Paying for [ivy league school]

[iCare]

I am also starting to see some value in loans for education for our situation. I am particularly intrigued by the idea of a loan for the last two years of college for the elder one while diverting all that money to fund the younger one.

But instead of allowing my children to take out loans, what if we loan them the money officially instead of getting from 3rd party or fafsa? After all Ivy wants us to pay them from our savings.

Has anyone on this forum had experience with loaning money from personal savings and retirement funds to pay for their children's education? If so, what are some things to consider when planning for such an arrangement?

After conducting a quick search, it seems that loan rates are very attractive for me/my wife and to earn on our savings/retirement egg, and I am wondering if it would be possible to make the loan official and have my children pay me back like they would with a third-party loan company. I am considering the paperwork, accounting, and taxes that would be involved with such an arrangement. Can things be kept really simple?

This approach could not only help ensure our own financial future (which is partly stressing us) but also benefit my children in case of unexpected circumstances.

[psteinx]

An unsecured inter-personal loan is, I think, super easy to execute. Draft a 1-page document (presumably templates are online). "Joe loans, and Sally accepts, $15,000 on 01/30/XXXX. Interest rate is X% annually, compounded at Y interval, payments to be made on this date, principal is amortized in this way, full principal is due 01/15/XXXX", etc. That's an unsecured loan, and may fall behind future mortgages, etc. in security. But of course, they're your kids, so...

Whether that loan would meet the standards that might play well with OTHER (more official) educational loans/grants/stipends, or perhaps, loan forgiveness programs, is hard to say. Also be aware that there's a minimum interest rate you must charge family members on substantial loans (>$10K I think), or the IRS will impute that much interest and add it to your income.

If you're trying to make loans OUT of some tax deferred vehicle (your IRA), that might make things more complicated...

EDIT - specify that interest rate is annual, even if compounding/payments are monthly or whatever.

[MMiroir]

I am also starting to see some value in loans for education for our situation. I am particularly intrigued by the idea of a loan for the last two years of college for the elder one while diverting all that money to fund the younger one.

But instead of allowing my children to take out loans, what if we loan them the money officially instead of getting from 3rd party or fafsa? After all Ivy wants us to pay them from our savings.

Has anyone on this forum had experience with loaning money from personal savings and retirement funds to pay for their children's education? If so, what are some things to consider when planning for such an arrangement?

After conducting a quick search, it seems that loan rates are very attractive for me/my wife and to earn on our savings/retirement egg, and I am wondering if it would be possible to make the loan official and have my children pay me back like they would with a third-party loan company. I am considering the paperwork, accounting, and taxes that would be involved with such an arrangement. Can things be kept really simple?

This approach could not only help ensure our own financial future (which is partly stressing us) but also benefit my children in case of unexpected circumstances.

Any loans you make out to other parties, whether are to family or not, counts as a financial asset and should be declared on the FAFSA/CSS.

[iCare]

An unsecured inter-personal loan is, I think, super easy to execute. Draft a 1-page document (presumably templates are online). "Joe loans, and Sally accepts, $15,000 on 01/30/XXXX. Interest rate is X%, compounded at Y interval, payments to be made on this date, principal is amortized in this way, full principal is due 01/15/XXXX", etc. That's an unsecured loan, and may fall behind future mortgages, etc. in security. But of course, they're your kids, so...

Whether that loan would meet the standards that might play well with OTHER (more official) educational loans/grants/stipends, or perhaps, loan forgiveness programs, is hard to say. Also be aware that there's a minimum interest rate you must charge family members on substantial loans (>$10K I think), or the IRS will impute that much interest and add it to your income.

If you're trying to make loans OUT of some tax deferred vehicle (your IRA), that might make things more complicated...

My 401k allows personal loans & we'd have to dip into personal savings.

We are ok to keep interest rates similar to irs, afterall I want same returns on my nest egg that they will have to pay 3rd party loans. I don't want to be greedy to save on taxes there. will look into examples for a reasonable payback plan on personal loans - ideally, mimic the repayment to a 3rd party student loan.

[thedaybeforetoday]

If an Ivy isn't affordable to the OP, shopping around for a better deal (and perhaps merit $) is as old as capitalism itself.

As of Jan 18, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year.

Comparable schools OP could consider as examples:

Duke: Average starting salary about $93,000
Stanford: Average starting salary, also roughly $93,000
U of Chicago: Average starting salary: $$76,730

Perhaps a notch down to gain merit $:
Carnegie Mellon average starting salary: $70,900
Northwestern U average starting salary about $72,000
University of Michigan: $75,842
Rice University: $72,400

I understand attending an Ivy has other benefits that are tougher to measure, but the OP has options if Ivy isn't affordable that could yield a similar or better ROI.

What is the source for your data as it does not seem to correlate to other public sources? Payscale puts Duke at $76,800, and the average for the Ivy League is much higher than $66,173.

https://www.payscale.com/college-salary ... /bachelors

Princeton - $81,800
Harvard - $80,900
Penn - $78,300
Columbia - $78,200
Yale - $78,000
Dartmouth - $77,600
Cornell - $75,800
Brown - $74,700

Your citing "early career pay", which is different than what I'm quoting, which is starting salary right after graduation (ie: first job for newly minted bachelors degree recipients).
citation: https://www.ziprecruiter.com/Salaries/I ... ate-Salary

[galawdawg]

Before you decide to loan your child(ren) the funds for the education, rather than letting them go through the normal student loan process, you need to ask yourself whether you are willing to grant them the same concessions that they may be eligible to receive with more traditional student loans. For example, and andwill you defer their payments if current student loan deferrals continue? Can and will you forgive their loans, in full or in part, if they would be eligible for loan forgiveness through PSLF or otherwise? And if you defer or forgive their loans, what is your plan to repay your own 401k loan and get back on track for retirement?

It may be more advantageous for both your child(ren) as well as you and your spouse if they borrow using traditional student loan programs rather than from the bank of mom and dad!

Just food for thought.

[thedaybeforetoday]

If an Ivy isn't affordable to the OP, shopping around for a better deal (and perhaps merit $) is as old as capitalism itself.

As of Jan 18, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year.

Comparable schools OP could consider as examples:

Duke: Average starting salary about $93,000
Stanford: Average starting salary, also roughly $93,000
U of Chicago: Average starting salary: $$76,730

Perhaps a notch down to gain merit $:
Carnegie Mellon average starting salary: $70,900
Northwestern U average starting salary about $72,000
University of Michigan: $75,842
Rice University: $72,400

I understand attending an Ivy has other benefits that are tougher to measure, but the OP has options if Ivy isn't affordable that could yield a similar or better ROI.

Now since OP has stated his son wants to attend medical school, perhaps a better metric to measure ROI for his son would be "percentage of undergrads admitted to medical school" as a research topic. One I'm not going to tackle, but OP, or rather his son, should probably take a look. You want to know up front if your getting value for your buck. (the average is about 41% acceptance rate to med school right out of undergrad).

I tend to think the PhD, MD or grad degree is more valuable than your undergrad degree, but I haven't looked at the numbers to see if I'm backed up by any research on that one. Another fun topic for the OP and son to take a look at!

I don t dispute these salary numbers one way or the other.

But one more piece of information is useful. The cost for Duke, Stanford, Northwestern and other top 20 privates is essentially the same as the Ivy s. And cost for out of state attendance at top state schools is probably close.

