Kid Expenses

[Gailete]

Oh the joys of being poor! No one expects you to be forking out all that for kids and most of the people I know are near the same financial footing as I am too. I had started a small gift trust for both my boys that came due when they were 21. It came to not even $2000 but I remember getting out of college, dead broke (worked my way through, no loans) and didn't have money for job interview clothes, no security deposit for an apartment, etc. so I wanted them to have a hand up for that. Other than that, no college was paid for by me as right around the time they were ready for collage is when I had to go on disability. When one got married, we traveled to the wedding, we gave them a check for $200 and I made them a quilt (approx. value $500-1000), when my son got a chance at a good deal on his first car, I loaned him the money and he paid me back including interest. I can barely pay my own mortgage, why would I be buying my kids a house? Let them earn it the hard way like I did.

I think so much has been distorted by the media and the types of shows and movies that people watch, the articles they read where the assumption is that all kids go to college. I see articles where pregnant parents have already started college funds. Does no one ever have a less than intelligent child that won't under any circumstances go to college? I was thrilled when my autistic son managed to go and get an associates degree by working his way through and college loans that he is still paying off--when he was young, I wasn't sure if he would even graduate high school! I think many of these desires to provide so much for kids is great to talk about, but not always in the best interests of the kids that really appreicate that first car since they earned it so that they know how much blood sweat and tears went into getting it.

[disneysteve]

I am hoping to have enough money saved to pay for a bachelor's degree at a public university for my DS.

Depending on where you live, 4 years at a state school can still set you back well over 100K.
And I'll point out again that times have changed to some extent. For example, a college friend of mine recently attended homecoming. She posted some pictures she took on campus, including one from the bookstore. The basic calculus textbook was $234 (or a bargain $175 used). That's one book for one class. Over 4 years at those rates, you're looking at thousands of dollars just for books. And of course, a laptop is a requirement - not a suggestion. College is more expensive than it used to be and not just due to normal inflation.

[thesimplemoneyblog]

College is more expensive than it used to be and not just due to normal inflation.

Great point DS. The average inflation for college costs over the last 20 years has been quite significant and has been somewhere to the tune of 7% per year. This significant inflation causes the cost of college to almost double every 10 years!

Check out: FinAid | Saving for College | Tuition Inflation for some more information on historical inflation for college.

[moneybags]

Having just made our first college visit on Saturday, this question is very much on my mind.

No, we do not plan to pay 100% of college. We simply don't have the means to do so. We have a 529 plan that currently has about 50K in it and we have 21 months before she starts college. We invest $300/month into that account, so by the time the first tuition payment is due, we should have about 57K. That will cover one entire year no matter where she goes plus at least part of a second year. I'm also figuring on continuing to designate the same $300/month that is already being set aside, so that's another 14-18K over the course of 4-5 years (her program may be a 5-year program). That brings the total up to around 75K that I'm already planning to provide. There may be more along the way but that will be the bulk of it. The rest will need to come from summer jobs, some of her own savings, and financial aid.

I find this interesting. A doctor with one child not having the means to pay for her college. I wouldn't plan on getting any financial aid if I were you, as you probably won't qualify. If you are including merit scholarships as "financial aid", that's a different story. A girl going into engineering could get scholarships at the right schools. If she has the right stats and is open to her school choice, you should consider pursuing colleges with generous "merit aid". Sometimes you can get a private college education cheaper than the state U because they give more merit scholarships.

[elessar78]

Add to that that recent studies done at Ohio State, IIRC, show that between freshman year and graduation students do not record an appreciable amount of improvement in cognitive ability. That's pretty sad, and I don't think it's limited to Ohio State. For 100K, that's a pretty sad statement. You're basically paying for a really expensive sleepaway camp!

Conversely, there was an interesting article in Time magazine not too long ago about the rise of MOOCs (online courses ). The quality of these have improved considerably and tap into how brains actually learn. The really conscientious proprietors of quality online courses have studied the interactive aspect of the medium and geared their "classes" to these realities. For example, they realized that the attention span of a college student is about 15 minutes, so every 15 minutes they intersperse some activity: group online discussion, a problem to solve, a question to answer.

In an experiment on the efficacy of online courses, Stanford University offered the exact same course online and in-person. The online students averaged a full letter grade higher than the in-person students—the results were statistically significant.

Point being, there are avenues on the horizon that can challenge the current model and hopefully drive college costs down.

My own alma mater has gone through this "bloat" and when I visit there's always a new stunning, glass buliding on campus. On the western edge of the campus is a new, state of the art, fitness center that rivals the Olympic training facility in Colorado. Why do students need this? Tuition in some ways subsidizes this development and it's almost appalling.

[disneysteve]

I find this interesting. A doctor with one child not having the means to pay for her college. I wouldn't plan on getting any financial aid if I were you, as you probably won't qualify. If you are including merit scholarships as "financial aid", that's a different story. A girl going into engineering could get scholarships at the right schools. If she has the right stats and is open to her school choice, you should consider pursuing colleges with generous "merit aid". Sometimes you can get a private college education cheaper than the state U because they give more merit scholarships.

