class as at BU for a total of $276 (back in the mid 90's).  A fantastic bargain.

    To the OP - I know lot's of kids who vacationed and had vacation homes, fancy cars, big houses, etc. that got way more financial aid than I did.  My parents refinanced their house and we kids took loans to go to school.  It will work.  As many have said the State schools are Fabulous!  I ended up as a communications arts major at Framingham State and had profs that taught at Emerson.  I also took classes at UMass Dartmouth and Mass Bay before landing in the right place.  My DH went to Bently and was lucky to have parents that could afford to send him there without him having student loans.  A major reason that happened is that he was an RA for 3 years.  That offset room and board.
     
  8. You have chosen to ignore posts from enjar. Show enjar's posts

    Re: Save for College or Take Family Vacations

    $50K/year for undergraduate education is a waste of money.  State schools, community colleges and small schools without the big name all offer FAR more for your education dollar than anywhere that charges $50K/year.  Plus, when you run the numbers for post-graduation and what those loans will cost (and how long the child will be paying them), they pretty much eclipse any additional (and often mythical) extra "earning power" some high-priced school will give you.

    Debt is a burden which will force you to live someone else's life and not your own.  Imagine the scenario of a child graduating with zero loans versus one graduating with $120K in loans.  Doing the simple calculations, and assuming a payback of 10 years, that's $12K/yr, or $1K per month that the kid has to come up with.  Figure a pretty decent starting job of $40K/yr, take out 30% for taxes, you now have $28K left.  Take out that $12K for loans, you are down to $16K to live on for a year.  For ten years!  In those ten years, it's also highly probable that the kid will also want to buy a car, get married and look forward to buying a house.  Having that $1K/month debt around won't make that very possible ... it's a corrosive cycle.

    This burden becomes especially hard when the child gets a "calling" to go do something that doesn't pay well, yet might be rewarding -- fields like social work, teaching, etc.  They want to lead with their heart and follow this dream, but they have to make loan payments -- and this prevents them from living their dream.

    There are many, many things in life which I want but cannot afford.  I would love to be able to send my kids anywhere they would like to, but I don't know that I'll be able to do so.  I'll do what I can but unfortunately some time in life we need to come to the realization that there are some things we just can't afford.  It isn't a pleasant thing, but sometimes you need to appreciate what you have instead of chasing what you simply can't afford.

    FWIW I went to an expensive private school for undergrad and had my employer pay for my Master's degree using the tuition reimbursement program they offered.  Sure, it was hard working full time and doing grad school part time, but I graduated without having to pay a dime.  If I could have a "do over" I should have gone to a state school.  I would have gotten the same (or better) education and had a lot more career flexibility after graduation since I wouldn't have needed to spend 8 years paying off my student loans (I was lucky enough to get a well-paying job that let me do so).

    I would also suggest reading "The Total Money Makeover" by Dave Ramsey, and "The Millionaire Next Door".  Perhaps it would be a good "family book club" reading -- especially for your high schooler.  Money management is one of the MOST valuable life skills anyone can have.

     
  9. You have chosen to ignore posts from kargiver. Show kargiver's posts

    Re: Save for College or Take Family Vacations

    I totally agree - I fell into the "great school name = great education = great life" trap.  It was a GREAT LIE.  It was the dumbest "smart" thing I've ever done.
     
  10. You have chosen to ignore posts from Lostgrouse. Show Lostgrouse's posts

    Re: Save for College or Take Family Vacations

    The 529 plans are kind of tricky.  If you put it in the name of the grandparents with the kid as beneficiary, it's treated more favorably in financial aid calculations than it is if it's in the name of the parents.  I believe that it's counted as a 50% asset if the parents own it and I think that it's ignored if the grandparents own it.  Stupid rules especially when the beneficiary is the same, but you can change the beneficiary.

    My father teaches at a community college which is his main professorship.  He also teaches the same classes at Northeastern and Stonehill.  So yeah, those kids are paying $4-$5K for the same class at the private school as the kids paying less than $500 at the community college.  It's not as prestigious, but save your money!!!
     
