projecting college costs

[mad9q]

I am interested in hearing how others are projecting future college costs, specifically in-state, public universities.  Are you just looking at current tuition and assuming a 2x annual inflation rate?   

[Lucky Girl]

I'm not projecting costs in a systematic way, because there are too many variables and my kids are age 6 & 3.  I have two kids, so the basic options are:

1.  Neither of them go to college, expense=$0 (highly unlikely in our extremely privileged and educated family)

2.  One goes to college, one does not go or gets full ride, expense= at least $200k by the time they get there, possibly more

3.  Both go to private or public colleges, expense = at least $200k, probably a lot more

With our assets I don't feel good about taking financial aid from others who truly need it, so we will save at least $200k in 529 plan, maybe up to $300k depending on what the outlook is like as we get closer to RE.  The rest we will figure out as we get there.  Multiple choices for covering the rest of the cost, including taxable accounts, loans, kid getting a job, living at home for a year to save, choosing cheaper college if our finances really tank.  In other words, flexibility is key, once you determine how you want to prioritize the covering of that expense versus quitting your job.

Important side note for those who question the value of paying for a child's college:  both my parents and DH's parents paid a substantial portion of our private college tuition, and room & board for the first two year.  After that we both covered our own room & board, and I graduated with loans as well.  The assistance from parents was very helpful, but we also learned to work hard and pay some of our way.

[onlykelsey]

I'm pregnant with our first, so I am no expert, but plan on opening a 529 in the next couple months.  I think our first goal will be to fund half the cost of in-state four-year public tuition and living.  It looks like that will be ~80K based on 6% inflation in rates.  I have no desire to fully fund my child's education, and will reevaluate as they grow.  That requires putting away $200 monthly from about now (currently in second trimester).

[tonysemail]

for cfiresim purposes, i use 65k per year for tuition and living expenses.
but i agree it's too far in the future and subject to any number of changes including student loan reform.
so i plan to be flexible and change the plan as I get closer.

for 529 purposes, i would be comfortable with 250k balance.
I may never get the balance that high, but it feels like there's too much uncertainty to save much more than that.

[mad9q]

Thanks all for the responses.  We have five kids, with the oldest being nine.  Current cost of attendance at our state's flagship is $30K.  If I use a 6% inflation estimate, this means we need to have roughly $200K for the oldest.  And then more for the other kids.   

[tooqk4u22]

It will be interesting to see whether or not cost trends continue at the 6-7% that they have over the last twenty years.

1. It's basically not affordable as it is, so how can it continue. 
2. The big millennial swell is largely in or well out of college now and the population trends behind them are much smaller, so this can cause:
     - universities to experience financial struggles and possibly shut down (already happening in some small ones)
     - supply and demand is imbalanced on the supply side so costs, per economics 101 should come down.
     - when supply is high colleges refuse to cut and instead seek greater funding from states/fed and/or raise prices to keep their bloated costs higher (but all it takes is a few to figure out that if they cut they can attract more students).
     - attract more international students who are willing to pay full freight (already happening).
 
Who knows, anyway I am not planning for it - I will do my best to guide them responsibly, they can take out loans/grants/scholarships, and if I am in a position to help I will.  But it won't come fully at the expense of FIRE - it is not hard to imagine $200k per kid for college.

[ZMonet]

Important side note for those who question the value of paying for a child's college:  both my parents and DH's parents paid a substantial portion of our private college tuition, and room & board for the first two year.  After that we both covered our own room & board, and I graduated with loans as well.  The assistance from parents was very helpful, but we also learned to work hard and pay some of our way.

Much the same here.  My parents didn't buy me much, but they valued education and paid for most all of college and grad school.  They refused my paying them back, so I figure I can repay them by paying for my kid's education, whatever that turns out to be. 12 years to go and so far we've averaged about $1k/month in 529s.

[Hadilly]

We set up a spreadsheet projecting costs for private and state schools. We also separated out tuition vs room and board, assuming tuition at 6% and room and board, more like 3%. Our goal is to be able to fund an Ivy League education fully, but we are only sheltering a small chunk in 529s. The rest is going in general investments, but tracking it as a college specific pot. Does that make sense?

It was really helpful to do the spreadsheet. It gave us a solid goal and a definite target to hit every year.

Extra money, we will use, pass along for grad school, etc.