I agree that the MD degree will be more valuable than the undergraduate degree. And An MD at the at the state medical school will be the most value for the money there. As a parent who has one child who attended an Ivy medical school, and one who attended a state medical school.

I agree that costs for Duke and Stanford would probably be similar to Ivy for OP's son, so I was citing those as schools OP's son could shop around to price compare more directly.

The other grouping was more around merit $.
As you know, no merit $ at Ivy so given OP's son was admitted to an Ivy, he would probably be offered decent to really strong merit$ at the next lower level, like Rice , Northwestern or other private CSS profile type school.
I also agree out of state high level U probably wouldn't offer to much merit $, so bad example there.
Thanks for pointing that out.

[psteinx]

If an Ivy isn't affordable to the OP, shopping around for a better deal (and perhaps merit $) is as old as capitalism itself.

As of Jan 18, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year.

Comparable schools OP could consider as examples:

Duke: Average starting salary about $93,000
Stanford: Average starting salary, also roughly $93,000
U of Chicago: Average starting salary: $$76,730

Perhaps a notch down to gain merit $:
Carnegie Mellon average starting salary: $70,900
Northwestern U average starting salary about $72,000
University of Michigan: $75,842
Rice University: $72,400

I understand attending an Ivy has other benefits that are tougher to measure, but the OP has options if Ivy isn't affordable that could yield a similar or better ROI.

What is the source for your data as it does not seem to correlate to other public sources? Payscale puts Duke at $76,800, and the average for the Ivy League is much higher than $66,173.

https://www.payscale.com/college-salary ... /bachelors

Princeton - $81,800
Harvard - $80,900
Penn - $78,300
Columbia - $78,200
Yale - $78,000
Dartmouth - $77,600
Cornell - $75,800
Brown - $74,700

Your citing "early career pay", which is different than what I'm quoting, which is starting salary right after graduation (ie: first job for newly minted bachelors degree recipients).

daybefore - You're not citing anything, nor, necessarily, quoting (if you are, it's unclear). You're CLAIMING certain figures. If you want to cite/quote, provide a source. If you want to COMPARE two cites, make sure they're strictly comparable, or nearly so (often for data like this, there can be subtle differences in composition, timing, etc. that add up to significant differences in the outcome measure).

FWIW, when I have dug in to reasonably accurate cites before, among universities of similar rank, within the same/comparable degree, where grads can be expected to go to similar geographies/industries, salaries are pretty comparable. It's pretty unlikely, IMO, that the average Duke grad is dramatically outearning the average Ivy grad, for any given common major, in same/similar city/region.

[cchrissyy]

don't loan out money you can't afford to lose

remember not every student completes their degree or gets a solid job.
there are all sorts of reasons which can come up unexpectedly, including chance events in physical or mental health.

[thedaybeforetoday]

If an Ivy isn't affordable to the OP, shopping around for a better deal (and perhaps merit $) is as old as capitalism itself.

As of Jan 18, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year.

Comparable schools OP could consider as examples:

Duke: Average starting salary about $93,000
Stanford: Average starting salary, also roughly $93,000
U of Chicago: Average starting salary: $$76,730

Perhaps a notch down to gain merit $:
Carnegie Mellon average starting salary: $70,900
Northwestern U average starting salary about $72,000
University of Michigan: $75,842
Rice University: $72,400

I understand attending an Ivy has other benefits that are tougher to measure, but the OP has options if Ivy isn't affordable that could yield a similar or better ROI.

What is the source for your data as it does not seem to correlate to other public sources? Payscale puts Duke at $76,800, and the average for the Ivy League is much higher than $66,173.

https://www.payscale.com/college-salary ... /bachelors

Princeton - $81,800
Harvard - $80,900
Penn - $78,300
Columbia - $78,200
Yale - $78,000
Dartmouth - $77,600
Cornell - $75,800
Brown - $74,700

Your citing "early career pay", which is different than what I'm quoting, which is starting salary right after graduation (ie: first job for newly minted bachelors degree recipients).

daybefore - You're not citing anything. You're CLAIMING certain figures. If you want to cite, provide a source. If you want to COMPARE two cites, make sure they're strictly comparable, or nearly so (often for data like this, there can be subtle differences in composition, timing, etc. that add up to significant differences in the outcome measure).

I used mainly local sources so all differ and therefore not going to redo everything, but here's a couple examples for ya:

Rice citation: https://abc13.com/rice-university-texas ... /10869371/
Carnegie Mellon citation: https://abc13.com/rice-university-texas ... /10869371/
Ivy league avg. salary citation: https://www.ziprecruiter.com/Salaries/I ... ate-Salary

Obviously this may not satisfy you so please feel free to do your own and report back, with citations of course.

[KRP]

Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

As to futures being baked in by high school, do you mean that by then their temperament, work ethic and foundational skills have set them on an unalterable course for life, and that subsequent opportunities do not matter?

Yes, I mean the unalterable course for life comes from within the talented kids. They drive opportunities. "subsequent opportunities" has no agency. If the implication is (and I'm not saying you're saying this, but let's run with this hypothetical in this response) that Ivies actively find and shove opportunities into their undergraduate students lives more often than other educational institutions, I'd have to disagree (not with you, but my own hypothetical) completely. Mostly, these institutions have Masters and PhD candidates teaching the undergraduate kids, so the faculty can spend more time making the institution noteworthy (while directly collaborating with their Masters and PhD students). These are clever candidates teaching those undergrads, but they are quite short on real experience in their field and life. In case anyone should think I'm against certain types of institutions, I'd definitely recommend getting a Masters or PhD from the more noteworthy institutions, since by then your talented kid would be working directly with the most noteworthy academics in their field.

[mnecon]

The other grouping was more around merit $.
As you know, no merit $ at Ivy so given OP's son was admitted to an Ivy, he would probably be offered decent to really strong merit$ at the next lower level, like Rice , Northwestern or other private CSS profile type school.
I also agree out of state high level U probably wouldn't offer to much merit $, so bad example there.
Thanks for pointing that out.

While the OP hasn't confirmed, my reply at the bottom of the last page included what I believe is a reasonable assumption and a binding ED agreement has probably already been signed, making choosing another school moot. That discussion was needed before the early application went in last fall. He should also have a financial aid award letter if he applied and it was offered.

IF he received it and it was 0$, now it is all about how to structure paying.

[KRP]

Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

If I am a super smart kid taking the CC-local state school path that you mention, and I wanted to work for McKinsey and make $140k after graduation, how would I go about doing it? Assuming I had no family connections? McKinsey doesn’t come to my campus, in fact none of the top firms do. What Partners would be willing to set time aside for a coffee chat with me? They are already busy doing coffee chats with alums of their own schools and similar other top tier ones. Nobody who graduated from my college is currently working there. Eventually through sheer perseverance and luck I may have a door open for me, but most likely I won’t.

Contrast that with the same kid at a “target” top college where all the top firms from all the top paying professions compete to land graduates.

Are you really going to tell me the opportunities are equal?

Yes, for undergraduate degrees.

[CletusCaddy]

Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

As to futures being baked in by high school, do you mean that by then their temperament, work ethic and foundational skills have set them on an unalterable course for life, and that subsequent opportunities do not matter?

