A couple nights ago CootieGirl and I sat down at the computer and began a discussion about college. Specifically: paying for college. I have to start off by saying that my parents very generously paid for most of my college expenses. And what they didn’t pay for, I got loans for. I think I may have had some sort of scholarship thanks to my dad being in the Navy, but I honestly can’t remember (it was a long time ago). So I was in a much easier situation than my own kids will be.
Part of that is because I’m not forcing my children to go to college. I think for many types of jobs today, a 2-year degree will suffice, if that. I’ve told my kids all along that I’ll support whatever way they decide to go. Thus far, it looks like both want to go to college at least for a couple years, if not four. So the discussion begins on how to pay for it all.
CG is currently in a personal finance class in school and it is teaching the Dave Ramsey method for remaining debt-free. As such, CG is determined to graduate from college with as little debt as possible, if not debt-free. She knows she has a 529 plan set up into which we’ve been putting money – but at best it’ll pay for one year of college if she picks a school like Winthrop College and lives at home while going to classes. It’ll go further if she can figure out a way to commute to a school like Francis Marion University, which is just over an hour south of where we live (i.e., only take M-W-F classes so she only has to do the commute three days a week). Lastly, her 529 plan would cover a full two-year degree if she were to go to York Technical College, since we’d get not only an in-state discount but an in-COUNTY discount (but she’d only go there if she decides to go into one of the fields for which they offer an Associate’s degree, or use them as a bridge program to transfer to a four-year college in her junior year.
But if she has her eyes set on a four-year school from the get go, then we need to figure out how to enable her to graduate with as little debt as possible. One way: scholarships and grants. And that’s what led us to sit down at the computer a couple nights ago to begin searching for potential money out there waiting for her. We checked CG’s GPA, and she’s a solid 3.5 GPA, with a weighted GPA of 3.887. That’s good. But because her high school has a high number of Honors students, she is sitting solidly in the lower middle with her class rank. I told her not to worry about it – I was also in the middle of my class rank and did NOT have a 3.5 GPA (I was a 3.0 if I was lucky), so she’ll be fine in that regard. Will she get scholarships to Yale or Harvard? No. But she’ll definitely be eligible for something if she can keep up the good work for the next couple of years.
Fortunately, academic scholarships are not the only ones around these days. Last night in less than an hour we identified at least $22,000 in non-academic scholarships for which she could apply NOW, and she was heartened to know she could continue for the next three years to accumulate as many scholarship wins as she could leading up to her HS graduation. None of the scholarships were state-specific, so if she decides to go to an out of state school (and thus have higher tuition costs as an non-resident) she’d still be able to apply the money to college costs. As of right now, though, CG wants to attend an SC school to qualify for cheaper tuition at the outset.
In addition to college, we also talked about her desire to eventually buy a car for herself. She said in her personal finance class they discussed the best way to buy a car and be debt-free. She said that once she is working, she plans on saving most of her take-home pay until she has enough to buy a cheap car outright and have some cash in reserves for repairs. I told her that was a fine idea if she could accomplish it by the time she needs her own car (i.e., when she goes to college). I didn’t have the heart to tell her that if she works 20 hours a week at minimum wage which in high school, she’ll likely only clear $400 a month after taxes. Set aside $200 of that into a savings account for a car, and after two years she’ll have only $4800 towards a car. Now, she can work 40 hours during the two summer breaks (provided she gets a job within walking distance of our house). If she does that, then she’ll save closer to $6000. If Denis and I chip in another $1K towards a car, at that price, if she had the money saved to buy a car today, she’d be able to get a 2009 Hyundai Accent with 97K miles on it. Not sure if that’s the kind of deal she will want when the time comes (a 10 year old car with almost 100K miles on it).  BUT she’d have a car that is paid for 100%, so maybe it is.
The other conversation we had was about how she wants to retire “early” and plans on saving as much as she can in order to do it. I told her that once she gets her first “real” job (that provides benefits and a 401K) she should automatically put 15% of her salary into her 401K as soon as she’s allowed, and to NEVER put in less than 15%. Assuming her salary continues to increase steadily during her career, she could potentially have at least $2M in her 401K by the time she’s eligible to withdraw her distributions. Add in other ways to save (post-tax Roth IRAs to avoid taxes, annuities, and just plain savings), and she could easily retire early when all is said and done. What’s awesome is she has become inspired to do just that because of this finance class she’s taking.
Suffice to say, this personal finance class has been outstanding (part of the college scholarship talk arose because of an assignment in that class) and I’ll be interested to see how it plays out for her.
