Hacker News Reader

Comment by ColinWright | Hacker News Reader

    > I have no intention of starting a
    > college fund for my son, ...

Start it anyway! If he wants to start his own company, you'll want to be able to support him. If he wants to buy a house, you'll want to be able to support him. If he wants to become a doctor, you'll want to be able to support him.

Guess what - it doesn't matter what he wants to do - you'll want to be able to support him, and having that fund will make that easier/possible.

This will probably get a lot of votes here because HN is resolutely anti-formal education, but that's no reason not to have the fund in place in case that's the way the child want to go.

View on HN

Is the college fund a uniquely American thing? I come from a relatively middle class background (UK) and don't know anyone whose parents paid for college. Their kids took out loans and got jobs like everyone else. I know some people got help with accommodation costs but most didn't.

It's more common in America only because university costs have skyrocketed in the United States to astronomical proportions.

But even with America it's a class thing. For the upper middle class and above you can consider college funds along with summer camps, piano lessons, private SAT tutors, etc. as optional expenses for kids that everyone would love to be able to afford but not everyone can.

For those that can afford them it's great. But for those who can't, it can be kind of an affront to see it thrown about as something any loving parent would provide their child with.

> It's more common in America only because university costs have skyrocketed in the United States to astronomical proportions.

True in general, but not in the specific. The "big name" universities, mainly private, and the UC system have become so expensive that they are out of reach for the typical working stiff with a high school diploma. That does not mean that every university, or even every university worth attending, is priced that way. Most people in the United States have access to a public university system that will offer them a bachelor's degree that can be paid for solely by working for ordinary wages over the course of 3-6 years. Many of those with good academic records would also qualify for scholarships, and from one's second year onward there are often assistantship positions (teaching, research, administrative) available that may be more convenient or lucrative than other work. Despite the doom-and-gloom you read here and pretty much everywhere else, a 17-year-old American does have choices other than an uneducated lifetime of grinding poverty or entering the workforce half a million dollars in debt.

Probably has to do with the absurd cost of US college. A "good" college/university (basically on par with what most countries think of as a 'University') in the US costs 5 times what it does in Canada or the UK, never mind places like France, Germany, Sweden, etc....

Even when college tuition wasn't at "absurd" levels, people still had college funds for their kids. Dorms/Apartments, food, cars, books, laptops are all very expensive on their own.

Even if you put away just $25 a month, when the time comes, you (and your kid) will be grateful.

> Dorms/Apartments, food, cars, books are all very expensive on their own.

And how many of these are necessary? If you live in a metro area with a University, you don't need an additional dorm/apartment expense. Cars? Again, if you live in a metro area big enough to have a University, odds are there's public transportation. If you relocate to a dorm, you don't need a car period.

I'm curious about the cost of books. I'm currently a University student - the cost of my books is about $400-800 CAD per semester, depending on the exact courses. All in, tuition plus books is around $7000-8000 per year (assuming 5 courses per semester). Not cheap, but compared to rent ($18000 per year, although I'm married so we have a decent enough place) and the overall cost of living, it's not so bad.

And I know most Canadians have a college fund too (I didn't however). The worrying part is that costs are rising in large part because college funds exist and credit for education is easy to acquire.

My son's engineering textbooks can cost $200-$500 apiece

> And how many of these are necessary? If you live in a metro area with a University

You seem to assume everyone lives in a major metro area, or that all universities are near one. That's not the case for majority of people and majority of universities. A lot of students go away to school, often in different cities or even different states from their home.

> The worrying part is that costs are rising in large part because college funds exist and credit for education is easy to acquire.

That's an absurd claim. Costs are raising because the government (Fed and State) have been dramatically reducing their share of subsidizing that used to be provided to universities. It costs a lot to put a single student through a single semester, and now families are having to pick up a larger share of that cost burden than ever before. College hasn't gotten more expensive, it's the individuals share that has.

> You seem to assume everyone lives in a major metro area, or that all universities are near one.

You missed the part where I said "If you relocate"...

> College hasn't gotten more expensive, it's the individuals share that has.

http://www.bloomberg.com/news/articles/2014-08-18/college-tu...

http://mercatus.org/expert_commentary/subsidized-loans-drive...

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/03/t...

Anyhow, there's various reasons why college costs have increased so much more than the CPI, but cheap access to credit is a huge one.

