We have saved $74,000 for DC1’s college so far. That’s $500/mo for 8 years in a Utah Vanguard 529 account.
Is it enough?
I don’t know.
This basic calculator says we need to increase our contributions another $470/month if we want to pay full tuition for both kids at a four-year private school.
Will we need to pay the full amount for school, or will we be eligible for financial aid in 9 years (give or take)?
I don’t know.
Whether or not we have to save more for say, Harvard (easy-to-use calculator) depends a lot on assumptions– (using this year’s numbers and pretending inflation cancels out) DH loses his job, we’re eligible for mondo financial aid. We get a combined raise of 40K (not that that’s going to happen given my salary hasn’t been matching inflation, but DH does work in tech!), we lose any eligibility. I haven’t figured out how they treat retirement funds– if we include them as savings, we’re not eligible, if we exclude them we’re quite eligible. Oh, and don’t leave 50K in your savings account when it can be hidden away elsewhere.
MIT (ironically painful to use calculator) says no financial aid at all unless DH loses his job. Financial aid is pretty good on just my income alone.
I want to throw in an elite SLAC or two there, but I think it’s safe to assume they’re probably between Harvard (known for being giving at relatively high levels of income/savings) and MIT (known for its stinginess) in generosity and costs. (Actually, I checked Wellesley from a Phil Levine link and it says we get no aid based on annual income alone, similar to MIT.)
74K is already more than ze would need to go to the state school I teach at. But I know what it’s like here, and ze won’t be going.
Btw, in terms of the cost of education inflation, my underlying assumption is that tuition costs will rise about the same rate as the stock market, but more than inflation. So if I had my eye on a local state college for DC1, I should stop now. If I have my eye on private school, then we should probably increase our contributions each year along with our salary increases (if any…) to match inflation. But who knows.
I guess we’re just going to keep on doing what we’ve been doing. Even if it’s not enough. Even if it might be too much. Because I don’t know what else to do. And it’s not that painful, really, because we’ve been doing it for so long and it’s automated so we don’t even notice it.
Update: related: Another blogger looks at Stanford costs. Almost everyone we know who went to Stanford is now a multi-millionaire (the one exception being our classmate who is now an international bum after getting an engineering PhD at an absurdly young age and burning out). Oh, and one of us knows a guy who decided to get an English PhD after Stanford. He’s also not a millionaire, to our knowledge.
[tiny rant warning]
I also have a serious problem feeling sorry for people like us [in the over 100K/under obviously-rich range] who complain about not getting financial aid at elite schools, as in this Tenured Radical post. If your family makes a lot of money, even if it’s not Obama definitions of rich, you can still start early and save. And there’s still plenty of places to hide money in order to keep eligibility at most private schools at those income levels (ex. retirement and your mortgage, also you may time your car replacement to decrease your cash savings). This acting like you shouldn’t have to pay large amounts of money as if you didn’t know college was coming and so it’s all coming out of your annual paycheck is ridiculous. And even if it *is* coming out of your annual paycheck, you’re still doing better than well over 75% of Americans.
In other words, I have trouble feeling sorry for the top 10% even if I’m one of them. Even if things aren’t anywhere near as nice for us as they are for the top 1% or top 0.01%. Even if I think that the government should subsidize public education more. I still don’t see that as something that people like me need (except, of course, as a state university employee where I worry about the long-term viability of my employer, but you know, as a parent I’m doing fine). It’s the other 90% that I care about.
How do you decide how much to save for your kids’ college? Do you feel sorry for the upper-middle class who might have to pay full-freight for their kids’ school, even though their ability to spend will still be pretty darn high?