Should You Pay for Your Kid's College? College Planning and Financial Strategies with Steve Mullen

Welcome to today's episode of Wealthy After 40. I'm so excited for today's guest. Steve Mullen is a connection we made through his podcast. So let me just have him share a little bit about who he is his podcast and what he does. Sure my name is steve mullin and I am a public relations pro. I'm a professional podcaster and I met Dalene because I have a Kind of a pet project with my wife co hosting a show called Caregiving Gen X Style we're a couple of gen xers who find themselves taking care of their elderly parents And we know that's a relatively common thing for people our age So we started the show up just to kind of it's cathartic for us But also one of our biggest goals is just let people know that they're not alone in that and we have gotten some good feedback lately that I think we're doing that I think we're managing to succeed with that because people are saying that you know, it was just great to hear from somebody in the same situation So, you know, we do We do a show every two weeks and it's usually on a different topic having to do with taking care of your elderly loved one yeah. I enjoyed it and I loved, especially what you do at the episode is you kind of give the update of how moms are and what experiences. And you know, it's, it's being on the flip side of my caregiving journey, like those, those experiences are what continue to help you proceed and move forward. So I don't know if you wanna do that, but how is Mom today? She's doing really good. Yesterday afternoon for a couple of hours. I go to visit a few times a week. She's in assisted living. And you know, she's doing pretty well. I'll give you a little funny story. Actually. It's a preview I'm probably going to mention in our next episode, but they do wine down Wednesday where they serve wine in their little bistro their little cafe and my mother typically doesn't go but yesterday She said well, you know, so and so keeps asking me why I don't come down So let's go down you can have wine or if you don't want wine You can have whatever you want and I am not a wine drinker You But so we sat down and it was kind of like being at the popular kids table in high school because the, there were five ladies there and they were some of the more with it. Residents there. And that includes my mom. She's pretty with it. And just listening to them grouse about everything there, basically. And you could tell who the Queen Bee was. And it was just an interesting experience, let me tell you. Yeah, that's fun. It's crazy how even in the later stage of life, we still have those very social Cues and social norms that are going on. So yeah, thank you for sharing that. Yeah, assisted living is high school for wrinkly people It's true. I love it. I love it. And I love that that's just a little insight as you know, Gen Xers to kind of think about it in that respect, you know, and hopefully if that is a shift they have to make with their You know, loved ones that they'll kind of remember what Steve said. Oh, you know, this is a, this is an okay place. So I love that. I love that. So while we did the episode, well, it was as we were getting to know each other Steve shared with me his story about choosing to pay for his kid's college. And we'll get into it a little bit further. So what I want listeners to take from this episode is not necessarily That this is the course of action, but more of the thought process and the impact of his him and making this decision so that you can create the own thought pattern for yourself. So, Steve, I know we talked about it. You have two kids and When was it, I know you had told me, but when was it that you guys, you and your wife kind of experienced this, of what are we going to do, and explored the paying for college? Sure, yeah, we have, we have two kids, one's 21, she's graduating college in just a few months. And our other our son is 19, he's a sophomore at college right now. So, you know, this has been some time back, you know, the kids were, were pretty young I mean, I think they were both born when we first started talking about this, so you're looking at, you know, 18 years ago probably and we started realizing well, we need to think about putting some money aside for college So, you know, we did we sat down we talked to our financial advisor and we talked to each other and You know, my wife and I come from very different backgrounds. I was extremely fortunate that my parents paid for everything for college. And it was a particularly good fortunate because it took me six years. So I was on the six year plan after a transfer. I lost a whole bunch of credits, but my wife on the other hand her parents were she's a child of divorce. Her mother couldn't pay for it. And her father wasn't really involved. So she took care of everything between grants and loans and and scholarships and everything else. And she did have some small loans when we got married and started thinking about having kids and I had noticed when I was in college that the people who were paying for their own college Had more of a stake in it. And you know, i'll admit I screwed around a lot A lot more than I should have but the people who are paying for it realized, you know This is something that that i'm paying for and I better do a good job at it So we decided to do it We made the conscious decision that we were not going to pay for everything and frankly, I'm not sure we could have so we figured out what can we do? And we came up with a plan That would basically cover Our hope was to cover at least the first two years of their school And we've done that with our daughter and then some the investments with the 529 went pretty well So we were able to go beyond that Our son wants to go to law school and we've already told him We'll take care of the first two years And then after that it's loans and