Whats the best way to pay for college tuition

One thing I have been wondering about is exactly how do most people draw down their 529s? We started one for each of our sons, my parents did the same, and my in-laws started one for my oldest but then passed before setting one up for my youngest. Each account will have a balance of roughly $10,000 when each son begins college. Do people withdraw at a rate of 25% per school year? I think I read that somewhere but was curious about what people actually do in reality.

It all depends on what works for your situation. I am covering DDs qualified expenses 100% from her 529 this year, but will cover $4k out of general investment funds next year to qualify for the tax credit. But since DD is going to a more moderately priced school and living at home and graduate school is unlikely in her case, I realized I could end up with a balance in her 529 if she gets out in 4 years, or even 5, using this plan. So I am taking a small "room and board" payment out of her 529 account each month as well. (Yes, it's allowed even if they live at home, up to the cost of attendance number set by the school.) I just store that money away in a regular account for use in covering the $4k in expenses for the tax credit in future years.
 
ALWAYS consider private, even out-of-state schools. Often times can cost less than in -state, state schools. They have high dollar scholarships available. They have endowments!
 
Parents should have an honest discussion with their h.s. age children about college expenses and what is affordable. Often, parents choose to not discuss finances for a variety of reasons, but your son/daughter needs to grasp there are most likely NOT unlimited funds available for college. You don't need to post your financial situation here, that is a private matter, but things to consider are how well-off you are financially, how stable is your job, etc. You may think you have a stable income, but companies can merge/be bought out or perhaps a division gets sold or company decides to 'downsize', leaving you without a job.

Be careful of financial advice from mortgage lenders or banks since some give advice about what is in THEIR best interest (i.e. making money off of your home equity loan) and not necessarily yours. During the last financial downturn, people often were sold on the benefits of home equity loans for any number of expenses, but the reality is you have to eventually pay that back (with interest) and if you need to sell your home and/or happen to be out of work, you have less equity in your home. Treating the equity in your home as your personal 'piggy bank' is generally a bad idea and the small amount of tax benefits is not a reason to take out such a loan.

Visit any college your son/daughter is serious about attending. Even if they get a scholarship to someplace you could otherwise not afford, will they fit in with the students going there? College is about more then going to classes and if the life-style of those going there is a lot different from yours, will they really fit in and find the experience enjoyable.

Many college search websites don't consider finances which is probably one of the most important factors when looking at college options. Also good advice for your son/daughter to get a job and/or take out their own college loans. Their future earning power most likely means they will have a greater opportunity to pay that back and places less burden on the parents who are much further along in their careers.
 
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Here's another vote for looking into a private college/university. DD#2 attended a local private university and lived at home (that saved almost $25k a year). She received a lot of financial aid, much of it merit based. In the end her financial aid covered just over 75%. The remaining 25% was much less then the cost of an state school (by a lot).
 
From info I have garnered over the years, we will definitely be investing bucks in the best ACT tutor we can find. I’ve seen time and time again how learning strategies to take the test pays off with a higher score, and thus more merit aid awarded. $1,200 for a few sessions with a tutor sound crazy? It might save us five figures down the line, so I’m ok with it. DS16 took the ACT in 8th grade in order to continue to qualify for a G&T program. He scored pretty good for not having covered any of the high school material, so we know that his score can only go up from there! Admissions and merit money is cut throat at the 30s level so you do anything you can to jockey for position.

If you live in one of the western states you should check out WICHE. www.wiche.edu/wue

If you are unfamiliar, certain schools in western states, to include Alaska and Hawaii, have agreements in other states so that out-of-state students pay no more than 150% of in-state tuition. Again, this is only for certain schools, and even within those schools, only certain majors. The chart of schools and programs is really interesting and the largest bang for your buck seems to be at the graduate level, if anyone has a current undergrad. I overheard someone talking about it at work one day in Hawaii. I was like, how have I never heard of this before? I guess because I grew up on the east coast. DS12 says that he wants to go back to Hawaii for college, so if he does this would come in super handy for us! Go Rainbow Warriors! :rainbow:
 
I'm not dismissing community college/trade school/military. If that's what they want to do, awesome! I don't think that's what dd has planned and I don't want to discourage her dreams. We have certainly had conversations that you can get a great education at a variety of places. DH and I both went to Sac State (that was local to us, and A LOT cheaper and pretty affordable when we went) and we are doing well. Our intention is to pay for their college education, I do not want them taking out loans. If loans need to be done, it will be on us. I'm just trying to find the most cost effective way to do that if we do need to borrow.

Rather than take out a HELOC you can have your children take out whatever loans are available to them and you can make the payments. If you do it while they're in school you should have most, if not all of it paid off by the time the graduate. There are also Plus loans available to parents, but the interest rates and repayment terms aren't as good as the loans the students can take out themselves.
 


