Hello! We'll be having our first child this summer. I've been thinking about college savings, and I'm wondering:
1. How much (in a dollar amount) do you hope to have saved for your child's college?
2. What are you hoping this will cover? (E.g. just tuition, tuition + books, tuition + books + living costs, etc.)
3. How did you arrive at that particular number?
I'd like to have a particular dollar amount in mind to work towards, but it seems difficult to determine a dollar amount to save when I don't know how much college will cost in 18 years (or which college my child will prefer). I'd love to hear what others are doing?
I have a college freshman and college senior right now. Long ago we set a goal to save 10K per year for their educations; that is, a total of 40K per child. Our thought process: We're in a low cost of living area, and our state universities are in the 14K/year range. We figured that with 10K per year, we'd be in a comfortable position to pay the remainder out of current earnings. We also set a goal to have this put away before the kids were teens, and we weren't sorry: Even if you're living frugally, the teenaged years are expensive.
We set limits for our kids. Early on, we told them we'd pay the following:
- 4 years tuition and fees ... but not extra semesters or summer school
- Dorm room and meal plan
OR a reliable, efficient car ... but not both ... and we'd gladly run up and down the road to bring them home for holidays and weekend visits, if they opted for the dorm room ... if they opted to move to an apartment, we'd still give them the cost of the dorm room, and they'd have to pay the difference
- They had to choose an in-state public school; this gave them a choice of 16 schools ... if they opted for a private school or out-of-state school, we'd give them the cost of tuition, and they'd have to pay the difference.
- We'd keep them on our health insurance and cell phone plan during college
- We told them that whatever scholarship money they earned /whatever money we didn't have to pay on their behalf would go into a car account for them when they reached their junior year ... we said junior year because that's when college kids typically take part in internships, student nursing or teaching, or whatever. We wanted them to graduate with a car that still had lots of life left in it so they wouldn't have to buy something right away.
Summary: We have covered all the basics, but they're responsible for extras.
In the event,
we over saved. Not a bad thing at all. Our kids are both on excellent scholarships, but that is NOT something you can assume will happen to you. This is the year about which I worried, yet I have spent less than $1000 this year for BOTH my kids' college needs. As a teacher of high school seniors, I assure you that fewer and fewer of our students are earning scholarships these days, and for BOTH of my kids to have full scholarships is really quite unique. I don't actually know anyone else RIGHT NOW who can say that -- though a decade ago I knew several people for whom it was true.
Equally important to saving: You need to groom your kids to think about money when it comes to college -- society will work against you, telling your kids lies about "good debt" and so forth. Obviously you're going to teach them about saving money in small ways as they grow up ... but about the time they begin high school, it's time to start talking about college and scholarships. You don't want to raise a kid who'll say, "Yes, I plan to attend a four-year party." And you want to talk about choosing a major that will lead to a job, and you want to walk them through likely entry-level job budgets to help them SEE their financial future. If you wait 'til senior year for this, it is too late.
However, I don't buy into the skin-in-the-game concept. The kid you send away to college is the same one who's been living in your house for 18 years.
You know him. If he's been responsible with money under your care, he's going to continue to watch his pennies when he leaves your home. On the other hand, if you've raised him to think money grows on trees, he's unlikely to pick up frugal habits simply because you start espousing them in his senior year of high school. Seems logical, but I see sooo many parents who don't grasp this idea: I see parents whose kids are graduating with lackluster GPAs, kids who hate reading and skip school regularly ... yet so many parents somehow think sending them away to a university will suddenly make them more responsible and appreciative of their sacrifices in saving over the years. The parents of one-semester-wonders are
very bitter about the money they've spent. The theme: Make decisions based upon the student you have, not the one you wish you had.
And I'll end with this thought: Education is changing FAST. The options that are available for my kids right now probably will look quite different when your 2016 baby is 18 years old and is making college choices. I suspect some of your child's options will be better, while others will be worse. It's up to you to keep yourself abreast of the changes. I can't imagine that saving now would be bad in any way -- you can decide later just how you'll parcel out the college money.