Don't kid yourself. Doctors don't all earn the high salaries that many people still think they do. Plus, I'm a family practice doctor which puts me solidly at the bottom of the physician pay scale. I have lots of friends and relatives in other careers who are earning significantly more than me. Anybody going into medicine "for the money" is delusional.

That said, financial aid doesn't just include grants. It also includes merit-based scholarships, work-study programs, subsidized (and unsubsidized) loans, etc. If you look at stats from most colleges, you'll find that a very high percentage of students receive at least some aid. RIT has 14,750 students. Over 12,000 receive financial aid. About 20% of them have families earning 100-150K. The reality is that if not for financial aid, most colleges would be empty. Very few families have the means to pay 100% of the costs.

[disneysteve]

My own alma mater has gone through this "bloat" and when I visit there's always a new stunning, glass buliding on campus. On the western edge of the campus is a new, state of the art, fitness center that rivals the Olympic training facility in Colorado. Why do students need this? Tuition in some ways subsidizes this development and it's almost appalling.

Great point. There has been an "arms race" of sorts between colleges to make themselves more and more appealing to prospective students, adding all kinds of bells and whistles that have little to nothing to do with academics.

[moneybags]

Don't kid yourself. Doctors don't all earn the high salaries that many people still think they do. Plus, I'm a family practice doctor which puts me solidly at the bottom of the physician pay scale. I have lots of friends and relatives in other careers who are earning significantly more than me. Anybody going into medicine "for the money" is delusional.

That said, financial aid doesn't just include grants. It also includes merit-based scholarships, work-study programs, subsidized (and unsubsidized) loans, etc. If you look at stats from most colleges, you'll find that a very high percentage of students receive at least some aid. RIT has 14,750 students. Over 12,000 receive financial aid. About 20% of them have families earning 100-150K. The reality is that if not for financial aid, most colleges would be empty. Very few families have the means to pay 100% of the costs.

I get it DS, definitely the perception of a doctor. As you start your search, don't forget that each school is required to have a financial calculator on their website. Put in your financial info to get an estimate of your EFC (expected family contribution). Definitely a handy tool, as you don't want your kid applying to places you can't afford. In terms of merit-based scholarships - the best are given from the schools; search their websites for details (although some are quite vague).

[LivingAlmostLarge]

I definitely am feeling that people on this board aren't as concerned as people I met in real life with paying for college and everything. Even if we stop at 2 kids I just can't see myself affording private school, tutors, etc. I enjoy my time with the kids and honestly it's worth every penny we aren't making by me working.

But I'd like one or two more. I know it'll make college probably a reach, we can afford some but not all, but I know we'll be financially secure for retirement. Our kids won't have to worry about us at least.

I've always said I would ask my kids to take out loans which I'd pay upon receiving of the grades because I don't want to pay for C or lower. I think it should be a percentage, so my kids can work and get fully paid for school or slack off and be responsible for it.

I'm hoping that if I go back to work later that my income could be earmarked for college.

Has anyone let their parents foot the college bill? I've meet quite a few friends discussing 529 and how their parents are dumping like $50k into a college fund. My parents can't afford to do that, nor my in-laws.

[disneysteve]

Has anyone let their parents foot the college bill? I've meet quite a few friends discussing 529 and how their parents are dumping like $50k into a college fund. My parents can't afford to do that, nor my in-laws.

Good question. We haven't had that conversation yet but I suspect we will. When DD is actually ready for school, I'm fairly certain my mom will offer us money. Either that or she will give DD a substantial HS graduation gift. I'm not talking about tens of thousands but I could see her giving her a few thousand, and if not all at once, definitely over the course of 4-5 years. But I'm in no way planning or counting on that in figuring out college costs.

[Gailete]

Has anyone let their parents foot the college bill? I've meet quite a few friends discussing 529 and how their parents are dumping like $50k into a college fund. My parents can't afford to do that, nor my in-laws.

When I was in college, my grandma stuck a $5 bill in the envelope with each letter she wrote me which was probably every month. Do grandmas now send $5 by way of Paypal or do they just skip things like that? It was a real sacrifice for my grandma and appreciated the help very much. I didn't even get $5 bills from my mom although she did make a lot of my clothes.

My husband and I talk about this alot as his dad paid all his college expenses with, I believe a small spending money allowance, while I pretty much had to round up everything. I typed term papers for toothpaste and laundry money. I didn't make my usual great grades while in college as I was also busting my tail paying for college, but I appreciate that time in my life so much. It was one point in time that I can point to and know without a doubt that I was truly cared for and appreciated. It was a huge boost to my self esteem what I accomplished while I was there.

