Financing a college education: Fact and Fiction

Written by Emily on July 12, 2007 – 10:00 am -

If you have children, saving for their college education is probably among your financial goals. Today, the average tuition at a private college is over $22,000. Refinance the house? Dip into retirement? Not according to Anne Marie Chaker at the Wall Street Journal Online. Her article Seven Myths About College Finances debunks several assumptions people are likely to make if they don’t look deeper into college financial aid.

Myth 1: Financial aid means grants and scholarships. Truth: Financial aid includes scholarships and grants (don’t have to be paid back) as well as federal loans. Loans can be subsidized and unsubsidized, but either way there is a cap on the interest rate–saving big bucks over the long term. Some jobs after college offer loan-forgiveness programs.

Myth 2: My assets (home and retirement savings) will prevent me from getting a need-based loan. Truth: The home you live in and retirement plans are not included when determining how much aid you can get under federal rules. Private colleges may use a separate formula, but do not include retirement savings.

Myth3: I should go with the lender preferred by my college financial aid office. Truth: Shop around and read the “fine print.” What looks like a good deal upfront might include an origination fee, or heavy penalties for missing a payment.

Myth 4: I’m doomed if I have two kids in college at the same time. Truth: You are likely to qualify for more aid.

Myth 5: The federal aid process follows a strict formula and my situation will never be given special consideration. Truth: College aid officers have the authority to make adjustments on a case by case basis. Documentaiton will be required.

Myth 6: Our child is likely to receive many private scholarships. Truth: Nearly all financial aid officers agree that parents overestimate the amount of scholarship and grant money children will receive.

Myth 7: The 529 college savings plan is bound to be the best for me. Truth: Shop around–be sure to look at fees.

If you are researching college financial aid, be sure to check out this post by Anna Leider.

After reading these articles, my biggest question is: Have parents always footed the bill for college? It never occurred to me to ask my roommates how they were financing their education; I only know that at least half of them worked. My parents paid my first year of room and board, but after that I was on my own. Just the idea that they would have used their retirement or refinanced their home to pay for my education seems crazy to me.

Has a college education become an entitlement? Even at the expense of the parent’s financial future? We live in a land of opportunity, and some believe that our country stays strong because life isn’t handed to us on a plate. We believe in hard work, and the self-made man. By giving our children everything, do we rob them of the chance to struggle, work hard, and fulfill their potential?


Posted in Debt, Finances, Saving | 6 Comments »

Generosity doesn’t have to break the bank

Written by Emily on July 11, 2007 – 10:00 am -

Get Rich Slowly offers practical suggestions for gift-giving on a budget in the post How to Escape the Gift Trap. We’ve all tried drawing names and going homemade, but I loved the idea of giving an experience. Making and sharing a meal, or inviting someone on a family outing. By doing this, you’re not just giving money or a gift, you’re making memories and history together.

Budgeting for gifts is tricky. We made a list of every occasion and person we wanted to give to, with the amount we would like to spend. We made sure to include Mother’s day, Father’s day, Valentine’s day, our anniversary, and any other easily-forgotten occasion for gift giving. When we added it all up, we were astounded–it cost as much as a vacation to Disney World! Now the tough question: what do we value most? Yes, we want (and need) to give, but we’re also saving to adopt another child, not to mention our goals to pay off debt and finish our basement. We didn’t eliminate gifts altogether, but had a great perspective to pare down our spending.

When the time comes to buy gifts, we consult our plan. If one of us wants to give more, we spend our personal money doing so. In a way, that makes getting a nicer gift even more meaningful. Another thing we’ve done is to give “our favorite things.” We created a list of our favorite items–things that make our lives easier and make us happy every time we use them. This ranges from the practical (Pampered Chef rubber scraper) to the luxurious (Mary Kay Satin Hands Pampering Set). We don’t feel the need to spend a lot, because we are giving something that we love and know is great.


Posted in Budgeting, Relationships | Comments Off on Generosity doesn’t have to break the bank

Put your mouth where your money is: Does eating healthy cost more?

Written by Emily on July 10, 2007 – 10:39 am -

Sam and I have recently started a new diet–a combination of Dr. Oz’s YOU diet, and Bob Greene’s Best Life Diet. Our focus is not so much on losing weight, but on making healthy eating and lifestyle changes. One thing that may have to change is our grocery budget. At least half of my grocery shopping is now done in the produce aisle–all the fresh fruits and veggies seem to add up. But am I really going to spend more in the long run? Some things I’m NOT buying lately: a lot of meat, cold cereal, huge bags of cheese, and white bread. Also, I’ve cut way back on eating out.

Carolyn O’Neil (a registered dietitian) asked her readers the same question. It seems that no matter how we choose to eat, we always pay a price–either in money or in poor health.

The University of Pittsburgh Medical Center offers some suggestions for eating healthy without breaking the bank.

I’d love to hear if healthy eating has changed your spending, and your tips and tricks for eating healthy on a budget.


Posted in Budget, Spending | 3 Comments »

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