Many people here do it, but it is mystifying to me also. I'm in my mid-30s still paying for the damn thing (almost done, but still). I can't imagine someone handing me such a huge gift like that.

Two things pop to mind: 1. The cost is ridiculous in the US. A top state-funded school will cost nearly $120,000 over four years (tuition, fees, room, board). 2. Our tax code has incentives for college savings plans.

We have it in Canada too through Registered Education Savings Plans (RESPs). I live in Quebec and basically every dollar invested in an RESP could be increased by 30% to 60% b/c of government grants. We can receive up to $7,200 from the Canada Education Savings Grant (CESG), up to $3,600 from the Quebec Education Savings Incentive (QESI), and up to $2,000 from the Canada Learning Bond (CLB). Altogether, it's about a $12,800 increase, which is quite nice.

(I grew up in the UK, now settled in the US)

The cost of university education in the US is pretty insane, compared to the UK. A college fund from your parents might not even pay for college - just reduce your loans to a level comparable to education in the UK.

The US offers some tax advantaged accounts/bonds for education expenses. 529 Plans, for instance, aren't tax deferred, but the earnings aren't taxed if used for college. And a number of people can contribute besides just the parents.

I'm curious, what's the cost of college in the UK? In many states in the US it's become outrageous, and that's not even considering private universities. That might be a motivation here to establish college funds.

Tuition is currently around £9,000 per year. Living costs/accommodation is separate. It does depend on which part of the UK you are in though (I believe it's much cheaper in Scotland).

I suspect that's the reason then. In the US college used to be similarly affordable, but costs have gone up this past 10-15 years in most states. And in some states long before that. I had friends at Georgia Tech that came from Pennsylvania because out-of-state tuition at GT was cheaper than in-state in PA.

I was actually interested in going the college in the US at one point so I researched it a lot (and even spent two weeks visiting a few). If I remember right international students pay out of state tuition and the places I looked (UW campus') went from around $20,000 to $35,000. Not sure about in-state prices but they would have been much cheaper and quite comparable to the UK. Is it more a problem of students wanting to leave their state to study? If they stayed in state it seems like a college fund wouldn't be necessary (of course with exceptions such as the one you mentioned).

In general, yes. Students going out of state drives up their costs sometimes 2-3x higher than staying in-state. With some exceptions like PA where going out-of-state might be cheaper. I really only know PA as being particularly expensive because I knew so many people from there. I'm not sure what the current list of affordable states and unaffordable states are.

Ok my kids' college fund came from Dell, who bought our startup. So I don't know what I'd have done otherwise - probably helped pay out of cashflow.

But definitely Parents are a component of college funding in the USA. In fact, the FAFSA expects parents to mortgage their house and sell property Before they'll allow a federal student loan.

There's no reason to have a "separate" investment for this. In particular, if you use certain special types of accounts (like 529s) you may have to pay penalties if you don't use it for education.

Wouldn't 529s be a very good reason to have a separate investment? Tax breaks, potential matching grants from states, etc.

That's true, so one should investigate what type of long-term investment fund will give the best options, but the point remains:

Start investing now.

If you don't pass the money to the kids outside of as an education expense, the taxes are irrelevant. The money can be given to other beneficiaries. Two siblings, one's finished school with $10k leftover? Give it to kid 2. Money left from that? Either parent wanting to go back to study something? Do they have cousins? Is one of the kids now married to a spouse that wants a degree?

If you ignore that it may be a bit unequal in the distribution of the money (seeming favoritism), all the money can still be spent with tax free earnings on education by passing it around to other potential beneficiaries.

I agree.

How about instead of college tuition, you offer him $1,000 for every unit completed in whatever college replacing thing he's doing.

Where's the tax incentive in that?

You don't get taxed at the federal... or possibly state level... in what you put away in 529 plans.

If it's twice as effective, it may still be better. It's actually an interesting question.

What if instead of college, we had elearning and a college dorm/village/den of college debauchery.. the stuff 19 year olds like. Instead of paying teachers and tutors and such, pay students to do the elearning. They can use the money to purchase wet t shirt related things or whatever.

I wonder if that would actually produce more learnings.

You will probably need to support him - all of these things are soon going to be out of the reach of people who can reach them now.

Reply on news.ycombinator.com