Managing your finances up to the time your children are accepted to college is prudent. There is nothing unethical about making home improvements (home improvements are necessary) and sinking as much of your income as possible into retirement accounts so that your are lean with extra cash when it is time for your kids to apply to college.
There are a LOT of other colleges, both public and private, that also give excellent financial aid based on financial need. MOST of those are top-tier colleges, so you have to have great grades and/or test scores to get in. Yes, of course, there are schools that give excellent scholarship money based on merit (academic and/or athletic), and that's a viable option for many.
The reason I commented initially is because of the comment that Ivies cost $340K or whatever the number was. That's just not the case for the vast majority of people.
The average household income for a family of 4 in my state of Ohio is $100,693. If that family was maxing out retirement income alone, they could easily be lean on cash without having to try to be lean on cash. In fact, they very likely would NOT be able to max out their retirement accounts or anywhere close to it on that income.
Here's a table of the average household income in all 50 states:
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
You make too many assumptions. You don't know how or why those people live in the homes they do. When you have a mortgage (which I still did when my youngest started college) AND you max retirement giving into THREE different retirement accounts (could be 4 for some people), AND you live in an area with high property taxes (which I do) AND you own a dog, AND you take at least two vacations a year because vacations are worth it, and you have a family of 4. $150,000 isn't all that much. I'm not complaining, because I could move to a cheaper area, take fewer vacations, cut back on retirement giving, etc., but my spending isn't and never has been outrageous. The financial aid my oldest kid got based on financial need was fair. My youngest kid had a combo of academic and athletic scholarship that paid the bulk of his college.
Harvard's average financial aid award is $53,000 per year. Anyone who pays full tuition can afford to do so.
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
You make too many assumptions. You don't know how or why those people live in the homes they do. When you have a mortgage (which I still did when my youngest started college) AND you max retirement giving into THREE different retirement accounts (could be 4 for some people), AND you live in an area with high property taxes (which I do) AND you own a dog, AND you take at least two vacations a year because vacations are worth it, and you have a family of 4. $150,000 isn't all that much. I'm not complaining, because I could move to a cheaper area, take fewer vacations, cut back on retirement giving, etc., but my spending isn't and never has been outrageous. The financial aid my oldest kid got based on financial need was fair. My youngest kid had a combo of academic and athletic scholarship that paid the bulk of his college.
Harvard's average financial aid award is $53,000 per year. Anyone who pays full tuition can afford to do so.
And no, what you did (if you knew early on that your kids were gifted as mine are and might be able to get into an elite college with great financial aid based on need) was not necessarily prudent. The person with the 2.5 mil house paid much less for college and can sell that house and buy an even nicer one for a fifth of the price somewhere else when they want to retire.
When I started planning to pay for college for my kids, we weren't making $150,000. We just had one income, and I had no idea what we'd be making 18 years later.
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
You make too many assumptions. You don't know how or why those people live in the homes they do. When you have a mortgage (which I still did when my youngest started college) AND you max retirement giving into THREE different retirement accounts (could be 4 for some people), AND you live in an area with high property taxes (which I do) AND you own a dog, AND you take at least two vacations a year because vacations are worth it, and you have a family of 4. $150,000 isn't all that much. I'm not complaining, because I could move to a cheaper area, take fewer vacations, cut back on retirement giving, etc., but my spending isn't and never has been outrageous. The financial aid my oldest kid got based on financial need was fair. My youngest kid had a combo of academic and athletic scholarship that paid the bulk of his college.
Harvard's average financial aid award is $53,000 per year. Anyone who pays full tuition can afford to do so.
Right. And you could’ve afforded to do so as well. Taking two great vacations instead of one is a choice. Maxing 3-4 retirement accounts is a choice. Saving for college via 529 and other college savings vehicles is also a choice. Buying new cars and renovating your home to appear less liquid, as you previously admitted you did, is also a choice. You could’ve afforded to pay full tuition. But you chose not to and to work the system instead.