Yes, I mean the unalterable course for life comes from within the talented kids. They drive opportunities. "subsequent opportunities" has no agency. If the implication is (and I'm not saying you're saying this, but let's run with this hypothetical in this response) that Ivies actively find and shove opportunities into their undergraduate students lives more often than other educational institutions, I'd have to disagree (not with you, but my own hypothetical) completely. Mostly, these institutions have Masters and PhD candidates teaching the undergraduate kids, so the faculty can spend more time making the institution noteworthy (while directly collaborating with their Masters and PhD students). These are clever candidates teaching those undergrads, but they are quite short on real experience in their field and life. In case anyone should think I'm against certain types of institutions, I'd definitely recommend getting a Masters or PhD from the more noteworthy institutions, since by then your talented kid would be working directly with the most noteworthy academics in their field.

It’s pretty clear you did not go to college at a top selective university.

[CletusCaddy]

Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

If I am a super smart kid taking the CC-local state school path that you mention, and I wanted to work for McKinsey and make $140k after graduation, how would I go about doing it? Assuming I had no family connections? McKinsey doesn’t come to my campus, in fact none of the top firms do. What Partners would be willing to set time aside for a coffee chat with me? They are already busy doing coffee chats with alums of their own schools and similar other top tier ones. Nobody who graduated from my college is currently working there. Eventually through sheer perseverance and luck I may have a door open for me, but most likely I won’t.

Contrast that with the same kid at a “target” top college where all the top firms from all the top paying professions compete to land graduates.

Are you really going to tell me the opportunities are equal?

I actually have a friend (well, former employee), who is late-20's working as a consultant for McKinsey, but went to a public school you've never heard of. He did not start out at McKinsey, his first job out of school was for me (at health products megacorp).

Nobody is going to debate that Ivy league schools provide opportunities in certain fields that other schools simply can't compete with. Therein lies the question, are you going into one of those fields? I have a sister, a few friends, and two colleagues who used their Ivy league undergrads to go into fields where it doesn't seem to matter much. Pointless debate, OP's child is going - paying for it is the question.

We need to define the right measure of success.

If you go to college as a means to get a high paying job, and you come out of it with a low paying job, you were not successful. By this measure the top universities are better than the others.

If you go to college for reasons other than getting a high paying job, and you come out of it with a low paying job, it’s not immediately obvious that you have failed. By this measure the top universities are perhaps on a more even playing field with other schools.

The irony is that most people going to lower ranked universities have financial outcomes as a top priority while a larger proportion of the top university students probably have other priorities in mind. Maybe because they already have met their Maslow hierarchy of needs through family wealth or whatever.

[KRP]

Is an $80k/year Ivy the only option?

IMO a degree from an Ivy is impressive only if its with an appropriate major that will have the ROI from an IVY education and will benefit from the networking that comes from that school. Assuming that is the case, I would start dumping cash into a HY saving account and hold off on using the 529 in hopes of some recovery in the market for the latter years of expense. Its risk there will be some recovery, but since you will need money quickly I think the HY savings is you best option right now.

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

If I am a super smart kid taking the CC-local state school path that you mention, and I wanted to work for McKinsey and make $140k after graduation, how would I go about doing it? Assuming I had no family connections? McKinsey doesn’t come to my campus, in fact none of the top firms do. What Partners would be willing to set time aside for a coffee chat with me? They are already busy doing coffee chats with alums of their own schools and similar other top tier ones. Nobody who graduated from my college is currently working there. Eventually through sheer perseverance and luck I may have a door open for me, but most likely I won’t.

Contrast that with the same kid at a “target” top college where all the top firms from all the top paying professions compete to land graduates.

Are you really going to tell me the opportunities are equal?

I actually have a friend (well, former employee), who is late-20's working as a consultant for McKinsey, but went to a public school you've never heard of. He did not start out at McKinsey, his first job out of school was for me (at health products megacorp).

Nobody is going to debate that Ivy league schools provide opportunities in certain fields that other schools simply can't compete with. Therein lies the question, are you going into one of those fields? I have a sister, a few friends, and two colleagues who used their Ivy league undergrads to go into fields where it doesn't seem to matter much. Pointless debate, OP's child is going - paying for it is the question.

Not completely pointless, as the tangential comment thrown into the OP's thread attempts to imply that kid + Ivy produces a rich (proxy for success and happiness, roll credits) adult kid, and kid + non-Ivy produces a non-rich (proxy for failure and immiserated) adult kid. Plenty of us know graduates of very expensive top rated schools where the end result doesn't fit that formula (and on a cost accounting basis has no ROI, in the end, but whose life are we talking about at this point?), and vice versa with random state schools. I'm suggesting to the boglehead subscriber that they remove those thoughts from the process, and focus on the undergraduate institutions which excite their kids. If that's an Ivy, help your kid make it happen.

[KRP]

Any major from an Ivy has the potential to have high ROI, indeed it is only at the top schools where that is the case.

Lots of Ivy league philosophy majors making bank as lawyers, bankers, and management consultants.

Hardly any from Cal State Fullerton in the same position.

I see this assertion often, which is empirically true, but the cause and effect are backwards.

A talented kid could choose to go to the local CC to save $, transfer almost anywhere, get an undergrad degree cheaply, and will still do just as well as they would attending an Ivy.

By the time kids are exiting high school, their future is baked into them.

Sounds like this kid is excited by their choice, which is probably the most important reason to try to make it happen.

As to futures being baked in by high school, do you mean that by then their temperament, work ethic and foundational skills have set them on an unalterable course for life, and that subsequent opportunities do not matter?

Yes, I mean the unalterable course for life comes from within the talented kids. They drive opportunities. "subsequent opportunities" has no agency. If the implication is (and I'm not saying you're saying this, but let's run with this hypothetical in this response) that Ivies actively find and shove opportunities into their undergraduate students lives more often than other educational institutions, I'd have to disagree (not with you, but my own hypothetical) completely. Mostly, these institutions have Masters and PhD candidates teaching the undergraduate kids, so the faculty can spend more time making the institution noteworthy (while directly collaborating with their Masters and PhD students). These are clever candidates teaching those undergrads, but they are quite short on real experience in their field and life. In case anyone should think I'm against certain types of institutions, I'd definitely recommend getting a Masters or PhD from the more noteworthy institutions, since by then your talented kid would be working directly with the most noteworthy academics in their field.

It’s pretty clear you did not go to college at a top selective university.

I thought that was obvious. A word to the wise is enough.

[psteinx]

If an Ivy isn't affordable to the OP, shopping around for a better deal (and perhaps merit $) is as old as capitalism itself.

As of Jan 18, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year.

Comparable schools OP could consider as examples:

Duke: Average starting salary about $93,000
Stanford: Average starting salary, also roughly $93,000
U of Chicago: Average starting salary: $$76,730

Perhaps a notch down to gain merit $:
Carnegie Mellon average starting salary: $70,900
Northwestern U average starting salary about $72,000
University of Michigan: $75,842
Rice University: $72,400

I understand attending an Ivy has other benefits that are tougher to measure, but the OP has options if Ivy isn't affordable that could yield a similar or better ROI.

