Paying for College

My oldest daughter is getting close to high school which means that now is the time to think about how will she get it funded. We’ve actually been thinking about this for a while but the urgency has now elevated. Because what she does in high school will set her up for the next stage in life.

This is crucial because since I went to school all those years ago, college has gotten a lot more competitive and a lot more expensive to attend. Competitive because more people are going to college now – both in the US and from international locations. A college degree has become almost a requirement for a larger percentage of the professions out there, it’s become the new high school degree. As a result, a much higher percentage of college aged people are trying to attend. Additionally, as other countries have developed, a much larger number of international students are coming to our universities. Furthermore, while the demand has grown, the supply hasn’t necessarily kept up, especially among elite universities. The elite universities that existed when I was applying are largely the same elite universities that exist today, but are now significantly more difficult to get into.

And college has gotten more expensive. Blame it on the 2008 recession and state governments unwillingness to subsidize tuition at the same rates. This obsessive drive to  to keep cutting taxes has cut available state funds and schools have taken the brunt of this. The state simply does not subsidize tuition nearly as generous as they once did. For me individually, paying for college was trivial. My parents made barely anything, I was among the top of my graduating class. I was able to pay for everything – tuition, board, entertainment, everything, through scholarships and grants and graduated with no debt.

I’m not sure what kind of student my kids will be. My daughter has been home-schooled up until basically now. We just enrolled her. She has shown discipline and a willingness to work. She has academic strengths and weaknesses. I have no real interest in pushing any of my kids in the race to the top. I hope that we can encourage but that hopefully they will be self-driven. But unless something drastic happens between now and their college years, they will not have the benefit of poverty to get them access to the same kind of generous aid I enjoyed.

But I expect my kids to be college bound, I just don’t have a good sense yet at what level is going to be appropriate for them.

With all of that as background, here is my basic strategy:

1) Our retirement is more important. We have to be able to pay for our old age. I’m willing and want to work as long as I possibly can, but at some point I just won’t be able to. At that point, whatever we’ve been able to save has got to last until me and my wife die.

2) We will save as much as we can in ways that are flexible. We have Roth’s, we have stocks, we have a 401k. All of this money can be used for our retirement, but a portion can be used for our children’s college education.

3) We have kicked off a 529 plan which will be money reserved only for children’s education. Considering retirement comes first, we’ll see how big this fund can grow.

4) Financial Aid

We expect our kids to take ownership of their education. I really want them to attend a university that wants them and proves it through scholarship offerings.If my kids want to pursue a university, especially an expensive one, I don’t expect that I (or they) will have to foot the entire, expensive bill. Otherwise, they simply don’t want my kids badly enough.

And I want this desire to be authentic. My goal as a parent for my kids in their high school years is to help instill in them a passion that can be nurtured and developed in college. If they have that and if they find an incredible situation at a university, they should have no problem expressing that passion to an enrollment board. That should be enough, I would hope, to get them in with financial aid.

So, this means starting as a freshman in high school, their grades will matter, their extra-curricular activities will matter. They will need to build up a “resume” to show that they have what it takes to make a significant contribution to the college they attend. They will then have to show this in a competitive environment and hopefully find a school willing to help get them there.

5) The Option to Start Slow and Experiment

Now, I’m not counting on this happening. I hope I can do whatever it takes to increase the odds, but it may not happen. My kids likely will end up like most kids and not yet have a clear idea of what they’d like to study coming out of high school. If that’s the case, an expensive school is likely not a fit. They can always explore and experiment by taking a year off or by taking classes at a junior college or they will always be able to live at home and attend the local state university only a few blocks from our house.

6) The Option to Take Student Loans

I believe student loans are a viable option to bridge the gap. The amount of debt my children take on should be directly proportional to the amount of income the degree will eventually generate once they graduate. And they should only take out loans to any significant degree once they have a clear path in front of them and should do whatever they can to minimize the burden.

In summary, my strategy is multi-faceted. I will encourage them, educate them, give them every opportunity to explore and learn and develop themselves into college bound students and help them market themselves in a way to maximize their opportunity to get whatever financial aid is available to them. Beyond that, I hope to save as much as I can. We live near a university, and hopefully will be when they begin attending a university, and we’d love to have them with us as they attend college. Finally, they will have to take ownership of their educational future.

Unfortunately, our government has not prioritized education to a high enough level to make it broadly affordable. Additionally, the wealth in our country sits in the bank accounts of a very small percentage of the country’s population. The rich have no trouble, no matter the price, to pay for college tuition. But I still believe anyone who wants to go to college can, it just takes a bit of additional planning and flexibility.

Please note, I’m not an expert on this subject, these are just my collection of thoughts based on conversations and reading over the years.