Four Kids in College: The Financial Stuff

I spend a huge amount of time fretting over how to pay for our kids' college educations. This started six years ago, when Elisabeth headed to Cal as an out-of-state student (which killed me because her dorm was literally a stone's throw from where I grew up). Back then, our attitude was we'll find a way. We even told the kids that they could apply to any school they wanted, and if they were accepted, well -- we'd find a way.

Elisabeth applied to Stanford and can I just say, thank goodness she didn't get in! Unless you're inordinately wealthy, $60,000 per year just doesn't come easy. (I cracked up when I got a letter from Stanford saying, essentially, "sorry 'bout that... but you're still our bestest alum friend and you'll still send us money, riiiiight?")

But even Cal was crazy expensive, since we paid out-of-state tuition. And the cost of Elisabeth's education, from when she started in 2002 to when she graduated in 2206, almost DOUBLED -- to 40+K per year! Believe me, there were many sleepless nights. (Fortunately, Elisabeth took out massive loans -- and really fortunately she's already paid them all off!)

So now we have three kids starting college in the fall. No wait -- FOUR. Elisabeth is starting school too -- graduate school -- but our rule is that we will assist with undergrad education, but graduate school is up the kids themselves.

As you can imagine, there are still (again) many sleepless nights because even though we pretty much limited them to in-state schools (unless they wanted to incur the extra cost themselves), two of those schools will cost over $20,000 per year. Ouch.

With me being unemployed during most of last year and Tom having switched careers a few years ago and taking a huge pay cut in the process, and with three dependent kids going to college, you'd think that we'd have gotten massive financial aid, wouldn't you? But can you believe it, not one of the kids got a PENNY in federal financial aid! Not one cent. I was absolutely floored and hugely disappointed. They got offers of small student loans through the universities themselves, but not one penny of federal financial aid for middle class a family with three kids in college. Something's wrong, don'tcha think?

Like a lot of well-meaning parents, we set up college accounts years ago for the kids when they were little. We didn't add to them on a regular basis through payroll deduction or regular contributions because frankly, we couldn't afford to. But we did contribute to them on quite a few sporadic occasions when we came into money, leaving each of the kids with a little over 20K in his/her college account. Believe me, it felt like a lot for many years while we were relatively oblivious to the sky-rocketing cost of college. Of course now we realize that it's barely enough for one year at a state school!

My choice now is to panic consistently (which I've done) or to take things one year at a time, which is hard because I know what's coming, but is really the only choice right now. Next year is taken care of for all the kids because that's how long it will probably take for them to blow through the money in their accounts. Except Kat, who is wisely going to a community college but living near a university. Her first two years of tuition, like Peter's first two years, will be substantially less than Aleks' at UW or Elisabeth's at UC Berkeley. The upside to that for Kat and Peter is that they'll owe less money in student loans upon graduation.

We always assumed that the kids could take out student loans, but with the financial crisis hitting lending institutions so hard these days, that looks like it's not a likelihood unless we co-sign, which our financial adviser has suggested we DON'T do "times three." And there's always home equity loans, but how scary is that?! Apparently lots of parents are opting for that route though; when I was at the bank last week shuffling college accounts from the 529 savings to the more liquid checking accounts, the loan officer told me that they're being inundated this month with panicky parents who are taking out fast home equity loans. As much as that option makes me cringe, it might be what we find ourselves doing a year from now.

And of course there's the "just grin and bear it" approach, in which we basically pay at least twice as much per month for college expenses as we pay on our mortgage. That approach requires us to forgo dinners out, entertainment, trips, etc., and live totally on the cheap, putting our monthly incomes only toward our kids' college educations -- which I might be happy to do if they, themselves had already tried and exhausted all avenues themselves.

Which brings us to scholarships. Oh man, don't get me started! Getting the kids to apply for scholarships has been as hard as getting them to floss or clean their rooms or, heaven forbid, hang up their towels! No, harder! They truly believe that they won't get a penny in scholarships because they're not members of specific groups like the Arabian Welders Association or Children of Icelandic Gypsies, so they don't even try. It kills me and is a source of great turmoil and pissiness on my part. Because all the available scholarships -- I repeat for my kids' sake: all the available scholarships! -- can be overwhelming, I have everything come in to my in-box and I send appropriate scholarship announcements onto the appropriate kid. Nursing scholarships to Kat, International Relations scholarships to Aleks... But have they applied for any? Noooooo! OK, maybe one. But it's pulling teeth to get them to apply for more. Yes, I've made it clear that the more "free" money they can find now, the less money they have to pay back later in loans. But I swear, they're not wrapping their heads around that; they just don't get it.

My heart races and my palms sweat just thinking about scholarships and why they're not applying for more of them, so I can't talk about that anymore. And yes, advice is welcome on that front, but I feel like I've tried everything, including incentives ("we'll give you 20% of any scholarships you get") and consequences ("we won't co-sign for loans, so you better get scholarships"). So far nothing has worked.

I really think there's a general inability for college-age kids (and not just ours) to wrap their heads around what it take financially to get through college for middle class Americans. If we were really poor or really rich, none of this would be an issue.

So right now I'm trying to spend more time being excited about our kids' new independence and less time fretting about how their college educations will be paid for. Chances are, we will be looking at a large home equity loan next year. And chances are that Aleks, especially, will need to take a year out and work to pay for his last two years -- something he definitely can't even fathom right now, when all he's thinking about is rush week at his new frat and the excitement of his classes.

My only option now is to take this whole adventure a day, month, and year at a time and to have confidence that one thing we did instill in our kids is the importance and the value of a college education and to believe that achieving that goal is something that they care about enough to make it happen, with our help or without it.