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Message
Cost of college projections are scary
Posted on 5/6/14 at 2:25 pm
Posted on 5/6/14 at 2:25 pm
The current cost to attend state schools in Alabama is roughly $25,000 per year (2 semesters; tuition, fees, room and board). At 7% inflation, that is $315,000 in 17 years.
We opened a 529 account the month our child was born, and contribute $350 a month into a diversified group of index funds. Assuming a 7% return, we will have roughly $165,000 when we start paying for school. This is frustrating.
I may have the wrong impression, but I think our level of saving/investing is better than most, as laid out above. And we are nowhere near having enough to pay for even an in-state school.
To those of you planning to pay your child's college bill, what are your numbers looking like?
We opened a 529 account the month our child was born, and contribute $350 a month into a diversified group of index funds. Assuming a 7% return, we will have roughly $165,000 when we start paying for school. This is frustrating.
I may have the wrong impression, but I think our level of saving/investing is better than most, as laid out above. And we are nowhere near having enough to pay for even an in-state school.
To those of you planning to pay your child's college bill, what are your numbers looking like?
8
Posted on 5/6/14 at 2:33 pm to Sigma
certainly not 165K
why are you using 7% for the inflation?
why are you using 7% for the inflation?
This post was edited on 5/6/14 at 2:34 pm
Posted on 5/6/14 at 2:37 pm to Sigma
quote:
To those of you planning to pay your child's college bill, what are your numbers looking like?
Looking like he/she is gettin' a job.
But, seriously, the cost of college has risen dramatically in recent years although it did only hit a 2.9% inflation rate for 13/14. Average in-state tuition at 4yr school is roughly $9k/year in US.
quote:Kind of misleading considering kids living on their own are paying this regardless of being in school or not and greatly inflates your numbers.
room and board
quote:
we will have roughly $165,000
I'm aiming for about half of that
. That's about 80k more than I had to start school with.
I want my kid to work during school, but still be able to focus on study as much as necessary without work taking too heavy of a toll.
If he/she has to take out loans to subsidize living/tuition/expenses, so be it, welcome to making adult choices.
Posted on 5/6/14 at 2:38 pm to Sigma
Not saying your wrong, but that seems a little high. I was thinking around 4% but I could be way off.. if so, that puts a lot of stress on investors that need 7% a year return just to stay even.
Posted on 5/6/14 at 2:39 pm to b-rab2
quote:
I was thinking around 4%
Net of inflation, I think that is about right.
Posted on 5/6/14 at 3:03 pm to Sigma
I have a feeling straight line projections won't be very accurate. My guess is there will be a tuition collapse soon. I don't see how it can sustain this rise in cost. It will be something like 40 straight years of absurd increases at that point.
Posted on 5/6/14 at 3:11 pm to Sigma
Not saying that it isn't smart to save and plan, but I find it hard to believe that the college model as we know will sustain that type of expense.
In another 15-20 years I think we will see a major shift to lower cost on-line or self study course work for general requirements and augment that with fewer, but more detailed and specific traditional classes.
In another 15-20 years I think we will see a major shift to lower cost on-line or self study course work for general requirements and augment that with fewer, but more detailed and specific traditional classes.
Posted on 5/6/14 at 3:12 pm to Teddy Ruxpin
quote:
My guess is there will be a tuition collapse soon. I don't see how it can sustain this rise in cost.
The abundance of loan $ (especially subsidized dollars) is already on the decline. Tuition will hit a ceiling, as we are already at that point where a college degree is a terrible investment for some.
Posted on 5/6/14 at 3:17 pm to Teddy Ruxpin
quote:
My guess is there will be a tuition collapse soon.
This. There is no way they will be able to just keep jacking the price up every year. Attendance numbers would drop, and the price would then come tumbling down.
Posted on 5/6/14 at 3:19 pm to Teddy Ruxpin
Agreed. I think we are reaching a plateau on the exorbitant tuition hikes.
Posted on 5/6/14 at 4:08 pm to Teddy Ruxpin
quote:
I have a feeling straight line projections won't be very accurate. My guess is there will be a tuition collapse soon. I don't see how it can sustain this rise in cost. It will be something like 40 straight years of absurd increases at that point.