What is the source for your data as it does not seem to correlate to other public sources? Payscale puts Duke at $76,800, and the average for the Ivy League is much higher than $66,173.

https://www.payscale.com/college-salary ... /bachelors

Princeton - $81,800
Harvard - $80,900
Penn - $78,300
Columbia - $78,200
Yale - $78,000
Dartmouth - $77,600
Cornell - $75,800
Brown - $74,700

Your citing "early career pay", which is different than what I'm quoting, which is starting salary right after graduation (ie: first job for newly minted bachelors degree recipients).

daybefore - You're not citing anything. You're CLAIMING certain figures. If you want to cite, provide a source. If you want to COMPARE two cites, make sure they're strictly comparable, or nearly so (often for data like this, there can be subtle differences in composition, timing, etc. that add up to significant differences in the outcome measure).

I used mainly local sources so all differ and therefore not going to redo everything, but here's a couple examples for ya:

Rice citation: https://abc13.com/rice-university-texas ... /10869371/
Carnegie Mellon citation: https://abc13.com/rice-university-texas ... /10869371/
Ivy league avg. salary citation: https://www.ziprecruiter.com/Salaries/I ... ate-Salary

Obviously this may not satisfy you so please feel free to do your own and report back, with citations of course.

I've already done my own rather detailed analysis, mainly using College Scorecard data. It was major-oriented (not all grads), and I don't want to rehash it in detail here, to win an internet argument (among other things, my data is mostly about 2 years old, I don't want to re-research it all to address you, and it would be hard to format and summarize adequately and concisely.

That said, let's just use your link - your first link, which goes (ultimately) to a payscale.com study (even though you seemingly object to payscale.com in a follow-up post).

https://www.payscale.com/college-salary ... ors/page/2

I see (early career pay $K)
Princeton 81.8
Harvard 80.9
Penn 78.3
Yale 78.0
Dartmouth 77.7
Brown 74.7
Columbia 78.2
Cornell 75.8

Pretty closely clustered.

Duke 77.8 - so, basically the same as the Ivies, not a $93K vs. $66K advantage as you suggest.

FWIW, Rice is at 77.9, Stanford at 87.1 (the latter, likely driven a bit higher by FAANG/West Coast salaries.)

Overall, things are reasonably compressed among ~top 20s (with perhaps the top 5-6 a half peg above, and ~15-20 a quarter peg below.) Adjust in a more fine-grained fashion for majors and job locations, and you'd generally see more compression, I think (beyond the top 5-6).

[thedaybeforetoday]

What is the source for your data as it does not seem to correlate to other public sources? Payscale puts Duke at $76,800, and the average for the Ivy League is much higher than $66,173.

https://www.payscale.com/college-salary ... /bachelors

Princeton - $81,800
Harvard - $80,900
Penn - $78,300
Columbia - $78,200
Yale - $78,000
Dartmouth - $77,600
Cornell - $75,800
Brown - $74,700

Your citing "early career pay", which is different than what I'm quoting, which is starting salary right after graduation (ie: first job for newly minted bachelors degree recipients).

daybefore - You're not citing anything. You're CLAIMING certain figures. If you want to cite, provide a source. If you want to COMPARE two cites, make sure they're strictly comparable, or nearly so (often for data like this, there can be subtle differences in composition, timing, etc. that add up to significant differences in the outcome measure).

I used mainly local sources so all differ and therefore not going to redo everything, but here's a couple examples for ya:

Rice citation: https://abc13.com/rice-university-texas ... /10869371/
Carnegie Mellon citation: https://abc13.com/rice-university-texas ... /10869371/
Ivy league avg. salary citation: https://www.ziprecruiter.com/Salaries/I ... ate-Salary

Obviously this may not satisfy you so please feel free to do your own and report back, with citations of course.

I've already done my own rather detailed analysis, mainly using College Scorecard data. It was major-oriented (not all grads), and I don't want to rehash it in detail here, to win an internet argument (among other things, my data is mostly about 2 years old, I don't want to re-research it all to address you, and it would be hard to format and summarize adequately and concisely.

That said, let's just use your link - your first link, which goes (ultimately) to a payscale.com study.

https://www.payscale.com/college-salary ... ors/page/2

I see (early career pay $K)
Princeton 81.8
Harvard 80.9
Penn 78.3
Yale 78.0
Dartmouth 77.7
Brown 74.7
Columbia 78.2
Cornell 75.8

Pretty closely clustered.

Duke 77.8 - so, basically the same as the Ivies, not a $93K vs. $66K advantage as you suggest.

FWIW, Rice is at 77.9, Stanford at 87.1 (the latter, likely driven a bit higher by FAANG/West Coast salaries.)

Overall, things are reasonably compressed among ~top 20s (with perhaps the top 5-6 a half peg above, and ~15-20 a quarter peg below.) Adjust in a more fine-grained fashion for majors and job locations, and you'd generally see more compression, I think (beyond the top 5-6).

Sorry, not looking for an argument thus that lack of italics on my part.
From the article I cited that you asked for (your welcome):
"How much does an Ivy League Graduate make?
As of Jan 19, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year."
As to avoid a lock, you can have the last word.

[psteinx]

Sorry, not looking for an argument thus that lack of italics on my part.
From the article I cited that you asked for (your welcome):
"How much does an Ivy League Graduate make?
As of Jan 19, 2023, the average annual pay for an Ivy League Graduate in the United States is $66,173 a year."
As to avoid a lock, you can have the last word.

OK, I will.

Here's your zip recruiter link:

https://www.ziprecruiter.com/Salaries/I ... ate-Salary

There's no sourcing whatsoever for this, and in detailed breakdown at the bottom, it says the average Ivy Technology grad is at $60,857 (~10% less than the overall Ivy average).

If you believe and accept this (without any further sourcing), then, yeah, we're at loggerheads. I would encourage you to change careers and become a recruiter - if you can hire (median) Ivy tech grads at $61K, there's a lot of companies who'd want you to recruit for them.

FWIW, my preferred data source is College Scorecard. It sources data from actual tax returns of graduates who received financial aid. Here's Brown (not a top Ivy), for example:

https://collegescorecard.ed.gov/school/ ... University

[WhiteMaxima]

It is not the school that determined your future earning,. It is the field of study that will affect your future earning. Social science degree from Ivy league shcool vs medical science degree from a public school.

[bltn]

Regarding a loan to your children for college/medical school, I would look again at GALAWDAWG s post.

And I would add that my general opinion of loans to family members is negative. Timely repayment could become a problem, and resentment could develop. My personal practice when a question of a family loan arises is to either avoid it or make it a gift. So far, Ive been able to avoid both.

[Misenplace]

This thread has run its course and is locked (topic exhausted). See: Locked Topics

Moderators or site admins may lock a topic (set it so no more replies may be added) when a violation of posting policy has occurred. Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.

Moderator Misenplace

[Misenplace]

After a request and further consideration, this thread is reopened to focus on OP's situation - strategies for paying for college.

Upthread the discussion became derailed on salary discussions and the value of an Ivy/elite education. That point has been made, let's move on and focus on OP's question - how to pay for it.

Moderator Misenplace

[TomatoTomahto]

After a request and further consideration, this thread is reopened to focus on OP's situation - strategies for paying for college.

Upthread the discussion became derailed on salary discussions and the value of an Ivy/elite education. That point has been made, let's move on and focus on OP's question - how to pay for it.

Moderator Misenplace

OP, we don't want to pry, but perhaps this could be best approached by telling us more about your financials: for example, how much in tax deferred, how much in taxable, annual household income and how stable it is, annual expenses and how much you could cut them before it becomes disagreeable, etc.

[iCare]

Thanks Moderator for reopening this thread. On this thread I found very good information, that is helping me replan. I had missed out on so many factors and was sweating over FA only.

