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What If My Kid Wants To Go To Stanford?

Hoover Tower at expensive Stanford University

Hoover Tower at Stanford

I had a continuing education class in Durango last weekend, and we used it as a family day trip, treating ourselves to dinner at our idea of gourmet; Applebee’s. As we sat there waiting for our food, Jim was watching college football on the many TV’s that are scattered about this four star establishment.

Stanford was battling someone on one of the screens, and our daughter asked who was playing. Jim looked at her and said,

That’s Stanford, where you are going to college.”

We kind of laughed since she doesn’t know Stanford from Pueblo Community College,  but that got me to thinking. What if my kid does want to go to Stanford?

She is only 7, and I’m not a tiger Mom who has been planning her educational future from conception, but let’s just for a minute consider it as a possiblity. Could we do it, and would it make sense?

Could She Get Accepted?

Because I’m a geek well rounded parent, I checked out some stats on getting accepted to Stanford University. We’ll assume today’s statistics because I have no idea what the next decade will bring.

For fall 2014,

There were 42,167 applicants, of which 2,145 or 5.1% were admitted.

73% of the admitted class had GPA’s of 4.0 or above.

95% of accepted applicants were in the top 10% of their class.

80% of those accepted scored over 700 on the math SAT’s, and 71% scored over 700 on critical reading SAT’s.

89% had a 30 or higher on the ACT.

Wow, if she wants to get in, she can never get below an A and has to have almost perfect test scores. With all that, she still has only has a 5% chance of getting in. That’s a lot of pressure!

How Much Does Stanford Cost?

Stanford does not offer a break in tuition for in state vs out of state, so everyone is in the same boat. According to collegecalc.org, the cost of tuition for 2014 at Stanford is $44,184. Add room and board, books, and fees and the cost per year averages $58,394. That makes a four year degree at Stanford ring in at $233,396!

Won’t You Get Financial Aid?

Well obviously if you’re smart enough to get into Stanford, you’ll probably get some scholarship money. Lower income students can also qualify for grants, which do not have to be repaid. For a family with an income of $48,000-$75,000, the net cost after scholarships and grants for this year was only $8,530, a very reasonable number if you ask me.

However, if  parents earn an income over $110,000, the net price rises to $37,357. Just like with Obamacare, middle to high income earners are pretty much screwed when it comes to higher education at prestigious schools. I agree that $110,000 is a good salary in many parts of the country, but to pay a third of your annual income for college is crazy. What if you have two kids in college at the same time? I guess Mom and Dad can live in the car and eat canned soup if they want their children to have an ivy league education.

Can’t You Save Money In a 529 Plan?

We do have a 529 plan set up and have contributed off and on since our daughter was a few months old. For the last couple of years, we’ve consistently put in $200 a month and extra at the end of the year if it made sense. Still, with our continued rate of savings, when she’s 18 we will only have $50k-$60k IF we can average between 7-8% on the rate of returns.

Our daughter also has a Roth IRA. If we make her contribute a portion of whatever income she earns from future jobs, it might add up to around $30K when she is 18. I’d love to let her save that for a retirement nest egg, but we could use it for educational purposes if we must.

At today’s prices, she could almost afford a Stanford degree. I really don’t think parents are on the hook for the full cost of a college education, but I want to help as much as possible. She would have to come up with an extra $60,000 in student loans or we could sell one of our rental properties if we really didn’t want her to be burdened with the full amount of debt.

How Much Is It Going To Cost in The Future?

My daughter will graduate from high school in 11 years. Estimated costs of tuition and other expenses for Stanford in 2024 are $102,413 or a massive, whopping, lifetime burdening amount of $409,653 for a four year bachelor’s degree. We better hope she finds a billionaire’s son to marry while she’s there because I can’t think of a single bachelor’s degree that averages enough start up salary to pay off the amount of money she would owe after graduation

This is the truly sad part of the story for me. Even if my kid is exceptional enough to get into Stanford or another Ivy League school, we could never afford it. Yes, we are considered top earners, but there is no way we can pay that much for a college education, and I would almost lock her in her room before I’d let her borrow that much money.

It’s a sad world we live in where only the uber rich and people in poverty can afford to send their kids to a prestigious school.

