Our Kids: College Questions

[BleedBlueGold]

I'm sure there is a thread already dedicated to college as it pertains to our children. Where to go, how much to save, etc. If so, can a mod merge this thread? I didn't have much luck with my search.

Anyways, I'm a new father, and being the planner that I am, college savings became a topic of discussion in my household recently. There were so many things brought up and I'd like to list some of them here and request that anyone with good data, experience, input post a response here to ease my stress and guide me along this process. Thanks!

• Does it matter where you go for undergrad? (In-state vs Out-of-State vs Private)
• How much to save for college? (Obviously, this one has many variables)
• Data on success rates for "better" schools?

In-state, public college tuition is estimated to be approximately $206,000 for undergrad when my daughter turns 18 based on The Internet Guide to Funding College and Section 529 College Savings Plans. Savingforcollege.com. To pay for 100% of the cost, I'd need to save about $490/month. What if she gets into ND or Stanford. Is it worth the extra cost/savings for undergrad? While everything I hear/read suggests that the undergrad school itself does not factor into the acceptance into grad school, do these "better" schools have higher success rates (better classes, better support systems, etc). Networking, types of jobs, average salaries, etc can be factors. I know Whiskey has data on this, but I never looked to see if it's athlete-only or general student population.

Any guidance helps, guys. In the end, we all want what's best for our children. I know it's early and I don't want to come across as putting expectations on my one-year-old, but I'm just trying to get a head start on planning for her future. If she's willing and able to attend a great university, I want to have the information ahead of time to help decide 1) can we afford it? 2) is it worth it?

Thanks.

 

[tussin]

Yes, the better schools have better educational, networking, and job opportunities with higher ROIs. That being said, if your daughter wants to become a school teacher or a nurse or something like that, then a state school is going to provide the same opportunities as an "elite institution" and get her to the same place. If she wants to become an engineer or pursue a business career, then it makes sense to pay up beyond state school tuition. There are exceptions; for example, Cal Berkley, UVA, and Michigan are all fantastic, high-ROI universities (especially within specific programs).

FWIW, I had the opportunity to attend several state schools and opted to take out some student loan debt to attend a private university. I don't regret the decision.

 

[Domina Nostra]

To me, the truly elite private schools definitively open doors and put you in company that you might not otherwise be in. Lots of people are snobs and prefer to associate with people with certain pedigrees. Others will use the diploma as shorthand for the hard work and intelligence that it took to earn it.

Those schools are also little propaganda factories, that are going to try as hard as they can to make your daughter think exactly like they do (which they refer to as "open-minded," but is a very specific brand of open-mindedness). ND should be an exception, but it is having massive issues maintaining its Catholic identity while fighting for the approval of secular macadamia. The current strategy is simply to insist that the Church happens to line up with the consensus academic view on all important issues, and if you don't agree with them you obviously have an uneducated understanding of theology.

Which leads to, is the education better? Sometimes. The baseline expectations are higher and the competition is stronger, but sometimes the level of BS is so sky high at the elite schools that you become an officially well-educated idiot. Remember, their are excellent professors and libraries at every school.

Those schools also basically make you prioritize a huge portion of your life towards them (only have so 1-2 kids, save a huge amount to pay tuition, organize daughter's life around admission process).

So is it worth it? It completely depends on our values. If the goal is to make her part of the cultural elite, its a big step in that direction. If the goal is to maximize earning potential, their are arguments both ways. If the goal is to have a happy family that sticks together and supports each other, it gets stickier. If the goal is to be a good Catholic, the school will not help, but some kids can fight their way through.

You get the picture...

 

[wizards8507]

First tip:
Maximize a Coverdell ESA at $2,000 per year. DO NOT contribute more than $2,000 per year for that account, and don't let any family members contribute to it. Anything above and beyond $2,000 per year should go into a 529.

Second tip:
529 plans are run by the states but you're not limited to YOUR state's 529. Some states provide special incentives if your kid ends up going to that state's public University, but in general you're best off picking a state that offers you flexibility into what funds your 529 goes into.

Third tip:
Yes, it matters where you go for undergrad, but not as much as what you major in. A UConn engineering major will have better prospects than a Notre Dame art history major.

Fourth tip:
Success rates in 2016 are going to be largely irrelevant to your daughter, who won't graduate until 2037.

 

[BleedBlueGold]

Yes, the better schools have better educational, networking, and job opportunities with higher ROIs. That being said, if your daughter wants to become a school teacher or a nurse or something like that, then a state school is going to provide the same opportunities as an "elite institution" and get her to the same place. If she wants to become an engineer or pursue a business career, then it makes sense to pay up beyond state school tuition. There are exceptions; for example, Cal Berkley, UVA, and Michigan are all fantastic, high-ROI universities (especially within specific programs).

