I’m about to retire but shocked by how much parents spend on college tuition – am I underestimating costs for my kids?
One of the biggest questions facing parents all over the country (and the world) is how to save so you can send children to college. Whether it’s one child or multiple, there is no question that costs have increased exponentially over the last few decades, with the average tuition price rising to at least $11,000 […] The post I’m about to retire but shocked by how much parents spend on college tuition – am I underestimating costs for my kids? appeared first on 24/7 Wall St..
One of the biggest questions facing parents all over the country (and the world) is how to save so you can send children to college. Whether it’s one child or multiple, there is no question that costs have increased exponentially over the last few decades, with the average tuition price rising to at least $11,000 annually for in-state schools.
This is a challenging situation as the Redditor, who is already financially secure, is now learning all about college costs.
There is no question that costs for higher education have grown significantly over the last few decades.
This means that the Redditor and others in his net worth class must decide how much they want to contribute to their children’s education.
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Key Points
For one Redditor posting in r/ChubbyFIRE, a subreddit where money is traditionally less of an issue, there is a question about how much parents in this financial category expect to spend on college. This individual is specifically asking because they were shocked at some parents indicating they had saved over $200,000 per child just for college purposes.
When you compare the cost of tuition even 20 years ago to today, you immediately see why parents of all financial levels are growing increasingly concerned about tuition pricing.
How Much Will You Spend
According to this Redditor’s post, his comments are in response to another post where parents indicated they would spend upwards of $20,000 per kid per year for college. What dropped his jaw to the floor was that this spend would come on top of the $200,000 per kid others mentioned they had saved away in 529 accounts.
As this Redditor is looking at exploring early retirement, there is now a growing concern in the back of their mind about how much they will need to spend on college. Having already spent $25,000 per daughter for preschool, the hope was that they were over expensive school costs now that the kids are in public grade and middle school.
Even with kids’ activities, which I can attest to saying can quickly add up, they aren’t seeing numbers come anywhere close to the $25,000 expense they had during pre-school, which was taken as a good sign. It’s unfortunate for this Redditor, but they now have to rethink their entire Chubby FIRE plan to account for potential college costs above and beyond original expectations.
College Costs Are Rising
If you look at the US News and World Report, the cost of college increased by 5.5% over the previous year, which is a testament to the rising costs. The publication indicates that the average price for in-state tuition at a public four-year university is $11,011 annually. If you stay public but go out of state, you can expect to spend around $24,513 per year for tuition, on average.
Things get really expensive when you try to go private, costing an average of $43,505 per year. It’s also really important to remember that these costs are in the middle of the pack cost-wise, so some schools cost more or less for each of the three categories. Of course, these costs don’t account for room and board, textbooks, or any other miscellaneous expenses, like food plans in a dorm.
Given all of these costs, it’s very possible this Redditor is underestimating the amount of money required for college.
What Reddit Says
It’s always interesting to hear what other Redditors think in posts like these, especially since the original poster is trying to gauge whether their take on this is crazy or not. As it turns out, many of their fellow ChubbyFIRE posters believe in covering all of their children’s college costs.
Given their financial good fortune, most of the comments here don’t want to weigh their children down with unnecessary loans or expenses when they can afford college without dramatically affecting the Chubby lifestyle.
Some parents are capping it, though. One parent suggests they will only give $20,000 total, which should be enough to cover most of a four-year state school locally. Then, they expect their children to work or take out loans for the rest.
The good news, if you can call it good news, is that the costs mentioned here align with the US News report on costs. Whether this gives the original poster peace of mind or not is another question, but it definitely feels as if many parents are setting aside enough to cover the entire cost of school, including private university costs in many cases.
The post I’m about to retire but shocked by how much parents spend on college tuition – am I underestimating costs for my kids? appeared first on 24/7 Wall St..