The Bright Side

There is a silver lining. The good news is that you don’t have to go to Stanford or any fancy school to have a decent career. Jim and I both went to state schools, and I can think of several occupations where you don’t even need a traditional college degree to do well financially. In 11 years, there might be more online options for education. Maybe the traditional four year degree will become a thing of the past. I can remember having to take two PE classes, library, sociology, and music appreciation in college, none of which helped me earn a degree. Maybe with skyrocketing costs, students will someday be allowed to take only what’s necessary for the career they want.

Our kiddo has no idea what she wants to be when she grows up, and I wouldn’t expect her to at age 7. Today it’s a veterinarian. Tomorrow it might be a ballerina. As she gets older and has more wits about the future, we can have an honest and open dialogue about careers, how much she might earn, and what the cost of a degree might be. We hopefully won’t decide based on emotion.

What If?

I will admit that if our daughter does turn out to be Stanford material, and she decides she wants to be President of the United States, I would have a hard time telling her she can’t because of money. I do sometimes worry that even though we plan and try and save, it still might not be enough. Even though I want to retire in 10 years, I could keep on working if it means the difference between affording college or not. While it’s pretty unlikely we’ll have to worry about such a scenario, I guess I’ll make sure to hustle as much as possible just in case!

What are your thoughts on the cost of a college education now or in the future? Do you really think it will cost over $400,000 to go to school in the next decade?

 

Image: Wikipedia Commons

 

 

 

 

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

45 comments

  1. My brother was in a situation where one of his professional degree options was in the 320 range and he came to the conclusion that if that was the only place he was accepted, he would have to find an alternative career.
    The cost just wouldn’t have justified itself and would have hampered his ability to do things when he finished. A few years later, he can look back and say it would have all come together, but you can’t count on that at the time.

    • I don’t think you can. Even if you plan on being something like a doctor or chemical engineer, you can’t count on a salary that would make enough to pay off that kind of debt right out of the gate. The worst thing you can do is defer and watch all the interest pile up.

  2. That’s just nuts, but not one bit surprising. I look at something like that and multiply it by our three kids know we’d never be able to afford it for all three. We’re high wage earners as well, but it’s almost as if we’d be working just to pay for the degree. That said, this is why it’s so important to look at justifiable options and save what you can now in order to put them in the best situation once it does come time for college.

    • I think that’s all you can do. I strongly believe parents should not sacrifice their own retirement to send kids to school. Smart young people with the emotional support of parents can find ways to go to college if they want, even if it means community college first or working their way through school.

  3. I think high schools are doing a better job of educating students about university. We were talking about Ivy League schools one day and our high schooler popped up with “Isn’t it better to get your bachelors from a state school and masters from Ivy League?” Yes!

    • That is a smart kid! The area we live in is very poor, so if kids do go to college, they almost all stay in state. Going to Stanford or Harvard is just not on the radar for most families here. I’m not sure if that’s good or bad.

  4. Ouch!! I think at the rate we are going, we are either going to have a very educated but serious in debt society, or no one who can afford to go to college.

    • That about sums it up. I do wish more people would become plumbers. I can’t ever seem to find one when we are in dire need.

  5. When our son was choosing colleges he knew upfront that he needed to choose a public university. Preferably in-state. He applied to a couple of out of state public universities but his first choice was our state’s flagship public university which has a nationally renowned reputation in engineering which was his major. (Unfortunately, its’ football team has sucked for years.) After undergraduate schooling was complete he went out of state for his masters and received a huge grant to attend that school. We made him aware early as to what we were willing to pay for and a private school wasn’t one of those things.

    • It sounds like he has done really well in choosing the state school. There seem to be many more options for graduate degrees, so that was very smart to wait to go out of state.

  6. Our plan is to help our daughter out with university. Our parents helped us out and it really made a difference for us starting out. That being said, I think we’ll only help with tuition and maybe books for a local school. If she wants to move out or go to a prestigious school that will be her decision and her bill.

    • I hope my kiddo will be practical. I had the chance to go to an expensive private school but picked the state option instead, and have never regretted it. I hope she is like me in that way.