FWIW, I had the opportunity to attend several state schools and opted to take out some student loan debt to attend a private university. I don't regret the decision.

So quick question regarding specifically a business career: I live in Indiana, so ungrad IU tuition factors in here. Mendoza vs Kelly Schools of Business are both ranked #1 and #4 respectively for undergrad. The price difference here is substantial (ND vs in-state IU). What then? Go to Kelly for undergrad and then see about a more elite institution for the MBA? Could this be a sufficient route for any upper tier career (lawyer, doctor, engineer, business, etc)?

 

[ab2cmiller]

So quick question regarding specifically a business career: I live in Indiana, so ungrad IU tuition factors in here. Mendoza vs Kelly Schools of Business are both ranked #1 and #4 respectively for undergrad. The price difference here is substantial (ND vs in-state IU). What then? Go to Kelly for undergrad and then see about a more elite institution for the MBA? Could this be a sufficient route for any upper tier career (lawyer, doctor, engineer, business, etc)?

Depends on the financial aid. My son graduated last year and we are in-state. It was down to ND and IU, with both business programs being excellent. IU was definitely cheaper, but not by much. He chose ND because he thought it was a better fit. Because ND's aid is need based, it just depends on your financial situation.

 

[ND NYC]

when comes to colleges, it's seems to always come down to your goals for your child vs their goals for themselves.

with my kids I have always asked them: what do YOU want to do, and tell me the reasons WHY before I agree to it?
(might be the Jesuit in me)
makes them think, makes them accountable, makes them understand consequences of their decisions.

too many parents making all the life decisions for their kids these days that they ought to be making for themselves.
to be sure, we need to guide, steer and provide input and advice/info but with mine I always want them to make big life decisions their own and for themselves.

what is considered a "great job"?
what is considered a "great school"?
do they/you want them to "learn a specific vocation"? (i.e accounting, nursing etc)
do you/they want to get a "great college experience"?

these are all things that will factor into it down the line for you. i'm in middle of it all right now.
keep in mind what you think and what they think is a "great job, great school, great experience" will most likely differ.

your doing the right thing by taking care of the financial end to support the decision THEY make many years from now.

I've gone the 529 route for all my kids, if you go that way only advice i'd give is to try and front load it if you have the means and get that money to work (as much of it as you can).

 

[BleedBlueGold]

First tip:
Maximize a Coverdell ESA at $2,000 per year. DO NOT contribute more than $2,000 per year for that account, and don't let any family members contribute to it. Anything above and beyond $2,000 per year should go into a 529.

Second tip:
529 plans are run by the states but you're not limited to YOUR state's 529. Some states provide special incentives if your kid ends up going to that state's public University, but in general you're best off picking a state that offers you flexibility into what funds your 529 goes into.

Third tip:
Yes, it matters where you go for undergrad, but not as much as what you major in. A UConn engineering major will have better prospects than a Notre Dame art history major.

Fourth tip:
Success rates in 2016 are going to be largely irrelevant to your daughter, who won't graduate until 2037.

We have a 529 that is maxed at $5,000 per year in order to get the $1000 capped tax credit. The rest goes into a non-retirement mutual fund to provide flexibility with spending in the event she doesn't choose college or gets substantial scholarships.

Clearly, her choice for career path plays a huge factor. I guess my question is more generally speaking: Go to Ball State, like mom and dad or go to ND, Duke, NW, Stanford, etc because they're better schools? Lots of variables to consider, but some people look at prestige as it pertains to success and what those schools can "unlock" for you. I'm basically asking 1) is this true? 2) is it worth it? And obviously the multitude of variables make it hard to give a simple answer, but hopefully you get what I'm saying/asking.

 

[BleedBlueGold]

Depends on the financial aid. My son graduated last year and we are in-state. It was down to ND and IU, with both business programs being excellent. IU was definitely cheaper, but not by much. He chose ND because he thought it was a better fit. Because ND's aid is need based, it just depends on your financial situation.

IU was cheaper but "not by much?" Interesting. Can you explain the need-based aid?

I'm clearly getting way ahead of myself here, but I'm just curious.

 

[ab2cmiller]

IU was cheaper but "not by much?" Interesting. Can you explain the need-based aid?

If you make millions a year ----- you pay full price
If your family is on welfare ------ you pay almost nothing

Very few merit scholarships are available at ND. Almost everything is "need based". The more you make/net worth the more you pay.