You make too many assumptions. You don't know how or why those people live in the homes they do. When you have a mortgage (which I still did when my youngest started college) AND you max retirement giving into THREE different retirement accounts (could be 4 for some people), AND you live in an area with high property taxes (which I do) AND you own a dog, AND you take at least two vacations a year because vacations are worth it, and you have a family of 4. $150,000 isn't all that much. I'm not complaining, because I could move to a cheaper area, take fewer vacations, cut back on retirement giving, etc., but my spending isn't and never has been outrageous. The financial aid my oldest kid got based on financial need was fair. My youngest kid had a combo of academic and athletic scholarship that paid the bulk of his college.
Harvard's average financial aid award is $53,000 per year. Anyone who pays full tuition can afford to do so.
And no, what you did (if you knew early on that your kids were gifted as mine are and might be able to get into an elite college with great financial aid based on need) was not necessarily prudent. The person with the 2.5 mil house paid much less for college and can sell that house and buy an even nicer one for a fifth of the price somewhere else when they want to retire.
When I started planning to pay for college for my kids, we weren't making $150,000. We just had one income, and I had no idea what we'd be making 18 years later.
But your plan to pay for college, as you’ve previously admitted, was not to save for college because you knew you had gifted kids and could use the system to your advantage. I get the gifted kids part. That’s pretty easy to spot early on because we have one of those. But nobody knows what they’re going to be making 18 years on, yes….?
To quote another liberal redistributionist, c’mon man.
The financial aid my oldest kid got based on financial need was fair.
Most subjective opinion ever rendered. Did your daughter have straight As with 11 AP classes, 1570 on the SAT first take, student government class officer, varsity xc and track, competitive piano, mucho volunteer hours, and founding member of a club that required some 15-20 hours per week?
If not, is your kid somehow more worthy of getting full tuition from the elite school?
You falsely state this everytime this topic comes up. You claim that the vast majority don't pay full price. That is a lie. 56% of students at Brown pay the full price which is $85K for 2023. The average student pays $57K.
I reject those stats. Another simple Google search says the average student pays $26,000 a year at Brown. I've done Net Calculator run throughs a million times for elite colleges (I did this for both of my kids and I have done it on the side for many others when advising them on college costs).
Sorry, but most don't pay full price to go to ANY college let alone Ivy League colleges.
The financial aid my oldest kid got based on financial need was fair.
Most subjective opinion ever rendered. Did your daughter have straight As with 11 AP classes, 1570 on the SAT first take, student government class officer, varsity xc and track, competitive piano, mucho volunteer hours, and founding member of a club that required some 15-20 hours per week?
If not, is your kid somehow more worthy of getting full tuition from the elite school?
Actually, almost EXACTLY all of what you said threre except for all the volunteerism (though she was a volunteer coach for the summer track program I ran at that time). She was one of 11 valedictorians (straight As), as many AP classes as she was allowed to take, a DIFFERENT score on the SAT because it was when all three segments were required (so out of 2400, not 1600), but still super high like that...and yes in one take and yes varsity CC and track athlete, first chair clarinet, and on and on and on...in the gifted program since 1st grade.
She could have gotten a full ride on an academic scholarship to a TON of schools that give merit aid (including many just automatically based on her test scores, GPA and National Merit Scholar standing), but she wanted to go to the elite school she visited, and when all was said and done, we ended up paying what amounted to room and board for her, so we let her go there.
Worthiness of getting full tuition at an elite school that doesn't offer merit scholarships is just all about financial need. You have to be able to get in on your merits, and she did that. We followed all of the rules and didn't bend over backwards to try to do so either (didn't invest a million dollars in a piece of art for example).
My son was also identified as gifted in the 1st grade, took a ton of AP classes, got super high test scores (though he wasn't valedictorian), but he was even better at CC and track than my daughter (both ran in college) as he was a HS all american...so he went a different route and went to a school that offered merit academic scholarships and athletic scholarships...and he got both of those.
