Life planning problem - not enough for the kids' educations
If your child is at least ten years old then this is probably your actual problem. If your child isn't yet ten then it's apt to be a presenting problem, concealing problems of pride. Perhaps you're not saving enough in general but can't yet admit it. Maybe you're not making enough money at your job. Or it could be that you're comparing yourself to others whom you perceive to be more successful that you.
When this is an actual problem, it's also a single problem. However, when this is a presenting problem it's actually covering up a cluster of different problems, most revolving around a sense that you're not doing as well financially as you think you should be doing, or as you think others are doing.
Expressed in this manner this is an irrational problem, whether it's your actual problem or not. What is enough? Enough to cover what the state expects parents to contribute to tuition at State U? Or enough to pay full tuition at Harvard? You need to come up with a number, or at least an estimate. Unless you have a finite target you'll never feel that you've put aside enough.
In order to come up with that target number you need to become an expert on college tuition, the means of paying it, and your own personal finances. Estimate what four years of room, board, and tuition will cost at a state or private school when your child is college age. You can find charts projecting these costs in any good book about paying for college.
With that cost estimate in hand you can then investigate the various subsidized and private loan, aid, and scholarship programs available. While the offerings will probably change by the time your child is ready for college, you can at least get a sense of what will be available for someone in your income bracket.
During your research you'll eventually come across the expected contributions of parents. This is an amount used in tabulating aid and loan packages. Every subsidized loan will automatically assume that you will be providing your child with that amount. If you aren't, you or your child will need to borrow that amount in a private loan. I tell my clients that their goal should be to provide their child with the amount of this expected contribution. If you do your best and fall short, the difference can be made up in loans. If you meet the goal, great. If you exceed it, that's even better. However, all you can do is your best.
When this is an actual problem, it's also a single problem. However, when this is a presenting problem it's actually covering up a cluster of different problems, most revolving around a sense that you're not doing as well financially as you think you should be doing, or as you think others are doing.
Expressed in this manner this is an irrational problem, whether it's your actual problem or not. What is enough? Enough to cover what the state expects parents to contribute to tuition at State U? Or enough to pay full tuition at Harvard? You need to come up with a number, or at least an estimate. Unless you have a finite target you'll never feel that you've put aside enough.
In order to come up with that target number you need to become an expert on college tuition, the means of paying it, and your own personal finances. Estimate what four years of room, board, and tuition will cost at a state or private school when your child is college age. You can find charts projecting these costs in any good book about paying for college.
With that cost estimate in hand you can then investigate the various subsidized and private loan, aid, and scholarship programs available. While the offerings will probably change by the time your child is ready for college, you can at least get a sense of what will be available for someone in your income bracket.
During your research you'll eventually come across the expected contributions of parents. This is an amount used in tabulating aid and loan packages. Every subsidized loan will automatically assume that you will be providing your child with that amount. If you aren't, you or your child will need to borrow that amount in a private loan. I tell my clients that their goal should be to provide their child with the amount of this expected contribution. If you do your best and fall short, the difference can be made up in loans. If you meet the goal, great. If you exceed it, that's even better. However, all you can do is your best.
[posted by : OFP on Oct. 25, 2009]
TAGS: life, education