  11. You have chosen to ignore posts from enjar. Show enjar's posts

    Re: Save for College or Take Family Vacations

    Yep.  We are still paying for my spouse's MBA, thanks to a lot of sacrifices and economizing over the past three years we have paid down a substantial amount of other debt we have taken on.  We have ~$20K left on it that drags on the budget every month as we are trying to eliminate it entirely.  In a year or two we will only have the mortgage left and then we will be able to fully fund our own retirement and begin saving for college for our kids.

    I just hope that someone learns from my experiences, I wish my parents had been able to guide me more effectively when I was growing up, but they also believed the "education debt is good debt" thing, and we all ended up paying for far too long.

    I do believe strongly that a college education is a good thing, and nearly essential to being successful today.  The only exceptions is for people who have a strong calling to work in a skilled trade -- if you work your way up and start your own business you can do very well there.  Or I also know a number of people who have done fairly well serving in the military, too -- especially when they take advantage of GI bill benefits or use the military training to enter some sort of public service like police or fire.  The military service, though, comes with obvious risks -- and it does require a lot of hard work for comparatively little pay -- but it does open doors, especially if you go career.

     
  12. You have chosen to ignore posts from MichelleandtheBoys. Show MichelleandtheBoys's posts

    Re: Save for College or Take Family Vacations

    It seems to me that unless you're taking $50k vacations, whatever you can save in the next three years won't make much of a difference as to which college you can afford three years from now. 
     
  13. You have chosen to ignore posts from rysmom. Show rysmom's posts

    Re: Save for College or Take Family Vacations

    At the moment my kids will be going to State schools especially since my DH works for one.  Free tuition will certainly help!  Of course that could all change by the time they get there.
     
  14. You have chosen to ignore posts from Lostgrouse. Show Lostgrouse's posts

    Re: Save for College or Take Family Vacations

    Rys, the tuition unfortunately is not that much of the cost at the state schools.  I went to Umass and since my dad teaches for the state my tuition was free.  That was a total benefit of about $2K a semester I believe.  The fees are pretty high compared to tuition which is why they give away the tuition.  The fees stay at the school, the tuition goes back to the state.  Granted I was able to get a great scholarship to cover the rest of the fees, but just be forewarned that it's not all roses at the state schools when you get free tuition.  The private colleges usually offer free everything when a parent works there.  
     
  15. You have chosen to ignore posts from rysmom. Show rysmom's posts

    Re: Save for College or Take Family Vacations

    I know the tution is peanuts compared to the fees but at least it is something.  Although my kids are 5 and 2 so who knows what the benefit will be by the time they get to college or if there is a benefit at all or if DH will still be there. 

     
  16. You have chosen to ignore posts from KAM2007. Show KAM2007's posts

    Re: Save for College or Take Family Vacations

    I've heard that investing for your retirement first is the best option, then for your children's education.

    Back in the day, not sure if this is still true, if you establish a Trust Fund for your child, and specify it's for "entertainment" purposes only, it cannot be included in the assests when figuring out financial aid.

    That being said, we are trying to max out our retirement savings, save our tax returns in either a UPlan or 529, and encourage DS to go to UMass Amherst. Or another state school-UMass does have one of the highest instate tutition rates, so it is worth looking at paying out of state rates for other schools.

    I left UMass with about $20k in loans, like most of my friends who went there, then racked up $40k in one year for my graduate degree-thankfully it was a one year program! I've got it paid down to about $34k...It kills me every month to pay close to a thousand dollars and not have that mokey off my back. But I still feel doing a state school for undergrad, and private for grad was the best way to go. I'm glad I did it that way.

    Our tax guy did say that based on your income, maxing out your IRA contributions, which you can use for education purposes, is a wise thing to do tax wise. However, we make too "much" for this to make sense. Not sure what the income cut off is. There are articles out there to determine the best savings approach for your income level.

    I would doubt you would be able to save enough in the next 4 years to pay for college, so I would save half, and take reasonable family vacations (i.e. rent a cabin in NH/ME for a week).

    Best of luck!
     
  17. You have chosen to ignore posts from framerican51008. Show framerican51008's posts

    Re: Save for College or Take Family Vacations

    I don't want to weigh in two much because I am certainly no expert, but I'd like to give my two cents...
    Student loans are not so bad!!  If you quaify for federal subsidized loans, they don't accrue interest until after you graduate.  Of course it would be great if your kids didn't have to take out loans, but it's not the end of the world.  I went to a small private college.  My mother helped pay and I received a scholarship for half the tuition, but I still ended up with about 24k in loans.  It hasn't been a burden at all.  It's just a fact of life... one of many monthly bills.
    Anyway, yes I think you should be saving now, but don't feel guilty about also saving for your retirement and/or having them take out student loans.
     