Managing your finances up to the time your children are accepted to college is prudent. There is nothing unethical about making home improvements (home improvements are necessary) and sinking as much of your income as possible into retirement accounts so that your are lean with extra cash when it is time for your kids to apply to college.
There are a LOT of other colleges, both public and private, that also give excellent financial aid based on financial need. MOST of those are top-tier colleges, so you have to have great grades and/or test scores to get in. Yes, of course, there are schools that give excellent scholarship money based on merit (academic and/or athletic), and that's a viable option for many.
The reason I commented initially is because of the comment that Ivies cost $340K or whatever the number was. That's just not the case for the vast majority of people.
The average household income for a family of 4 in my state of Ohio is $100,693. If that family was maxing out retirement income alone, they could easily be lean on cash without having to try to be lean on cash. In fact, they very likely would NOT be able to max out their retirement accounts or anywhere close to it on that income.
Here's a table of the average household income in all 50 states:
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
If you don't play the game because you think the game is unfair, you screw yourself and your kids.
My kids are 3 and 1, I learned what the game is, so that I can do things which make sense for my kids and family.
If you have more than 1 kid, colleges are going to take more than half of your nonretirement savings, you can either put it to work improving your family's life or let the school have it. Unless you can get rich enough where college isn't expensive (which is very unlikely for most of us), then you should hide all your extra money in retirement accounts/whole life insurance/primary residence. ROTH IRAs are the best because the money is most accessible in case of emergency.
You make too many assumptions. You don't know how or why those people live in the homes they do. When you have a mortgage (which I still did when my youngest started college) AND you max retirement giving into THREE different retirement accounts (could be 4 for some people), AND you live in an area with high property taxes (which I do) AND you own a dog, AND you take at least two vacations a year because vacations are worth it, and you have a family of 4. $150,000 isn't all that much. I'm not complaining, because I could move to a cheaper area, take fewer vacations, cut back on retirement giving, etc., but my spending isn't and never has been outrageous. The financial aid my oldest kid got based on financial need was fair. My youngest kid had a combo of academic and athletic scholarship that paid the bulk of his college.
Harvard's average financial aid award is $53,000 per year. Anyone who pays full tuition can afford to do so.
Right. And you could’ve afforded to do so as well. Taking two great vacations instead of one is a choice. Maxing 3-4 retirement accounts is a choice. Saving for college via 529 and other college savings vehicles is also a choice. Buying new cars and renovating your home to appear less liquid, as you previously admitted you did, is also a choice. You could’ve afforded to pay full tuition. But you chose not to and to work the system instead.
Of course those are choices. I didn't want to work until I was 65...or even until 60 for that matter, so we invested as much as we could stomach. We bought a house in a great school district because that was important to us. We had no idea that our kids would even for sure want to go to college early on. Gifted children don't ALWAYS end up performing well in school and don't always want to go to college. I have a friend who is a genius, and instead of going to college, he started his own software company right out of high school. You just never know the path a kid will take. I went to high school with another kid who was and is still a genius, but he never put all the pieces together and literally lives in his parent's basement with no job at age 55.
My house NEEDED those removations when we made them. I didn't do it just because I wanted a different style. And the cars...we needed those too (one was bought new, the other was used)...well, we didn't NEED a new car, but I'm allowed to have SOME things I want. I didn't buy a Bugati.
Yes, a 529 plan is a choice. It's a good choice for some. It's NOT a good choice for others. Wasn't a good choice for my family based on the abilities of my kids and the likelihood they would go to elite colleges.
I will push back on me being able to pay full tuition to an elite college when my daughter went to college. I'm not about to derail my retirement giving to pay full price for a kid of mine to go to an elite private college, so that's off the table. My wife had barely been back working for just a few years at that time, and we had put off a TON of things that needed to be done to the house because it was just my income before she went back to work. Could we have invested like mad since the day she was born, bought a smaller house in a worse school district, invested way less so I would have to work until age 65 or more? Sure...we could have. Unacceptable though.