scholarships and grants and you'll have to worry about that yourself. And you know, we help out every place we can. I mean, we take care of the books, we take care of that stuff and help with groceries and whatnot, but we want them to have like I said before, have a stake in it. And that was, that was our conscious decision. I like that. I also had to pay for all of my college. I chose to pay for my daughters. I only have one. So in a position that, you know, is different than maybe some other people but I know you had also said, you wanted to enjoy life, but not also not take away from your retirement. So if you can speak a little bit about that and then also like maybe why you chose the 529. Sure, you know and yeah, it's it's all tied together I mean, yes, we could have paid for probably every cent of their college But what that would have meant was that our retirement would have been Negatively impacted we wouldn't have been able to put enough aside for ourselves And you know, we want to have a nice retirement and I think we're on track to have a pretty good one but i'm not sure how that would have worked if we were doubling What we are putting down for our kids college. We did decide on the 529 just because the investments in our state There is a state sponsored 529 plan I honestly have no idea if that's a common thing or not. But, the way that works is that the minute you sign up, they tell you, Okay, here's what you pay every month, and it locks in the cost of college at that time. So if you start it when you're a kid's two, you'll be paying for their college in, You know, that, that year. The problem with it is, is there's no flexibility. Because if you pay less, it just ceases to exist. So we decided to get our own 529. That way there was some flexibility where, you know, if things were a little tight, we could dial it back for a month. And we never really had to do that, thankfully. It came close a couple of times, but So, that was, we just wanted that flexibility, but also the benefits of the 529. I like that. And then, I know when you sent information about the podcast episode we recorded, you said we just pulled out our final payment for our daughter. Yes. Oh, it feels good. And explain, like, her situation. You know, financially, what is she looking at? Yes. Well, so she is in nursing school she will have a you know, assuming all goes well And I think at this point I can't you know, i'll knock on wood a little bit But I don't really see things going that poorly. So she has you know, she'll she'll finish up with her bachelor's of science and nursing you know, she'll take her certification exam and then you know the good thing about nursing while it doesn't pay a ton of money You'll always have a job she's already interviewed for a job. In fact, despite the fact that she doesn't graduate until may and you know, the pay is it's pretty good. You're never going to get rich off of it, but it's a good starting payment And we had the benefit of with her. She's actually going to have a lot less loans than our son a lot lower loans than our son Because and even forgetting the law school portion of it because She's a saver. And honest to goodness where she gets that from. I'm really not sure. We were savers. We don't live extravagantly, but this girl puts away money like nobody's business. Just between little part time jobs, babysitting, dog sitting. By the time she got to college, she had 15, 000 in her savings account. Which was really impressive. And she does work at the hospital as a tech. The one that she hopes to work at, you know, at full time soon. So she was able to, what we did with her she moved into an apartment for her junior year. And we sat down with her and said, look, you have enough money where you could start paying your rent. And I know you don't want to take it out of your savings, because I know you like your savings where it is. But if you do that, we're not taking it out of your 529, which means your loans will be lower. And it turns out she actually has, she's going to have almost 10, 000 left over in her 529 when she graduates. Which can then go straight to her loans. And she, I don't know the exact number, she's got 20,000 in loans. So that'll take it, you know, not quite in half, but close. And suddenly that becomes a whole lot easier to get rid of. At that point you're looking at a price of a used car. Which, she should be able to knock down because she already has a car. So you know, that worked out really well and I've talked to, Friends of ours who are dealing with this. They've got, you know, I was actually just talking to a good friend of mine over the weekend who's got a daughter who just went into college and he's trying to figure out ways. He didn't put anything aside at all and his initial thought, and he had said this to me, he said, well, it'll be all loans for her. It's on her. It's hers. Okay, well, if that's how your family wants to do it now, they're Kind of backtracking on that and they want to help her out and she is moving into an apartment And I said look if she's able to even pay for part of that rent That's money that's not coming out of your pocket and you're able to you know If she's in an apartment, you can cut the meal plan and just give her grocery money, which will be a whole lot cheaper So, you know, there are things you can do even while they're in college to try to reduce The cost out of pocket and when we figured out some of those things and you know moving into an apartment We figured out in this I'm sure this isn't, you know, gonna exactly work out with every school but the cost of living in an apartment for 12 months is about the same as Living in a dorm for nine months But when you live in the dorms a lot of times they require a meal plan, which those are insanely expensive Even the small ones are strange or just ridiculous So, I mean, you know, again, there were some things that we were