 

[tussin]

So quick question regarding specifically a business career: I live in Indiana, so ungrad IU tuition factors in here. Mendoza vs Kelly Schools of Business are both ranked #1 and #4 respectively for undergrad. The price difference here is substantial (ND vs in-state IU). What then? Go to Kelly for undergrad and then see about a more elite institution for the MBA? Could this be a sufficient route for any upper tier career (lawyer, doctor, engineer, business, etc)?

That is certainly a sufficient route. No doubt about it.

Both are great programs with highly successful graduates in all fields. However, the Mendoza degree has a higher ROI. Why is that? Likely because Mendoza places better into "elite" business careers -- investment banking, consulting, etc.

 

[BobbyMac]

If you are still in Indiana, you have some fantastic state school options. IU has numerous highly ranked schools on the national level. Their Kelley Business school is one of the tops on most every list, both undergrad & graduate. Purdue is historically well known and highly rated for many STEM disciplines, especially engineering. Many people will find a bachelors from one of those schools, in the right field will provide them with everything they could ask for, not just locally but from coast to coast.

Another option you can do in Indy is start at IUPUI and use it as a juco, then transfer to Bloomington or W Lafayette. A lot of very successful people from my area did that using PNC, PUC, IUN or IUSB before transferring to the main campuses down state.

 

[BleedBlueGold]

If you make millions a year ----- you pay full price
If your family is on welfare ------ you pay almost nothing

Very few merit scholarships are available at ND. Almost everything is "need based". The more you make/net worth the more you pay.

So what you're basically saying is you got more aid from the $60k/year school vs the $25k/year school and it essentially cancelled out the difference? Idk specifics, but I find it fascinating that financial aid can fluctuate that much from school to school.

That is certainly a sufficient route. No doubt about it.

Both are great programs with highly successful graduates in all fields. However, the Mendoza degree has a higher ROI. Why is that? Likely because Mendoza places better into "elite" business careers -- investment banking, consulting, etc.

The ROI and job placement data is significant to me. But are you talking just undergrad? Or post grad degrees as well?

If you are still in Indiana, you have some fantastic state school options. IU has numerous highly ranked schools on the national level. Their Kelley Business school is one of the tops on most every list, both undergrad & graduate. Purdue is historically well known and highly rated for many STEM disciplines, especially engineering. Many people will find a bachelors from one of those schools, in the right field will provide them with everything they could ask for, not just locally but from coast to coast.

Another option you can do in Indy is start at IUPUI and use it as a juco, then transfer to Bloomington or W Lafayette. A lot of very successful people from my area did that using PNC, PUC, IUN or IUSB before transferring to the main campuses down state.

I saved money, personally, by going to PNC first for basic classes and then I transferred to Ball State for my specific medical program.

 

[Rack Em]

If you make millions a year ----- you pay full price
If your family is on welfare ------ you pay almost nothing

Very few merit scholarships are available at ND. Almost everything is "need based". The more you make/net worth the more you pay.

Not entirely true**

My parents were state employees and we paid full sticker price at ND because they:
1) had little to no debt on cars, house, loans, etc.
2) had saved substantially for my college

Consequently, ND said "fuck you, your need-based aid is unsubsidized loans" since they had saved for the occasion. Need-based is total BS because I guarantee my family was in the bottom 20% of gross income in my class at ND.

 

[wizards8507]

Not entirely true**

My parents were state employees and we paid full sticker price at ND because they:
1) had little to no debt on cars, house, loans, etc.
2) had saved substantially for my college

Consequently, ND said "fuck you, your need-based aid is unsubsidized loans" since they had saved for the occasion. Need-based is total BS because I guarantee my family was in the bottom 20% of gross income in my class at ND.

To be fair, ND doesn't calculate your financial need, the Federal Government does. But yeah, the system is totally screwy. I benefited bigly freshman year because my dad had just gotten laid off. He was only laid off briefly but that period when he was unemployed was the time when FAFSA was due so our household income was super that year.

 

[Rack Em]

To be fair, ND doesn't calculate your financial need, the Federal Government does. But yeah, the system is totally screwy. I benefited bigly freshman year because my dad had just gotten laid off. He was only laid off briefly but that period when he was unemployed was the time when FAFSA was due so our household income was super that year.

Yeah I guess that's true.

Fucking Obama.....

 

[MNIrishman]

So quick question regarding specifically a business career: I live in Indiana, so ungrad IU tuition factors in here. Mendoza vs Kelly Schools of Business are both ranked #1 and #4 respectively for undergrad. The price difference here is substantial (ND vs in-state IU). What then? Go to Kelly for undergrad and then see about a more elite institution for the MBA? Could this be a sufficient route for any upper tier career (lawyer, doctor, engineer, business, etc)?