I played with online calculators plugging in salary + assets. Our current situation = we qualify for almost 0 FA so not worth wasting time on appeal yet. But I have replanned it over the last week as follows. turns out it may be less complicated than I imagined so far.

The biggest hurdle to cross for replanning is to accept the huge burden and agree to payup. I gained a lot of mental peace by accepting the reality that I am not making any huge mistakes or missing out on any chances at FA. (except that i should have done it 4 years ago!). The answer is to pay up 100% now!

Current summary of replan (please pitch in suggestions):

1) older child - takes out independent loans. Will check out whitecoatinvestor forums. May have to pay another semester from 529 - this simplifies things to bring focus to just 1 kid's education instead of 2 for the next 8 years

2) sources for the 2nd kid:

Year1: pay from 529; Save 1/4 from current paycheck for year5=$25K; kid finds some oncampus job=$5k

Year2: pay from 529; Save 1/4 from current paycheck for year5; ; kid finds some oncampus job=$5k

Year3: pay from savings; Save 1/4 from current paycheck for year5; kid finds some oncampus job=$5k

Year4: pay from savings; Save 1/4 from current paycheck for year5; ; kid finds some oncampus job=$5k

Year5: pay from savings (saved up over last 4 years)

Year6: Loan from 401k + kids savings from 4 year work + scholarship money if any + dig in savings

Year7: kid2 takes loan

Year8: kid2 takes loan

3) with above plan, since we burn assets for 4 years; may qualify us some reduction for post-grad fees and gives us time to shift assets (such as sell rental to put equity in primary residence)

4) Don't need to compromise on retirement savings with above plans; that doesn't count towards parent assets.

5) The above plan reduces our salary burden from $8-9k per month (which we don't have) to $2.5K per month (we'd pause some post-tax retirement contributions).

6) One sad point is that this plan requires 4 years' worth of loans to be taken out on kids. We wanted to be proud parents who funded our children through college and graduated debt-free.

At least with the above plan, I have a cash outlay plan.

I'd keep trying to find extra money to help my older child become debt-free now as well. During year7/8, he may be able to pitch in with kid2 education as well if he starts earning by then.


I am revisiting all plans. We may be able to go back to school in year 3 or 4 to appeal or we have another opportunity during graduate school admission for FA as well.

Trusts don't seem to work, as all trusts have to be disclosed.

[iCare]

OP, we don't want to pry, but perhaps this could be best approached by telling us more about your financials: for example, how much in tax deferred, how much in taxable, annual household income and how stable it is, annual expenses and how much you could cut them before it becomes disagreeable, etc.

@Tomato; For now, I'll hold off on sharing my actual numbers for a bit longer. Some posters pointed me to a few financial calculators on university websites for estimating costs. I can give you numbers if they can help in any way. On these calculators, it is better to assume "borderline" numbers for every line item.

Net net is that i posted my revised plan above. Revised plan requires me to divert only after-tax retirement contribution.

[Admiral]

OP, we don't want to pry, but perhaps this could be best approached by telling us more about your financials: for example, how much in tax deferred, how much in taxable, annual household income and how stable it is, annual expenses and how much you could cut them before it becomes disagreeable, etc.

@Tomato; For now, I'll hold off on sharing my actual numbers for a bit longer. Some posters pointed me to a few financial calculators on university websites for estimating costs. I can give you numbers if they can help in any way. On these calculators, it is better to assume "borderline" numbers for every line item.

Net net is that i posted my revised plan above. Revised plan requires me to divert only after-tax retirement contribution.

If we knew your financials, you'd get better advice. For example: By the time they reach age 50ish (with a kid going off to college) many high earners (which you apparently are) have a solid retirement nest egg and can afford to cut back on retirement a bit. Not eliminate savings, of course, but reduce.

If you have a nice pile saved, most of your growth will come from existing savings not new contributions. Therefore, cutting back $20k (or whatever) for 4 years and using that to help pay for tuition is not going to dent your plan. In some cases this may be preferable to a loan.

Do you?

I assume your kid was accepted early decision as general admissions have not been released for the Ivies. Did you consider the financials before applying early? For the other kid, I HIGHLY suggest applying to other schools as well as the Ivy+ schools. Many students who are accepted at an Ivy+for full freight can get a full ride at schools slightly less competitive. My friend's kid got into a number of Ivies: he was offered a full ride at Lehigh which is a very good school.

He chose Harvard, but there you go!

[TomatoTomahto]

OP, we don't want to pry, but perhaps this could be best approached by telling us more about your financials: for example, how much in tax deferred, how much in taxable, annual household income and how stable it is, annual expenses and how much you could cut them before it becomes disagreeable, etc.

@Tomato; For now, I'll hold off on sharing my actual numbers for a bit longer. Some posters pointed me to a few financial calculators on university websites for estimating costs. I can give you numbers if they can help in any way. On these calculators, it is better to assume "borderline" numbers for every line item.

Net net is that i posted my revised plan above. Revised plan requires me to divert only after-tax retirement contribution.

OP, I’m not good at analyzing financial plans (many BHs are), but it seems to be that you have found a workable plan. Good luck, I think things will work out well.

[galawdawg]

One more comment regarding student loans. While I know you mentioned that "One sad point is that this plan requires 4 years' worth of loans to be taken out on kids. We wanted to be proud parents who funded our children through college and graduated debt-free", for the very vast majority that is simply not a goal that is achievable, particularly if their child(ren) attend expensive private (or even flagship state) universities and/or pursue an education that isn't completed in four (4) years. College costs have increased significantly over the past forty (40) years as a percentage of HHI.

Remember that you always have the option to gift your child(ren) funds to help them with student loan payments. You and your spouse could each give $17,000 to each child without any tax consequences or even filing out any forms. That is the 2023 gift tax exclusion amount, amounts above that simply require the filing of a federal gift tax return, IRS Form 709. Unless you gift more than $12.06 million in which case you'll owe tax!

So be cautious about locking into a plan that provides no flexibility for you, your spouse and your children. Even if the full freight is covered by student loans, you and your spouse could together gift $34,000 annually to each child to pay those loans if your financial circumstances permit. (Or if they become highly compensated physicians making $500k+ per year, they can certainly pay some or all of those "investment" costs themselves with very little impact on any reasonable lifestyle.)

On the other hand, if you scrimp, save and cut your retirement contributions to fund their educations, in full or in part, there are no "refunds" if they become eligible for student loan forgiveness, such as PSLF.

Something to consider.

[cmr79]

OP, we don't want to pry, but perhaps this could be best approached by telling us more about your financials: for example, how much in tax deferred, how much in taxable, annual household income and how stable it is, annual expenses and how much you could cut them before it becomes disagreeable, etc.

@Tomato; For now, I'll hold off on sharing my actual numbers for a bit longer. Some posters pointed me to a few financial calculators on university websites for estimating costs. I can give you numbers if they can help in any way. On these calculators, it is better to assume "borderline" numbers for every line item.

Net net is that i posted my revised plan above. Revised plan requires me to divert only after-tax retirement contribution.

If we knew your financials, you'd get better advice. For example: By the time they reach age 50ish (with a kid going off to college) many high earners (which you apparently are) have a solid retirement nest egg and can afford to cut back on retirement a bit. Not eliminate savings, of course, but reduce.

