Posted on 02/14/2013 1:12:15 PM PST by Kaslin
Dear Carrie, I'm the father of three teenage daughters. I've been saving for college since they were babies, so I'm shocked to find myself $100,000 short. How can I cover this gap? The oldest is 16. --A Reader
Dear Reader, First, I want to congratulate you for making saving for your daughters' educations a priority. It's no easy task to keep that as a primary goal in the face of all the other costs of raising children. A national Sallie Mae study, "How America Pays for College 2012," found that the typical family covered just 28 percent of their kids' college costs through savings and income in 2011-12. So give yourself a little credit.
But it's no wonder that parents are struggling. According to the College Board, average total charges for in-state students at four-year public colleges and universities in 2011-12 were close to $18,000 a year. Total costs for out-of-state students were over $30,000 per year. Yearly total costs at private nonprofit four-year institutions were close to $40,000. And these are just the averages!
Multiply these average annual costs by four years and then by three children and you have a tremendous challenge. Fortunately, with some research and planning -- and a little help from your daughters themselves -- there are ways to meet it head-on.
Research -- and apply for -- all financial aid
A lot of parents make the mistake of thinking their kids won't qualify for financial aid -- and make the even bigger mistake of not applying for it. But whether it's through private scholarships or government grants and loans, there's a considerable amount of financial help out there -- and not all of it is asset based.
Again, according to the College Board, in 2011-12, full-time undergraduate students received an average of $13,218 per student in financial aid from a combination of federal loans and other sources. That's pretty encouraging.
Equally encouraging is the fact that the Department of Education has made the FAFSA (Free Application for Federal Student Aid) process more streamlined and easier to navigate. Consider, too, that in FAFSA calculations, only 5.64 percent of parents' assets are considered available for college expenses. There's also an asset protection allowance (which increases as the parents age), so a certain percentage of assets won't be counted. Retirement accounts and the value of your primary residence are also excluded.
I don't know how close your daughters are in age, but another factor that increases eligibility for aid is how many kids you have in college at the same time. Finaid.org is a good resource to research ways to maximize financial aid eligibility.
Help with student loans
There's a lot written about the burden of student debt these days, and there's no denying that paying back student loans can be an albatross for many years if not managed wisely. But today, student loans are a fact of life and a viable way to pay for an education. The average student loan debt for 2011 graduates was $26,500. However, you don't necessarily have to saddle your daughters with the entire bill. To cover the shortfall in savings, you could finance a certain percentage of college costs through student loans (ideally federal) and help your daughters pay them back over time.
Put your kids to work
If you haven't done it so far, now's the time to get your daughters involved in saving. Encourage them to get a summer job or even part-time work during the school year and put a percentage of their earnings toward college. It's not unusual for kids to contribute toward their education. According to the same Sallie Mae study, students pay about 12 percent of college costs from their own savings and income, and the National Center for Education Statistics reports that about 40 percent of full-time undergraduates work while in college.
You could also encourage your daughters to put a portion of any monetary gifts toward a college account. Speaking of gifts, when grandparents or other relatives want to buy something for the girls, suggest a contribution toward their education. It all adds up!
Be tax-smart
If you don't have your savings in a 529 College Savings Account, consider opening one for each of your daughters now. A single person can contribute up to $70,000 per child (or $140,000 for a married couple) without gift tax implications, and earnings grow tax-free. Withdrawals are also tax free if used for qualified education expenses.
Once your oldest daughter is in college, talk to your tax advisor about available college tax credits and deductions.
Protect your own retirement
One last -- and very important -- thought. Even though you're saving for your kids, don't short-change your retirement. There are many ways to pay for college, but retirement savings is pretty much up to you. By all means help your daughters, but make sure that when they're graduated and on their own, they can feel confident that you've not only take care of them, you've taken care of yourself, as well.
“DO NOT borrow money from the Federal government “Direct Loan” program! We did that for one year and they are a nightmare to deal with.”
We never did that, but what was the nightmare?
“Nevertheless, it is shocking how much middle-class families are expected to pay toward college costs, and how little of the total assistance distributed is in the form of merit-based aid.”
No, it’s not. At least if you think as a conservative. The ENTIRE GOAL of the left-wingers that run our colleges has ALWAYS BEEN to punish the rich...and to them, the rich is anyone above the federal poverty level. So they have FINALLY achieved their long-term goal, which was to charge tuition based on family income - you make more, you pay more - that simple (and, by the way, try to think of anything else priced that way). Of course they couldn’t say that outright, so they took an indirect route to the same place. They simply have a very high “sticker price”, but give discounts to those that ‘qualify’, due to ‘hardship’.
Do you see the message...when Harvard and the rest of the Ivory League stated that there would be NO MORE MERIT-BASED scholarships (about 2 years ago), they had finally achieved their dream...from their early LSD days...and there is NOTHING we can do about it, since they OWN the schools.
OUTSTANDING!
Judge Smails is THE MAN !!
It’s the “big education” cycle, dear to the hearts of Democrats:
1) make massive borrowed funds available to students
2) increase school tuition to absorb funding
3) schools pay inflated salaries to inflated ranks of profs and admins
4) profs and admins donate heavily to Democrats
and repeat
It’s the “big education” cycle, dear to the hearts of Democrats:
1) make massive borrowed funds available to students
2) increase school tuition to absorb funding
3) schools pay inflated salaries to inflated ranks of profs and admins
4) profs and admins donate heavily to Democrats
and repeat
//////////////
worth repeating
If you’re paying full price you’re doing it wrong.
Kids can work their way thru. They’ll value it more if they do. Help out, but no free ride.
Be flexible with school and degree. Few employers care where you went, just that you did and can finish long term hard projects. Go somewhere you can afford. There is a lot of free money out there if you’re willing to go to it.
Go somewhere cheap for the first couple years, taking classes taught the same everywhere. Finish somewhere special.
Get a real job which is willing to invest in you. Many will pay your way if you get a relevant degree.
My error. My daughter says its Chegg.com
I started my own business about six years before our kids started college. The turn in the economy cost a lot of our savings. The college accounts were the last to go...but they were raided.
I discovered that if your kids are good students, good citizens, and can sell their abilities to a college, there is a ton of financial aid out there.
I have two kids in college. They each work many hours a week on campus. Combined, their debt will be about $25k. Now our business is moving again...we will help pay off their debts in about five years.
It’s possible to do it. It just takes work.
They don’t respond to inquiries. They don’t apply the funds to the loans you direct them to. If a private lender did what they do, thekd be prosecuted.
wgu.edu
“They don’t respond to inquiries. They don’t apply the funds to the loans you direct them to. If a private lender did what they do, thekd be prosecuted.”
Thanks...no surprise with that bunch. Sorry to hear it though.
not that i am surprised,
but there is a lot of tremendous advice on this thread.
Now, if everyone who posted was a member of congress i would sleep better.
You've only been here 13 years, people don't know that yet.
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