As bad as the student loan situation is in this country in 2014, imagine 2030. I think/hope you are right. Something has to give.
Posted on 5/6/14 at 4:27 pm to Teddy Ruxpin
quote:
My guess is there will be a tuition collapse soon
Agreed. However, most of the planning software I've used for projecting college costs have a default inflation set at 7. I think college tuition is definitely one of the next bubbles to burst, but might as well plan for the worst, right?
Posted on 5/6/14 at 4:30 pm to LNCHBOX
The reason they've been able to jack it up so much recently is because the unlimited amount of govt backed loans/grant/etc is what's footing the bill.
That said I'm shooting for 200k per kid
That said I'm shooting for 200k per kid
Posted on 5/6/14 at 4:30 pm to Sigma
I'm thinking college will probably be free by then
Posted on 5/6/14 at 6:33 pm to LNCHBOX
quote:
This. There is no way they will be able to just keep jacking the price up every year. Attendance numbers would drop, and the price would then come tumbling down.
If the current trends continue, in 17 years welders, machinist, HVAC techs, plumbers, people that can service manufacturing robots, and most any other killed trade, will have salaries that will be hard to ignore and lure away even more people that would have otherwise gone to college further reducing attendance.
This post was edited on 5/6/14 at 6:44 pm
Posted on 5/6/14 at 6:35 pm to Sigma
I am just going to dump this here.
cost of attendance per year
Alabama - $23106
Auburn - $28098
Troy - $21200
UWA - $21674
ASU - $17442
JSU/AAMU - unknown didn't have easy access to the calculator on mobile.
Honestly, point them to a CC for two years then transfer to the school of their choosing. The savings are in doing that.
I didn't realize it was more expensive to attend Auburn though. Also, I paid about 19k a year at Alabama but this was 5 years ago, I also had a scholarship that cut out 3/4ths of that.
cost of attendance per year
Alabama - $23106
Auburn - $28098
Troy - $21200
UWA - $21674
ASU - $17442
JSU/AAMU - unknown didn't have easy access to the calculator on mobile.
Honestly, point them to a CC for two years then transfer to the school of their choosing. The savings are in doing that.
I didn't realize it was more expensive to attend Auburn though. Also, I paid about 19k a year at Alabama but this was 5 years ago, I also had a scholarship that cut out 3/4ths of that.
Posted on 5/6/14 at 7:06 pm to yellowfin
quote:
That said I'm shooting for 200k per kid
I'll sell you one for that price.
Posted on 5/6/14 at 9:28 pm to LSUAfro
It's already here, Loyola University laid off 1/3 of their staff in late 2013, after their freshmen class size dropped 30%. (I'm not sure why they didn't plan for layoffs immediately in May when everyone sent in deposits.)
CityBusiness had an article about staff lining up overnight to get lottery numbers for severance pay, hoping to get laid off in this wave while Loyola can afford severance.
The WSJ had a big article about several colleges (Spring Hill was mentioned) whose enrollments are plummeting.
The demographics simply aren't there to support so many universities going forward. The second baby boom ended in 1990 (those kids went to college 2008 - 2012) and the number of Americans attending college will only go down for the foreseeable future.
I have also been on the local alumni committee for a top 25 university the last 5 years. The number of kids applying is down and more importantly colleges are struggling to get admitted students to enroll in the last 4-5 years. There are the same number of colleges chasing fewer and fewer students.
CityBusiness had an article about staff lining up overnight to get lottery numbers for severance pay, hoping to get laid off in this wave while Loyola can afford severance.
The WSJ had a big article about several colleges (Spring Hill was mentioned) whose enrollments are plummeting.
The demographics simply aren't there to support so many universities going forward. The second baby boom ended in 1990 (those kids went to college 2008 - 2012) and the number of Americans attending college will only go down for the foreseeable future.
I have also been on the local alumni committee for a top 25 university the last 5 years. The number of kids applying is down and more importantly colleges are struggling to get admitted students to enroll in the last 4-5 years. There are the same number of colleges chasing fewer and fewer students.
Posted on 5/6/14 at 9:40 pm to Sigma
Invest several hundred bucks in a good ACT tutor every year starting freshman year of HS and they'll get to go for free.
This post was edited on 5/6/14 at 9:40 pm
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