If you have a nice pile saved, most of your growth will come from existing savings not new contributions. Therefore, cutting back $20k (or whatever) for 4 years and using that to help pay for tuition is not going to dent your plan. In some cases this may be preferable to a loan.

Do you?

I assume your kid was accepted early decision as general admissions have not been released for the Ivies. Did you consider the financials before applying early? For the other kid, I HIGHLY suggest applying to other schools as well as the Ivy+ schools. Many students who are accepted at an Ivy+for full freight can get a full ride at schools slightly less competitive. My friend's kid got into a number of Ivies: he was offered a full ride at Lehigh which is a very good school.

He chose Harvard, but there you go!

Application deadlines for most competitive non-Ivy schools have passed already or will by Feb 1. Additionally, OP specifically stated the decision has already been made for the younger child to attend the Ivy.

I think OP's plan sounds reasonable. Yes, you wanted to pay for undergrad and grad school completely for both kids, but it doesn't appear that you can afford to do this at the selected schools while meeting higher priority (at least in your spouse's opinion!) financial obligations.

OP, you mentioned that by spending down assets over the next several years, you think you might qualify for additional assistance for your second child's grad/medical school? I doubt this will be the case; very little in the way of need-based aid is available for medical school other than loans. Doesn't hurt to try, though, and some individual medical schools may offer additional grants. Personally, I found that the more competitive (and better resourced) medical schools to which I was accepted seemed to offer more grant aid than the less competitive schools to which I was accepted, at least in general.

[MMiroir]

Thanks Moderator for reopening this thread. On this thread I found very good information, that is helping me replan. I had missed out on so many factors and was sweating over FA only.

I played with online calculators plugging in salary + assets. Our current situation = we qualify for almost 0 FA so not worth wasting time on appeal yet. But I have replanned it over the last week as follows. turns out it may be less complicated than I imagined so far.

The biggest hurdle to cross for replanning is to accept the huge burden and agree to payup. I gained a lot of mental peace by accepting the reality that I am not making any huge mistakes or missing out on any chances at FA. (except that i should have done it 4 years ago!). The answer is to pay up 100% now!

Current summary of replan (please pitch in suggestions):

1) older child - takes out independent loans. Will check out whitecoatinvestor forums. May have to pay another semester from 529 - this simplifies things to bring focus to just 1 kid's education instead of 2 for the next 8 years

2) sources for the 2nd kid:

Year1: pay from 529; Save 1/4 from current paycheck for year5=$25K; kid finds some oncampus job=$5k

Year2: pay from 529; Save 1/4 from current paycheck for year5; ; kid finds some oncampus job=$5k

Year3: pay from savings; Save 1/4 from current paycheck for year5; kid finds some oncampus job=$5k

Year4: pay from savings; Save 1/4 from current paycheck for year5; ; kid finds some oncampus job=$5k

Year5: pay from savings (saved up over last 4 years)

Year6: Loan from 401k + kids savings from 4 year work + scholarship money if any + dig in savings

Year7: kid2 takes loan

Year8: kid2 takes loan

3) with above plan, since we burn assets for 4 years; may qualify us some reduction for post-grad fees and gives us time to shift assets (such as sell rental to put equity in primary residence)

4) Don't need to compromise on retirement savings with above plans; that doesn't count towards parent assets.

5) The above plan reduces our salary burden from $8-9k per month (which we don't have) to $2.5K per month (we'd pause some post-tax retirement contributions).

6) One sad point is that this plan requires 4 years' worth of loans to be taken out on kids. We wanted to be proud parents who funded our children through college and graduated debt-free.

At least with the above plan, I have a cash outlay plan.

I'd keep trying to find extra money to help my older child become debt-free now as well. During year7/8, he may be able to pitch in with kid2 education as well if he starts earning by then.


I am revisiting all plans. We may be able to go back to school in year 3 or 4 to appeal or we have another opportunity during graduate school admission for FA as well.

Trusts don't seem to work, as all trusts have to be disclosed.

Some notes about the plan.

1 - If you are borderline for financial aid, file the FAFSA and CSS every year and appeal. Colleges are constantly increasing the income limits for qualifying for Financial Aid. For example, when I first ran the Harvard NPC five years ago, the highest income that would qualify for FA was around $225,000. Today it is around $290,000.

2 - The financial aid awards are very fungible by the college, and they will take into account extraordinary expenses in deciding the size of the award. One year we had very high medical expenses, and we were able to get a couple of thousand off tuition after presenting the medical expenses.

3 - You are better off using the 529 accounts first and not spacing them out over four years. The reason being that the 529 money can only be used for college while your other funds do not have this limit. If you do qualify for FA, your non-529 accounts can be used for paying off a mortgage or funding the retirement accounts, or just as emergency funds.

4 - If you do hold off on funding tax deferred retirement accounts, realize that you will be paying current income taxes on the income that would otherwise be sheltered so your overall tax bill would go up.

5 - Once your income gets above the $160,000, the increase in tuition that the school charges approaches 50%. The following figures are from the Harvard NPC, and show the increase in tuition for different income levels. Coupled with national and state income taxes, the combined marginal "tax" rate for tuition and income tax can be over 80%.

Income Merit Aid Aid Delta Marginal Rate
$100,000 $72,663
$110,000 $70,563 $2,100 21.0%
$120,000 $68,763 $1,800 18.0%
$130,000 $66,763 $2,000 20.0%
$140,000 $64,563 $2,200 22.0%
$150,000 $62,163 $2,400 24.0%
$160,000 $56,363 $5,800 58.0%
$170,000 $51,663 $4,700 47.0%
$180,000 $46,563 $5,100 51.0%
$190,000 $40,663 $5,900 59.0%
$200,000 $37,763 $2,900 29.0%
$210,000 $33,713 $4,050 40.5%
$220,000 $29,413 $4,300 43.0%
$230,000 $24,963 $4,450 44.5%
$240,000 $20,263 $4,700 47.0%
$250,000 $15,413 $4,850 48.5%
$260,000 $10,363 $5,050 50.5%

Note that the variability in the marginal rate makes no sense to me, but I ran the numbers twice and those were the results.

6 - Regarding schools, if your son got into Harvard, Yale or Princeton, those schools are definitely worth the cost and financial pain. On the other hand, a lower tier Ivy like Cornell is probably not worth the cost versus a good state school.

[iCare]

If we knew your financials, you'd get better advice. For example: By the time they reach age 50ish (with a kid going off to college) many high earners (which you apparently are) have a solid retirement nest egg and can afford to cut back on retirement a bit. Not eliminate savings, of course, but reduce.

If you have a nice pile saved, most of your growth will come from existing savings not new contributions. Therefore, cutting back $20k (or whatever) for 4 years and using that to help pay for tuition is not going to dent your plan. In some cases this may be preferable to a loan.

Do you?

At this stage in our lives, my wife and I are in our early 50s and have not yet fully prepared for our retirement goals. We are currently trying to catch up by contributing to our 401k and using after-tax money.

In the past, we made some mistakes with our financial planning, particularly with the location of our assets and income. For example, we still have a lot to save for retirement given our current health and other circumstances, and on top of that, the college tuition expenses for our children have been a significant financial burden.

We also made the mistake of putting some money into our children's bank accounts (un-necessarily), which are heavily considered in financial aid calculations.

My wife took on extra work in the past two years to help save for our children's college education, but this unfortunately backfired as it raised our taxes a lot and further hurt our chances for financial aid.