  7. I just had this conversation with my five-year-old daughter. We have been practicing bumping with a volleyball since that is her new passion all of a sudden and it was on TV and Stanford was playing. I’d totally be fine with my daughter going there and would support her doing that if that is what she wanted to do. If that is her goal she will have to be smarter and even more goal oriented than her dad. Why aim low? However I want her to study and learn something she is interested in and with many jobs it doesn’t matter where you went to school. College is expensive so you better plan now rather than later no matter where they decide to go to school.

    • I would say that it doesn’t matter where you go to school with most jobs. Unless you’re going into politics or want to be surgeon general, any state school would probably be just fine.

  8. You certainly don’t need to be in the hallowed halls of an Ivy-league school (or on a similar level like Stanford) to have a great career. There are plenty of great state schools and small liberal arts colleges (or heck, even trade school) — like you mentioned. The whole price tag on college education as sincerely gotten out of control. If your daughter wants to be a programmer and work in Silicon Valley — then yeah, Stanford would be a great fit and provide a huge network for her. If she wants to major in English then…eh… Great to see you and your husband have a healthy mentality about the whole thing though. I had to pay for 50% of my college education even though my parents could afford the whole thing. Turned out to be a great thing for me!

    You should listen to this NPR segment about the price tag of college, if you haven’t already: http://www.npr.org/blogs/money/2012/05/11/152511771/the-real-price-of-college

    • Thanks for the link. I will check that out. There are some decently priced state schools in Colorado. Fort Lewis, where Jim went to college, is only $4000 a year for tuition. I’m sure it will go up, but hopefully will remain somewhat affordable.

  9. I honestly think they’ll pass some sort of refinance plan for student loans, which will actually allow the price to continue rising since the burden would be “a little less” for students. I selfishly hope this happens in the short term because my wife got no help from her parents with school but they made too much for her to get any aid (besides loan aid, of course). I honestly feel like I should open a college savings account NOW for my children who don’t even exist at the moment. I think college will keep going up in cost and even if it leveled off a bit the expenses will still stay very high.

    • I can actually see that as an option at some point. You could start saving for your future kids years before they are born just to you might be able to afford community college.

  10. A great career can certainly be had without a $400k noose around your neck as the welcome gift, but if your chosen career requires a college degree, there are alternatives: Germany, for example, now offers free (I’ll say that again… FREE) college education to students worldwide. http://tinyurl.com/phc58wn

  11. This is something Chris and I think about too, Kim. We’ve been saving since the girls were born, and I hope/expect to put a solid dent into their college costs, although I agree with you – it’s more than fair for the kids to help out (ideally through earning money/not student loans). One of the biggest mistakes I see is parents letting their kids choose wherever they want to go without seriously sitting down with them and crunching the numbers to make sure their college of choice makes sense. And equally important, making sure their children understand how taking on debt will affect them. Most kids don’t have any idea of the ramifications until after they graduate and start paying down that debt.

    • I would venture to guess that many of those 2,000+ students at Stanford who are paying full price or close to it have not fully thought about how much those loans are going to impact their choices in the future. When you graduate with that much debt, you pretty much have to take the job that will pay the bills and forget about being an entrepreneur. We see that quite a bit with optometry when new grads have to go to work for Costco or Wal Mart because it’s a high starting salary. Forget the fact that those type jobs often eat out your soul!

  12. Wow those numbers are scary. My sister is actually in a PhD program at Stanford but apparently there are lots of opportunities for outside funding so her costs will be at a minimum (wouldn’t it be nice if we had that for optometry school?) My son is 2 at the moment so thinking 16 years in the future is tough, but spending $400K on a bachelor’s it out of the question. That being said, will med students get into $1million dollars of student debt? When will it end? I think you’re right that by the time our kids go to college there will be some alternative options out there. Hopefully some affordable ones.

    • I finished college in three years, and I could have finished in two if all the general ed was not required. I understand it makes you a more well rounded person, but we aren’t going to be able to afford well rounded.

  13. I recently crunched the numbers on our local state school and found that over the last 14 years tuition/fees were rising over 8% a year! I have another 14 years until my oldest is college-age and if tuition keeps rising at that rate, I might even be sweating a payment for a state school! I’m not sure how much of these runaway costs are caused by cuts in government funding vs university bloat, but something’s gotta give!

