The cost of college

[99Saturn]

In my experience:

The $100K in the 529 is expected to be used 100% for college.

The $100K in the brokerage account is expected to be used at a much smaller %.

Edit: If the $100K were in a brokerage account that was part of your 401(k), it would be 0%.

They are absolutely treated differently. Very differently.

The tax benefits of contributing to a 529 are one side of the equation. How money is viewed in determining need is the other.

Each institution will view things slightly differently, but those two accounts are, in fact, viewed quite differently.

As you plan your future, the first priority, and first dollars, need to go to your retirement account. Then, once you are funding that at the proper level, you can consider a 529.

When my oldest child was eight years old, I started a 529 for her and her siblings. The next year, my company went into bankruptcy, and my pay was cut by 65%. I was struggling to pay the mortgage, so college would simply have to wait.

It wasn’t a matter of planning for me, it was the reality of very difficult times.

But, coming out of that, after I’d gone back on active duty, when paying for college, it was very interesting to see how colleges viewed things.

I sat in the office of the Director of financial aid at an elite school, where we discussed my financial situation, as well as their offer for my oldest daughter. That conversation, as well as the six college educations, for which I have paid, has shaped my comments here.

Helpful thanks - leaves me scratching my head a little bit about 529 versus brokerage (on a personal level) but appreciate the context.

 

[nickaluch]

I'm the product of an undergraduate and graduate state school education. In 1996 my state school tuition was $3k per semester and even with books let's say $8K per year or $32k for 4 years. I went to dental school at a state school where 3 out 4 years were in-state at $25K per year with housing and living expenses. My total education expenses for 11 years of higher education were $160k which is a deal these days. We are starting to look at schools with my oldest and the current costs are:

State School - UMass is $35K per year or $140K per 4 years or $420k for three kids.

Private University - We did a tour of Providence college today which is $75K per year or $300K per 4 years or $900K for three kids.

State schools have gone up 5x in 22 years. My wife went to Trinity College in Hartford CT and graduated in 1996 and it was $40K per year meaning private schools have increased 2x in 22 years.

Where does it end?

I feel your pain I'm on my last of three daughters all went away to private college. My middle one went to Providence excellent school she went for the same price as a SUNY. I paid for there college a big sacrifice on me I passed on a lot of things I wanted to do but it's all good it was more important to me that my girls are educated and self sufficient

 

[LDB]

I'm the product of an undergraduate and graduate state school education. In 1996 my state school tuition was $3k per semester and even with books let's say $8K per year or $32k for 4 years. I went to dental school at a state school where 3 out 4 years were in-state at $25K per year with housing and living expenses. My total education expenses for 11 years of higher education were $160k which is a deal these days. We are starting to look at schools with my oldest and the current costs are:

State School - UMass is $35K per year or $140K per 4 years or $420k for three kids.

Private University - We did a tour of Providence college today which is $75K per year or $300K per 4 years or $900K for three kids.

State schools have gone up 5x in 22 years. My wife went to Trinity College in Hartford CT and graduated in 1996 and it was $40K per year meaning private schools have increased 2x in 22 years.

Where does it end?

My father went to medical school fall 1951 to graduation spring 1955. His total cost per year was $2600-$2800. Total cost. Tuition, books, room & board. Education has turned into a racket and should be treated as such under RICO and other laws.

 

[PWMDMD]

I feel your pain I'm on my last of three daughters all went away to private college. My middle one went to Providence excellent school she went for the same price as a SUNY. I paid for there college a big sacrifice on me I passed on a lot of things I wanted to do but it's all good it was more important to me that my girls are educated and self sufficient

My SIL went to Providence College and we visited it - a beautiful school.

 

[PWMDMD]

My father went to medical school fall 1951 to graduation spring 1955. His total cost per year was $2600-$2800. Total cost. Tuition, books, room & board. Education has turned into a racket and should be treated as such under RICO and other laws.

I had an ancient faculty member in dental school who went to Columbia for dental school for $1200 per year.

 

[PWMDMD]

Helpful thanks - leaves me scratching my head a little bit about 529 versus brokerage (on a personal level) but appreciate the context.

You have to be strategic about it because it's all just a game.

 

[PandaBear]

I think the concept of "going to a better college will bring you a life of guaranteed stability and income" is now no longer real.

Back then Google had a policy of looking for people from reputable schools, and after like 20 years of data they conclude it is useless. So they went back to intense exam-based interview hiring each time.

