How is anyone affording life right now: college tuition edition
Two kids, two tuitions. Why is paying for college so damn expensive and complicated?
Welcome to Everything is Liminal, a (mostly) free weekly publication. Occasionally, I publish content behind a paywall. As this week’s newsletter is focused on financial matters, part of this newsletter is for paid subscriptions which also means comments are only open to paid subscribers. As always, thank you for being here. 🖤
I remember twenty years ago when I had my first child, reading somewhere that we would need to sock away around $500 a month starting from birth in order to have enough money to pay for four years of private college tuition.
Lol.
Well, that wasn’t going to happen.
Back then, we were just making enough to make ends meet, so the thought of setting aside $500 a month was a ludicrous proposition and out of our reality. Still, I opened a 529 account for my firstborn when she turned 3 months old and set up auto deposits of $50 a month for the first couple of years. It was a modest amount, but it’s what we could manage at the time.
Over the years, I upped the contributions incrementally as our income increased until we ended up at $400 in monthly contributions by the time she reached her sophomore year of high school. We added any monetary birthday and holiday gifts as well. We implemented the same college savings strategy for our second child when she was born.
Twenty years later, I’m here to tell you (again) that compound interest works. Even despite big market downturns in 2008 and 2020 where we lost a chunk of gains, it truly is like magic, especially if you start early to capitalize on time and stock market returns.
At our contribution rate, we knew that we wouldn’t have enough to pay for a private college, so we set our sights on having enough to cover our state schools. That was our benchmark. Anything beyond that we would have to figure out.
And so here we are, on the cusp of dropping off our youngest child at college, which means that I have successfully posted payments for two fall semester tuitions for each my children. It was the most money I had ever spent in a single month outside of our apartment downpayment 20 years ago. It was terrifying.
But it also felt like an accomplishment. Saving $800 a month across two 529 accounts those last few years on our income was a huge stretch, and after what feels like a total of four years of being in college application season, both kids are finally in college. I feel immensely grateful and proud to be able to pay the tuition bills this summer. We made it!
Weirdly, even though I’m still sorting out the logistics of how we’re going to swing two tuitions for the entirety of my kids’ education, I feel mostly relief knowing the numbers that we’re now dealing with. I only learned what college really costs when I took my head out of the sand and started paying attention once my kids were in high school. Previously, the uncertainty of how much it would all cost was a looming mystery that drove the anxiety up considerably.
So, how much does college cost these days?
Because I like transparency in numbers, here is an example of what college in the US costs (non-US readers won’t be able to relate—lucky you).
I have one child at a state university and now another in a private college. This is the sticker price for tuition, all in, including room & board and incidentals for the 2024-25 academic year:
State university (in-state): $31,000
Private university: $86,000
Again, that is per year. 🫨
I know. Yeah. I had sticker shock reactions when I first saw that too. I also stupidly forgot that costs goes up every year at an average rate of 3–5%.
Had college tuition really gone up that much?
Apparently, yes. By a lot.
There has been much written about why college costs have gotten out of hand, but some factors include reduced government funding, supply and demand, and wages not keeping up with rising tuition resulting in the proliferations of loans. Colleges are a business (the marketing and spam output alone will make your head spin) and rising costs have largely been passed onto the customer—us.
By the time our oldest started college in 2022, the money that we had in her 529 account would almost be enough for a New York State school (the market downturns did hurt). As it turned out, she was only interested in applying to big state universities, and much to the relief of our finances, decided to go to our state school. I’m happy to say that she loves her college experience so far.
My youngest child, who is leaving in a week, is going to a private college. And no, we don’t have enough in her 529 account to cover all four years, but I will say that we aren’t paying the sticker price either. I’ve learned a lot about how financial aid and merit scholarships work over the course of two application cycles and I’ve learned that paying for college is a very complicated system.
So how much does it cost, really?
I just want to pause here and say a few words on why I’m writing on this topic this week. It’s college application season once again and millions of parents (maybe even some of you readers) are trying to muddle through this insanely emotional and nerve-racking process.
I know that costs are scary and much of it can seem “unfair” when you don’t have half a million dollars to send your kids to the private university of their dreams. And is the cost of tuition even worth it?
There’s a lot of debate on whether a college education is a right or a privilege, and to be clear, there are other pathways to success. Your child doesn’t need to go to an expensive private school—that is for every family to decide. We certainly deliberated over this endlessly. With the exorbitant cost of college, skilled trades are gaining in popularity with Gen Z as some four year colleges struggle with enrollment while others are cutting majors and programs.
I’ve never minded being transparent about financial matters because life has gotten ridiculously expensive and I do think collective sharing from personal experience is helpful. I know I’ve gained a lot of information from obsessing over message boards myself on how to navigate the emotional and financial challenges of how to pay for college. Plus, now that I’m done with the college application process, I have a lot of useless-to-me, but possibly useful-to-others information rattling around in my head. I feel like I need to dump it somewhere!
Paid subscribers, read on for what I’ve learned about financial aid, merit scholarships, college endowments, and how saving, in a way, punished us (not really, but sort of).
Free subscribers, I will see you next week…from a truly empty nest! 😭😦
