Your asked "How are you supposed to pay for that?"....here is the plan so far:
My husband and I both work at good jobs. However, we had kids when we were older (I found out I was pregnant with my oldest son on my 30th birthday) and do not want to take out parent loans at the age of 50 to pay these college bills. We expect our sons to pay for part of their college and I estimate they will have $20,000-$25,000 in student loans after 4 years. I have worked full time my sons' entire lives and started saving the daycare money for college when each started Kindergarden and those expenses decreased.....which helps a lot. I have been doing my own financial planning to get to this point but the stock market hit in 2008 as well as the fast rising cost of college is working against me.
I have read articles that say you should aim to save 1/3 of the college costs, earn 1/3 while the kid(s) are in college and borrow the last 1/3. If you take the Clarkson sticker price of $49,000 per year ($196,000 for 4 years assuming NO yearly cost increase....laugh uneasily as most colleges we visited say their costs go up 3-6% per year), that is saying you should save $65000 in advance, earn $65000 during the 4 years for college, and BORROW $65000. Of course, I have 2 kids with a 2 year overlap so DOUBLE all of those numbers to get....save $130000, earn $130000 during 6 years for college, and BORROW $130000.
I have not gone to a financial advisor but against the above criteria we are in "great" shape:
******* Save $130,000: DONE
* Have $70,000 for EACH BOY in their NYS 529 college fund (this is the daycare money I saved up. We get a NYS tax break by saving for college in a NYS 529)....as long as they are "dependent" students, this counts on the FAFSA as parent asset. If "independent" student, this counts as a student asset.
* Have some money saved in our name
* Have $13,000 in a ROTH IRA that I can use as a last resort for the LAST year so it does not count against us on the FAFSA.
******* Earn $130,000 in 6 years for college: CLOSE!
* House would be paid off in 2018 (although we will probably stop prepaying the extra $120 per month principal to meet that date and shoot for paid off in 2020). $120x12 months x 6 years = $8,640
* No debt except house and my van which will be paid off at the end of this year (so that $400 per month car payment can go to college costs). $400x12 months x 6 years = $28,800
* Since the 2008 stock market problem, I have tightened the family budget a bit and prevented any NET growth in spending (ie: we saved the 2% payroll tax holiday money and the small raise I got last year) for college. The net result was about $15,000 put into savings for college last year. $15,000 x 6 years = $90,000
$8640 + $28800 + $90000 = $127,440
******* BORROW the remaining $130,000: Here is my problem/concern!
* EACH boy borrows $25,000 in student loans
* $80,000 bill remains....
ANY scholarship money we get will be applied to that remaining $80,000 bill. One of my young coworkers who graduated from Clarkson 4-5 years ago said that almost everyone he knew got a $9000 per year scholarship from the alumni endowment fund. We will not hear until next month about financial aid but $36,000 ($9000x4 years) almost cuts that remaining balance in half. We have applied for some scholarships and I will do some more looking this weekend.
ANY work/study the boys get during school months will be applid to the remaining bill.
I should be able to save more during the 6 college years once the food bill at home decreases (the $49000 per year is TOTAL cost of attendence including room/board) and we go out less often. Hopefully, the economy picks up and both boys will be able to find summer jobs. Maybe I can get a 2nd part-time job at night. Maybe raises will come back in style. Hopefully neither one of us loses our day job! Any other ideas or insites???
Edited by: ANNMKATH at: 2/17/2012 (11:34)
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