If you're going to get an MBA anyway, don't waste time on the undergrad business route. Better to create complementary skills rather than redundant ones.

 

[Rack Em]

To be fair, ND doesn't calculate your financial need, the Federal Government does. But yeah, the system is totally screwy. I benefited bigly freshman year because my dad had just gotten laid off. He was only laid off briefly but that period when he was unemployed was the time when FAFSA was due so our household income was super that year.

As an FYI, the FAFSA is pretty invasive and takes into account your money you may be completely unwilling to use on paying for college. Pretty much everything is considered disposable income, if I understand correctly. Wiz, is that true?

This is why I have a huge issue with the current federal student loan racket...sorry I mean "loan program".

 

[ND NYC]

To be fair, ND doesn't calculate your financial need, the Federal Government does. But yeah, the system is totally screwy. I benefited bigly freshman year because my dad had just gotten laid off. He was only laid off briefly but that period when he was unemployed was the time when FAFSA was due so our household income was super that year.

buddy of mine (construction worker) was laid off when his daughter was in 11th grade for pretty long time, so his daughter was straight a student, great sats, great athlete, the whole deal...so she applied to bunch of Ivys, gets accepted into Princeton, and the cost for her to go there vs in state Rutgers (my buddy lives in NJ) was about 15K cheaper because her dad basically was out of work for about 9 months. (this was back in late 90s)
note: he was bartending under the table while laid off.

 

[wizards8507]

If you're going to get an MBA anyway, don't waste time on the undergrad business route. Better to create complementary skills rather than redundant ones.

I disagree completely. Nobody should be getting their MBA immediately after undergrad because any MBA program worth anything wants you to have work experience. Thus, you get your undergrad business degree, then your business work experience, then your MBA. And if you want to do anything other than investment banking, there's no need for a sexy MBA.

As an FYI, the FAFSA is pretty invasive and takes into account your money you may be completely unwilling to use on paying for college. Pretty much everything is considered disposable income, if I understand correctly. Wiz, is that true?

It's a bit more complicated than that, but basically yes. My mom works at Brown University and they pay $10K per year for kids' tuition regardless of school. My sister as at BC and the Brown money had absolutely no impact other than she lost $10K in scholarship money she would have otherwise gotten from BC.

Keep as many assets as possible in the parents' name, as the schools take a bigger chunk of student assets than they do parent assets.

This is why I have a huge issue with the current federal student loan racket...sorry I mean "loan program".

That's why propositions to increase college affordability by increasing Pell Grants or student loans are bullshit. Students treat that as free money so schools see a green light to raise tuition. The only net impacts are that the schools get richer and total debt increases (national debt in the case of grants and student debt in the case of loans). Subsidies don't benefit the students at all when you consider all market dynamics.

 

[Rack Em]

That's why propositions to increase college affordability by increasing Pell Grants or student loans are bullshit. Students treat that as free money so schools see a green light to raise tuition. The only net impacts are that the schools get richer and total debt increases (national debt in the case of grants and student debt in the case of loans). Subsidies don't benefit the students at all when you consider all market dynamics.

It will be a tremendous contributor to the next housing crisis. Students are graduating with lots of debt and they can't afford to buy a house or make the payments. Meanwhile universities (ND included) laugh all the way to the bank. It's the most asinine thing I've ever seen.

 

[tussin]

The ROI and job placement data is significant to me. But are you talking just undergrad? Or post grad degrees as well?

I was talking just undergrad -- where Mendoza's ROI is almost unparalleled. I think IU's MBA program (Kelley) actually has a higher ROI than the Mendoza MBA.

Nobody should be getting their MBA immediately after undergrad because any MBA program worth anything wants you to have work experience. Thus, you get your undergrad business degree, then your business work experience, then your MBA. And if you want to do anything other than investment banking, there's no need for a sexy MBA.

The bolded is not true. The MBA still has one of the highest ROIs of advanced degrees and a minority of grads go into IB. Tons of high paying career paths often require MBAs -- consulting, PE, brand management, product management at tech, executive-track at top companies. Less and less MBAs are going into IB every year.

 

[irishroo]

So quick question regarding specifically a business career: I live in Indiana, so ungrad IU tuition factors in here. Mendoza vs Kelly Schools of Business are both ranked #1 and #4 respectively for undergrad. The price difference here is substantial (ND vs in-state IU). What then? Go to Kelly for undergrad and then see about a more elite institution for the MBA? Could this be a sufficient route for any upper tier career (lawyer, doctor, engineer, business, etc)?

