The other night Yankee Bill and I were sitting in the hot tub and discussing how few people we knew had actually started saving anything for their children to go to college.
Yes-for those of you who haven’t heard it before, we do have a hot tub. To be fair, we bought it used-but we’ll replace it in a heartbeat with a brand new one when it finally kicks the bucket. I have no idea how much money it actually costs us to run (it’s never NOT run on the last 3 houses) but I have not doubt that it is worth it. It is beneficial not only to my neck and back (think migraine prevention here) and Yankee Bill’s Knees, but also to our marriage. 85% of the time the hot tub is the only time in the day when we both just stay still, relax, and talk to each other. When you look at it that way, it’s worth every penny.
It really is astounding. I mean, most folks you talk to these days make an assumption that to get a decent job you need a college degree (or some sort of advance schooling-for our purposes lets assume that tech schools cost money too). And yet so many folks haven’t even bothered to figure out how much money that might possibly cost them, or where it is going to come from.
A few years ago, when Buddy was 1, Yankee Bill and I did some thinking and talking about what our goals for our kids college education was. No, I don’t mean we picked out schools and majors; I mean we picked out what our goal of financial support assistance would be.
Both Yankee Bill and I had parents who had the foresight to put away money for our educations. Neither one of us had enough put away for a full ride.
In my particular situation, I was one of 5 kids, all of whom went to college. With the 3 year Army ROTC scholarship that I won (books, tuition and fees-no room and board money), the money my parents had saved for me was enough to cover the first year and the room and board for the remaining 3 years at the State School. I decided to take a semester away program that cost as much for one semester as a full year at my school (Semester at Sea-an awesome program. Live on a ship and take classes for one semester while visiting 10 countries and circumnavigating the globe, well worth the experience for anyone), and wound up having to take out a $7000 unsubsidized Stafford loan.
Yankee Bill started off at the local community college with his parents paying but his heart wasn’t in it. He (as his mom likes to say) majored in “Women, beer, foozball and pac-man”, and wound up in the US Army after a year and a half at age 20 (uh-gotta rib him here–when he went in the Army, I was in 5th grade. hee hee hee). He wound up later being chosen for degree completion by the Army, which means they sent him to college full time and he completed his degree in 18 months straight. (They only do that for the brightest and the best. Did I pick well or what?)
So we both had to work for at least part of our education. I had thoughtful parents with foresight who just had too many kids to save for, and thus applied for scholarships, Yankee Bill had parents that were footing the bill, but wasn’t ready for college yet-he later had to work to be worthy to have his employer send him.
We both compared this to our own experiences of kids who were “getting a full ride”. Now, I know that there are some kids out there who have everything paid for who appreciate it, buckle down and work hard. But there are a lot more kids who at 18 don’t fully appreciate the value of money. These kids sometimes don’t put as much effort into things, perhaps don’t understand the value of what they haven’t had to work for. I’m not saying that they are bad, I’m just saying that their understanding has not fully matured.
So after a bit of discussion Yankee Bill and I came up with our decision on what we felt was a fair amount to contribute to our children’s education. Just so you know, this decision was predicated on the fact that we live in the state of NY which has an EXCELLENT state university system. We felt that as parents our goal would be to save enough money for each of our children to be able to afford tuition, books and fees at the state university system. There is one main campus, 1 satellite campus and 1 community college campus all within a half hour drive of our house (the main campus being SUNY Binghamton, a very well thought of school-lots of folks from Long Island pay to send their kids up here to go to school). If the kids chose, they could attend the state school and live at home and come out of the experience completely debt free. If they chose to live on campus (either here or at another state school) or to go to a non state school (we probably have 10 within an hour drive, including big names like Cornell) then they will have to look into scholarships, loans etc.
So, now we get into the numbers portion of all of this. We had a goal, which was tuition, books and fees (approx). How the heck do you figure out what that will be in 2016 and 2018?
Disclaimer! Lets start out right up front by saying this is not a definitive how to. I don’t think at any point I’ve faked any of you into thinking I’m some sort of financial genius or accountant. There are lots of other places besides my blog that you can go online (or in real life) to find great information on the how to of saving for college. Please, if you need that sort of help, talk to a professional, don’t trust just me! I’d hate to have you hunting me down with a shotgun later. The Motley Fool has an entire section on College Savings. They are way more qualified than me!
Since we were talking state schools I figured I start out by seeing what SUNY (State University of New York) costs now. I went to their website and looked it up. For this current school year (06-07) the estimated cost for a commuter is $12,140 (if you are curious, on campus living is estimated for $16,880). These are estimated costs because it varies depending on which campus you actually attend.
But how do I go from this cost to the cost in 12 years? or the cost in 14 years? After all, we are saving for Princess and Buddy!
After some searching I found this website called “Learning Quest” that had a section on “Investing for College” They have a chart that uses a 5% increase from the current rates to project the future costs. If you read the little blurb you’ll see exactly how they get it-I can’t figure out how to paraphrase it without outright copying it! According to that chart, we need to save $112,426 to send Princess to public university (although it does not compare commuter to living on campus) and $123,950 to send Buddy. Anyone else starting to feel poor yet?
I did find an older article (via Google, I just love Google!) from 2005 that showed an actual proposed tuition schedule for the SUNY system through 2016. The estimated price that they had listed for this year was $5,073 for only tuition, and the actual price for only tuition was $4,350. So the figures actually weren’t that far off.
All of this is to say that we did our best to research and guesstimate, and then went with a nice round figure of about $100,000 a kiddo for college as a goal. We invest regularly and with fairly aggressive stuff currently (since we have time, later we’ll switch to more conservative stuff) in a college 529 for the kids, and any extra money we get at Birthday’s, Christmas etc all goes into that (Thanks Grandpa Bones, Great Grandpa Hertzel, Cici, Nana F!).
What do you folks think? Are you interested in some more informative links or disection and how to on the actual financial peice? As I said, I’m not really qualified, but I know some other bloggers who are, and I could ask a guest blogger to write something up-If you think that would be interesting please leave a comment and let me know. Otherwise, it’s back to recipes and quick tips :O
I like your approach. It is hard to find a balance. I saw many kids party away their gift of all expenses paid college. Yet, we don’t want to burden them with excessive debt. We also put away birthday and Christmas money, but are unable to do much more than that.
This is a great article! I agree with you that unless you have to work for it, its hard to appreciate the value of education. We currently dont have kids. But when we do have them, I think our approach will be similar – cover some of the basics, but make them work for the rest of it. If we have more saved than what covers the basics, we can always help them pay off the debt later.
I’ll tell you, when I went back for a second degree and paid for the entire thing myself, it really makes you value the education you’re getting.
note: “Paid” is used loosely in that paragraph. …still paying… luckily interest rates are low. AND of course, thanks for co-signing the one little loan for me. That is the one that got paid off first. It was appreciated more than you know. I am blessed to have such a great sister and brother-in-law.
OK, and I totally mixed my tenses in the last comment. Can ya tell I’m actually educated!?!?
Love ya sis 🙂