We had put off spending money on stuff until about 4 years before my daughter went to college. Since we now had extra money, we fixed and updated things that we needed. We didn't go above and beyond what was needed to maintain our house and extremely reasonable lifestyle in order to get full tuition from a university. Would we have taken 2 vacations a year if I was concerned about paying for college? Nope. But I planned. Vacations (at least the ones I took when the kids were still here) are valuable learing experiences for children and family bonding time. Why should I keep driving older cars that are money pits or pay for cars with a loan just so I can pay more to a university? We had the money in cash, so we bought those two cars with cash. Prudent. Allowed. Ethical.
Right. And you could’ve afforded to do so as well. Taking two great vacations instead of one is a choice. Maxing 3-4 retirement accounts is a choice. Saving for college via 529 and other college savings vehicles is also a choice. Buying new cars and renovating your home to appear less liquid, as you previously admitted you did, is also a choice. You could’ve afforded to pay full tuition. But you chose not to and to work the system instead.
I will push back on me being able to pay full tuition to an elite college when my daughter went to college. I'm not about to derail my retirement giving to pay full price for a kid of mine to go to an elite private college, so that's off the table.
Prudent. Allowed.
Prudent? Maybe. Allowed? Yes. But that’s very different from ethical. And I simply disagree.
You finished a previous post by saying anyone who pays full tuition can afford to. That’s quite liberal of you. You could’ve afforded to as well, but you CHOSE not to. Yet, you supposedly somehow have $12 million in investments. Yep, you could’ve afforded it too, but you let someone else fund it.
So why don’t you fund a full scholarship at your alma mater for someone else’s kid? Because, you know, you invested so well and want to pay it forward…
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
If you don't play the game because you think the game is unfair, you screw yourself and your kids.
My kids are 3 and 1, I learned what the game is, so that I can do things which make sense for my kids and family.
If you have more than 1 kid, colleges are going to take more than half of your nonretirement savings, you can either put it to work improving your family's life or let the school have it. Unless you can get rich enough where college isn't expensive (which is very unlikely for most of us), then you should hide all your extra money in retirement accounts/whole life insurance/primary residence. ROTH IRAs are the best because the money is most accessible in case of emergency.
CORRECT!
I wouldn't even call it hiding money though. I don't have a pension. My wife doesn't have a pension. Who knows what SS will bring. Investing in retirement accounts as much as you possibly can is absolutely critical if you want to have any kind of an enjoyable retirement. It's a necessity. I'm not going to feel guilty that I didn't arrange my finances in such a way that I ended up sending a few hundred thousand dollars to an Ivy League (or similiarly expensive) school that has an endowment of $53.2 BILLION (Harvard). No thanks.
It’s “prudent” if you are close to the line. I believe you said you were making about $150,000 when your kids went to college. Which is a lot of money in OH, but not so much in, say, CA or DC area.
Not everyone has the “luxury” of being prudent. But I know many families who live in nicer houses than I do and drive fancier cars and are just spendy people who got “need” based aid, which I think is complete bull$hit, because it is. I mean, was it not prudent for me to forego buying the $2.5 million house and two luxury vehicles so that I could exhaust our savings to get financial aid for college, independent of our 401ks?
Ivies cost full price for a substantial percentage of people. It’s not like 90% of families are getting full tuition. Now, some people are fine with that. Personally, I think it’s a colossal waste of money.
If you don't play the game because you think the game is unfair, you screw yourself and your kids.
My kids are 3 and 1, I learned what the game is, so that I can do things which make sense for my kids and family.
If you have more than 1 kid, colleges are going to take more than half of your nonretirement savings, you can either put it to work improving your family's life or let the school have it. Unless you can get rich enough where college isn't expensive (which is very unlikely for most of us), then you should hide all your extra money in retirement accounts/whole life insurance/primary residence. ROTH IRAs are the best because the money is most accessible in case of emergency.