I think it's a mistake to think that your undergrad choice won't have a major impact on your MBA choice. Top business grad schools primarily care about 4 things, (arguably) in this order:
- Work experience
- Undergrad academic record
- GMAT/GRE score
- Essays/recommendations

The top two on that list are hugely impacted by your choice of undergraduate school. Coming out of a great undergrad program opens so many more doors to build quality, desirable work experience, and of course it impacts your undergrad academic record. Going to a "lesser" undergrad school significantly reduces your chances at getting in to a top MBA program not because it's a lesser education or because the quality of the students and faculty is any lower, but because top firms that send a lot of employees on to top MBA programs typically don't recruit at those schools.

 

[wizards8507]

The bolded is not true. The MBA still has one of the highest ROIs of advanced degrees and a minority of grads go into IB. Tons of high paying career paths often require MBAs -- consulting, PE, brand management, product management at tech, executive-track at top companies. Less and less MBAs are going into IB every year.

I said "sexy MBA," not MBA in general. Yes, people are going to want MBAs in those career tracks but they're not going to give a shit if it's from Wharton or Booth unless you're going into certain very specific fields (IB and prestige consulting chief among them). A state university's MBA is "good enough" for most people. A $120,000 MBA and two years of lost income would have been a crippling amount of debt for my chosen career (corporate finance) and my family, so a $30,000 part-time MBA from a state school and funded by my employer was by far the greatest ROI.

 

[tussin]

I said "sexy MBA," not MBA in general. Yes, people are going to want MBAs in those career tracks but they're not going to give a shit if it's from Wharton or Booth unless you're going into certain very specific fields (IB and prestige consulting chief among them). A state university's MBA is "good enough" for most people. A $120,000 MBA and two years of lost income would have been a crippling amount of debt for my chosen career (corporate finance) and my family, so a $30,000 part-time MBA from a state school and funded by my employer was by far the greatest ROI.

Imagine how doctors feel with their debt load....

Wharton and Booth MBAs give you a few things that state school, part-time degrees don't:
1. Access to better companies and better jobs -- IBs, top consulting firms, great roles in every F500 company. That's valuable and can't be understated (especially for career switchers).
2. A safety net in the event of an economic crisis. You don't see too many Wharton or Booth guys struggling to find employment.

I remember the topic where you were debating which avenue to take and do agree that you chose the right path. But it's not as simple as IB or bust at top schools.

 

[wizards8507]

Imagine how doctors feel with their debt load....

Yes, but the mega-salary upon graduation is much more of a "sure thing" for the doctor than it is for the MBA student.

Wharton and Booth MBAs give you a few things that state school, part-time degrees don't:
1. Access to better companies and better jobs -- IBs, top consulting firms, great roles in every F500 company. That's valuable and can't be understated (especially for career switchers).

I agree for career-switchers. But the part-time student doesn't need access to better companies and better jobs if they already have a good job at a good company, especially if their undergrad network is skrong. Even if I had gone to a top MBA program, I still suspect I would have relied more on the ND network than anything else. I mentioned my brother-in-law and he's much more connected to his undergrad community from Villanova than his grad community from Booth.

2. A safety net in the event of an economic crisis. You don't see too many Wharton or Booth guys struggling to find employment.

I think it's exactly the opposite. When it comes to "who gets laid off" in times of crisis, it doesn't matter anymore what your resume says. It's all about job performance at that point. The degree gets you hired, which goes to our point of agreement around job-switchers, but the thing that keeps you employed is performance. I think the insecurity of debt payments, especially early in your career when your income is at the lowest it ever will be, more than outweighs the security blanket of a prestigious degree.

 

[NDBoiler]

Couldn't find a good thread for this, but a very interesting article:

War on campus: The escalating battle over college free speech - CNN.com

 

[T Town Tommy]

Found this interesting.

https://www.nytimes.com/interactive/projects/college-mobility/

 

[MNIrishman]

Huh. Some colleges really deliver terrible value. How do you wind up with graduates who earn less than the US median value for all individuals? On the plus side, it is nice to see ND performing well in this metric with figures that are very comparable to Harvard and Stanford and substantially better than UChicago and Northwestern.

 

[Whiskeyjack]

Huh. Some colleges really deliver terrible value. How do you wind up with graduates who earn less than the US median value for all individuals? On the plus side, it is nice to see ND performing well in this metric with figures that are very comparable to Harvard and Stanford and substantially better than UChicago and Northwestern.

The fact that Georgetown ranks higher than ND makes me suspect that these figures are heavily skewed by the regional distribution of graduates. Would love to see them after controlling for cost of living.