I find this topic interesting especially by the lack of responses of folks who aren't planning to pay anything for their kids because they don't have anything to pay. I can't believe that I'm the only person on a "Saving Advice" site that has minimal money! That is why I'm here to help figure out how to get more and use what I have wisely and keep me motivated in saving while we are in the last 2 decades before hubby can retire and to have more set aside before I can't do anything for myself (although a new med I'm on is giving me hope about my RA )

I would love to see other's response and to the original poster, I sure hope you go for those extra kids and not worry about the money. Who knows you might end up with the world's next Albert Einstein or Bill Gates. I don't think whether or not you can cover 100% of their college expenses should be the motivating factor about whether or not you can have more kids. It isn't like you can't keep your rent paid or are are depending on the government for food stamps, etc. If hubby is in agreement, go for it! How many of us wouldn't be here today if their parents had stopped at two. I know I wouldn't and even though I grew up poor, I know I have made a difference in other's lives and they are glad I was their when they needed me.

[josetann]

I find this topic interesting especially by the lack of responses of folks who aren't planning to pay anything for their kids because they don't have anything to pay. I can't believe that I'm the only person on a "Saving Advice" site that has minimal money! That is why I'm here to help figure out how to get more and use what I have wisely and keep me motivated in saving while we are in the last 2 decades before hubby can retire and to have more set aside before I can't do anything for myself (although a new med I'm on is giving me hope about my RA )

I'd say we're in the lower-end of household income. According to wikipedia, we're lower-middle class. I'm sure we'll help our kids some with university costs, but no way we're going to foot the entire cost of a prestigious 4yr private university.

Right now, we're not contributing anything in a 529 account. First priority is a Roth IRA (when eligible) or other retirement account. From my limited understanding, funds in a 529 count more towards available money to fund a university education than funds in a parent's retirement account. And since I can withdraw the principal amount from a Roth IRA with no penalties...I could use those funds for college expenses. Now, if I had plenty to fully fund a Roth IRA and other retirement accounts and had plenty left over, I'm sure we'd be looking into 529 accounts.

Also, we're on track to get our Australian citizenship (almost one year down, three more to go). If we ride that out, then that's another route available to us and our kids. Currently, university is heavily subsidized for permanent residents and citizens. This may change, of course, but still...I don't see how it can hurt us. When the time comes, we'll sit down with our kids and figure the best way for them to follow their path. They may choose a career that does not need a traditional 4yr degree (plumber, electrician, checkout clerk). Or if they do, we may find a non-traditional way to go about it. My wife's a Registered Nurse with a 2yr Associate's degree in the US (I don't know the full costs, there were some grants, out of pocket wasn't that much). She's getting her Midwifery post-graduate here in Australia for under $6k (one year program to go from an RN to midwife). So we're talking three years of schooling, probably four digits in expenses, and she's a midwife (yes, only in Australia...it may or may not convert to the US easily, we'll come to that later).

Really, the thing that "worries" me the most when thinking of adding a third kid, is travel costs. That's an extra plane ticket, two motel rooms vs one (it's already hard enough to book a room that'll hold four), two cruise cabins vs one, etc. Just means we'll have to get even more creative, that's all.

[DayByDay]

I find this topic interesting especially by the lack of responses of folks who aren't planning to pay anything for their kids because they don't have anything to pay. I can't believe that I'm the only person on a "Saving Advice" site that has minimal money!

Nope, you aren't the only person. Didn't pay for any of those things for first adult child with the exception of $200 towards her wedding. Just the cost of attending it (out-of-state) was too much for us (air fare, hotel, food, and my husband's tuxedo rental).

Paid nothing for second adult child, and don't expect to pay anything for third child.

[Tree0164]

I will be paying for some of their college expenses. I have been putting money into a 529 plan since all 3 boys were born-depending on time between $50-$100 each month. Honestly, it won't come to a huge amount.

They are on their own for grad school and weddings.

My oldest will be driving in about 2 years and he might get my 2001 mini-van at that time.


It is not the big expenses that get you for kids-it is all the extra activities that they want to do. $50 here and there that all adds up. For example, this week I need to pay $100 towards my oldest son's 8th grade trip, $65 for spring soccer and another $130 for cub scout registration for the two youngest. That is one top of their regular expenses. I don't think I could really afford another kid at this time.

[dawnwes]

HA! My parents paid for my college education. My father told me I could take as many years as I wanted to finish college but HIS money ended after 4 years!

I think I was the only one of my friends to graduate in 4 years!

Now, my husband was in an interesting 5 year program. He went to school 2 quarters per year and then they placed him in a work situation for the 3rd quarter and the entire summer. This allowed him to work almost 8 months a year, get internship level pay, which covered his tuition and living expenses for the year.

Dawn

+1 to this.

I went to a state school, and it was still nearly 20k per year. I worked part-time throughout college, and depending on your major(s), even that is tough if you want to do well. No way I could have mustered through all my classes, and done a full-time job, and still have earned good grades.

The debt was inevitable, so I made my investment in the grades/education, rather than trying to dig myself out in advance by working more than I thought I could while in school.

Be cautious of "5 year" programs. Some of them are legitimate in that they have full loads every semester and STILL take five years, while others are a means to keep the student there for an extra year but purposely spacing required courses in such a way that the student ends up with a lighter load because it's impossible to meet all the pre-reqs in time to do things in 4 years. Some can still be accomplished in 4 years if the student is a good learner and aggressive about their class load.