  18. You have chosen to ignore posts from lemonmelon. Show lemonmelon's posts

    Re: Save for College or Take Family Vacations

    Yeah, my payments are under $200/month (for the rest of my natural life), and I actually willingly upped them last year. The woman kept saying "are you sure? because we can lower that payment." The rate is insane, something like 4%. Federal loans are the bomb. I wish they'd take over my mortgage and credit card too.
     
  19. You have chosen to ignore posts from GC1016. Show GC1016's posts

    Re: Save for College or Take Family Vacations

    Couple thoughts:

    Retirement is always first.  You can borrow to pay for school, if that's the choice your family makes. 

    As to the "should we take vacations?" question, I think that depends.  I think family time is important, but so is economizing to put aside money for the parents' portion of school.  So, I guess my formula would be: retirement, college, THEN vacations. 

    My husband's parents budgeted from the day he and his siblings were born for them to go to their in-state option for four years.  If the kids opted to go to an out-of-state or private school, they had to make up the difference with scholarships or student loans.  They both opted to borrow to go to out-of-state, private schools, and I don't think either of them regret it.  [I will say, too, that my husband's FICO score is phenomenal, better than mine which irks me as I carried very little debt in my 20's, so those college loans make him a better risk than me.  (just a side note on borrowing)]
     
    HOWEVER -- that was (mumbles number) years ago, when the difference between an in-state school and a private education wasn't as staggering as it is now.  I agree with other posters about the "flight to economic quality" we're seeing with applications to in-state and community colleges.  I think that, if anything, I'd spend the next four years setting realistic expectations for your kids, talking about their goals and how that jives with your family's financial position. 

    And get thee to a good financial advisor, even if just to have him/her deem your husband's financial planning sound. 



     
  20. You have chosen to ignore posts from Claddaugh. Show Claddaugh's posts

    Re: Save for College or Take Family Vacations

    This site has some good info about 529's and other saving options.

    http://www.savingforcollege.com/


    I agree with the folks who suggest looking into state and community schools. I went to UMass and have had a successful career. I don't regret it one bit!
     
  21. You have chosen to ignore posts from cosmogirl. Show cosmogirl's posts

    Re: Save for College or Take Family Vacations

    I encourage you and your husband to find someone who specializes in college financing and pay for a consultation with him/her to get a clear understanding of exactly what to expect and to do what's best.  

    What you should do to maximize possible financial aid, how to handle her work earnings, whether a 529 is a good idea, etc etc.

    (Obviously, you can find a lot of this out  yourself but it takes a lot of time, research, and expertise to really figure it out.  Sort of the same thing as doing your own taxes vs. paying someone to help you....)

    (I got my Associates Degree at Mass. Bay but my B.S. still says Bentley College....there's no asterisk saying I only went there (and paid tuition there) for 2 years!!!)




     
  22. You have chosen to ignore posts from Daisy75. Show Daisy75's posts

    Re: Save for College or Take Family Vacations

    Another thing to keep in mind about UMass Amherst--it's part of the "5 College System."  Under this system, a student going to any one of the 5 colleges (UMass, Smith, Mt. Holyoke, Amherst, Hampshire) can take UP TO HALF of their classes at any of the other schools.  So, a student paying tuition at UMass could take 2 or 3 classes each semester at any of the other 4 schools (and yes, men can and do opt to take classes at Smith and Mt. Holyoke).  This is an amazing opportunity when you think about it.  Tuition, room, board, etc.  at 4 of the schools is easily $50K or more (I haven't checked recently, but I know it's up there--they were all in the low-mid 30s in the mid-90s) and these schools are consistently highly ranked by US News and World Report (yeah, I know there are issues with those rankings...but just painting the big picture).  Of course, UMass is also an excellent school with excellent programs, but it's significantly cheaper.  This is an excellent way for someone to save money by going to a state school but have the experience of taking some classes at some small liberal arts schools.

    Anyway--just throwing that out there as a "compromise" for a kid who really wants to go to a small, private, liberal arts school but can't afford it or doesn't want to take on the debt.
     
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