What does it mean for kids who go to an affordable state school vs a super expensive elite school? It means a lot of smarter harder working kids would end up in affordable state schools instead of super expensive elite schools because of ROI or affordability reason. These elite schools may turn into luxury brands instead of quality indicator in the future instead.

Personally as a middle class parent, I'd keep those money for the kids and start their retirement / home purchase fund early instead. It is a better investment. I would avoid the worst schools still to avoid bad influence, but I don't believe elite schools are the way to go in the future, not with huge loans for a non high income generating degree.

 

[ecotourist]

I think the concept of "going to a better college will bring you a life of guaranteed stability and income" is now no longer real.

The situation is a bit different in Canada. We have a couple of semi-prestige schools but no-one pays much (or even any) attention to where someone went to university. A medical degree or an engineering degree from any Canadian university is what you need to gain entry to advanced training or good jobs. After that your progress depends on initiative, ability and hard work. All of our graduates have "the knowledge".

Over my career I've hired at least 20 physicians to really good jobs. The issue of where someone went to (a Canadian) university never came up.

 

[Passport1]

Scholarship




No Scholarship

 

[PWMDMD]

I think the concept of "going to a better college will bring you a life of guaranteed stability and income" is now no longer real.

Back then Google had a policy of looking for people from reputable schools, and after like 20 years of data they conclude it is useless. So they went back to intense exam-based interview hiring each time.

What does it mean for kids who go to an affordable state school vs a super expensive elite school? It means a lot of smarter harder working kids would end up in affordable state schools instead of super expensive elite schools because of ROI or affordability reason. These elite schools may turn into luxury brands instead of quality indicator in the future instead.

Personally as a middle class parent, I'd keep those money for the kids and start their retirement / home purchase fund early instead. It is a better investment. I would avoid the worst schools still to avoid bad influence, but I don't believe elite schools are the way to go in the future, not with huge loans for a non high income generating degree.

I can kind of answer this by way of my background. This is not a flex - I know I'm a smart guy and what I've done and I don't look for accolades but it's relevant to the discussion. There's lots of smart people in the world, many a lot smarter - I'm nothing special.

I graduated high school with 67 average having spent most of my time smoking pot and partying - I had A LOT of fun! I failed my first semester at Westchester Community college and basically wasted the entire year. I had an epiphany and decided to try and I started by taking summer classes between freshman and sophomore year - Intro to biology 1 and 2 and I loved it - two A's. Decided to apply to the only 4 year SUNY school in my area which was known for its performing arts programs. I want to be a biology major but applied as undecided because it was easier to get in. One of the admissions counselors called me for an interview (something they don't normally do) and basically sat me down and said if I promise to try he'd take a chance on me. I was in my second year but really redoing my freshman year. I graduated from there one class shy of a double BS in biology and chemistry (advanced inorganic chem was offered every other year) with straight A's, the highest overall GPA of any student in the natural sciences, and inducted into a national science honor society. I TA'd several very difficult courses including organic chem and physical chem. There were a bunch of other students there right behind me so I certainly wasn't unique. Many of those people have gone onto med school and PhDs.

How good was my state school education? I scored in the 99th percentile on my dental school entrance exam (1% of test takers did better than I did) and I was accepted to every dental school I applied to except my own state school SUNY Stony Brook. I was accepted to UConn, Harvard, UPenn, Columbia, Tufts, NYU, and Boston U. Even with my background I had a huge chip on my shoulder going into dental school because I was there with people from Harvard, Princeton, Cornell, Yale, etc. Maybe my little SUNY arts school with a tiny natural sciences school was just easier and that's why I did so well. UConn at the time only accepted 35 students and they use the Harvard model and place the medical and dental students together for the first 2 years and makes no distinction between them as far as course work - we sit in the same courses, anatomy labs, take the same tests, etc which meant I had 135 people to compare myself to as far as knowledge base/ability. I scored a 96 part 1 of my boards (covers science/medicine) having not really studied.

Here's what I found in this ultra competitive environment filled with kids from really prestigious schools - there was no difference. One of my study partners went to Lawrenceville Academy and then majored in biophysics at Princeton and sitting there studying our knowledge base and understanding was similar and we always scored pretty close to each other on exams. Another friend was a biology/math double major from Harvard and she actually struggled to keep up with us. There were other kids there from state schools who did well too.