Freshman can borrow $5500 max *in their name*, sophomores $6500, and juniors and seniors $7500. Depending on income levels, some may be subsidized (interest does not accrue during the school years).


Also to note.....it can be helpful to have your student have loans in their name (regardless of who is going to pay them off) when it comes time to graduate and begin work. Several fields have recently been paying off student loans as hiring bonuses.
 
My kids will both graduate with no student loans, but tuition is free or nearly free here in Georgia for qualifying kids going to state schools.

Both my kids did dual enrollment while still in high school. Both went to our local university full time while a senior in high school. My youngest finished his freshman year of college for $30 due to dual enrollment. It is crazy how that program works. More kids should take advantage!

My oldest son just started his first grown up job. His employer pays down student loans for their new hires. A perk of picking them to work for. He works in the accounting field. Other companies probably do the same to be competitive.
 
Here's another vote for looking into a private college/university. DD#2 attended a local private university and lived at home (that saved almost $25k a year). She received a lot of financial aid, much of it merit based. In the end her financial aid covered just over 75%. The remaining 25% was much less then the cost of an state school (by a lot).

How do you know/find out if you qualify for merit aid.

She just got her psat scores back and they were pretty good for a first go around. SAT prep over the summer, then SAT hopefully in the fall.
 
Rather than take out a HELOC you can have your children take out whatever loans are available to them and you can make the payments. If you do it while they're in school you should have most, if not all of it paid off by the time the graduate. There are also Plus loans available to parents, but the interest rates and repayment terms aren't as good as the loans the students can take out themselves.

This is likely what we will do. HELOC doesn't seem to be a good idea and the PLUS loans have what I feel are high interest rates and high loan fees.
 
Standardized tests like SAT/ACT measure general math/english knowledge gathered all throughout high school. I don't see a lot of value taking it too early in h.s. since your son/daughter probably hasn't yet had the more advanced math courses. If your child is only a mediocre student, spending money for SAT/ACT tutors will probably yield minimal improvements. Tips/tricks/practice tests/coaching aren't going to suddenly make an average student get amazing SAT/ACT scores, regardless of the sales pitch given by those selling such services.
 
Standardized tests like SAT/ACT measure general math/english knowledge gathered all throughout high school. I don't see a lot of value taking it too early in h.s. since your son/daughter probably hasn't yet had the more advanced math courses. If your child is only a mediocre student, spending money for SAT/ACT tutors will probably yield minimal improvements. Tips/tricks/practice tests/coaching aren't going to suddenly make an average student get amazing SAT/ACT scores, regardless of the sales pitch given by those selling such services.
And more and more University aren't even accepting SAT/ACT tests anymore.
 
It's time for us to start thinking about this. We would really like to put our kids through college. Not sure where our sophomore will go yet, likely a UC or state college, with room and board. I'm pretty sure she will not qualify for financial aid.

We have saved a bunch but likely not enough to pay in full with what we have.

I really don't know what our options are. I have contacted our mortgage broker and tax person in hopes they will have some ideas.

I was thinking about a home equity line of credit, where we only draw on it when it's time to pay tuition.

Hit me with all your advice/ideas!

We started to save before our kids were born.
We asked the Grandparents to give them fewer material things for birthday's and Christmas and a savings bond instead.
We put all our overtime into extra payments on our mortgage. Took us 17 years, but got the house paid off 5 years before our oldest hit college.
When the mortgage was paid off, the house payment money went into the college fund each month.
FAFSA. But be warned, they generally expect you to pay about 27% of your gross pay (not take home pay) in tuition out of pocket. And unless you are in your 60's, they consider money for you kids college to be a higher priority than saving for retirement.
Student loans
Parent loans
Last resort, taking equity out of the house.

Fortunately, we never had to use the last option.
 
Standardized tests like SAT/ACT measure general math/english knowledge gathered all throughout high school. I don't see a lot of value taking it too early in h.s. since your son/daughter probably hasn't yet had the more advanced math courses. If your child is only a mediocre student, spending money for SAT/ACT tutors will probably yield minimal improvements. Tips/tricks/practice tests/coaching aren't going to suddenly make an average student get amazing SAT/ACT scores, regardless of the sales pitch given by those selling such services.


I strongly disagree with this.

4 kids here. All took the ACT in 7th grade through Duke Tips. Didn't expect them to do outstanding on the test, but I did want them to take the test to see what the test is like and to know that they would need to pay attention in their classes as they went along through the next 4 years. The each scored at least a 20--not bad for a 7th grader to get a baseline and experience taking the test that would be required of them later in high school. It also helped them to know that mom and dad were not just blowing smoke about needing to get good grades and to study and take harder classes.

Fast forward to Sophomore year. We had each of them to take the ACT again to get a feel for what they knew and had learned and for the teen to understand his/her weaknesses and be able to schedule the needed classes and pay attention in those classes that they were weak in.