The key word here is “hide,” and you’re right, that’s what people, who can and are willing to, do. But it’s not always that simple. Some people make too much money to fund ROTHs. We do. That’s not a super high threshold. Some of our employers discontinued matching on 401k contributions, and then some of our contributions got returned because of not passing certain litmus tests as companies in terms of executive pay. Whole life? Maybe, but that’s mostly a rip off where they take a huge chunk of fees up front.
Say you are a family who makes $300,000 per year but lives in CA or DC. It doesn’t go very far, and then you are boxed out from some of these wealth sheltering vehicles. The only thing I could’ve done is sunk all of my money into my house or cars or moved to a really expensive house. Which is really stupid just to try to get financial aid for college.
It’s just not that simple, but I hear you. Had I made $150,000 per year and lived in the Midwest, I’m sure I would’ve massaged it better.
If you don't play the game because you think the game is unfair, you screw yourself and your kids.
My kids are 3 and 1, I learned what the game is, so that I can do things which make sense for my kids and family.
If you have more than 1 kid, colleges are going to take more than half of your nonretirement savings, you can either put it to work improving your family's life or let the school have it. Unless you can get rich enough where college isn't expensive (which is very unlikely for most of us), then you should hide all your extra money in retirement accounts/whole life insurance/primary residence. ROTH IRAs are the best because the money is most accessible in case of emergency.
I wouldn't even call it hiding money though.
Lol, of course you wouldn’t. Reveals your true character.
I will push back on me being able to pay full tuition to an elite college when my daughter went to college. I'm not about to derail my retirement giving to pay full price for a kid of mine to go to an elite private college, so that's off the table.
Prudent. Allowed.
Prudent? Maybe. Allowed? Yes. But that’s very different from ethical. And I simply disagree.
You finished a previous post by saying anyone who pays full tuition can afford to. That’s quite liberal of you. You could’ve afforded to as well, but you CHOSE not to. Yet, you supposedly somehow have $12 million in investments. Yep, you could’ve afforded it too, but you let someone else fund it.
So why don’t you fund a full scholarship at your alma mater for someone else’s kid? Because, you know, you invested so well and want to pay it forward…
1) When my daugher went to college, it would have been irresponsible of me to have put things in motion to have afforded $80,000 a year to send her to college. Not at the risk of my retirement. Not at the risk of my wife's retirement (I made more than she did over our careers, and I am responsible for making sure she isn't destitute if I were to die young). Not at the risk of having my kids go to a bad public school. I mean, we could have moved to Detroit, and I could have bought a house for a dollar. Um...no.
2) I do not have $12 million in investments. It wouldn't take you too long counting down to get to where I am, but it's not $12 million.
3) Who funded it? We still paid for room and board, and the money we paid for sure MORE than paid for what it cost the university to house and feed her. The university she went to has a HUGE endowment, and it increases every year. Most elite colleges don't need a penny from incoming students anymore.
4) You sound like sour grapes. Not my fault that you didn't know the proper way to structure all of this to your benefit. If the universities thought the system was unfair to them, they would change it. ALL universities still need students to come there as enrollment across the board is dropping. Not really a good idea for universities now to decide to make it MORE expensive to attend.
5) Who says I won't fund a scholarship fund? I think there are more worthy places to give my money to though. I'm only 56 after all and not even taking from my retirement accounts just yet. Gotta see where we end up, how much we need to spend on a house, etc. You're very interested in what I do with my money. I don't care what you do with YOUR money.
Consider Georgia Tech. In ACC but not a distance running school. Has a business school, but make sure you look into whatever the running is like and the engineering school type of institute requirements.
Proper way to structure it? Some of us are very good at investing. We fully funded our retirement accounts. We paid off our house. We paid off cars and paid cash for two more cars for the children. One school told us that we could by artwork.