Now, I'm not saying every state school student is equivalent to a Harvard or Princeton student but what I am saying is a really motivated state school student +20 years ago was absolutely able to get a top-notch education if they were willing to work for it. I'll put a top student from a state school up against a top student from anywhere. My guess is it was probably easier to get by with a C- at my state school compared to Harvard and Princeton but that's just a guess because I haven't had exposure to those kinds of students from those schools. I have a good friend who was high school valedictorian, went to Worcester Polytechnic Institute for undergrad, Cornell for her PhD in chemical engineering, and now teaches at WPI and yeah...she certainly knows more about her discipline but there's no difference between us in our ability to learn or our non-chemical engineering specific knowledge.

All this has changed in the past 20 years too. Now we have top high school students choosing state schools in the California/North Carolina/Connecticut/Massachusetts and these larger state universities have become super competitive for cost reasons. What my background does not address are alumni connections and opportunities only available to people who attend prestigious schools - that isn't really a thing in dentistry. People who go to Harvard business school have exposure to situations and people that people who go to Fitchburg State business school don't and that can be the difference between being at a hedge fund and being a Fidelity advisor at a local branch. I'm not knocking the Fidelity advisor.

 

[Al]

The cost of college has vastly out-paced inflation. While your experience isn’t off topic, it’s a relic of a different time.

Albright College this past year was $45,000 before aid, for room, board, and tuition.

Harvard this past year was $78,000 for the same. Harvard will exceed $80,000 this coming year.

Not many kids working part time during college are going to clear $45,000, even working hard in the quarry.

Yea..so true Astro

 

[Lapham3]

In Minnesota many are going to a state community college for their first 2 years and a state university or private for the remainder. The credits can transfer. A number of private colleges are having enrollment problem. Cost is the main driver. The other thing is that the technical schools are doing well with shorter schooling for grad/certificates. That should make it better for the shortage of trades.

 

[Al]

In Minnesota many are going to a state community college for their first 2 years

Yea. Community college is the way to go.

In PA. The "State School" is PSU. But its really a land grant college. Cost for tuition is $18,368 for instate residents. That is 142`%
Above the average state school.

 

[Dave Hess]

In Minnesota many are going to a state community college for their first 2 years and a state university or private for the remainder. The credits can transfer. A number of private colleges are having enrollment problem. Cost is the main driver. The other thing is that the technical schools are doing well with shorter schooling for grad/certificates. That should make it better for the shortage of trades.

That’s the best way if they didn’t get a scholarship.

Grants are another way to save money.

 

[JHZR2]

I can kind of answer this by way of my background. This is not a flex - I know I'm a smart guy and what I've done and I don't look for accolades but it's relevant to the discussion. There's lots of smart people in the world, many a lot smarter - I'm nothing special.

I graduated high school with 67 average having spent most of my time smoking pot and partying - I had A LOT of fun! I failed my first semester at Westchester Community college and basically wasted the entire year. I had an epiphany and decided to try and I started by taking summer classes between freshman and sophomore year - Intro to biology 1 and 2 and I loved it - two A's. Decided to apply to the only 4 year SUNY school in my area which was known for its performing arts programs. I want to be a biology major but applied as undecided because it was easier to get in. One of the admissions counselors called me for an interview (something they don't normally do) and basically sat me down and said if I promise to try he'd take a chance on me. I was in my second year but really redoing my freshman year. I graduated from there one class shy of a double BS in biology and chemistry (advanced inorganic chem was offered every other year) with straight A's, the highest overall GPA of any student in the natural sciences, and inducted into a national science honor society. I TA'd several very difficult courses including organic chem and physical chem. There were a bunch of other students there right behind me so I certainly wasn't unique. Many of those people have gone onto med school and PhDs.

How good was my state school education? I scored in the 99th percentile on my dental school entrance exam (1% of test takers did better than I did) and I was accepted to every dental school I applied to except my own state school SUNY Stony Brook. I was accepted to UConn, Harvard, UPenn, Columbia, Tufts, NYU, and Boston U. Even with my background I had a huge chip on my shoulder going into dental school because I was there with people from Harvard, Princeton, Cornell, Yale, etc. Maybe my little SUNY arts school with a tiny natural sciences school was just easier and that's why I did so well. UConn at the time only accepted 35 students and they use the Harvard model and place the medical and dental students together for the first 2 years and makes no distinction between them as far as course work - we sit in the same courses, anatomy labs, take the same tests, etc which meant I had 135 people to compare myself to as far as knowledge base/ability. I scored a 96 part 1 of my boards (covers science/medicine) having not really studied.