able to do with her, so she's not going to have near as much liability for her loans as we thought she would. I love how you've done that and educated her along the way as well. And you didn't have to create a savings that would hopefully cover everything. But once you got there, you were able to mitigate some more for her, some more for you. So I know when we talked so this is about your son. I know as we talked, we talked about degrees, we talked about, you know, because he's going to law school, which is another three years. And I think you and I kind of share the same philosophy in this, and I just want you to kind of, you know, explain how you were guiding him through, you know, those expenses and those, that processes, those decisions. Well, the first thing we told him when he said he wanted to go to law school is that you really should make sure That your undergraduate degree is something that is marketable without the law degree And you know, he initially thought well a history degree or an english degree and and believe me I am not bashing those degrees, but they don't necessarily directly lead to a job so what he's doing he's actually he started out doing criminology, which I actually preferred to what he switched over to he switched over to political science, but you know, there are places There are a lot of things you can do with that. So that was the first thing now the second thing is You know, he's going to have more loans. There's just no way around it. Even if he doesn't go to law school, he's going to have more loans because his college is a little more expensive. And they also, he's got a nice scholarship, but they require you to stay in the dorms all four years to keep it. So we're going to be doing at some point his senior year, probably some kind of cost benefit of analysis is, is it cheaper to lose the scholarship, but save the money? On an apartment from what he says he's heard of a lot of people that do that that try to figure that out And you don't save money that way at his scholarship level so You know, we'll have to figure that out but some good advice that we got when our daughter was getting right it was her senior year of high school her high school had a an advisor Who came in specifically to help out with prep for college expenses and such You And and I told her what our plan was and she said, okay, well that amount is not bad considering what a nurse Gets paid to start with It's a manageable loan. She's not coming in with a salary of, you know, 70, 000 or 80, 000, but loans of 150, 000. That's not happening. Our son will have higher loans, but also, at least in theory, higher salary possibilities over time. So, you know, we don't love it and we'll help out however we can with him. But, you know, the fact is we, we can't do much more than we've already done. Yeah, I know I had my share of student loans. I say that loosely. I don't know if I already shared with you. I, when I was doing my first couple of years, I was living at home. I was working full time. So I was going to school part time. And I was using their short term loans so I'd have to pay half up front, pay the other half in like, oh, it was about 10 weeks. And so working, I was able to accumulate it and paid it just fine. So it was almost just like a pause or a delay. And then when I started university, you know, it was shorter weeks, so they were on terms and so not as much time and the cost was higher, right? Going from the state college to a university is a different cost. And so I applied for a student loan and I was denied and yeah. And because my dad made too much, but my dad didn't make enough to help me. Right. And I was also working as well. And I'm like, okay, that's great. But we don't have the money for college. You know, we are living just fine. And so I literally took out a signature loan, personal loan. And but because I was just a few weeks shy of being able to pay it in full, you know, that was paid off fairly quickly, but I know more recently, some of these student loan servicers. have not been vetted, I guess, or qualified. So how have you navigated that and, avoided that? What advice would you give to somebody who their child is going to have to take out student loans all or part? How can you support them and give them advice? The I'll tell you I don't know much about personal loans. We have been fortunate that so there's There are two types of the federal loans that are offered to you or are offered to your student Anyway there's the federally subsidized loans and the federally unsubsidized loans Please do not ask me the difference between that because I am a communications person. I don't do numbers. I don't add I talk But I know I was I asked about those with that advisor at my daughter's high school and she said If you are going to have loans, those are the loans to have fortunately, we didn't need anything beyond that It basically the loans ended up being I think a few thousand three three to five thousand dollars a semester, which is how it worked out to Yeah, about, well, actually, no, I think it's worked out to be less than that, probably around three. It worked out, like I said, her total loans will be about 23, 000, 24, 000. So in those loans, you don't have to start paying them off until six months after you graduate. They're relatively low interest relatively low payment if you can't pay anymore, but we will Strongly advise our daughter to pay as much as she physically can Just to get rid of these things you hear these nightmare stories about people who? Walked out of college with a fifty thousand dollar loan. They pay the minimum for ten years and the loan hasn't moved and it's because you're paying the minimum and I know you know, there's a lot of people that's all they can do we don't want her to be in that situation. So again, we'll you know, we'll work help her work out a payment schedule and And she should be able