By mid Junior year, the kids began to take the test with some seriousness. DD is a junior now. She knows that English and Language are her stronger suits. Math not as strong. She also has a friend whose strength is math. They and another peer studied for the ACT in October. And tutored each other during that session in the areas that they were weak in. DD is behind on some of her high school math courses (just did not get the classes on her schedule until this year), but all 3 of them improved their scores well into the 30s. They are each now eligible for serious merit aid at the schools they are interested in. They also have a young male teacher who is hosting tutoring sessions after school for the standardized tests. By the looks of the scores, it's paying off. Also, DD had an amazing orthodontist who gives back to the kids by hosting ACT prep workshops free to current and former patients. DD took advantage of that as well. All tutoring and studying was free.

DD took the PSAT last year to understand what it was like. This summer she took the SAT and got her score. She then knew her weaknesses and the same kids studied together for the PSAT. Their scores (and there is only one shot at a good PSAT score-the test in October of junior year) are each a few points above our state's last year cut off for national merit. So the prospects of National Merit Semifinalist look pretty good-again--merit $ at schools they choose to go to.

So with some studying and taking a few ACT and PSAT tests, DD will save us several thousands of dollars.

I know this because my oldest three followed similar paths and have completed a total of 11 years of school with very little out of our pockets. Oldest has his masters with no debt. DS #2 is in year 4 of his program. Again, no debt. DS #3 is in year 2. When these 3 received their scholarship letters, the schools said the value of the scholarships for room, board, tuition and some returned to my kids in their pockets was over $40,000 each. I don't know anywhere where the return on investment can compare.
 
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If your child is only a mediocre student, spending money for SAT/ACT tutors will probably yield minimal improvements. Tips/tricks/practice tests/coaching aren't going to suddenly make an average student get amazing SAT/ACT scores, regardless of the sales pitch given by those selling such services.


Agreed. A mid-20s score is not going to suddenly rocket into the 30s. I’m talking about engaging a tutor for students who are already on track to end up in the 30s. The Duke TIP and JHU CTY students. When you get into the 30s one point can make a difference. Like, full ride difference. I’m going to revise my previous statement of ‘this could save us five figures’ – I meant to say six figures!

I keep hearing people say that Khan Academy’s free online prep is excellent. Maybe we’ll start them off with that and see where they end up on the early ACT attempts. I’m just saying, based on what I know firsthand, I will be more than willing when the time comes to engage a top tutor to get an extra point or two.

I’m really enjoying and absorbing the advice in this thread. Thank you everyone!
 
To the OP - how do you know if you are on track for merit? Some colleges post a gpa/test score threshold online. Others are more vague, but if you go to college confidential this time of year and read who got in where with how much merit you will start seeing a trend. Plus people there can steer you towards colleges that are generous with merit. Not all of them are. My DD specifically applied to safeties that would throw quite a bit of money her way based on what we saw and she was offered pretty much what we expected.

Also, check the sophomore PSAT against the National Merit cutoff for juniors this year. If she is close (even if she is over the bar it doesn't matter since sophomores aren't able to get it) then she can study over the summer and it should bump her up over the bar. That number changes each year, and CA is one of the higher score states, so make sure you see what it takes there. If she can get NM it means free tuition at a bunch of universities, including OK, Bama, Kentucky, ASU and more. It also means partial scholarships at some great privates like USC and Northeastern, but admission is not guaranteed.

And more and more University aren't even accepting SAT/ACT tests anymore.

I'm not sure what colleges you are talking about, but I have one in college right now and every single application she filled out required either SAT or ACT, and quite a few required SAT subject tests on top of that. Yeah, there are a few test optional colleges, but the majority still require a test.
 
I'm not sure what colleges you are talking about, but I have one in college right now and every single application she filled out required either SAT or ACT, and quite a few required SAT subject tests on top of that. Yeah, there are a few test optional colleges, but the majority still require a test.

Certainly the majority still do, but every year a few more base admissions on the total student.......grades, activities, community involvement, special talents, over test scores. All those SAT/ACT prep course have too many students scoring high so college are looking at broader criteria.
 
Certainly the majority still do, but every year a few more base admissions on the total student.......grades, activities, community involvement, special talents, over test scores. All those SAT/ACT prep course have too many students scoring high so college are looking at broader criteria.


Meh. As a parent deep in kids in college and looking at college, even those scoring high on standardized tests are well rounded in activities, clubs, volunteering, part time jobs, etc.

The best college scholarships are still merit $ earned based on tests.

And not many are going away from standardized tests.

There are so many good state colleges that my kids have not had to compete for admission. The colleges compete for the kids.

Oldest ds was waitlisted at Vanderbilt and accepted to Notre Dame. But our mantra has been go to school where you can get a respected degree that will get you a decent job with the least amt of debt.

Many state schools have well respected colleges of study without going to more prestigous and expensive schools.
 

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