Here's what I found in this ultra competitive environment filled with kids from really prestigious schools - there was no difference. One of my study partners went to Lawrenceville Academy and then majored in biophysics at Princeton and sitting there studying our knowledge base and understanding was similar and we always scored pretty close to each other on exams. Another friend was a biology/math double major from Harvard and she actually struggled to keep up with us. There were other kids there from state schools who did well too.

Now, I'm not saying every state school student is equivalent to a Harvard or Princeton student but what I am saying is a really motivated state school student +20 years ago was absolutely able to get a top-notch education if they were willing to work for it. I'll put a top student from a state school up against a top student from anywhere. My guess is it was probably easier to get by with a C- at my state school compared to Harvard and Princeton but that's just a guess because I haven't had exposure to those kinds of students from those schools. I have a good friend who was high school valedictorian, went to Worcester Polytechnic Institute for undergrad, Cornell for her PhD in chemical engineering, and now teaches at WPI and yeah...she certainly knows more about her discipline but there's no difference between us in our ability to learn or our non-chemical engineering specific knowledge.

All this has changed in the past 20 years too. Now we have top high school students choosing state schools in the California/North Carolina/Connecticut/Massachusetts and these larger state universities have become super competitive for cost reasons. What my background does not address are alumni connections and opportunities only available to people who attend prestigious schools - that isn't really a thing in dentistry. People who go to Harvard business school have exposure to situations and people that people who go to Fitchburg State business school don't and that can be the difference between being at a hedge fund and being a Fidelity advisor at a local branch. I'm not knocking the Fidelity advisor.

I’m involved in a lot of cutting edge basic and applied engineering research. The ivys is not where we go. Not every state school has a strong program in every discipline, and they are very competitive in their own right to get faculty that bring research expenditures.

Finding the right PI is a big part of doing quality tangible work, but state schools generally do much better in this at least in my areas.

 

[JHZR2]

Yea. Community college is the way to go.

In PA. The "State School" is PSU. But its really a land grant college. Cost for tuition is $18,368 for instate residents. That is 142`%
Above the average state school.

That depends. To be a bio major or something maybe so.

I could not have gotten an engineering degree at a top-10 (state) engineering program without taking the curriculum from spring semester freshman year. It would have resulted in 1-2 more years based upon the prerequisites and sequence of classes.

 

[PimTac]

My 3rd child committed to a small school about 1.5hrs away for mechanical engineering for the fall of 2023. Pitt-Bradford. It will be about $24k/yr for him after any Fed/State considerations. He'll have to borrow it all. The thought of it keeps me up at night.

A job is out of the question?

 

[SC Maintenance]

Yea. Community college is the way to go.

In PA. The "State School" is PSU. But its really a land grant college. Cost for tuition is $18,368 for instate residents. That is 142`%
Above the average state school.

Double edge sword. Its cheaper, but one bad professor and a D or F can drop their GPA enough to keep them out of competitive programs. So it depends on what their goals are. I had bad prof's - everyone has. Its not as fair as everyone would like to think it is. If they want in to a highly competitive program and have the grades out of high school, I would take it.

Not to mention 1st year cc calculus is not same as first year engineering calculus, for example. So they get to the big school and are lost.

Another possibility is if they do online courses in the summer if the school offers them - gets them ahead and you don't have the extra R&B costs. Many started this during the pandemic and continued it. Good way to get electives out of the way.

 

[jeepman3071]

I had an ancient faculty member in dental school who went to Columbia for dental school for $1200 per year.

Dang, did they help build the school?

I was lucky that I graduated in 2014, and was able to graduate with no debt by working full-time and commuting as well as taking an extra year to finish. I'm not sure that is even possible these days. I think the problem is kids need to have more exposure to programs and majors during high school so they can figure out what they want. College isn't for everyone, especially if you have no idea what you want to do, that's when it becomes very expensive. The trades are great right now, as well as certification programs. I have a coworker who is 24, went to a 1.5 year certification program for IT networking and he makes more than me, with zero debt.

 

[Dave Hess]

Dang, did they help build the school?

I was lucky that I graduated in 2014, and was able to graduate with no debt by working full-time and commuting as well as taking an extra year to finish. I'm not sure that is even possible these days. I think the problem is kids need to have more exposure to programs and majors during high school so they can figure out what they want. College isn't for everyone, especially if you have no idea what you want to do, that's when it becomes very expensive. The trades are great right now, as well as certification programs. I have a coworker who is 24, went to a 1.5 year certification program for IT networking and he makes more than me, with zero debt.

Many employers pay for all the certifications and will reimburse you. I know a few people working in hospital IT dept with no degree but lots of Cisco type certifications making good money.