    • I think you’re right. Salaries are not increasing anywhere near the rate of college costs. Either the traditional 4 year college experience has to be streamlined or some other funding has to be added or no one will be able to go.

  14. Interesting post! I do think the sticker prices of colleges will be mind-boggling in a decade or two, but that really isn’t what students/families pay often.

    I applied to Stanford for undergrad and didn’t get in (it was one of my ‘reach’ schools and yeah I judged that right!) but actually when I visited the campus before the rejection came in I realized that I didn’t want to go to a university like Stanford for undergrad. It really seemed like it would be a better place for grad students. And I ended up going to a private liberal arts college for undergrad and was incredibly happy with my choice, especially since my parents picked up the vast majority of the tab.

    I am struggling a bit with whether I would encourage my (future hypothetical) children to go to a state school or a private school, especially since we expect to be living in CA and they have a wonderful public system. Even more than that question, though, I’m not sure how we would react if our kids wanted to major in something we consider not terribly marketable! We never considered majoring in anything other than the sciences, which are great, flexible liberal arts degrees. You definitely have to consider your likely ROI for your school/major when you commit to a school/price, but most students change their minds about what to major in!

    • I would have a really hard time if our daughter wanted to major in something I knew would not be worth the cost of the degree. We are just too practical to send her to college for the “experience” without it earning her a career that is marketable. Did it make you feel a bit defeated when Stanford did not accept you? I think I would have felt that way, even if I knew there was slim to no chance of getting in.

      • No. I mean, rejection isn’t great, but I didn’t care because I got into my top choice. If I hadn’t gotten into Mudd and had to go to one of my safety schools I would have been a bit disappointed, but even my safety schools (UVA, for one) are great universities. I generally kind of shoot for the stars and don’t take rejection personally. 🙂

  15. I say all the time that I hope Will goes to a state school over a private school. I just don’t see how you can ever get a good return on over $200,000 of an education. There are only a handful of careers that will give that to you, and who knows what our kids will do with the rest of their lives. I think state schools not only provide great value, but there are more alums out there which means more networking opportunities for jobs when you graduate and most every job opportunity has more to do with networking than anything else.

    • I have never regretted going to a state school. I would have certainly regretted having more student loans if I’d gone private. It would not have gotten me a better paying job at all and I would probably still be paying them off.

  16. I have wondered lately what might happen to college costs when my son gets there (16 years down the road). Is this even sustainable anymore? Can colleges keep upping the costs with no restriction? I’m not sure, but I still save for college, but have thought more about colleges. I can only afford so much, but Stanford is not one of them.

    • It almost makes you not want to save at all. Kind of like, what’s the point? We will keep saving and hopefully make the best choice that isn’t going to bankrupt us all.

  17. I’d like to add another vote for the in-state public schools. Major bonus is that Mr. Maroon and I met there! I had plenty of friends that got caught up in the ‘glamour’ of a private school. I think one in particular was very judgmental and looked down with disgust at my desire to drive three hours to a ‘mediocre’ school instead of her plane trip half-way across the country to a so-called ‘elite’ school. Let me tell you, my degree is just as good as hers, despite the difference in cost. A quick look at the current rates from each school’s respective financial aid office, my tuition was an astounding 5 times less than hers!

    And in all honesty, my school has enough of a reputation and incredibly strong base of Former Students that I strongly believe it is a bonus in the working world. We both are proud enough of that education that Mr. Maroon and I both wear a chunk of gold on our right ring fingers to show off that school pride EVERY day. I know for a fact that I opened doors for myself in the professional environment with my ‘mediocre’ degree at a fraction of the cost. I wouldn’t change a thing!

    • We have no regrets about attending state schools either. Actually, I’m really proud we didn’t rack up more debt just for the sake of a school name. It would not have meant a better salary.

  18. If you have multiple kids in college at the same time, they take that into account and you get more financial aid.

    And even if you’re paying a third of your income at 111,000, you’re still making $74K. Hardly living in your car or eating canned soup. More, if you make more, and you should have been saving from the beginning if you’re a high earner. We certainly have. It’s not like the cost of private schooling should come as some kind of a shock to high earners. And it’s not like they’ve just started earning 110K for the first time the minute their kid goes to college.