Additionally, we made some poor choices in the stock market and have faced financial losses as a result. It's never easy to accept mistakes, especially at this stage in life, but we are doing our best to move forward and make the most of the situation.

It's usually hard enough for anyone to accept mistakes, especially at this age, but we are doing our best to move forward and make the most of the situation. We understand that mistakes happen and we hope that our efforts.

Some of us live life as it comes....

I assume your kid was accepted early decision as general admissions have not been released for the Ivies. Did you consider the financials before applying early? For the other kid, I HIGHLY suggest applying to other schools as well as the Ivy+ schools. Many students who are accepted at an Ivy+for full freight can get a full ride at schools slightly less competitive. My friend's kid got into a number of Ivies: he was offered a full ride at Lehigh which is a very good school.

He chose Harvard, but there you go!

Yes it was ED based on academics, ECs.

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

[iCare]

One more comment regarding student loans. While I know you mentioned that "One sad point is that this plan requires 4 years' worth of loans to be taken out on kids. We wanted to be proud parents who funded our children through college and graduated debt-free", for the very vast majority that is simply not a goal that is achievable, particularly if their child(ren) attend expensive private (or even flagship state) universities and/or pursue an education that isn't completed in four (4) years. College costs have increased significantly over the past forty (40) years as a percentage of HHI.

Remember that you always have the option to gift your child(ren) funds to help them with student loan payments. You and your spouse could each give $17,000 to each child without any tax consequences or even filing out any forms. That is the 2023 gift tax exclusion amount, amounts above that simply require the filing of a federal gift tax return, IRS Form 709. Unless you gift more than $12.06 million in which case you'll owe tax!

So be cautious about locking into a plan that provides no flexibility for you, your spouse and your children. Even if the full freight is covered by student loans, you and your spouse could together gift $34,000 annually to each child to pay those loans if your financial circumstances permit. (Or if they become highly compensated physicians making $500k+ per year, they can certainly pay some or all of those "investment" costs themselves with very little impact on any reasonable lifestyle.)

On the other hand, if you scrimp, save and cut your retirement contributions to fund their educations, in full or in part, there are no "refunds" if they become eligible for student loan forgiveness, such as PSLF.

Something to consider.

Thanks for suggesting, but problem at hand is cash generation for paying. Gifting will require even more income...

Planning for Loan forgiveness? Do you really believe it can work for anyone? Esp us, who couldn't plan for college or retirement so far?.... hmm

[iCare]

One more comment regarding student loans. While I know you mentioned that "One sad point is that this plan requires 4 years' worth of loans to be taken out on kids. We wanted to be proud parents who funded our children through college and graduated debt-free", for the very vast majority that is simply not a goal that is achievable, particularly if their child(ren) attend expensive private (or even flagship state) universities and/or pursue an education that isn't completed in four (4) years. College costs have increased significantly over the past forty (40) years as a percentage of HHI.

Remember that you always have the option to gift your child(ren) funds to help them with student loan payments. You and your spouse could each give $17,000 to each child without any tax consequences or even filing out any forms. That is the 2023 gift tax exclusion amount, amounts above that simply require the filing of a federal gift tax return, IRS Form 709. Unless you gift more than $12.06 million in which case you'll owe tax!

So be cautious about locking into a plan that provides no flexibility for you, your spouse and your children. Even if the full freight is covered by student loans, you and your spouse could together gift $34,000 annually to each child to pay those loans if your financial circumstances permit. (Or if they become highly compensated physicians making $500k+ per year, they can certainly pay some or all of those "investment" costs themselves with very little impact on any reasonable lifestyle.)

On the other hand, if you scrimp, save and cut your retirement contributions to fund their educations, in full or in part, there are no "refunds" if they become eligible for student loan forgiveness, such as PSLF.

Something to consider.

Thanks for suggesting, but problem at hand is cash generation for paying. Gifting will require even more income...

Planning for Loan forgiveness? Do you really believe it can work for anyone? Esp. us, who couldn't plan for college or retirement so far?.... hmm. I'd look into it later to understand, but doesn't seem it can benefit our situation.

[galawdawg]

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

Not to unnecessarily pry, but did your son choose this offer of admission, did you choose it for him/her or did you all choose it together?

And if he was part of this decision, what information (if any) did he consider as far as costs? In other words, was his decision based upon the expectation that his costs would be covered without the need for work or loans?

Thanks for suggesting, but problem at hand is cash generation for paying. Gifting will require even more income...

Planning for Loan forgiveness? Do you really believe it can work for anyone? Esp. us, who couldn't plan for college or retirement so far?.... hmm. I'd look into it later to understand, but doesn't seem it can benefit our situation.

PSLF is a loan forgiveness program for those who work for a non-profit (such as most university hospitals and many community hospitals), VA or military health care and other qualifying positions (assuming your son becomes a physician or other healthcare provider). Here is an article by JIm Dahle (a fellow Boglehead) that explains that program. It is an option worth reviewing and may tip the scales towards student loans rather than paying out-of-pocket. https://www.whitecoatinvestor.com/publi ... rgiveness/

[e5116]

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

Not to unnecessarily pry, but did your son choose this offer of admission, did you choose it for him/her or did you all choose it together?

And if he was part of this decision, what information (if any) did he consider as far as costs? In other words, was his decision based upon the expectation that his costs would be covered without the need for work or loans?

Thanks for suggesting, but problem at hand is cash generation for paying. Gifting will require even more income...

Planning for Loan forgiveness? Do you really believe it can work for anyone? Esp. us, who couldn't plan for college or retirement so far?.... hmm. I'd look into it later to understand, but doesn't seem it can benefit our situation.

PSLF is a loan forgiveness program for those who work for a non-profit (such as most university hospitals and many community hospitals), VA or military health care and other qualifying positions (assuming your son becomes a physician or other healthcare provider). Here is an article by JIm Dahle (a fellow Boglehead) that explains that program. It is an option worth reviewing and may tip the scales towards student loans rather than paying out-of-pocket. https://www.whitecoatinvestor.com/publi ... rgiveness/

I know a highly specialized physician (making $$$$, but took a LONG time to get to that point) who hasn't had to pay back any on loans for the last few years because of COVID pause of payments and will only have a couple months of payments before PSLF forgives the enormous balance. Pretty nice bonus; easier for doctors because hospitals are technically non-profits. Not going to apply to many of those in business and other industries......Didn't see if OP said the plan was for med school, but also plans can change, so wouldn't bank on that or PSLF to bail out the loans due. Also wouldn't plan on there being a three year pause on federal loan payments like we've seen recently (and those 3 years count towards the 10 years of forgiveness timing).

[iCare]

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

Not to unnecessarily pry, but did your son choose this offer of admission, did you choose it for him/her or did you all choose it together?

And if he was part of this decision, what information (if any) did he consider as far as costs? In other words, was his decision based upon the expectation that his costs would be covered without the need for work or loans?

It was his decision. He worked hard for getting in ED. None of that was ours. Its only fair for him for parents to pay for tuition as they did for elder one.

We saved up in 529 that he knows, sticker shock is new to him and to us. We have a workable plan to move forward with.

[galawdawg]

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

Not to unnecessarily pry, but did your son choose this offer of admission, did you choose it for him/her or did you all choose it together?