to, you know, make sure she has a roommate and hopefully keeps her old beat up car running so she can get to work and take the bus if she needs to and You know just keep her expenses down for a couple of years or a few years until she can get rid of that and then she'll have That that that money freed up maybe to get herself a nice car or something Yeah, yeah, I love that. I know when I had my loans cause I did get traditional student loans later on. It's that six month grace period is very nice, you know, for different ways. I mean, I was working full time. So it was just like, okay, accumulate it and then pay what you can. But I know when I was making the payments on some of them, Like, my loan was only for 10 years, so I don't know how that fell or if they were different then than they are now, you know, I did also have unsubsidized and subsidized, so, you know, yeah, what are your advice to people who are exploring costs of college? Do you have a couple of tips to get them started? You know, I think teach your kids to manage their money. As early as possible Our daughter is really good at that. She doesn't really go out and do a lot. She shops her clothes at thrift stores She's got a like I said kind of a beat up car that runs just fine Our son's a little bit more of a challenge. He likes to go out and buy new things but he's getting better about it. But you know them learning to manage their money particularly if you You Tell them that you'll help out with expenses while they're there it's gonna help you down the road and I will say that's another thing that we told our kids Look if you want to go out to dinner if you want to get a pizza while you're at school if you wanted to go do, you know some fun stuff that's on you That's your money. That's not our money. And if you don't have the money, then you just don't go do it. You have a meal plan or we gave you grocery money Or however, it worked. And I think they've done pretty well with that. They both have had jobs we didn't want them working their freshman year, but sophomore junior senior They're having their have jobs of some kind where they make some money just if only for gas and pizza money or whatever it is you know and beyond that I think You know, I like a job is kind of important. I think a part time job if they can handle it obviously the school is the most important thing and if they are the type of kid who They need that extra time then you're unfortunately You probably just need to give them a little bit extra money for that because really the education is the most important thing You Our daughter, like I said, she didn't, she doesn't do a whole lot other than go to school and work. Our son is, is the flip side of that. He's in a fraternity. He's got a girlfriend, he's got a job. He's got a leadership position in the international fraternal society or somewhat, some such thing. He's actually in Indianapolis right now at a, at a conference for that. So he does a lot of stuff. Fortunately, his grades are good. He was on the Dean's list. He's been on the Dean's list two out of three semesters. And he just missed it the other one. So, you know, as long as he's Doing well in school. We have no problem with all that other stuff And it'll look good on a law school resume. So and I think, you know, being involved is really important as long as it's not going to break the bank. The fraternity thing, by the way, something that people, I didn't know this, fraternities obviously cost money. And we told him, you want to join a fraternity, that's on you too. It's 500 a semester, and if you want to do it, you're going to pay for it. And he's gotten some benefits out of it already. I, I wasn't really a big fan of it to begin with, but I see it now, particularly. In the line of work that he wants to go into having those connections is a good thing and it's a big National fraternity too. So that will hopefully help him. So you know other than that I think like I said managing money is a is a big thing to teach them because it's going to help you when they get off to college because Hopefully you won't have that call, on a saturday afternoon. Hey, mom. I don't have any money. Hey dad I can you float me fifty dollars or whatever? So Hopefully they're managing it themselves I love the interactive managing that you're doing as well. It's, it's important to, you know, they learn, they have to learn it. They can't just be go, okay, go make it happen. You know, it's definitely, you know, money, money is a beast in and of itself. It is. Well, and it's, you know, and if they learn now, they won't have to learn it later. And we were talking on, on my podcast about Our topic, which, by the way, the show, I didn't mention earlier, the show with Dalene came out early, or late, late late January, late January, last Tuesday in January, so anybody who wants to check it out, they can, but, anyway, what we were talking about was taking care of your elderly loved ones and trying to make sure you don't go broke while you're doing that, and part, one of the, one of the things we talked about was parents who don't know how to manage their money. because clearly they never learned. So hopefully, you know, if you do it, help you. If you help your kids now, they'll be better down the road. Yeah, so true. Well, thank you steve. I appreciate it. Where can people find you if they want to connect with you? Probably the best way to listen to the podcast is just to google caregiving gen x style my name is steve mullin. I again, you know, I I do produce podcasts professionally If if anybody wants to hit me up about that, they can go to my website, which which is endgame pr. com Endgameer. com and there's a contact me page so you can get in touch with me about that Awesome. Well, thank you for your time today and thank you for having this conversation with me and listeners. We'll see you next week. All right. Thanks for having me on.