I’ll be graduating soon. I can’t believe that four years have gone by, just like that. Mom can believe it, though. Especially because she can finally stop writing the giant tuition checks every month. There is a lot of debate on if parents should pay for their children’s college education, and obviously it’s an issue that depends on the family’s situation and values. So, there are no one-size-fits-all solutions.
Well, knowing what Mom paid the bulk of my college tuition for me, I want to do the same for my future kid. At the very least, I’d want to have three years of private school education expenses saved up. But that’s going to be a tall task.
According to Sallie Mae’s College Cost Calculator, the current $40,000/year tuition (or $160,000 for 4 years) will balloon to an astounding $1,031,373 in 26 years, assuming 7% annual cost increase. The cost of attending four years of private school will exceed $1 million dollars. I know that $1 million in 26 years won’t be worth as much as now, but it’s still a whole lot of money!
Good thing I won’t have to worry about paying for someone else’s college expenses for a LONG time.
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I was pretty surprised that your college education was so darn expensive… $160k for 4 years?… Ouch… No wonder so many college kids graduate with such huge chunks of starter debt…
Being the spoiled Daddy’s Girl that I was (and sort of still am) I had no idea what my parents paid for tuition. NO IDEA. That’s pretty embarassing…
In my own defense, I did pay for just about everything else other than tuition… food, rent, gas, clothes, fun money with a waitressing job…
According to my alma mater, school now costs $2729 a semester-and that is just tuition… So, the average kid in WI can expect to pay about $30k for a five year education and graduate with a college degree…
Compared to what your parents paid, WI Universities seem to be a relative bargain! Even out-of-state kids get off relatively cheap at $6500/semester.
It’s a personal thing, though. A private school degree can open a lot of doors that my brand can’t…
In retrospect, knowing what you know now, would you do it again? Seriously, your parents hand you a check for $110,000 and say “dear, here is the money for your education, do with it as you see fit…” Would you have spent it on your education all over again? Or would you have spent it differently?
Just curious.
MissGoldBug
I worry about this, too, Wanda–like you, I feel my parents’ choice to pay for my education out of pocket (no financial aid, even! And I was on the other side of the country! All told, it probably cost them close to $250k) confers upon me an obligation to do the same for my own children, to the greatest extent possible. I’ve been considering this course of action: opening a 529 plan for myself when I’ve knocked off some other savings goals, but (presumably) still substantially before I have kids. A 529, I believe, can be transfered to various immediate family members (for educational purposes only), including, of course, children. The idea is that I’d get the reduced rate of tax-advantaged contribution and give the money more time to grow–contributions would need to be pretty hefty to compound to $1m in 18 years, but if you add, say, another 10 years, the contribution necessary decreases dramatically.
Anyway, just something I’ve been turning over in my head.
wow, kudos to your parents for helping you out like that! After paying for my undergrad and grad degrees with mostly student loans, I’m attempting to work off some massive debt!
Thanks for commenting on my blog so I could discover yours! I’m always looking for good blogs to add to my reading list.
MGB – That’s a good question, and honestly I don’t know. The thing is, I was mainly deciding between all private schools, where the price tag is basically the same. But knowing what I do now about compounding interest, it’d be hard to give up $110,000.
On the other hand, that’s sort of a moot point because my parents would NEVER hand over $100k+ for me to “do with it as I see fit.” The way they see it, their responsibility is to provide me with an excellent education (sort of a “kid-launch”), not to give me money, and my responsibility is to do well.
But you’re right… $100k is a whole lot of money to give up. Maybe I would’ve worked more part-time jobs in college, or stopped eating so many meals out.
English Major – I think a 529 is a great idea. If you ever want to go back to grad school, you’ll also have those funds at your disposal. And even if you decide not to have kids, you can transfer the account to your cousins/nieces/nephews, etc.
shawna – thanks for dropping by! It’s definitely a relief not to have massive student loans, but if I go to b-school… well.. the loans will rain down on me. :/
Yeah, but b-school loans will “pay themselves off”
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It’s hard to get my head around how much your parents paid for your schooling. I applied only to UCs, went to the one that offered me the biggest scholarship, and paid for the rest by working through school. I’m really proud of that, but I feel like having the ability to have taken some unpaid internships over the summers might have been better in some ways. I hope I’m able to provide that for my kids… so I know how you feel (if for different reasons).
I think these are excellent strategies to ponder. Possibly as early as when the stick turns blue. [grin]
In the meantime, a very hearty congratulations.
If you can readily fund a private education that yields both a superior education and accelerated $$$ / advancement in your carrier, then fantastic.
However, if the finances will be a significant burden and / or the private school is not elite, then my strong suggestion is to invest in a quality state school where you are likely to get an equivalent education that will not impair your ability to earn / advance in your career.
Ultimately, unless you are in a very specific discipline where the school has cache, the pedigree of the education falls away and the results of your work take over.
To that extent, I currently have no intentions of funding a private education for my 4 children, but will do so (or substantially so) for a 4 year education at one of our state universities.
If I find myself with additional funds, then I intend to provide them with practical financial assistance for things like purchasing a home, etc (provided they dont’ turn out to be financial ding-dongs or otherwise undeserving from my perspective).
pf – Great post… was thinking the same thing while reading all of this…
I am 5 years out of college, went to an instate school and end up with 15k in loans over a 4 year period. I got some grant help and worked my entire 4 years while going to school to pay for my room and board/food. While working on campus I ended up meeting a university executive, and he introduced me to my current employer to get an internship. I’ve worked for that company ever sense.
My cousin is currently a senior at Notre Dame and his parents are paying a ton as well to send him there… He loves it and is getting a great education but I don’t see how much better off than an equally bright student from a state school will be doing out of college. It’s been proven over and over just because you are bright doesn’t mean you will be wealthy.
It is a really crazy time isnt it? You know have to think about all of the different options that you have in front of you when it comes to getting a job and working for a living. It can be a lot to take in. THe best advice I was given was to just take it one step at a time and not try to overwhelm yourself with so many different options or ideas. When things fall on your path that is when you address it. You can't prepare for everything. Slow and steady is the way to go.