And if he was part of this decision, what information (if any) did he consider as far as costs? In other words, was his decision based upon the expectation that his costs would be covered without the need for work or loans?

It was his decision. He worked hard for getting in ED. None of that was ours. Its only fair for him for parents to pay for tuition as they did for elder one.

We saved up in 529 that he knows, sticker shock is new to him and to us. We have a workable plan to move forward with.

Got it. And while it sounds like it is too late at this point to have the "affordability" talk with your college-bound son, I always recommend that parents have an open dialog with their child(ren) about various college, trade school and career options as their child(ren) start considering their plans after high school.

While there is certainly nothing wrong with deciding to pay in full "whatever it costs, no matter what" for your child(ren)'s undergraduate and graduate degrees if that reflects your own personal values, for most parents decisions about who pays how much of what costs are necessary considerations before one commits to whatever their chosen path will be. Including their child(ren) in those discussions and decisions help everyone take the wisest possible approach and can often be an important financial lesson for their soon-to-be adult child(ren). I say that not to be critical of anything you have done but for the benefit of others who will read this thread and whose children have not yet reached college-decision age.

I hope that you and your spouse are able to successfully make the necessary adjustments to your finances so that your children will benefit from an education at an exclusive university and that they, in turn, will take full advantage of the opportunities that lie before them!

[stoptothink]

While we are confident that he would have been accepted to other institutions, we have chosen to accept this offer and enroll him in this particular school.

Not to unnecessarily pry, but did your son choose this offer of admission, did you choose it for him/her or did you all choose it together?

And if he was part of this decision, what information (if any) did he consider as far as costs? In other words, was his decision based upon the expectation that his costs would be covered without the need for work or loans?

Thanks for suggesting, but problem at hand is cash generation for paying. Gifting will require even more income...

Planning for Loan forgiveness? Do you really believe it can work for anyone? Esp. us, who couldn't plan for college or retirement so far?.... hmm. I'd look into it later to understand, but doesn't seem it can benefit our situation.

PSLF is a loan forgiveness program for those who work for a non-profit (such as most university hospitals and many community hospitals), VA or military health care and other qualifying positions (assuming your son becomes a physician or other healthcare provider). Here is an article by JIm Dahle (a fellow Boglehead) that explains that program. It is an option worth reviewing and may tip the scales towards student loans rather than paying out-of-pocket. https://www.whitecoatinvestor.com/publi ... rgiveness/

I know a highly specialized physician (making $$$$, but took a LONG time to get to that point) who hasn't had to pay back any on loans for the last few years because of COVID pause of payments and will only have a couple months of payments before PSLF forgives the enormous balance. Pretty nice bonus; easier for doctors because hospitals are technically non-profits. Not going to apply to many of those in business and other industries......Didn't see if OP said the plan was for med school, but also plans can change, so wouldn't bank on that or PSLF to bail out the loans due. Also wouldn't plan on there being a three year pause on federal loan payments like we've seen recently (and those 3 years count towards the 10 years of forgiveness timing).

I happen to know a physician in pretty much the exact same position. Absolute insanity that the last 3yrs will count towards PSLF.

[iCare]

PSLF is yet another interesting program... so many knobs to turn to

[galawdawg]

PSLF is yet another interesting program... so many knobs to turn to

For someone willing to work at a qualifying entity, PSLF may be the best bargain out there for those non-scholarship students attending high-priced undergraduate and graduate schools. Basically an "after-the-fact" scholarship that can end up paying for as much as two-thirds of one's total student loans.

[snowday2022]

PSLF is yet another interesting program... so many knobs to turn to

For someone willing to work at a qualifying entity, PSLF may be the best bargain out there for those non-scholarship students attending high-priced undergraduate and graduate schools. Basically an "after-the-fact" scholarship that can end up paying for as much as two-thirds of one's total student loans.

For very specialized physicians these programs don’t make sense financially unless one is attracted to the position for another reason. The delta between these jobs and PP is too great (can be 2-3X or more in some specialties).

[texasdiver]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

[Vulcan]

Coupled with national and state income taxes, the combined marginal "tax" rate for tuition and income tax can be over 80%.

indeed

[LeftCoastIV]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

FYI UCLA out-out-state tuition is around $45K. UC Irvine around $43K. I haven't checked Berkeley. Still expensive, but I think less than most elite privates (or other privates before merit aid if your kid receives any).

[iCare]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

FYI UCLA out-out-state tuition is around $45K. UC Irvine around $43K. I haven't checked Berkeley. Still expensive, but I think less than most elite privates (or other privates before merit aid if your kid receives any).

Are you quoting just the tuition or the total cost of attendance? I usually look at the total cost for planning for expense layout.

[Pdxnative]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

FYI UCLA out-out-state tuition is around $45K. UC Irvine around $43K. I haven't checked Berkeley. Still expensive, but I think less than most elite privates (or other privates before merit aid if your kid receives any).

Princeton and MIT tuition is around 55k. One can disagree about whether that counts as roughly the same ballpark (for me it does) but I think the point was that one isn’t saving a whole lot by opting for the well-regarded out of state public vs. an Ivy if the Ivy is an option. The big drop in price would come from going with an in state public or a lower-ranked private.

[LeftCoastIV]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

FYI UCLA out-out-state tuition is around $45K. UC Irvine around $43K. I haven't checked Berkeley. Still expensive, but I think less than most elite privates (or other privates before merit aid if your kid receives any).

Are you quoting just the tuition or the total cost of attendance? I usually look at the total cost for planning for expense layout.

Tuition only in the numbers above

[LeftCoastIV]

Just an FYI from someone with who put one child through college, has a second in college, and a third who is a HS Junior.

You will be in the same exact position with pretty much every highly ranked private school in the country. You won't likely save much of anything to choose a slightly less prestigious private school like an Amherst, Swarthmore, Pomona, Reed, Washington U, NYI, Boston U, Rice, etc. You'll likely be full pay at all of those an any other top tier private and the total cost will be in the same rough ballpark as the Ivies, and even more in some cases. Most of those are "need-blind" just like the Ivies, which means they don't generally do merit scholarships but expect the wealthy do to full pay.

The only private options that will save you money are those that are a big step down where they will offer substantial "merit scholarships" which have nothing actually to do with merit but are simply a price discount to attract top students who would otherwise pick higher rated schools.

The only public option that will save money is your in-state schools or second tier out-of-state publics. All the very top publics like Michigan, UC-Berkeley, UCLA, etc. will charge out-of-state tuition that will put them in the same ballparks as the Ivies. Some public schools like Alabama and Oklahoma offer generous scholarships to top out-of-state students. But I would not call those top public universities.

So basically suck it up and figure out how to pay the Ivy tuition, or dial back down to your local state schools or a second tier private. Those are the choices.

FYI UCLA out-out-state tuition is around $45K. UC Irvine around $43K. I haven't checked Berkeley. Still expensive, but I think less than most elite privates (or other privates before merit aid if your kid receives any).

Princeton and MIT tuition is around 55k. One can disagree about whether that counts as roughly the same ballpark (for me it does) but I think the point was that one isn’t saving a whole lot by opting for the well-regarded out of state public vs. an Ivy if the Ivy is an option. The big drop in price would come from going with an in state public or a lower-ranked private.

I think where the decision gets harder is with mid-tier privates that charge as much or more than elite schools. The delta between in-state flagship and private schools tuition can be 4-5x (before any merit aid).