Strategy for paying for College (and FIRE)

[dadof4]

Hi guys,

First post here. I've been reading the blog and forums for a few weeks, and like a lot of others mentioned about themselves, I noticed that I've been a moustachian for years without knowing it.

I'm 38, happily married, with four kids between the ages of 3-11. It will be a stretch, but with some luck we might have enough to consider ER when our oldest reaches college age. At that point we'll be looking at the next twelve+ years where at least one kid will be in college. If some of the kids want to go to grad school, it will last even longer. Considering that even the most optimistic calculators have expenses at over $20k a year, we're looking at minimizing a $320k problem (before inflation).

So a couple of questions. Going in to ER will naturally reduce our income. Will that help us get grants despite a high net worth? Otherwise, it may be necessary to have more assets in retirement accounts and a larger primary residence.

It looks like the biggest component of college expense is living expenses. So the strategy would involve moving the whole family to a university town (tentatively Eugene, OR), and having the kids stay with us through their college years.  After 12 years, the kids will have complete college and be ready for independence, the Mrs and I can move on, or stay if we like it there.

This would hinge on all of the kids wanting to go to the same school (and getting in), but with enough brainwashing..err... helpful parental guidance.. I think we'll be able to pull that off (assuming we start early).

Any thoughts?

[StarryC]

I would not count on any amount of "parental guidance" being enough to convince all of your children to live at home for all of their college years.  And, would you really want to deprive them of the on campus experience?  Maybe freshman year, or two years, but probably not all 4!   

Move to the college town, and try to get jobs at the college to get discounted tuition? 

[randymarsh]

Don't count on any aid other than loans from the FAFSA if you and your spouse make anything close to an average middle class income - 60K or so? Maybe up that number a bit for the years you have multiple kids in school. As a MMM reader, I bet your income in ER will be much lower, but that presents another problem:

You'll have that income coming from sizable investments, but those investments have to be listed on the FAFSA. Retirement accounts and your primary residence aren't included. But any brokerage account will be plus cash on hand.

I receive ~$500 a year in non-loan aid and my FAFSA includes one student and one parent with income under $70,000 and reportable assets of less than 10K. That aid is from my school and not the government, so your mileage will vary. Your kids might get a bit more since you'll have at least a couple in school at the same time.

It's wishful thinking that all 4 kids will spend all 4 years at home. I spent freshman year at home, half of sophomore year in Italy and half in my own apartment. Half of junior year in my apartment and the rest back at home. If I could go back, I would do freshman year in a dorm, Italy, then finish out the rest at home. Or find the income (not loans) to let me live on my own.

In my opinion, I think funding grad school is overly generous. I get wanting to cover undergrad, but I think your kids should be able to cover grad school themselves.

Many scholarships from schools are based on GPA and ACT/SAT scores. If I had gotten a 30 instead of a 27 on the ACT, I'd probably be graduating with half the debt.

[dadof4]

I would not count on any amount of "parental guidance" being enough to convince all of your children to live at home for all of their college years. 

4 out of 4 is probably wishful thinking, but it allows a workable fallback plan. If one of them is rebellious or independent, and wants to do things on their own, then by all means. But independence has its cost - they'll have to work for it, qualify for scholarships and grants, and/or pay for it later with student loans.

And, would you really want to deprive them of the on campus experience?  Maybe freshman year, or two years, but probably not all 4!

Since most of my information about the "on campus experience" has been gleamed from watching Animal House, I think the kids will be better off without it :)

I went to college a bit later in life (at age 22), so I have a different perspective.

Move to the college town, and try to get jobs at the college to get discounted tuition? 

Good idea. I'll have to look in to that.

[dadof4]

Don't count on any aid other than loans from the FAFSA if you and your spouse make anything close to an average middle class income - 60K or so? Maybe up that number a bit for the years you have multiple kids in school. As a MMM reader, I bet your income in ER will be much lower, but that presents another problem:

You'll have that income coming from sizable investments, but those investments have to be listed on the FAFSA. Retirement accounts and your primary residence aren't included. But any brokerage account will be plus cash on hand.

So unless I try to game the system (like squirreling cash in retirement accounts ahead of time, getting a larger house and surviving on part time work and a home equity loan), federal grants should not be a factor. I'm not seeing how even with the above monkey business and getting a grant, I stay ahead.

In my opinion, I think funding grad school is overly generous. I get wanting to cover undergrad, but I think your kids should be able to cover grad school themselves.

I agree. At best, they'll have free room and board (at home), and limited financial help.

Many scholarships from schools are based on GPA and ACT/SAT scores. If I had gotten a 30 instead of a 27 on the ACT, I'd probably be graduating with half the debt.

I'll proceed to brainwash them in to doing well on these tests then!