    At $500/month for 7 years (something we’ve made a priority even before we made >6 fig), my son has 73K in his 529. That’s enough to pay for a state school already. At our current rate of saving, it may not pay full tuition/room/board by the time he goes off to college, but we won’t be paying the full amount out of our cash flow the year he goes either. And our mortgage will have been paid off.

    I have a really hard time feeling sorry for people who make a lot of money and don’t save. Financial aid is also very generous for people who don’t make a lot of money.

    • p.s. My husband and I both went to (different) fancy private schools for less than the cost of our state flagship because of grants and scholarships. We’re pretty sure it made a huge difference in our earning power. Research backs us up– people with low income parents are helped much more by elite schools than people with higher income parents (for whom it doesn’t make a difference).

      • p.p.s. I’m surprised nobody mentioned this, but 400K in the future won’t be the same as 400K today. Those college calculators tend to estimate college cost inflation as about the same as or less than stock market inflation and 2-3% more than regular inflation. If you put your savings in the market, you should be fine. If you don’t get raises that beat inflation, then your 110K salary (or whatever) will be worth a lot more financial aid because the well-endowed private schools will adjust accordingly. 400K looks scary now, but in however many years it will seem smaller. Just like candy bars used to cost 5 cents when my mom was a kid and are a full dollar now. Our incomes and investments have adjusted accordingly.

    • I would never ask anyone to feel sorry for me, but I would also never pay a third of my income so my kid could get a degree that is not really worth more than one from a state school. The only times I can think that Ivy league would be worth the money, maybe, would be for going into politics or working on Wall Street. Otherwise, no matter how much money I made, it smacks to me of driving a BMW when a Honda would run just the same.

      • If you make a lot of money now, the fancy name school probably won’t make a difference. But if you do spend a third of your income on college or a BMW or whatever, and then you’re forced to “eat canned food and live in your car” you’re doing something wrong. Most folks live just fine on under 74K/year.

        Personally we value education and want our children to go wherever they want to go. Because our parents gave us that gift and we make enough money that it’s worth say, not going to Disneyland every Christmas or buying fancy cars or houses or furniture now to achieve it. What better things could we do with all that money we’re accumulating from living frugally and making >6 figures now? Honestly, $500/month for each kid doesn’t hurt much when you’re making more than 90K/year. (And yes, we’re maxing out our retirement.)

  19. Samantha Cloverman

    Don’t go. Completely not worth it. Students will get a better education just about anywhere else. I’ve a student there –
    – professors don’t care about the students. All they care about is trying to get a new startup going and earning tons of money and fame
    – its a huge bureaucracy – students have to apply for everything
    – students actually can’t get in to classes, classes are huge and taught by TA’s. Have no idea how they get their ratio numbers so low – maybe in the humanities because its sure not in the sciences
    – University is indifferent to students – says it has all these resources but they have so many students and community members trying to use them only a small percentage of people get to

    • Thank you for the insight. How sad that your student got in and now is having to deal with all this. Maybe a good old state school is truly the better option.

    • Thank you for the insight. How sad that your student got in and now is having to deal with all this. Maybe a good old state school is truly the better option.

  20. It really is sad that you have to be lower wage earners to be able to afford these schools. Ivy League education should be available to students that have what it takes academically, not just those who are low-income, uber rich, or “Legacy”. We’re high earners and my husband did it WITHOUT a college degree (I am a sahm w/ a college degree from a state univ) but he’s smart as a whip, although we value education and know his success is not the norm but a combination of working harder than those around him, strategy, and yes, luck in a stable industry. He’s recruited often and has built a great career. My husband and I have business plans in the short-term for our family, thus forgo some of our college savings although we do plan on helping them.
    I can honestly say that as my husband and his colleagues (almost all have MBAs or JDs) look at candidates, they don’t care where the candidates were educated as long as it’s not one of those “online schools” or vocational-type “universities”. Those degrees might as well not be on the resume.
    Our oldest daughter has aspirations of Stanford, but I would encourage her to go to a great state school with a reputable program in her area of interest or a local private school with roots in the metroplex (we’re in Texas and there are a few that have strong ties here).

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